Angela Merkel's political honeymoon with Nicolas Sarkozy came to an end on Wednesday when the German chancellor warned the French president to stop undermining the euro and the independence of the European Central Bank. The abrupt rebuff ended weeks of diplomatic silence from Ms Merkel over Mr Sarkozy's flurry of contentious economic proposals.Asked by German television whether she supported the president's calls for a weaker euro to help eurozone exports, she answered "absolutely not. I would definitely object to this, and so would the entire government"."The population should be protected against inflation. This is very important. That is why the independence of the European Central Bank is the alpha and omega. And that is why Germany will not budge on this," she said.
Angela Merkel's political honeymoon with Nicolas Sarkozy came to an end on Wednesday when the German chancellor warned the French president to stop undermining the euro and the independence of the European Central Bank.
The abrupt rebuff ended weeks of diplomatic silence from Ms Merkel over Mr Sarkozy's flurry of contentious economic proposals.
Asked by German television whether she supported the president's calls for a weaker euro to help eurozone exports, she answered "absolutely not. I would definitely object to this, and so would the entire government".
"The population should be protected against inflation. This is very important. That is why the independence of the European Central Bank is the alpha and omega. And that is why Germany will not budge on this," she said.
As for Merkel, saying the "population must be protected from inflation" when you have in fact obtained a competitive advantage by reducing labour costs on that same population's back, takes a fair amount of chutzpah. When locusts move on, they leave nothing behind
This does not preclude high wages (quite the opposite in fact), as Germany shows, and only requires that wage increases be in line with productivity increases.
The recent crunch on Germa nwages has come from the combination of an overvalued DM entering the euro (misplaced pride), and the zeitgeist of relentless focus on company profits, which has unfairly tipped the balance too far in sharing productivity gains. In the long run, we're all dead. John Maynard Keynes
What I object to in Merkel's statement is the inference that the "population"'s interests are being protected when in fact it's the "population" and other economies in the eurozone that are footing the bill for the mark euro. When locusts move on, they leave nothing behind
