Anatole Kaletsky: With every day that passes, and especially since the French election, it is becoming clearer that the problem country for the euro—the odd man out in terms of economic structure and the chief obstacle to any political resolution of the euro crisis—is not Greece, Spain or Italy. It is Germany. It is Germany that refuses even to talk about mutual debt and banking guarantees. It is Germany that insists on self-defeating fiscal austerity and intolerable political conditions for the debtor countries. It is Germany that vetoes quantitative easing by the ECB, which could cap bond yields and relieve deflationary debt traps. And it is Germany that makes the other euro countries uncompetitive, discourages devaluation of the euro against the dollar and refuses even to relax its own domestic fiscal policies to reduce its trade surplus and support growth….
6 Replies to “What Will Germany Do?”
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Yes I agree, it is Germany that has the only fully working economy in the Eurozone and yes it is Germany with firm austerity (don’t spend more than you take in). Yes it is the dedication to education and hard work ethic that makes the rest of Europe uncompetitive with Germany. I’m 100% on your side. Germany should be kicked out of the Euro for embarrassing the rest of Europe.
Europe would be much better of without Germany in the Euro. The rest of Europe needs Quantitative Easing (Counterfeiting). Just look how effective Quantitative Easing has been here in the United States. We’re right in the middle of QE3 over here and watching unemployment rise again and the stock market fall.
Draft up a petition to kick Germany out and reestablish the DM. I’ll be the first to sign it.
Right?
HK
This is not as simple as hard-working Germans duped by lazy Latins. Germany leaving the EZ would plunge them into exactly the same dilemna as the Swiss and Danes: a too strong currency compared to weaker neighbors, making exports uncompetitive. They would profit from all their bonds being repayable in devalued euros, but their banks would be insolvent for the same reason: their liabilities (deposits) would be in DM while cross-border assets (loans and bond investments) are denominated in devalued euros.
The Euro has always been a bad idea from the start.
Unfortunately many of the more socialistic countries see wealth redistribution as mandatory from other more profitable countries.
As with most intelligent people suffering through the global recession, some serious soul searching is going on.
We are at the dividing line of humanity here. There are those to choose to stand up as individuals and move forward and others that choose to put life’s matters in other people’s hands.
For those that choose the latter they should be prepared to be ruled by dictators.
My Grandparents lived through Hitler’s reign and raise 5 children at the same time. When Germany was defeated and my family left starving they did not wait for charity. They went to work and worked hard for many years. My Grandmother was productive every single day of her life until age 92.
Hard work is the only way out of this mess.
Please take some time to look at my various blog posts. I think you may find them interesting.
HK
“Hard work is the only way out of this mess.”
I agree. But we need to headed in the right direction. Otherwise hard work will achieve nothing.
I agree just the opposite. Hard work always comes first, and amazingly even a short period of such get things moving in the right direction.
Stimulus is like being overweight and buying a home gym before you have cracked you first bead of sweat. The intention will always be to diet and exercise but if it actually happens is another thing. Stimulus programs depend on creating high degrees of economic leverage which traditionally they have not.
HK
It is all very good to say that the solution is hard work. But what do you do when you look for work but cannot find it?