Must-Read: Simon Wren-Lewis: Why Germany Wants Rid of Greece: “Germany [has] created a fantasy story… Greeks as a privileged and lazy people…

…who kept on taking ‘bailouts’ while refusing to do anything to correct their situation…. So powerful has this fantasy become, it is now driving German policy (and policy in a few other countries as well) in totally irrational ways. In particular, Germany refuses to discuss debt relief with Greece, yet seems quite happy to see Greece leave the Eurozone, the inevitable consequence of which would be that Greece would obtain much greater debt relief through default. Talk about cutting off your nose to spite your face. What is driving Germany’s desperate need to rid itself of the Greek problem? One possible answer is that… since 2010 Greece has done most of what the Troika asked of it…. What has happened to Greece as a result is hardly surprising: austerity is contractionary, and austerity on steroids is ruinous. Yet Germany is a country where the ideas of Keynes, and therefore mainstream macroeconomics in the rest of the world, are considered profoundly wrong…. Greece then becomes a kind of experiment to see which is right: the German view, or ‘Anglo-Saxon economics’. The results of the experiment are not to Germany’s liking…. Confronting this reality has been too much for Germany. So instead it has created its fantasy… to cast its failed experiment to one side, blaming the character of the patient…. So much easier to pretend that the problems of Greece lie with its people, or culture, or politicians, or its resistance to particular ‘structural reforms’, than to admit that Greece’s real problem is of your making.