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German Attitude On Euro Crisis Is Changing

(c) Sky News 2012

There are a few subtleties to the great euro crisis you only really pick up when you spend a bit of time on the other side of the Channel.

Among them is how deeply ingrained in the German psyche is the fear of allowing inflation to pick up or the public finances to slide.

Its (Euronext: ALITS.NX - news) people, such as Beata Sattler-Asshof, 62, who lives in the Tiergarten district of Berlin, live, for the most part, more sensibly than many of their Mediterranean counterparts - or the Brits.

They use credit cards less often, and budget their lives more assiduously.

Indeed, in her speeches, Angela Merkel sometimes extols the virtues of living like a "Swabian hausfrau" - never spending more than you earn, never living excessively.

It is a cliche, but it is one Frau Sattler-Asshof can relate to.

While she is not from Swabia (she has lived in Berlin for 40 years, having been brought up near the Dutch border), she rarely borrows to pay for things, and would rather rent her apartment than buy it.

She (SNP: ^SHEY - news) could afford one but given that it is cheaper to rent than pay a mortgage, why bother?

Good financial housekeeping is not merely a habit - it is etched into the country's very fabric.

Take the word "inflation": it does not mean quite what it does back in the UK.

Whereas in Britain it is a pretty straightforward term for when prices (or something else) are rising, in German "inflation" has altogether different connotations: it is sometimes used to describe where something happens to excess.

For instance, there is a German phrase which roughly translates as "don't use the word love too often", except that in this case, the "too often" part uses the adjectival form of "inflation".

In other words, it is not merely that Germans are taught not to repeat the mistakes of their 1920s ancestors and create cartloads of hyperinflation.

It is drummed into German children in subtle but powerful ways from an early age that, even if they know nothing about finance, inflation is something to be feared.

It is that resistance to rising prices which is creating one of the biggest current dilemmas for the German people.

For one of the few ways they can make the single currency work (and be in no doubt there is no-one you speak to here who does not want it to work) is by generating a little bit more home-grown German inflation.

After all, what the eurozone desperately needs right now is for the Mediterranean members to export more, but in order for that to happen, they need the massive price advantage German-made goods have to be whittled away. In other words - deflation in Greece, inflation in Germany.

But so long as this cultural resistance to inflation and poor financial management persists, Greece is unlikely to get fed with yet more bailout cash.

When we left Frau Sattler-Asshof, she was deep in debate over the dining room table with her husband and daughter over whether Greece should be allowed to stay in the euro. She was adamant that it should. The others were not so sure.

That is telling: only a couple of years ago the notion of a country leaving the euro was anathema in Germany.

Public opinion is shifting. And given there is only one country in Europe (Chicago Options: ^REURUSD - news) with the real financial wherewithal to fund future bail-outs of Greece, let alone Spain or Italy, that is the really telling shift in the euro crisis.