Response to xchrom (Reply #15)
Tue Nov 5, 2013, 10:18 AM
Ghost Dog (13,713 posts)
16. "The charge is always the same"?
...The charge is always the same: The Germans have acquired an unreasonable advantage by one-sidedly focusing on exports, and now they are flooding foreign markets with their products. At the same time, this view holds that the Germans live and consume below their means, which is detrimental to foreign companies because there is less demand for their products in Germany...
... Romano Prodi – Mr Euro himself – is calling for a Latin Front to rise up against Germany and force through a reflation policy before the whole experiment of monetary union spins out of control.
"France, Italy, and Spain should together pound their fists on the table, but they are not doing so because they delude themselves that they can go it alone," he told Quotidiano Nazionale
Should Germany persist in imposing its contractionary ruin on Europe – "should the euro break apart, with one exchange rate in the North and one in the South", as he puts it – Germany itself will reap as it has sown. "Their exchange rate will double and they will not sell a single Mercedes in Europe. German industrialists know this but all they manage to secure are slight changes, not enough to end the crisis."... "German public opinion is by now convinced that any economic stimulus for the European economy is an unjustified help for the 'feckless' South, to which I have the honour of belonging. They are obsessed with inflation, just like teenagers obsessed with sex. They don't understand that the real problem today is deflation,.."...
... Prof Prodi says Germany is living in an Alice-in-Wonderland world of intellectual confusion, thinking that it can run a current account surplus of 7pc of GDP (almost three time's China's surplus), with an inflation rate of almost zero, without at the same time blocking recovery. But no amount of protest makes any difference. "It has not effect on German policy because France, Italy, and Spain lack any common approach, even though all these countries they have identical interests."...
... They have the majority votes in the EU Council of Ministers. They have a majority on the ECB's Governing Council, and indeed on other bodies such as the European Investment Bank, which could be mobilised for a Marshall Plan (that empty promise from some wretched and now forgotten EU summit, never delivered like all those New Deal EMU pledges that came before).
They have natural justice, economic authority, and the EU treaties on their side. They can and should deploy their combined political power to impose a full fiscal and monetary reflation strategy on the EU, Abenomics for Europe. Germany might find that a few years of 3pc inflation and a mini-boom are not so painful after all. But if it finds this outcome so intolerable, the exit door is wide open. It can leave EMU. (And destroy part of its banking system in the process.)...
I think the Spiegel piece misrepresents the charge. Problems that have been referred to are the austere deflationary policies imposed at exchange and interest rates greatly favorable to Germany but that are unbalancing the EU project itself.
The second piece is a long commentary by Evans-Pritchard from Sunday...
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"The charge is always the same"?
|Ghost Dog||Nov 2013||#16|
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