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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".

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
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