Stiglitz: Germany has no common sense in economics, nor compassion

Stiglitz: Germany has no common sense in economics, nor compassion

Athens, July 16, 2015/ Independent Balkan News Agency

By Spiros Sideris

“Germany has no common sense in economics, nor compassion”. These words belong to the famous economist and Nobel Prize winner, the American Joseph Stiglitz, and were chosen by the newspaper Liberation for its title in the two-page publication.

In an interview with the famous economist, says the author in the foreword, Stiglitz “strongly dispute the strategy of Berlin in the Greek crisis and calls for a radical overhaul of the international financial system”.

Also, the paper puts in context, the words of the economist in connection with debts:

“Germany owes its economic recovery in the biggest debt remission ever, in 1953. It (Germany) should have been learned from the Treaty of Versailles in 1919, the consequences of insurmountable debts. But it didn’t learn, neither of the compassion nor of the destruction in these two periods of history, which were key periods”, Stiglitz argues.

In the journalist’s question on what he thinks of the new Greek bailout, Mr. Stiglitz replied:

“That which Germany has imposed with the stick is simply unthinkable. It is also a very bad economic policy. We continue to recommend economic models that are counterproductive, inefficient and creating injustices and inequalities. To continue to demand from Greece primary surpluses of 3.5% of GDP for 2018 is not only punitive, but it is blind stupidity.

The recent history of Greece has proved that. This will continue to strengthen the recession in a country whose GDP was a decline by 25% within five years”, Stiglitz said and added:

“I do not know of any other example of such a recession that was caused in such a deliberate manner and with such devastating human consequences. And we come back, adding a new layer of humiliation”.

To the question “what should be done”, Stiglitz replied:

“We know and the IMF also knows and admits now: There has to be a restructuring of the Greek debt, or rather a relief. Germany does not want to hear neither the one nor the other. In other words, it says that it wants Greece back on track, but it strives for a policy and requires a program that will actually bring it to its kneels even further. The intervention in the sovereignty of a country, the dictates in a dictatorial manner that are being imposed is a very dangerous thing”, he says.

With reference to the history and postwar deleting of the German debt, Stiglitz emphasizes that “we did not learn lessons from history” and characterizes the Greek crisis as “an absurd saga that shows us the worst of hypocrisy and lack of compassion”.

On the possible consequences for the euro zone, the economist believes that it will be “devastating”, points out that in such a zone, “the key is solidarity” through which any shock can be dealt with.

He acknowledged that from now on nothing in the eurozone will be the same; we will have a before and an after the “Greek program”.

This is because Europe and the euro zone “were created to bring countries closer. Now it turns them against each other, with the stronger devouring the weakest. It is the refusal of the euro zone itself, what we witnessed in front of our eyes”, he points out.

Stiglitz also noted then that it is a lack of “political governance in Europe, where politics is either absent or only serves financial interests, a combination that never gives anything good”, the economist concluded.