Welcome to the new version of European Tribune. It's just a new layout, so everything should work as before - please report bugs here.
Display:
Postwar German foreign policy did not need any help to make catastrophes.

Germany has had the same basic foreign policy objective for at least the last forty years: To get someone else to pay for defending the D-Mark exchange rate.

This is, admittedly, preferable to a foreign policy commitment to get the Sudetenland and Danzig zurück ins Reich. Unfortunately, that is not a particularly impressive bar to clear.

- Jake

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

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Aug 10th, 2011 at 06:21:21 PM EST
[ Parent ]
It's my impression Denmark got caught-up with the German Post WW2 "don't do anything stupid domestically" because of the key decision to protect the DM.  The Danish economy was - is? - so tied to the German economy it's similar to the Canadian/US economic relationship.  Effectively, then, German internal economic policy became, willy-nilly, Danish economic reality.  

?

Skepticism is the first step on the road to truth. -- Denis Diderot

by ATinNM on Wed Aug 10th, 2011 at 07:30:28 PM EST
[ Parent ]
Short answer: No. That was actually a contentious political decision at the time, although this fact has been airbrushed from the official version of history.

Slightly longer answer: Denmark joined Bretton Woods, just like the rest of The WestTM. When Bretton Woods crashed, we tried to maintain a D-Mark peg, but had a decade of regular devaluations against it.

Of course devaluing and then attempting to defend the new exchange rate is just asking to be attacked. What we should have done was to float our currency. What we did instead was elect a right-wing economic hit man who enforced the D-Mark peg to the exclusion of all sensible macroeconomic concerns. Right on cue, this caused our productive economy to crater and the FIRE sector to blow a huge bubble all over the first half of the 1980s.

Somehow the 1980 decision to go for broke on the peg rather than abandon it has been anointed as the greatest act of wisdom in recent Danish economic history - rather than the gross act of irresponsible industrial sabotage it actually was.

- Jake

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

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Aug 10th, 2011 at 07:46:33 PM EST
[ Parent ]
thanks for the correction.


Skepticism is the first step on the road to truth. -- Denis Diderot
by ATinNM on Wed Aug 10th, 2011 at 09:46:38 PM EST
[ Parent ]
Sounds like your history is being written by Austro-Chicagoans.  You have my sympathies.
by rifek on Thu Aug 11th, 2011 at 02:42:46 PM EST
[ Parent ]
Sounds like the defence Sweden put up for the ERM/Ecu-peg (or whatever it was called) in the early 90's. The Riksbank jacked interest rates up to 500 % (yes, really) before it conceded defeat and let the krona float. Madness, but at least and unlike in Denmark, everyone in Sweden nowadays agrees that the peg was insane.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Aug 11th, 2011 at 05:16:35 PM EST
[ Parent ]
The Riksbank jacked interest rates up to 500 % (yes, really) before it conceded defeat and let the krona float.

In the immortal words of the Bundesbank:

The Bundesbank with its commitment to price stability had refused to lower interest rates massively. The partner countries are forcibly reminded of their responsibility for their currencies; the process of convergence needed for monetary union is strengthened.


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Aug 11th, 2011 at 05:27:21 PM EST
[ Parent ]


Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Aug 11th, 2011 at 06:08:29 PM EST
[ Parent ]
as we know it ...

and I feel fine

Skepticism is the first step on the road to truth. -- Denis Diderot

by ATinNM on Thu Aug 11th, 2011 at 06:25:20 PM EST
[ Parent ]
The problem for Denmark was that the decision to defend the peg was made at the time Europe was coming out of the oil crisis, and the defence was supported by the full force of hitman fiscal policy. Which meant that it did not require ridiculous interest rate spreads, "only" a fiscal policy of systematic industrial sabotage. Indeed, the Danish version of the D-Mark peg has been a fiscal peg targeting interest rate spreads.

It will be interesting to see what happens the day it comes under serious attack. So far our oil revenues have made such attacks non-viable, but that state of affairs will not last beyond the present decade.

- Jake

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

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Aug 12th, 2011 at 05:16:57 AM EST
[ Parent ]

Display:

Occasional Series