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Someone above thinks Sinn - who everybody on the left, if not the center, hates is more or less the same like Bofinger and you can amalgate them under the rubrtic "german economists".

"And then it took until late Sunday to extract from Germany a grudging agreement to support the Italian and Spanish bond markets."

see? You are doing it again. "Germany" didn't do anything of that sort. The fanatics Germany did send to the ECB wre just voted down.

Now the question is why the rest of the ECB did not do that earlier; Occams razor: They are a bunch of neolibs too.

by IM on Sat Aug 13th, 2011 at 03:33:34 AM EST
[ Parent ]
Someone above thinks Sinn - who everybody on the left, if not the center, hates is more or less the same like Bofinger and you can amalgate them under the rubrtic "german economists".

shrug

Anybody who talks about sovereign deficits without talking about the external accounts is part of the problem, not of the solution. Raising taxes is less harmful in the sort term and has some benefits in the long, so it beats slash-and-burn Austerity. But it will not solve the problem, and pretending that it will obfuscates the nature of the problem.

And yes, Germany has a larger f(r)action of such economists - certainly a more vocal one - than any other Eurozone country. And yes, deficit errorism is more obnoxious when it is espoused from within a narrative of national exceptionalism. And yes, other internal surplus countries do it too, but Germany is the undisputed leader and spokescountry for the surplus faction. So it gets most of the pillorying. For the same reason that Likud gets more hate for Israeli Apartheid policies than Labour, despite their actually implemented policies being so similar as to appear indistinguishable to an outside observer.

It may be more correct to say that most economists don't understand national accounting, that most German economists talk like German exceptionalists and that this is unhelpful. But concision has a virtue of its own.

The fanatics Germany did send to the ECB wre just voted down.

Now the question is why the rest of the ECB did not do that earlier; Occams razor: They are a bunch of neolibs too.

Nobody is suggesting otherwise. The decision to help Ireland commit assisted suicide and the decision to throw Greece under the bus were virtually unanimous.

However, a solid majority of these neolibs began to see the handwriting on the wall around the time Portugal was thrown under the bus. They even started talking about maybe not doing it. I labour under no particular illusions that they were doing that out of concern for Portugal, but by that time even the dumbest neolib could see that Spain and Italy would be next, and Italy appears to have been the swing vote.

As soon as that sort of talk started, the German government and the BuBa pitched a public hissy fit and threatened to pick up their marbles and go home.

It is possible - even probable - that this was simply taken as an excuse to do nothing by people who were already inclined to do nothing. But the fact remains that the BuBa has a twenty year history of pitching hissy fits at any suggestion that it should maybe stop demanding that other people - anybody and everybody except the BuBa - must pay the cost of defending its exchange rate policy.

And the fact remains that BuBa hissy fits have marked the end of every discussion of measures that might actually have helped resolve rather than deepen the present crisis. Would those discussions have led to meaningful action if the BuBa had not pitched those hissy fits? We do not know - it is possible that some who lent verbal support to such ideas did so in the expectation that the BuBa would provide an excuse to back out. But we do know that the BuBa is a major part of the problem.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Aug 13th, 2011 at 08:08:57 AM EST
[ Parent ]
Not it isn't. It is a regional branch of the ECB. You are living in the past.

And what effing exchange rate poliy? There is no exchange rate in a currency union. And regarding the exchange rate of the euro, do you want to argue it is undervalued?

"As soon as that sort of talk started, the German government and the BuBa pitched a public hissy fit and threatened to pick up their marbles and go home."

The opinion of the german government - the position of the opposition is different, you should admit at least that - was rightly or wrongly shared by a lot of other countries. Regarding the Bundesbank, what are you talking about? How exactly can they pick up their marbles and go home? They are just a administrative sub-division of the ECB. They can't go home, there is no home anymore. They have exactly one division, that is one vote at the general council. Like estonia.

And, no , "concision" doesn't justify rampamt national stereotyping. Bofinger isn't Sinn and if you are unable or unwilling to admit even that, you shouldn't comment on german economic debates.

by IM on Sun Aug 14th, 2011 at 06:46:31 AM EST
[ Parent ]
Not it isn't. It is a regional branch of the ECB.

It sure as Hell doesn't act like it.

And what effing exchange rate poliy? There is no exchange rate in a currency union.

