Why Germany might let Europe fall
August 18th, 2011
09:00 AM ET

Why Germany might let Europe fall

By Fareed Zakaria, CNN

This is the moment of truth for Europe.

For the last year or so, the Europeans have repeatedly produced workable compromises that kicked the can forward. They hoped these compromises would quiet the markets.

This strategy was often quite successful. Europeans kept promising, “Yes, we are going to bail out the weaker countries with the greatest debt load, but we want some structural reforms in return. And as we get more structural reforms, we’ll bail them out more. And if the crisis seems more intense, we’ll bail them out again.”

The Europeans repeatedly produced packages that were enough to satisfy the markets.  Their hope was that at some point concerns would dampen down and then in the quiet of the night they could allow a country like Greece to soft default - a restructuring that doesn't spook everyone and doesn’t become a Lehman Brothers-like event.  They sought a quiet reshuffling of debt.

I think this soft landing has now become impossible.

Today what people are basically asking is: “Is Europe’s debt going to be centralized or not?” In other words, is Europe going to be willing to say, “All our debt is pooled together and theoretically, as a single entity, we’ll pay it back.”

The key to this commitment is Germany. Germany is the only country that can pay.

But Germany is increasingly reluctant to do so.  What we're watching is the rise of a new, ‘normal’ Germany, which in turn will lead to the unraveling of the old, highly unnatural structure of Europe.

The old structure of Europe rested on an extraordinary degree of German abnegation of its own interests.  The Germans believed their national interest lay in subordinating itself in every way to Europe’s broader interest.  That was what Europe was built on.

That’s why when you go to Brussels to the European Union you find a French-run affair with Germany’s money - a German-financed, French-run organization.

That has changed.  The Germans, 60-years after World War II, are understandably becoming a more normal country. They are deeply, purely European but they are not going to pursue Europe’s interests at the expense of their own.

Despite what people say, Angela Merkel has been extraordinarily willing to bail out weaker states in Europe.  Obviously, she's tried to get a good deal in terms of forcing some structural reforms in Greece and places like that.  But the real story is that she did this despite German public opinion, which is now 75% opposed to any kind of bailout. This German opposition to bailouts will surely remain going forward.

And if that is the trend going forward, the Europeans are going to have a very, very big problem. There really is no way you can make the numbers work without a much more substantial German commitment of resources than there is now.  If that doesn’t come through, it’s very difficult to see how the euro in its current form survives.

The key to Europe’s future is how Germany conceives of its interests.  If it does so in a way that would be perfectly normal (it is important to emphasize there is nothing scary about Germany simply saying that it wants to do what’s right for Germany as well as Europe rather than always putting Europe above Germany) this might be the end of Europe as we've known it.  It might be the end of Europe as a constructed, political entity built and supported by key nations, particularly Germany, no matter the cost.

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Topics: Debt Crisis • Europe • From Fareed • Politics • United States

soundoff (704 Responses)
  1. ralph

    knowledge increased at rapid rate compared to history of human civilization, along with speed of information? prophecy fulfilled
    Israel becoming a nation again? prophecy fulfilled
    Increase in natural disasters? http://english.sina.com/technology/p/2010/0128/302222.html
    One world currency after economic collapse? Coming soon

    As much as I'd like to disagree, I must say that all of the Bible's signs of end times are approaching and at a more rapid pace. It is compared to birth pangs, and it's scary to think that it's happening on our watch. How long or how many years nobody knows, but it is certainly approaching! Jesus lives!

    August 18, 2011 at 1:57 pm |
    • Jesus

      I hate to inform you, my friend, but I'm quite preoccupied right now. You might want to call your local congressman for help with this thing you mortals call "econony."

      Keep me posted though. I do read CNN.

      August 18, 2011 at 2:02 pm |
    • el Bruce

      If somebody dragged back Jesus in a time machine, he wouldn't recognize a Tea Partier as a follower of his if they had a 500' bible duct-taped to their house. They do not represent his teachings nor influence.

