Everyone is worried that Greece might default on its national debt. That's really not news. By one estimate, in the 180 years since it gained its independence from the Ottomans in 1832, the country has been in default or restructuring for half this period. The news is that this time, Germany is willing to bail Greece out.
Throughout the euro-zone crisis, it has been conventional wisdom to regard the Germans as narrow-minded, ungenerous and dogmatically wedded to prescriptions of austerity to treat Europe's problems. These criticisms are vastly overstated.
Can a president who's elected on a promise to be normal deal with Europe in the throes of a crisis of abnormality?
With France's Francois Hollande taking office, an all-star panel debates "Mr. Normal" and how the politics will reverberate across Europe in this excerpt from the past week's "Fareed Zakaria GPS." Watch the video above.
And is Germany taking too much of the anger? Here's what Josef Joffe, Die Zeit editor, had to say:
ZAKARIA: Josef Joffe, you know that much of the rhetoric and the anger is directed at Germany. The idea is the Germans are forcing all this austerity on Europe, European governments having forced to cut their budgets. It's causing misery, unemployment. It's even causing bigger budget deficits.
But you've sort of defended the German position, isn't it fair to say?
JOSEF JOFFE, EDITOR, DIE ZEIT: Well, I mean, Angela Merkel makes for a nice whipping boy for problems which are deeply rooted in the societies that we've just heard about [France, Greece, Spain]. ... FULL POST
Although Francois Hollande rode to victory in France on an anti-austerity platform, Germany is standing fast.
Even with a new government in France, Europe's fiscal discipline pact is not up for negotiation, says German Chancellor Angela Merkel.
"It is a basic approach in Europe that we do not change everything we have decided upon already after elections, whether in big or small countries," she said this week. "If that was the case, then we could not work in Europe."
Some say these are possible signs of turbulent times ahead for the European Union, with some calling into question the whole idea of European integration.
In this video report, CNN's Fred Pleitgen takes a look at how the current crisis may shape the EU.
By Mohamed El-Erian, Project Syndicate
On a recent trip to Germany, I was struck by two distinct narratives. One narrative features a robust German economy with low unemployment, strong finances, and the right competitive position to exploit the most dynamic segments of global demand. The other narrative describes an economy that is encumbered by never-ending European debt crises whose perpetrators seek to shift their responsibility – and their financing needs – onto Germany’s pristine balance sheet.
Both narratives are understandable. But they cannot co-exist forever. After all, it is difficult to be a good house in a deteriorating neighborhood. Either the neighborhood improves, or the value of the house declines. And it matters a great deal which narrative prevails – for Germany, for Europe, and for the global economy. FULL POST
By Hélène Hofman, GlobalPost
A mystery benefactor has been leaving packets of money to charitable organizations and needy individuals in Braunschweig, Germany.
Blank white envelopes containing bundles of bank notes have been arriving at various addresses in the Lower Saxony city since late last year, the Daily Mail reports.
So far a total of at least 190,000 Euros (US$251,000) has been sent to a robbery victim, a hospice, a kindergarten, various charities and the family of a handicapped boy. FULL POST
By Amy Silverstein, GlobalPost
A German waitress felt a little nervous about bringing a tray of beer to the table where German Chancellor Angela Merkel was sitting. So the waitress asked her colleague, Martin, to serve Merkel's table instead.
Martin, 21, held the tray of beer with his left hand while serving Merkel with his right hand. But he didn't keep his balance. The five glasses of beer slid off of his tray and landed directly on the back of the most powerful person in Germany. A YouTube video of the accident began going viral last night.
Editor's Note: The following is reprinted with the permission of the Council on Foreign Relations.
German Chancellor Angela Merkel formally opened the World Economic Forum in Davos on Wednesday, calling on Europe to become "more European" (DeutscheWelle) in order to address the ongoing eurozone sovereign debt crisis. Merkel urged her European counterparts to move forward with a so-called fiscal compact agreed upon late last year. However, she resisted calls for Germany to provide more financial aid to prop up the eurozone's weaker states, reiterating her belief in strict austerity and debt reduction as the best way to resolve the crisis.
