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First of all, Flassbeck is the only(!) prominent economist in Germany arguing strictly against the madness of austerity. But he's living in the border region between France and Switzerland, so he's a European more than a German.

Among all the economic think tanks in Germany, only the union-sponsored IMK makes a credible case against this madness. Everyone else is more or less in line with the neoclassic perspective. Not a Keynesian in sight, much less a post-Keynesian group.

But now to the meat of the issue. There will be no major political shift in Germany in the near future. As Flassbeck stated, only a single party opposes the financial inquisition commonly known as the Troika. Unfortunatly, it's the socialists, and despite overwhelmingly popular policies, they are still an absolute no-go for large swaths of the demos thanks to the authoritarian regime in East Germany. Sucks, but it is what it is.

So it's up to the French people once again to save the continent from itself. Noone else has the balls or the influence to put an end to this misguided union. How likely is it for the French government to openly challenge German hegemony soon? I wouldn't bet on it. Which means the Greeks are fuuuucked².

In any case, what would it take for Greece to stabilise? And by stabilise I'm talking about a return to a manageable level of unemployment, a working healthcare system and social safety net. A conservative guesstimate would be a public deficit of ~10% of GDP for at least 5 straight years. Alternatively, the EIB would have to prop up Greece with €50b a year for the same number of years. To get a working bureaucracy, to undo four decades of nepotism, Greece would basically need a generation to reestablish itself as a state – and it would require appropriate financing.

Now remember which of Syriza's demands is painted as most controversial right now: debt restructuring. Debt restructuring, while neccessary at some point, is entirely pointless as long as the fiscal policy remains contractionary. Greece needs austerity to stop, right the fuck now. Greece needs to provide income-generating jobs for its people. All the talk about debt is utterly pointless, because at 25% unemployment, we're looking at permanent damage in every way imaginable. The social toll alone should be completely unacceptable within Europe if we truly gave two shits about human dignity.

So, even if Syriza get their way tomorrow, Greece would still be flushed down the shitter. Syriza's proposal is contractionary. Any primary surplus in this situation is contractionary.

Greece is done within the Euro. The use of a foreign currency makes it impossible to use appropriate fiscal policy on their own. Unfortunatly, but also intentionally, the currency issuer, the ECB, is placed outside the democratic control of the European Parliament, or any national parliament for that matter. Fiscal policy within the EZ was taken out of the control of our elected representatives to ensure that the neoclassic/neoliberal approach was irrevocably built into the system. We can thank Germany for that, by the way.

There is a shortage of spending in Greece. There is a shortage of spending in Spain. There is a shortage of spending in Portugal, Ireland, Italy, France. There is a shortage of spending in Germany, for fuck's sake. Put the ECB under control of the EP, add full employment (2-3% unemployment) to its mandate, and have them finance the appropriate programs at the national level. The output gap in Europe is so massive, the un(der)employment so vast, they could spend a trillion Euros and inflation would still not reach the agreed upon target value of 2%.

All it would take to change the rules is consent from every national parliament in the union. Might as well go skinny-dipping instead.

*quality Flassbeck

Boosting this quality contribution up in the Hot Listing - declared quality by radx.

I am German myself and I am disgusted how the German media and politicians are only blaming Greece. Some conservative papers (like welt.de) are ticking out completely and are turning to phrases that are very close to our Nazi history and are not allowing overly critical comments.

How Germans could chop down wages so quickly and without much opposition from the people and other parties?
The main reason is Hartz IV. https://en.wikipedia.org/wiki/Hartz_concept
Its a reform for the unemployed people, which at first sight doesnt have much to do with wages of the working people. But it does have everything to do with it. Let me explain:
Before Hartz IV unemployed people didnt have much to fear from the state. They got their unemployment (Sozialhilfe) money every month which was enough to live without much fear of anything. It didnt mean much to be unemployed. But people found a job if they wanted to. Of course, like every country, it was exploited by a tiny minority. People were happy with it and many countries were envious of that system because it provided so much social security that people got very peaceful and crime rates were pretty much non-existent.