      August 18, 2011 at 2:10 pm |
    • ralph

      @bruce – I completely agree. They, along with most megachurches and Republican politicians, are nowhere close to what Jesus taught. All they do is drag His name through the mud for their own selfish benefit. There was a reason Jesus said "Give unto Caesar what is Ceasar's" AKA don't get involved with political games, just go out and try to be a good person and help others. Neither side seems to do that, althought the Repubs are def worse.

      August 18, 2011 at 2:13 pm |
    • Bruce

      Yes, Ralph–Jesus is returning. He cometh in the form of the Tea Party, and after Rick Perry takes the helm as President of the United States, Jesus will destroy the entirety of what we now know of as the "world economy" in short order, using their uninformed (albeit very passionate) views of the world and their st@nk-stupid economic theories that are encapsulated in "yer can't spend money yer don't have!"

      Remember, Jesus comes to destroy first, and then rebuild. What he will build is not necessarily what anybody wants him to rebuild.

      I hope I get chucked into the lake of fire when all is said and done...

      August 18, 2011 at 2:15 pm |
    • ScottJoh


      August 18, 2011 at 2:40 pm |
  2. WDinDallas

    Germany has always been the power in Europe, since the 7th century. They ended the Roman Empire and then started the next empire under the same name. This will be known as the Fourth Empire.

    I would divest myself of euro's if I were you.

    August 18, 2011 at 2:11 pm |
  3. Michael

    How can someone who is completely disconnected from the realities ot the European economy put out this analytical garbage on a day when the markets are absorbing bad economic metrics. To say that this is irresponsible journalism is an understatement.

    August 18, 2011 at 2:16 pm |
    • SayWhat

      So what the h.e.l.l. are you saying? That Germany wants to bail out whoever needs to be bailed out in Europe? But that's the debate the Germans are facing now and the article illustrates the analytical aspects of both sides of the arguument quite well. I don't understand your beef.

      August 19, 2011 at 2:54 pm |
  4. Dennis

    Read Aloud For Best Effect!!!
    The European Union commissioners have announced that agreement has been reached to adopt English as the preferred language for European communications, rather than German, which was the other possibility. As part of the negotiations, Her Majesty's Government conceded that English spelling had some room for improvement and has accepted a five-year phased plan for what will be known as EuroEnglish (Euro for short).

    In the first year, "s" will be used instead of the soft "c." Sertainly, sivil servants will resieve this news with joy. Also, the hard "c" will be replaced with "k". Not only will this klear up konfusion, but typewriters kan have one less letter.

    There will be growing publik emthusiasm in the sekond year, when the troublesome "ph" will be replaced by "f". This will make words like fotograf" 20 persent shorter.

    In the third year, publik akseptanse of the new spelling kan be expekted to reach the stage where more komplikated changes are possible. Governments will enkorage the removal of double letters, which have always ben a deterent to akurate speling. Also, al wil agre that the horible mes of silent "e"s in the languag is disgrasful, and they would go.

    By the fourth year, peopl wil be reseptiv to steps such as replasing "th" by "z" and "w" by " v".

    During ze fifz year, ze unesesary "o" kan be dropd from vords kontaining "ou", and similar changes vud of kors be aplid to ozer kombinations of leters.

    After zis fifz yer, ve vil hav a reli sensibl riten styl. Zer vil be no mor trubls or difikultis and evrivun vil find it ezi tu understand ech ozer.

    Ze drem vil finali kum tru.

    August 18, 2011 at 2:16 pm |
    • Long lost found

      Dad!!! Is that you?

      August 18, 2011 at 6:33 pm |
    • Rock Reynolds

      That is funny!

      August 18, 2011 at 10:07 pm |
  5. blah9999

    Looks like Hitler's dream is going to come true. Not with military might, but with financial might.

    August 18, 2011 at 2:16 pm |

    It was this sort of mess that lent support to Alexander Hamilton's argument for a stronger and more centralized national American government with a national bank in his Federalist Papers. It just makes me wonder whether the answer is for these "EU" countries to emphasize the "U" to the ver extent of relinquishing their respective sovereignty. Just given this economic situation (which bears striking resemblance to the States following the Revolutionary War), the EU almost reminds me the United States during the Articles of Confederacy. If the European Union is an ideal to be realized, I think the cost thereof has grown increasingly clear.