By Siobhan Dowling, GlobalPost
BERLIN, Germany – Unemployment is rising in most European Union countries, as the effects of crippling sovereign debt crisis, and the austerity measures prescribed to tackle it, take their toll.
Yet the bloc's biggest and richest member has seemed almost immune to the effects of the crisis, particularly when it comes to its labor market. While dole queues lengthen in Spain, France and Greece, in Germany they are rapidly dwindling.
In fact Germany has seen the number out of work decrease to its lowest level since 1991. It's a remarkable turnaround. FULL POST
Editor's Note: Sebastian Mallaby is the Director of the Maurice R. Greenberg Center for Geoeconomic Studies and Paul A. Volcker Senior Fellow for International Economics at the Council on Foreign Relations.
By Sebastian Mallaby, CFR.org
Financial markets are behaving as though the euro crisis is on its way to resolution. Following Sunday's announcement of Italy's new budget and Monday's joint declaration from Germany's Chancellor Angela Merkel and France's President Nicolas Sarkozy, government bond markets have rallied in Italy, Spain, and Portugal.
Global stock markets initially jumped, following the previous week's strong performance. Expectations are running high that the EU summit, due to begin Thursday and run into Friday, will douse the fire that has been spreading across Europe since the first Greek bailout in May 2010. FULL POST
Editor's Note: Matthias Matthijs is Assistant Professor at the School of International Service of American University and a Lecturer at the Johns Hopkins School of Advanced International Studies. Mark Blyth is Professor of International Political Economy at Brown University.
By Matthias Matthijs and Mark Blyth, Foreign Affairs
"Never did a ship founder with a captain and a crew more ignorant of the reasons for its misfortune or more impotent to do anything about it." This was Eric Hobsbawm's damning judgment of the policy elite's response to the Great Depression. As these leaders reached for the old truisms of balancing budgets, lowering tariffs, and restoring the gold standard, they merely worsened the crisis. The same judgment may soon be passed on Germany for its role in the ongoing European sovereign debt saga.
After watching the economies of Greece, Ireland, and Portugal founder, the world has now turned its attention to Italy, home to the world's eighth-largest national economy and third-largest sovereign bond market. The diagnosis is sadly redolent: Europe should deflate its way to growth by sticking with a gold standard of sorts: the hard-money German-dominated euro. Meanwhile, under enormous international pressure, the Greeks replaced socialist Prime Minister George Papandreou with Lucas Papademos, a former official of the European Central Bank, and the Italians placed economist and former European Commissioner Mario Monti, hailed "super Mario," in the stead of Silvio Berlusconi.Yet despite the EU's coup d'état, the yield on ten year Italian debt went back above seven percent within twenty-four hours of Monti showing up for work. FULL POST
Editor's Note: Joseph Nye, a former US assistant secretary of defense, is a professor at Harvard and the author of The Future of Power. For more from Nye, visit Project Syndicate or follow it on Facebook and Twitter.
By Joseph Nye, Project Syndicate
As Europe struggles to save the euro, the chorus of complaints about weak leadership in the world’s major economies grows louder. Many have singled out German Chancellor Angela Merkel for failing to promote a vision of Europe similar to that of her predecessor and mentor, Helmut Kohl. Are the critics right?
Part of what effective leaders do is communicate a vision that gives meaning to policies and inspires others to support these policies (and those who propose them). It is one of the ways in which leaders help to create shared objectives and energize common action. Usually, such a vision provides a scenario for the future that is meant to encourage change, though it may also portray the status quo – or the past – as attractive, thereby encouraging resistance to change. FULL POST
By Fareed Zakaria, CNN
It is ironic that Greece - a tiny economy that is a mere 2.2% of the Eurozone and not even among the top 25 economies in the world - has produced so much turmoil. But there has always been a fundamental flaw in the design of the Eurozone. Europe created a single currency without adequate fiscal policy coordination. Very competitive economies like Germany were joined together with uncompetitive economies like Greece.
Nevertheless, I remain cautiously optimistic. This is because, despite what many critics say, Germany is playing its cards right. Many argue that Germany should come up with a dramatic solution to the debt problem. Chancellor Angela Merkel is not leading, critics charge. I disagree. Germany has a good reason for being sluggish. It is trying to force countries like Greece to enact meaningful reforms.