Economic Conditions in Germany Post WWI and the 21st Century

            When thinking about the post economic conditions of WWI which were devastating to not only Germany but Europe in general.  Germany was the poorest country in Europe at the time and once Hitler and the German Socialist party took charge, the first thing they did was to throw out German J private Central Bank and Germans and for the first time started printing its own Marks. International bankers placed an embargo for defaulting and printing its own money.

Germany was forced to instead accept humiliating demands and make painful concessions: the Versailles Treaty held Germany responsible for the war, parts of the nation’s territory were craved off and handed to neighbors, and - most devastatingly - the nation was burdened with obscene financial “compensation” it had to pay to the victors, particularly France. The obligation to accept guilt for the European war was painful for German pride, but it was the latter which would be most consequential.

 

Economist Keynes saw the financial reparations Germany had to pay and predicated economic hardships for the nation. His prediction was restrained. The Wiemar Republic failed above all not due to fractional politics or Nazi agitation, but due to hyperinflation. In fact a chart of Nazi representation in the Reichstags compliments inflation and unemployment levels in Germany. In other words, Nazis rose and fell with popularity in parallel to economic conditions. Had the Germany economic not been shackled by France’s undue demands, the Nazis would have remained a fringe party unable to connect with middle class Germans. But economic destitution was able to convince many normal Germans that the Nazis were right: their problems were due to the fact that the Germans have been unfairly made to pay the costs of the War, unfairly asked to accept sole guilt.


Most recently Europe is facing 440bn in debt.  They are in desperate need of a financial bailout to safe guard the Euro.  Greece may be the first country in need of being rescued by this bailout.  This monumental debt will have a major effect on international financing today and will have major challenges that go along with the debt crisis not only in Europe but in the United States as well.  This fund can only be used as a last resort to rescue the euro zone country whose plight jeopardizes the stability of the Euro. This could trigger a cascade of losses and freeze financial markets.