“The road to hell is paved with good intentions. “ (Bernard of Clairvaux)
The current crisis regarding the European Monetary Union is a crisis of competence distribution.Â Â This much is clear when one considers the fact that the Euro is experiencing a threefold crisis: banking, governmental debt, and balance of payments are all plaguing the EMU at the moment. Far too many players have their hands in the pockets of others, “moral hazards“ are occurring more frequently, and competences are becoming blurred. Despite the Fiscal Pact and the ban on bailouts, member states are now caught in a joint liability community. But if theoretically all are equally responsible for everything, then in actuality no one is liable for anything, resulting in only “soft“ budget restrictions of economic and political actors. The incentives for voters, politicians, banks, and collective agreement partners to economically kick over the traces are large. What’s more, voters and politicians in the EMU are tempted to operate at the expense of others and there are strong incentives for banks to privatize profits and hold states hostage for losses. Social partners are also susceptible to the appeal of passing off employment burdens to third parties.
“The Lingering Crisis in the European Monetary Union
Organized irresponsibility is destabilizing the Euro “ weiterlesen
It is not constant struggle that is the sign of healthy competition, but diversity. (Michael Rothschild)
The European Union is in bad shape, both economically and politically. For a while now, economic growth has trickled to a halt not only in central states, but in peripheral countries, as well. Member states are moving further apart in terms of prosperity and it seems even the slightest convergence is few and far between. The unemployment rate is hitting record highs and it is predominantly young people who are being affected; younger generations in Southern Europe are more or less losing the prospect of a secure future. The middle class is shrinking and poverty is growing. This, of course, is not only true for crisis states. Indeed, the collapsing euro is a sword of Damocles that hangs over all, threatening every member state with an economic and political meltdown. It’s no wonder that public approval of an increased Europe is shrinking, while the name Brussels has become nightmare-inducing for some. National, regional and local issues have begun to dominate again while Europe’s relevance is being called into question more often.
“The Future of the European Union: Competition or Centralization?
Europe has gone too far“ weiterlesen
“This German-bashing is getting tiresome. When Paul Krugman studied economics, he ranked at the top of his class. If his classmates bashed him for making them look bad by comparison, would he urge them to study harder? Would he give them lessons in how to study more efficiently? Or would he sabotage his own grades and lobby for grade inflation for his classmates?“ (anonymous comment in the NYT)
ItÂ´s time again: Germany is in the dock. It is accused of having too high current account surplus – and not for the first time. The American Ministry of Finance and the IMF denounce, the EU-Commission still wants to investigate. With their continuous surpluses, the Germans were not only like an axe upon the Euro, they also destabilised the world economy – along with the Chinese and Japanese. The charged German firms are unaware of having done anything wrong. They make an effort to make their products internationally competitive. A productivity-oriented wage and collective-bargaining policy and a strong flow of marketable innovations make German firms unpleasant competition on the world markets. They are particularly successful with their investment goods. Here in this country, mercantilist instruments that favour exports and hinder imports are applied not more than anywhere else. With the Euro, Germany has relinquished the instrument prone to manipulation – the exchange rate. No wonder that German employers, trade unionists and politicians now find the world a perplexing place. Should Germany be robbed of the fruits of its hard work by planned economy upper limits for current account surpluses?
“Germany in the Dock
The Euro distorts the current account balances“ weiterlesen