Hartz IV was planned to cut the massive costs of that social system. The left wing government (which turned out to be massive hypocrites), a coalition of a socialist party and a green party, claimed it would decrease unemployment rates massively and save lots of tax money and they would force those lazy useless unemployed people to get jobs. They emphasized on "the hard earning people whos tax money is stolen by lazy unemployed" and used the tiny minority of exploiters to get Hartz IV under way. Hartz IV was basically a cut for unemployed people where they would barely have enough money to live from or pay the rent from it. It also allowed the government to use many tricks to adjust the unemployment rate. They for example excluded people who were unemployed at a certain age or people who were send on useless trainings (like how you write a job application or how you use a PC), which were forced on them from the government. If they didnt attend, they would get cuts on the already not enough Hartz IV money.

They got it through the parliament (since there was no oppositon of mention thank to their "democratic" coalition) and it went all downhill from there. Unemployed people were suddenly massively discriminated, even by the politicians, because they had created so much hate against unemployed and built many stereotypes in the process, supported by stupid fake shows in the media, just to push Hartz IV through. As I said before, they only used the minority that exploited the system before in their arguments, and didnt care about the majority. That also lead to companies falling for the created stereotype and not employing people who had been using Hartz IV at one time and even going as far as them looking at older employees as inferior. They got rid of them in a massive purge, which also led to the trick of excluding old people near pension-age from the unemployment statistics. Pensions dropped because those old fired people didnt get a job anymore and had to use Hartz IV. That meant that they had to use up their savings before they get Hartz IV money (that rule is part of Hartz IV), which drained old people of their money and also caused them to get caught in an even worse trap:
After a few years of getting Hartz IV money, they dropped to the lowest pension rate, which was barely above Hartz IV. It didnt matter if they worked 40 years of their life in a well paid job. Now they were poor and would never get a pension that was appropriate to their former job. That lead to a massive shift in wealth away from the normal people (middle class and poor), to the rich people. The buying power of Germans was destroyed, and it became even worse after the socialist/conservative government (yes, a stupid coalition like that is possible here) increased the sales tax by 3% to a whopping 19%. As result of this living costs exploded and black labor skyrocketed. Cost of energy of any kind, taxes, food prices, gas, rents, every day stuff you need increased massively. The Euro was to blame too, because prices of many things (especially food) were just exchanged 1-1 to the Euro. So for example if there was cheese before that cost 1 Deutsche Mark, it would now cost 1 Euro, even though 1 Euro was worth 2 Deutsche Mark. Wages collapsed, while everything got much more pricy. Hartz IV made all that worse.
Now for the main reason how Hatz IV pushed wages down:
The fear of dropping into Hartz IV (for the reasons I mentioned) was massive. Nobody ever wanted to drop into Hartz IV because they knew then everything was over. So they accepted extremely low wage jobs, even if that meant they would get less money than they would from Hartz IV, which already was barely enough to live a crappy live from. They took 2, 3, 4 shitty paid jobs instead, and the companies loved it, because they saved a lot of money with that. The problem with that was that even well educated people had fear of Hartz IV and accepted lower wages because of it. Wages didnt rise for 20 years (and they dont rise much now either). Yet living costs, as I said, increased massively. It all came together.
Germanys economy was very low at one point, yet they still tried to tell us that the unemployment rate dropped again (even 2007/08 and every year after that). People started to learn how they manipulated us and now we are here. Companies making revenue records after revenue records, yet nothing is arriving at the people. The media claims everything is well, the statistics still lie to us that the unemployment rate is low, but its not.
And now they are trying to blame the Greeks for our problems. Just like the unemployed Germans before, and the stupid masses fall for it again.
Yet they still wonder why Germans are a dying breed (population has been dropping for years now), and dont get that having children is very expensive in Germany and only few people still have money or time for that (since both women and men have multiple jobs to be able to live) because of these developments.