Of Greece Germany and Porsches

I am no economist but I thought I would try this: The interlocking woes of the Eurozone seem endlessly complex. The wasteful Greeks, Italians etc. are all denounced as compared to the hard working Germans living within their means and now being forced to bail out the profligate southern Europeans. A classic example is presented in the revelation that there are more Porsche Cayennes per capitia in the Greek city of Larisa, the capital of the relatively poor agricultural area of Thessaly, than anywhere else in the world. The article goes on pointing out that a couple of years ago there were more of the luxury SUVs in Greece than people admitting to earning more than 50,000 euro a year.

It is a perfect demonstration of the folly of the Greeks; their hopelessly inefficient taxation system; their reluctance either as individuals or a nation to manage their financial affairs properly. In light of that why should the Germans bail them out? Or if the Germans are as kind and generous as to bail them out why should they not demand a heavy price in order to ensure the Greeks’ house is put in order? After all one can hardly expect the Greeks to do it themselves: they might cheat.

However, this piece of trivia about Porsches (well of course to the cognoscenti a Cayenne is not a proper Porsche: the engine is in the wrong place – sorry I digress) also demonstrates the advantages the Germans have gained from the euro and indeed Greek borrowing. Had the Greeks been behaving in a more Germanic fashion (paying their taxes, borrowing less individually and as a nation etc. etc.) then they would have been buying less of Stuttgart’s finest jeep (actually manufactured in Leipzig) which would have resulted in less of them being sold, less income to Porsche, less profits, less German employees’ less tax revenues for the German state etc.

Furthermore had the Euro not existed the Drachma would have become devalued against the Deutschmark which would have resulted in the Porsche Cayenne becoming more difficult for the Greek citizen to purchase and hence, as less were sold, the profits to Porsche would have gone down etc.

As it is German banks have lent much of the Euros to Greece which is citizens have used to purchase German products (such as Porsches). Hence, as Mick says below the bluff and double bluffs are relevant all round. The Greeks may have been living beyond their means both as individuals and as a state but that living beyond its means has helped German manufacturers, banks, investors etc.