Michael Lewis - Boomerang - Travels in the New Third World

A WEEK EARLIER, in Berlin, I had gone to see Germany’s deputy minister of finance, a forty-four-year-old career government official named Jörg Asmussen. The Germans now are in possession of the only Finance Ministry in the big-time developed world whose leaders don’t need to worry whether their economy will collapse the moment investors stop buying their bonds. As unemployment in Greece climbs to the highest on record (16.2 percent, at last count), it falls in Germany to twenty-year lows (6.9 percent). Germany appears to have experienced a financial crisis without economic consequences. They’d donned head condoms in the presence of their bankers, and avoided being splattered by their mud. As a result, for the past year or so the financial markets have been trying and failing to get a read on the German people: they can obviously afford to pay off the debts of their fellow Europeans, but will they actually do it? Are they now Europeans, or are they still Germans? Any utterance or gesture by any German official anywhere near this decision for the past eighteen months has been a market-moving headline, and there have been plenty of them, most of them echoing German public opinion, and expressing incomprehension and outrage that other people can behave so irresponsibly. Asmussen is one of the Germans now being obsessively watched. Along with his boss, Wolfgang Schäuble, he’s one of two German officials present in every conversation between the German government and the deadbeats.

The Finance Ministry, built in the mid-1930s, is a monument to both the Nazis’ ambition and their taste. A faceless butte, it is so big that if you circle it in the wrong direction it can take you twenty minutes to find the front door. I circle it in the wrong direction, then sweat and huff to make up for lost time, all the while wondering if provincial Nazis in from the sticks had the same experience, wandering outside these forbidding stone walls trying to figure out how to get in. At length I find a familiar-looking courtyard: the only difference between its appearance now and in famous old photographs is that Hitler is no longer marching in and out of the entryway, and the statue of the eagle perched atop the swastika has been removed. “It was built for Göring’s Air Ministry,” says the waiting Finance Ministry public relations man, who is, oddly enough, French. “You can tell from the cheerful architecture.” He explains that the building is so big because Hermann Göring wanted to be able to land planes on its roof.

I have arrived about three minutes late, but the German deputy minister of finance runs a full five minutes later, which, I will learn, is viewed by Germans almost as a felony. He apologizes a great deal more than he needs to for the delay. He wears the slender framed spectacles of a German film director, and is extremely fit and bald, but by choice rather than circumstance. Extremely fit white men who shave their heads are making a statement, in my experience of them. “I don’t need body fat and I don’t need hair,” they seem to be saying, while also implying that anyone who does is a wuss. The deputy finance minister even laughs just as all extremely fit men with shaved heads should laugh, if they want to remain in character. Instead of opening his mouth to allow the air to pass, he purses his lips and snorts the sound out through his nose. He may need laughter as much as other men, but he needs less air to laugh with. His desk is a template of self-discipline. Alive with implied activity—legal pads, Post-it notes, manila folders—every single object on it is perfectly aligned with all the others and with the edges of the desk. Every angle is precisely ninety degrees. But the most striking optional décor is a big white sign on the wall beside the desk. It’s in German but translates easily back into the original English:

THE SECRET OF SUCCESS IS TO UNDERSTAND THE POINT OF VIEW OF OTHERS.

This surprises me. It’s not at all what an extremely fit bald man should have as his mantra. It’s soft . The deputy German finance minister further disturbs my wild assumptions about him by speaking clearly, even recklessly, about subjects most finance ministers assume it is their job to obscure. He offers up, without much prompting, that he has just finished reading the latest unpublished report by IMF investigators on the progress made by the Greek government in reforming itself. “They have not implemented the measures they have promised to implement,” he says simply. “They are not making the agreed-upon reforms.”

“The people at the IMF put it that clearly?” I ask.

He turns to page seven of the IMF report, where it recommends not giving the Greeks the next tranche of the money the government needs to avoid defaulting on its bonds. “They have a massive problem still with revenue collection. Not the tax law itself. It’s the collection which needs to be overhauled.”

The Greeks are still refusing to pay their taxes, in other words. But it is only one of many Greek sins. “Their labor market isn’t changing as it needs to.” I ask him for an example. “They had very clearly as a tradition a thirteenth or fourteenth monthly salary,” he says instantly. “Due to developments in the last ten years, a similar [civil service] job in Germany pays fifty-five thousand euros. In Greece is it seventy thousand.” To get around pay restraints in the calendar year, the Greek government simply paid employees for months that didn’t exist. “They need to change the relationship of the people to the government,” he continues. “It is not a task that can be done in three months.” Changing the relationship between any people and its government, he added, was not a trivial matter. The Greeks needed to change their culture. He couldn’t have put this more bluntly: if the Greeks and the Germans were to coexist in a currency union, the Greeks needed to change who they are.

This is unlikely to happen soon enough to matter. The Greeks not only have massive debts but are still running big deficits. Trapped by an artificially strong currency, they cannot turn these deficits into surpluses, even if they do everything outsiders want them to do. Their exports, priced in euros, remain expensive. The German government wants the Greeks to slash the size of their government, but that will also slow economic growth and reduce tax revenues. And so one of two things must happen. Either the Germans must agree to integrate Europe fiscally, so that Germany and Greece bear the same relationship to each other as, say, Indiana and Mississippi—the tax dollars of ordinary Germans would go into a common coffer and be used to pay for the lifestyle of ordinary Greeks—or the Greeks (and probably, eventually, every non-German) must introduce “structural reform,” a euphemism for magically and radically transforming themselves into a people as efficient and productive as the Germans. The first solution is pleasant for Greeks but painful for Germans. The second solution is pleasant for Germans but painful, possibly even suicidal, for Greeks.

The only economically plausible scenario is that the Germans, with a bit of help from a rapidly shrinking population of solvent European countries, suck it up, work harder, and pay for everyone else. But what is economically plausible appears to be politically unacceptable. The German people all know at least one fact about the euro: that before they agreed to trade in their deutsche marks their leaders promised them, explicitly, they would never be required to bail out other countries. The rule was created with the founding of the European Central Bank and was violated in 2010. Public opinion turns more against the violation every day—so much so that Chancellor Angela Merkel, who has a reputation for reading the public mood, hasn’t even bothered to try to go before the German people to persuade them that it might be in their interest to help the Greeks.