Eduardo Porter has a well-written and rational story up at the NYT, “Germany Will Pay Up To Save Euro.” He writes convincingly about how letting the euro zone fall apart will be much more expensive and painful for Germany than saving it. So he concludes that after holding out for the best terms she can, Merkel will cave.
Porter is intellectually focused on labor costs and export prices, but the Germans viscerally don’t want to bail out a bunch of foreigners whom they see as lazy and corrupt. He’s arguing numbers on an issue that will be decided by emotion. The Germans see themselves as the pig who built his house of bricks, and those who hurriedly built their houses of straw and twigs so they could party deserve to get eaten by the wolf.
If countries always did what made sense, we wouldn’t have had our housing crash, the government would have bailed out the sub-prime market and kept housing prices from imploding. We’ve lost a helluva lot more national wealth than a housing fix would have cost. And that was the American government refusing to help Americans, not Germany refusing to help a bunch of racially inferior foreigners with their crappy non-Aryan genes.