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Today isn’t just Wednesday. It is 60 years since Greece, Spain and Italy forgave half of Germany’s debts. Since then Europe has had peace and Germany has prospered to become an economic titan in Europe and the world.
Sixty years ago it was Germany begging for forgiveness. And those countries who today are called the debt-ridden “periphery” were the judges in court. Germany, fresh from military defeat, was not in a strong position to bargain yet those countries gave it another chance.
That dramatic revelation can be read here on German online website Deutsche Welle: http://www.dw.de/german-economic-miracle-thanks-to-debt-relief/a-16630511
Today, the tables are turned but the sentiment is not there. Germany’s dogmatic Chancellor Angela Merkel, preoccupied with elections at home in September, is insisting that Greece, Spain, Italy, Ireland and Portugal adhere to unpopular austerity measures rather than write off half their debts the way they were in 1953.
That unpopularity has already come at a price. This week’s inconclusive Italian national elections have surprised even Italy at how no one has overall power and by how the President of Italy is not able by constitution to call fresh elections 6 months before he retires. And Europe is in despair at what this could mean for the austerity plans and war on debt.
Elsewhere there have been national strikes and rioting in countries like Greece. It’s working? Not yet. But the price of the dogma is already huge.
I have written extensively on this and why I believe that debt forgiveness is important and the only lasting solution to the debt crisis.
Indeed I hinted on how we should consider writing off debts and a similar amount of inflated assets in order to wipe the debt slate clean. This I applied to the case of the UK property price crisis in an article entitled UK readies for new “first timers” property crash on 13 March 2012.
And on 23 October 2012, I returned to the issue and cited Jörg Krämer, chief economist at Commerzbank in Frankfurt, on why some form of debt forgiveness is inevitable for countries like Greece: Austerity makes debt bloat, but there is a better way.
Today, the 60th anniversary of such a meaningful and publicly-spirited action by Mediterranean countries towards Germany ought to be reciprocated.
Indeed, it is perhaps notable that since 1860 when Germany and Italy changed their constitutions Germany has defaulted three times on its debt. Italy never has.