A currency union is an exchange rate policy.

And regarding the exchange rate of the euro, do you want to argue it is undervalued?

No, the €-Mark is about where it should be, since its external accounts are roughly in balance.

The problem is that Germany (and the Netherlands, Austria and to an extent Finland) want to run an internal current accounts surplus but do not want to finance the internal deficits this creates.

The opinion of the german government [...] was rightly or wrongly shared by a lot of other countries.

Yes, that's what I wrote: The German government and the BuBa pitched a hissy fit, and the rest of the EPP-PES shut up and fell back in line. You seem to be claiming that they would have done so even if Merkel and the BuBa had not pitched a hissy fit. In that case, one cannot help but wonder why the BuBa broke the confidentiality of ECB proceedings - confidentiality that was instituted at the BuBa's insistence (because the BuBa does not like democratic oversight of central bank operations). That seems like a rather drastic sort of step to take simply to voice a consensus position.

the position of the opposition is different,

Die Linke are talking sense most of the time, but they are at least two election cycles away from being in a position to appoint ECBuBa governors. As for the SPD and Die Grüne, their wage suppression policies from the last time they were in government are a substantial part of the problem (Hartz, anyone?). A stint in opposition may have reduced the amount of neoclassical brain rot in those parties, but I'll reserve judgment on that count until I see what they do the next time they have a chance to actually do something.

Regarding the Bundesbank, what are you talking about? How exactly can they pick up their marbles and go home?

Uh, by not clearing €-Mark transactions with other countries and reissuing D-Mark notes.

They are just a administrative sub-division of the ECB.

You know that and I know that, but from their public pontifications it does not appear that the BuBa officials have quite internalised that fact yet.

Bofinger isn't Sinn

Didn't say that. I said that neither understands national accounting. Which is true.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Aug 14th, 2011 at 07:13:22 AM EST
[ Parent ]
"Uh, by not clearing €-Mark transactions with other countries and reissuing D-Mark notes."

€Mark? Petty.

And that is an illusion. You are basically arguing that because the Bundesbanks sometimes talks as if the still matter, they still matter. But they don't. Sticks and stones will break my bones, but words can never hurt me.

"s, that's what I wrote: The German government and the BuBa pitched a hissy fit, and the rest of the EPP-PES shut up and fell back in line. You seem to be claiming that they would have done so even if Merkel and the BuBa had not pitched a hissy fit"

So the right-wing government of say the Netherlands are closeted Keynesians or even MMT people? And the act like they act only under german duress?

"Didn't say that. I said that neither understands national accounting. Which is true."

"National accounting" has nothing to do with taxation levels. The higher levels of taxation in the scandinavian countries or (somewhat) Germany is the result of prefered policies. As Bofinger pointed put, you can't run a good state on the tax levels of the US or Ireland. That has nothing not with current account balances; Ireland is running a surplus and a big budget deficit.

by IM on Sun Aug 14th, 2011 at 07:40:44 AM EST
[ Parent ]
And that is an illusion. You are basically arguing that because the Bundesbanks sometimes talks as if the still matter, they still matter.

If they did not matter, they would be punished for breaking the rules of confidentiality that they themselves insisted on.

They're not, so they do.

Sticks and stones will break my bones, but words can never hurt me.

They can increase bond spreads. And since the BuBa has been the most poisonously opposed to doing anything meaningful about those (that is, unrestricted primary market operations)...

So the right-wing government of say the Netherlands are closeted Keynesians

No, the Dutch are almost as insane as the BuBa. But the Spanish , Italian and French governments are just barely smart enough to see that the only solution to this crisis is to print money. German hissy fits at every mention of this solution is not a helpful part of the European political scene.

"National accounting" has nothing to do with taxation levels.

But everything to do with the ability of taxation levels to affect the sovereign budget outcome in the context of a deleveraging private sector.

As Bofinger pointed put, you can't run a good state on the tax levels of the US or Ireland. That has nothing not with current account balances;

The quite clear implication of the table Mig quoted was that if just the countries running sovereign deficits in excess of the Grief and Stupidity Pact limit would institute German levels of taxation, those sovereign deficits would go away.

That implication violates a couple of accounting identities.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Aug 14th, 2011 at 08:08:48 AM EST
[ Parent ]

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