# Why do Germany and the (predominantly US funded) IMF keep throwing good money after bad? **URL:** \ **Category:** Great Debates\ **Created:** [July 12, 2012, 7:56pm UTC](https://boards.straightdope.com/t/why-do-germany-and-the-predominantly-us-funded-imf-keep-throwing-good-money-after-bad/628043 "2012-07-12T19:56:34Z")\ **Posts on this page:** 5\ **Page:** 2
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [July 14, 2012, 9:00pm UTC](https://boards.straightdope.com/t/why-do-germany-and-the-predominantly-us-funded-imf-keep-throwing-good-money-after-bad/628043/21 "2012-07-14T21:00:47Z")
There is always serious opposition to anything related to the EU. ---
**Author:** ![PrettyVacant](https://avatars.discourse-cdn.com/v4/letter/p/49beb7/32.png) [@PrettyVacant](https://boards.straightdope.com/u/PrettyVacant)\ **Post date:** [July 14, 2012, 9:48pm UTC](https://boards.straightdope.com/t/why-do-germany-and-the-predominantly-us-funded-imf-keep-throwing-good-money-after-bad/628043/22 "2012-07-14T21:48:32Z")
> [@msmith537](#): > > [Since the USD is the de-facto reserve currency for the world…yes.](http://en.wikipedia.org/wiki/File:Reserve_currencies.svg) You seem to have a habit of random association. I don’t think anyone will be surprised you actually bought the phase ‘world financial policemen’. ---
**Author:** ![Ximenean](https://avatars.discourse-cdn.com/v4/letter/x/aca169/32.png) [@Ximenean](https://boards.straightdope.com/u/Ximenean)\ **Post date:** [July 15, 2012, 4:41pm UTC](https://boards.straightdope.com/t/why-do-germany-and-the-predominantly-us-funded-imf-keep-throwing-good-money-after-bad/628043/23 "2012-07-15T16:41:22Z")
> [@septimus](#): > > Was there serious opposition two decades ago? Do people now see the Euro as a mistake? Iceland wasn’t even in Euro-zone; does Euro commonality get any blame for its banking crisis? [QUOTE=Really Not All That Bright] There is always serious opposition to anything related to the EU [/QUOTE] It is often remarked on that there was surprisingly little debate about monetary union. In many of the affected countries, it was waved through by the governments of the time without any referendum. The closest call was France, where they did have a referendum and it scraped through. The debate was more vigorous in some countries, but the UK and Denmark secured opt-outs from the euro, so it became something of an academic question. For the most part, the electorates of Europe seemed to just accept that it was a good idea. Regarding Iceland, I don’t think you can infer much from what happened there. It’s a country with a population similar to that of a medium-sized European city, and it is not part of the EU, let alone the eurozone. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [July 16, 2012, 3:30am UTC](https://boards.straightdope.com/t/why-do-germany-and-the-predominantly-us-funded-imf-keep-throwing-good-money-after-bad/628043/24 "2012-07-16T03:30:54Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Eh? The pre-Euro currencies were \*not \*integrated at 1:1. I’m well aware of that. That was only one of the problems associated with East German integration, and I was only using it as an example of currency unions not going well, not as a specific indictment of the issues with the Euro, which were not as immediately bad, but which held many more long-term problems. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [July 16, 2012, 12:16pm UTC](https://boards.straightdope.com/t/why-do-germany-and-the-predominantly-us-funded-imf-keep-throwing-good-money-after-bad/628043/25 "2012-07-16T12:16:27Z")
> [@smiling\_bandit](#): > > All that’s true, but remember that most people don’t see the alternative, or what they give up. All they see is the high employment rate, not the expensive imports and lack of domestic investment. Same as in the Broken WIndows fallacy - your loss is invisible, but the gain is very visible. So you ignroe the loss. I’m sure fear plays a role: even if you’re pretty sure that things would be better in the alternative, there’s a lot of political and economic risk which goes along with it. Why not try to keep things exactly the way they are now, and just take the acceptable result rather than the _potential_ better one. > > Intriguingly, this is the second instance where Helmut Kohl’s financial idiocy in currency zones resulted in economic disaster: his intitial terms of reintegrating East Germany traded Ostmarks for Westmarks at a 1-for-1 parity. And as any financier could have (and many did) tell him, this completely kneecapped the eastern economy, forcing Germany to pay through the nose to rebuild its already-shaky economy. It’s kinda weird, because it’s so damn similar you’da thought somebody would have realized that the Euro would encounter similar problems. Good points-it is worth recalling that the Euro was sold as a way to reduce transaction costs, in inter-European trade. That was completely valid, but tying the value to the euro to Germany resulted in small businesses in places like Greece, being driven out of business. In addition, while the Euro allowed for lower transaction costs, it did nothing to eliminate the various national inspectional organizations (TUV, DIN, etc.) that play a big part in inhibiting inter-european trade. [Previous page](https://boards.straightdope.com/t/why-do-germany-and-the-predominantly-us-funded-imf-keep-throwing-good-money-after-bad/628043.md?page=1)