Janice Stein says “It’s overwhelmingly in Germany’s economic self-interest to provide trans-European financial stability"

June 18, 2012

How Europe’s power broker wound up at centre of its financial woes

Article by Barrie McKenna in The Globe and Mail; Published Wednesday, Jun. 13 2012

…Experts say the impending Greek vote marks a perilous inflection point in the euro-zone debt saga. Either Germans give more, and soon, or the system begins to unravel.

“It’s overwhelmingly in Germany’s economic self-interest to provide trans-European financial stability,” insisted Janice Stein, director of the Munk School of Global Affairs at the University of Toronto.

But a complex mixture of history, politics and the collective psyche of the German people has turned a no-brainer decision into a soul-searching exercise.

Germans have a “visceral discomfort” with the whole notion of going into excessive debt, fearing that it will spur potentially dangerous inflation, Ms. Stein explained. The country’s fixation with austerity dates back a century, she said.

“[German Chancellor] Angela Merkel has a very limited time to change her position,” said Ms. Stein, who has visited Germany a handful of times in the past year. “She’s inching her way forward when the markets need a strong statement to restore confidence. She may have too little, too late, to offer…”

Click here to read the full article on The Globe & Mail website.