The "German Problem:" The Timing of Politics and the Politics of Timing

This paper adds an electoral and federal dimension to Germany’s policy response to the euro crisis (and lack thereof). It does so by considering both the ‘timing of politics’ and the ‘politics of timing.’ In the former consideration, while German policymakers accept the need for a massive intervention in sovereign bond markets of other Eurozone members, they want to pick the optimal time of intervention to maximize the efforts of private actors and deter public and private behavior that might require more bailouts in the future. Their central focus is on moral hazard, and their aim is that their political choice—to intervene—come at the ‘right’ time. In the latter, a concern about the ‘politics of timing’ means that German elites also feel they cannot intervene until they have properly prepared their voters. By the time elites have sold a bailout of a certain envisioned size to their voters, however, the problem has grown such that this size is no longer adequate to the job. Here, the elite focus is centrally on the legitimacy of their policy choices. Adding to the difficulty, if one focuses primarily on the timing of politics, then patience is a virtue, and elites should wait and minimize future moral hazard concerns. If one focuses primarily on the politics of timing, however, then patience is a vice, as windows of opportunity for stemming the crisis slam shut, one after another.