Most Germans Want Greece Out of the Euro

Most Germans Want Greece Out of the Euro

Most Germans Want Greece Out of the Euro

Moneybox
A blog about business and economics.
Feb. 6 2012 8:22 AM

Most Germans Want Greece Out of the Euro

New Democracy Party leader Antonis Samaras waits before an emergency meeting at Greek Prime Minister Lucas Papademos' office in Athens
New Democracy Party leader Antonis Samaras waits before an emergency meeting at Greek Prime Minister Lucas Papademos' office in Athens

ARIS MESSINIS/AFP/Getty Images

Bild, the super-high-selling right-of-center German tabloid is out with a new poll that shows 53 percent of Germans want Greece out of the euro, and just 34 percent want it to stay in.

On the merits, I think a "Greece out, everyone else stays in" solution was perfectly possible 24 or 18 or 12 months ago. Today, however, it's not going to work. The exit of Greece from the system would likely lead to a run on Portugal. And while "Greece out, everyone else in" is a psychologically and politically plausible stopping point "Greece and Portugal out, everyone else stays in" isn't. If Portugal is out then Spain is out, and if Spain is out then Italy's out, and if Italy's out then France is out, and if France is out there's no point. So you're left with either a big bailout of Greece or a big bailout of Portugal, and the basic technical logic of just doing it for Greece rather than mucking around is very sound. The political case is much weaker, however, as the poll illustrates. So what's happening right now is that European officials are trying to get Greek politicians to agree to vicious austerity measures not so much because the austerity per se will actually solve anything, but because the politics of Northern Europe demands that Greece pay a pound of flesh in exchange for its bailout.

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I note that while it's not "fair" it's actually entirely typical for an enduring currency union to involve persistent open-ended place-to-place fiscal transfers. About as many people live in the San Francisco Metropolitan Statistical Area as live in Kentucky, and San Franciscans subsidize Kentuckians indolent lifestyles year after year. Or think about retiree meccas like Florida and Arizona. Even the people who live there and aren't retired are either directly or indirectly reliant upon Social Security and Medicare for their livelihoods. Your tax dollars and mine keep the hospitals open in those states and the high salaries drawn by the physicians and administrators keep the car dealerships and nice restaurants afloat. But the way American politics works is that transfer payments to old people are seen as benefits for the old people rather than as bailouts of the kinds of places where old people live.