But it has always been the Germans who kept asking for higher interest rates and a harder currency. The monetary union, as you surely know, does not include the UK, Denmark or Sweden. That's because these countries opted out. No one forced the Greek into the MU. They cheated their way into it by falsifying their accounts.
I remember the discussion over Greece at the time - about how extra leeway was made to squeeze Greece in a couple of years late. Everybody knew about it. The explicit extent of it was in the news not long after:
Sep 2004 http://euobserver.com/?aid=17351 : "Greece was in breach of the euro rules at the time it joined the single currency, according to new figures produced today by the Greek government."
Re Germany - it was at risk of deflation! German politicians were constantly moaning about how high ECB rates were, and how they had to be lowered, and that was the wide consensus of economists too:
The links you provide are mostly from the previous recession. In a recession politicians demand rate cuts everywhere, even in Germany. What I'm saying is that compared to other European countries the Germans have always been on the hawkish side. They were the ones who made sure that the mandate of the ECB did not include fighting unemployment (contrary to the US Fed). They were the ones who wanted the "no bailout" clause in the treaties. They faught the French "economic government" idea tooth and nails. Their ECB members are the greatest hawks. The Germans have always been scared of importing Italian style economic policy and they made sure the ECB's only mandate was fighting inflation.
The Greek were not forced or pressured to join the MU. The article does not say that at all. They wanted to join and the other countries didn't want to block them even though they suspected the numbers weren't quite right. The full extent of Greek book cooking was only revealed in 2010 (or 2009?).
The point is that I'm describing a bias of German policy, not some kind of hard and fast rule that holds without exception. Spain would be another example similar to Ireland. But that's all temporary and doesn't change the fundamental bias of Germans to fight inflation first and foremost.
Yes, and my point is that the ECB was therefore be stuck: too high a rate and Germany suffers, too low a rate and places like Ireland suffer. Ultimately the ECB chose a rate which was better for Germany than for Ireland, in the balance of things, and now Germany is very unhappy that it got such a good deal.
You're absolutely right that the rate was totally inappropriate for Ireland at that point in time. Today, it is more appropriate for Ireland than it is for Germany. These issues are inevitable in any currency area. The benefits are also well known.