    August 18, 2011 at 2:18 pm |
  7. Ken

    SO, if Germany is so great of an economy, then perhaps they should demand Germans should be running a LOT more of Europe. They seem to know what they are doing and better educate their people on how to live within their means. Perhaps they need to engage in a process to reeducate other Europeans on how to live within their means. Just think of it, Germany firmly in control of the reigns of power and finances across Europe, working to convert the Europeans over to the Germany way of thinking. Looks like the final winner of WWII will turn out to be Germany. Hitler would be so proud.

    August 18, 2011 at 2:19 pm |
  8. Allen N Wollscheidt

    The woodwork is indeed EMPTIED OUT this day ! ! !

    It is conversations like those in this string that makes me wonder whether or not I got off at the wrong bus stop when I was picking a universe and later a galaxy to inhabit - let alone a solar system ! !

    August 18, 2011 at 2:22 pm |
  9. denim

    Seems to me Germany could own the rest of Europe by buying its debt. I wonder how that would look. Instead of Germany, France, Hungry, Greece, etc., a future map could just say Germany. No other ordnance necessary, just accountants.

    August 18, 2011 at 2:23 pm |
  10. Johnson

    I don't think Germans or French should support failed countries like Greece etc.

    August 18, 2011 at 2:24 pm |
    • 2f

      I agree...
      Just because Germany and France managed to navigate thru these difficult times doesn't mean they will be immune to it in the long term and should protect themselves as well.
      It's also time for other countries to aknowledge their issues and come up with a plan to sustain themselves for the long run.

      August 18, 2011 at 2:45 pm |
    • russ46

      hurray for germany

      August 18, 2011 at 4:22 pm |
  11. Alexander

    I feel for Germany in this, being expected to shoulder the burden for the EU. I hope that the other EU nations step up and put some massive assets on the table as well as reforms to make the situation more workable for the German's. Of course the German's did start two world wars so perhaps this is their chance to give something back. I'm hoping that they don't just let it all fall apart.

    August 18, 2011 at 2:27 pm |
  12. 2f

    What a scary bunch of religious nut!

    I have a great idea, How about we agree to disagree, and respect each other's religion?

    But of course we all know that Buddha is the true one!


    August 18, 2011 at 2:41 pm |
  13. rogerwatson

    i get a kick out of americans ! the average american is struggling and yet you think buffett is wrong to think billionaires should pay more tax, you pay judge judy 37 million ayear? and a forum about european economic woes degenerates into religious dogma ? im canadian and we pay our bills like the germans and banks never fail because they dont lend money to boneheads and we keep our religion to ourselves. and before you critic canada try learning about us

    August 18, 2011 at 2:42 pm |
    • 2f

      I love maple syrup,
      I love Canadian bacon
      I love watching a good riot in the streets of Vancouver after losing the Stanley cup.... (GO BRUINS!)

      All kidding aside, I go there on vacation often you do have a great country, nice people, clean cities it's always a pleasure going there.

      August 18, 2011 at 3:01 pm |
      • Too late

        ...try putting the maple surup on bacon ` not a lot just a little ~ fablous

        August 18, 2011 at 3:28 pm |
      • Saboth

        But aren't people dying in the streets from untreated maladies, due to their horrendous medical system? Weren't you afraid that as you wandered around, a rogue death squad would confuse you for a sick citizen? At least that's how I picture the country according to Republican estimates of national healthcare.

        Me...I just want to work my 45-60 hours a week through the flu and any other ailments I have, use my 5-10 days off per year while paying 25% of my paycheck for insurance premiums for insurance that seems to cover nothing, and retire in 40 years when I am 2 years away from death's door, but wrung out like an old mule.

        August 19, 2011 at 10:52 pm |
  14. bunnymont

    Who created the person: God/Allah or whatever who created the universe? And what does all this have to do with European economics?

    August 18, 2011 at 2:43 pm |
    • 2f

      Absolutely nothing, welcome to America!

