Germany's Increasing Liabilities Towards the Eurozone

From today's Open Europe news summary:

"German SPD budgetary spokesman: Funding deficits via the ECB the worst way of dealing with the eurozone crisis Speaking to Berliner Zeitung, the SPD’s budgetary policy spokesperson Carsten Schneider estimated that Germany’s true liability towards the eurozone stood at around one trillion euros, arguing that “In reality we have already been in a debt union for a long time. We are liable not only for the debts of the deficit countries via the Greek package and the bailout funds but also for far larger amounts relating to the transactions of the ECB.” Schneider also criticised the “opaque and undemocratic” decision-making within the ECB, arguing that “In the ECB’s Governing Council Germany has only got one vote just like Malta and can always be outvoted. Financing deficits via the ECB is the worst way of dealing with the eurozone crisis”."

The "transactions of the ECB", to which Herr Schneider refers, are the credit obligations due Germany through the ECB's TARGET2 system, as described by Dr. Philipp Bagus in this article:

Passing the Bailout Buck, by Dr. Philipp Bagus

Furthermore, as should be expected, Greece asks for a two-year delay in meeting its budgetary promises. One should expect that this two-year delay will never arrive.

"Greece to renew push for two year delay to austerity programme
The FT reports that Greek Prime Minister Antonis Samaras will renew his push for a two year extension to the country’s fiscal consolidation programme when he meets German Chancellor Angela Merkel and French President Francois Hollande next week. According to Greek government documents seen by the paper, Greece would require an additional €20bn in funding if cuts were slowed. However, the funds could be raised by increasing short-term debt, delaying repayment of the initial EU/IMF loans or even increasing disbursements from the IMF. The Greek government is still expected to present plans for a further €11.5bn in cuts over 2013-14 to Eurogroup Chief Jean-Claude Juncker in a meeting next week, despite the fact that the coalition is yet to fully agree on how these cuts will be achieved."

As long as Greece and the other debtor nations can externalize the cost of their profligacy, they will never summon the courage to reform their economies. The only answer is to end the socialist euro experiment and return to the founding principles of the European Union (which have already been met!); i.e., free trade in goods and services, free mobility of capital, and free movement of labor. This is the true liberal ideal, not a socialist transfer union enforced by a coercive, centralized European government in Brussels.