Post-Greece, Germany and EU face reality

A man looks at newspapers showing the results of yesterday's referendum in central Athens, Greece, July 6, 2015. [Photo/Agencies]

What we are witnessing in Greece and beyond, in Europe, is an absurd but not entirely unexpected spectacle. During the past couple of decades since the fall of the Berlin Wall and the disintegration of the Soviet Union, there has never been such a powerful agglomeration of political risk. Fear reigns supreme not just among investors.

Greece is a pile of shattered illusions. The euro has been decimated. The upcoming global turnaround in interest rates is hitting the Greeks with full force.

Moreover, it threatens all Western European welfare states that have lived beyond their means for decades. After all, the steady fall in interest rates has added fuel to the fire of welfare spending in Europe over the past 40 years.

Even in Germany, supposedly a “winner” of recent developments and economic trends, life insurance and state budgets are already at the breaking point.

How can a country survive if total debt (beyond the public sector alone) is growing in real terms with the passage of every year, with no reserves accumulated for social security and pensions? All this comes against the background of daunting demographic trends.

In short, far beyond the serious problems in Athens, we are dealing with a monetary union that has a ruined reputation and lost much resilience.

The idea to create a modern and homogeneous copy of the Empire of Charles the Great — called “Maastricht” this time around — was na?ve. It has now failed, with and through Greece. This is the core message that policymakers are now starting to realize.

For some, this is extremely discomforting because it means that Europe will remain a continent of nation states.

But why else would the British government call a referendum on leaving the European Union probably next year? Why else are very EU-skeptic trends gaining strength in other countries? The underlying message seems simple: If you are riding a dead horse, you need to get off.