      August 18, 2011 at 2:47 pm |
  15. Scott

    I hope Germany DOES let Europe as a whole fail!!.Europe like the US has continued to squander money with little regard to paying off their debts. It's like a gambler taking out a marker when he knows he already in the whole. "One winning hand and I can pay back everything" Europe continues to blow sunshine up everyone's backside in hopes that they can make the debt go away with a little sleight-of-hand. The only problem is that they need Germany to bend over in order to make any reasonable attempt to do so. If Germany can stand on it's own ,then so be it....the other countries should take notice of what they did and start planning accordingly

    August 18, 2011 at 2:47 pm |
  16. Allen N Wollscheidt

    Is this not all just a bit "The-Mouse-That-Roared-esque" ? ? : Germany fought wars of aggression in order to capture Europe - Yet now that The Fatherland HAS indeed gathered much sway over Europe - but peacefully - it simply wants to spit it back out now that the trial run has proved disappointing ! ! !

    Of course, peacefully is NOT much in the way of sport, is it ? ? ?

    If human beings are a "work in progress", we are making little.

    August 18, 2011 at 2:49 pm |
    • Kay

      Why would they want the world now? Everyone is bankrupt!

      August 18, 2011 at 11:27 pm |
      • Kay

        Oops! I meant Europe... why would they want Europe now? It's bankrupt.

        August 18, 2011 at 11:30 pm |
  17. 2f

    If Germany let's Europe fail they would hurt themselves. Currently there is only 2 or 3 countries in Europe that are still somewhat healthy. Only 2 countries started paying back the original bailout packages. But with one currency it would not do for Germany or France to let the rest of the Euro using countries fail.

    August 18, 2011 at 2:51 pm |
    • S1N

      If they kept the Euro, that would be true. If they switched back to the Deutsch Mark, that concern would no longer be relevant.

      August 19, 2011 at 1:52 am |
  18. stilty

    Organized religion is the worst thing that ever happened to the planet! It is responsible for more hatred,death,misery,and destruction than all the other reasons combined! Most people believe what their parents taught/forced them to believe. Others cling to their beliefs for comfort that this life isn't all that there is. Simply read all of the anger,hatrd and vitriol spewed above and you'll see that most of these" religious" people don't practice what they preach. The rapid overpopulation of our planet is what will cause it's end not some religious figure.

    August 18, 2011 at 3:09 pm |
    • S1N

      The only problem I have with most of the religious nuts on here, not to include those of you who aren't trying to shove your beliefs down my throat, is that they are not all members of suicide cults.

      August 19, 2011 at 1:52 am |
  19. Andrew

    Seriously? How did this go from an article about the uncertainty of the EU and Germany's place in it, to religous battles of who's right, who's wrong?? Either way, let me join in.. First, when we look at everything we've learned from Science, it reveals how little we know, but also how people dismiss through either ignorance or whatever what we have learned. Listen, the bottom line is, we don't know.. we may never know.. What we do know is that we may not be unique (life) in this universe, it's a total reality that there may be other life forms out there, maybe now, maybe in the past, maybe in the future, but all things point to this being the case.. Think about all the different forms of life here on Earth, many that we know little about from bioluminesent bacteria that animals have been able to evolve to use to creatures that survive in 400 degree volcanic vents, creatures able to survive subzero temps, even becoming dormant until they are able to become active in suitable environments.. It's crazy, but it all shows that life doesn't always need what we once though it needed to survive based on Earthly observations. This does not mean there is no god, it just highlights that biblical writings really tell stories to create society's that are able to live with each other(most), and then human nature went wrong, and now religion in general may be our downfall.. Everyone believes that to go to heaven or whatever, you have to follow a specific religion, others believe that cleansing the Earth of non-believers(of their rightous religion) is god's work and their responsibility. Policies, laws and societal views are based on these religious views imposing their will on others. I hope we can one day get to the point were we can all believe what we want, respect others in believing differently, and do what we want as long as it doesn't affect others. Either way, if a child molester can repent and go to heaven, but someone who decides to live model life, doing good deeds in the belief that it is whats needed to live harmoniously together with others will go to Hell for not believing in outdated literature, then God needs a reality check... Maybe we do too..

    August 18, 2011 at 3:18 pm |
    • Chaz

      Geez!Way to go,Andrew! A well thought out,interestingly written ,accurate analysis.No name calling,religious zealotry,or disrespectful labeling of other contributors.More power to you and your kind!

      August 18, 2011 at 5:04 pm |
    • PRWIII


      Thank you...

