Germany has every right to impose a gauleiter on Greece

Page last updated at 05:45 GMT, Tuesday, January 31, 2012 - 10:45 EST

The Telegraph (blog):

Let the Germans take control

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By Jeremy Warner

I'm sorry, but I cannot agree with the general sense of outrage sparked by calls for an EU bureaucrat – or German gauleiter, as depicted in some quarters – to take control of the Greek economy.

Greece lied its way into the single currency, and it has repeatedly failed to keep its promises since, even after agreeing the conditionality of IMF and Eurozone loans. If it wants to stay in the club, which bizarrely in my opinion, it still appears to, then some way of forcing it to obey the rules must be found. You don't keep lending to a perpetually delinquent creditor.

Now of course, to blame Greece for the eurozone's debt crisis, as many Germans seem to, is to misunderstand the nature of the problem. Fiscal delinquency is merely the symptom of what is at root a simple balance of payments crisis caused by divergent competitiveness. The single currency makes correction through the normal market mechanism of free floating exchange rates impossible.

It doesn't matter how much fiscal austerity or structural reform Greece does, it is most unlikely to regain competitiveness with Germany without devaluation.

Read the whole story: The Telegraph (blog)