“Economists exert a minor and scarcely detectable influence on the societies in which they live.“(George Stigler)
The mess in the European currency area continues, and the Euro isn’t out of the woods yet. The three trouble areas infecting one another continue to smolder: a number of countries in the EU continue to be less competitive, debt is once again too high almost everywhere, and many banks are still undercapitalized. The threefold crisis in the Eurozone is being driven by multiple “moral hazards“, those of the politicians, voters and bankers (here). They had their beginnings in the periphery, in the PIIGS. The (German) center and the ECB saved the EMU from the collapse. This interpretation of the euro-crisis is, however, becoming less important and is held less and less commonly in politics and the media. The attempt to gloss over the story of the crisis is made much more often. The victim is now the periphery, and Germany in particular1 is the culprit. “Germany-Bashing“ is meanwhile fashionable throughout Europe. Even American economists, like Alan Blinder and Paul Krugman, take part in the witch hunt against an “aimlessly wandering“ Germany.
„The worst isn’t over yet for the Euro
Is Germany to blame?“ 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