      August 19, 2011 at 3:45 pm |
  20. irwin

    I think Germany is Europe. !!!! What's the idiot going about

    August 18, 2011 at 3:22 pm |
  21. U ppl

    Just find it funny when someone cracks open the religion bottle everyone starts drinking from it.

    August 18, 2011 at 3:29 pm |
  22. Too late

    "Burneth the golden, gooey, plant. Packeth the pipe full and toketh deep into thy lungs. Then the camel will fit thru the eye of the needle and you will see the end of the rainbow. Brothers and sisters of earth ~ partaketh and mellow out."
    Book of Peter 25:624

    August 18, 2011 at 3:34 pm |
  23. Wilhem

    as a world power Germany is at the forefront of many of the fields of industry, as a society we seem to isolating ourselves from europe. does this mean socialism and nationalism? i dont know but we shall see..

    August 18, 2011 at 3:39 pm |
  24. Realistic View

    Seriously, reading news in the press world wide is pointing to another recession at the least. We are in a Fed made bubble that's been duplicated in every developed country. So wether the Fed prints more money to QE us and push the dollar's value to the bottom, or do what is necessary and let the market correct it's self, we are all in for hard times over the next few years...

    August 18, 2011 at 3:41 pm |
    • Too late

      You are 100% correct. The recession that any observer can see begining around the world is going to be bone crushing. By the end of 2011 we will be in the midst of something worse than the Great Depression of last century.
      This has nothing to do with rapture or chirst coming or any of that stupidity. All the blame for what is coming can be laid at the doors of incompetent governance by self-serving corrupt, petty people who have run the world into the ground while the citizens just dilly dallied and talked about how great they were. Stupid humans.

      August 18, 2011 at 3:54 pm |
  25. joonsbee

    F italy. How insulting.

    August 18, 2011 at 3:55 pm |
  26. Rumpus10

    Ah, the fruit of socialism......

    August 18, 2011 at 4:03 pm |
    • Too late

      Is 10 your IQ?

      August 18, 2011 at 4:06 pm |
    • S1N

      Of course, because socialism has been SO bad for Germany and the Scandinavian countries who sport both longer lives and a higher quality of life than the United States.

      The ironic part is that the only reason I didn't move back to Europe after leaving the Army is that I couldn't afford to. Apparently international travel isn't paid for when you separate. I would love nothing more than to get away from you inbred, Tea Bagger hicks who would do the world a favor by killing yourselves.

      August 19, 2011 at 1:48 am |
      • S1N

        I forgot to mention stronger economies and lower unemployment in Germany and the Scandinavian countries.

        August 19, 2011 at 1:49 am |
  27. Because

    Germans like David Hasselhoff.

    August 18, 2011 at 4:13 pm |
    • S1N

      After many years of trying, I STILL don't understand their unnatural obsession with him.

      August 19, 2011 at 8:11 pm |
  28. AS jack said

    Funny, 8 years ago as the EU solidified, enacted rules for continuity among EU nations the fundies were saying, "Tis the sign of a one world gov't. developing the end is near!"
    Now they're saying "The EU is falling apart and anarchy reigns tis a sign the end is near!"
    Well which is it and where is Jesus? Last I heard he got on a bus and just left Chicago.

    August 18, 2011 at 4:30 pm |
    • russ46

      thats right i saw him too elvis was carring his bags

      August 18, 2011 at 4:55 pm |
    • S1N

      Jesus had to get some mountain top real estate to hide in. After all, EVERYONE knows the world ends in December 2012. All of those Mayan calendar nut jobs couldn't be wrong. I mean, who's EVER been wrong about the end of the world? Oh... right.

      August 19, 2011 at 1:54 am |
  29. Michelle G

    I thought the EU was like a gang, once you joined you couldn't get out?

    August 18, 2011 at 4:53 pm |
    • Chris

      That it still kind of true. Germany can't simply quit. Believe me, whether it would be right or wrong doesn't matter. It won't happen.

      August 30, 2011 at 6:35 pm |
  30. Joieya

    Real issue is the concentration of wealth in some hands. It should rotate even forcibly else a MESS

    August 18, 2011 at 4:57 pm |
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