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Who are you and what have you done to the real Angie?

by Migeru Thu Jul 5th, 2012 at 04:50:49 AM EST

A funny thing happened on the way to the PIIGS slaughterhouse.

From the Irish Times: Merkel and Monti show unity at summit (July 5, 2012)

IF THERE was a keynote word to yesterday’s Italo-German summit in Rome between German chancellor Angela Merkel and Italian prime minister Mario Monti, it was perhaps “togetherness”. Germany, Italy and all the EU partners, we’re all in this together for better or for worse.
Never mind that the press narrative a week ago was that Merkel had suffered a political defeat at the hands of Monti.
When one Italian reporter suggested to the chancellor that many EU citizens see her as something of a big black witch wielding a big austerity stick, Dr Merkel became more than a little animated.

“Look, if our European neighbours are not doing well, then we Germans cannot be doing well. It is obviously in our interests that all the other (European) countries do well economically, otherwise Germany’s prosperity will be undermined,” she said.

Is she going to start pushing that idea in the German political debate as a way to reverse the damage of her three years of "feckless southern Neighbours" vote-gathering strategy?

One can only hope.


Display:
Nothing like waking up in a crap mood and having hopeful news like this ruin it.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2012 at 01:29:54 AM EST
Eh... some of the captains of german export industry had a word with her?
Certainly, the austerity narrative is not doing people in the buisness of actually manufacturing things any favors, so Id expect them to be pulling strings by now.
by Thomas on Thu Jul 5th, 2012 at 02:12:04 AM EST
You are massively over-estimating the economical acumen of the average german industrialist.
by IM on Thu Jul 5th, 2012 at 02:26:39 AM EST
[ Parent ]
Yeah, but new export orders should be starting to dry up right about now, given that Spain and Italy are being put in a fiscal straitjacket. Greece was chickenfeed. Spain and Italy could seriously impair their solvency.

They need to pay attention to that, even if they don't understand it.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jul 5th, 2012 at 04:05:43 AM EST
[ Parent ]
This is indeed the key to the Euro crisis.

Only if German export orders decline enough will there be any pressure from business to question the current direction of policy.

And no, the average industrialist cannot and will not articulate a good alternative, but at least they might start demanding change.

If not, then the Euro is dead for sure.

by Metatone (metatone [a|t] gmail (dot) com) on Thu Jul 5th, 2012 at 07:18:56 AM EST
[ Parent ]
And no, the average industrialist cannot and will not articulate a good alternative, but at least they might start demanding change.

That's not good enough, because if they cannot and will not articulate a good alternative it probably means that their reflex would be to oppose the good alternative if it is presented to them. So they will demand change, and change will be had but not in the right direction either.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa

by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2012 at 08:07:15 AM EST
[ Parent ]
Change in some random direction would beat the change we are having right now.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jul 5th, 2012 at 08:45:49 AM EST
[ Parent ]
From today's Salon, via Eurointelligence:
Germany is no[w] joining the downturn, as the service sector stagnates
More survey evidence that the recession is deepening

All of Europe's biggest economies are in recession or heading there and there is little sign that things will improve soon, several surveys showed yesterday, according to Reuters. It quoted an analyst as saying that the PMIs are bottoming at a level consistent with a further weakening of activity in Q2. Markit's Eurozone Composite PMI was 46.4 in June, and has remained below the 50 mark for ten consecutive months. Markit said the surveys were consistent with a 0.6% contraction for the euro zone economy in the second quarter. Germany is also entering a downturn. Its services sector stagnated in June.



If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2012 at 08:13:09 AM EST
[ Parent ]
I am betting uncle Barack informed her that he was not happy of what she was doing to HIS election prospects.

There is hierarchy here, and Germany is close to the top but it is not THE top.

Interestingly it is the Anglo-Saxons that come in rescue of Keynesianism in times of peril (Keynes a Brit, FDR, BO in an half-assed way)

by cagatacos on Thu Jul 5th, 2012 at 06:27:23 AM EST
[ Parent ]
That depends on little things like the definition of "doing well".

Let's see: doing well = being more like Germany and "being more like Germany" doesn't actually means being more like Germany but "standard neoliberal clap-trap"

by IM on Thu Jul 5th, 2012 at 02:25:02 AM EST
They don't want to rock the lifeboat too much. No need for mysterious forces at work for an explanation.
by oliver on Thu Jul 5th, 2012 at 03:14:32 AM EST
There's no brinksmanship like the German brinksmanship.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2012 at 04:22:13 AM EST
[ Parent ]
European Tribune - Who are you and what have you done to the real Angie?
"feckless southern Neighbours" vote-gathering strategy

Has it only been an electoral concern all along?

It undoubtedly has that side to it. But was it even necessary to the effort of garnering support within Germany for a hardline authoritarian liberal policy? It looks like that is the bedrock of German European policy anyway, and is hardly a subject of debate. The (almost) entire financial-economic-political establishment appears to spontaneously back it (as in, certain lines of thinking seem axiomatic to them), not just Merkel and the CDU/FDP.

More precisely, it seems likely that Germany never really accepted certain economies within the euro, and was happy to avail itself of the first opportunity to trash a small transgressor country pour encourager les autres.

Long way to row back, if that's what Angie's doing.

(you may resume crap mood)

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jul 5th, 2012 at 03:37:06 AM EST
All the leaks from senior figures certainly fit the idea that they thought Greece was expendable.

As others have noted, perhaps now they are realising that virtuous or not Spain and Italy are too big to be jettisoned without serious upheaval for every country, including Germany.

by Metatone (metatone [a|t] gmail (dot) com) on Thu Jul 5th, 2012 at 07:20:50 AM EST
[ Parent ]
Words are just words. Follow the actions. Follow the money ... that's all that matters in todays' societies.

http://www.youtube.com/watch?v=_wp4O7v5320
by THE Twank (yatta blah blah @ blah.com) on Thu Jul 5th, 2012 at 08:27:17 AM EST
FT Alphaville

To sum up my impressions of Berlin, German politicians are starting to question the strongly held beliefs that have brought them this far.

This marks a change from the situation just a year ago, when policymakers were still brimming with confidence. Some of them even said last week that they needed to spend more time studying the experiences of Japan and other countries.

But at the same time they lack their American and British counterparts' understanding of balance sheet recessions, and rectifying this will take time. I therefore expect German policymakers will continue to focus on treating the patient's diabetes while largely ignoring his case of pneumonia.



It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Jul 5th, 2012 at 09:16:14 AM EST
See also:
Moving on... @Sam1Fleming
Draghi says growth now weakening across the whole of the euro area. Cuts today were not coordinated by central banks.
Question time. I bet you were not expecting this one: @MatinaStevis
"The decision was unanimous on all grounds" says Mr Draghi. ‪#ECB
@faisalislam
"The decision was unanimous" says Draghi. Wow. Bundesbank caves in to pressure.... They'll back Eurobonds within the year!
More like Bundesbank caves in to reality.


If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2012 at 09:29:10 AM EST
[ Parent ]
Also

"Let's define deflation "protracted and generalised fall in the price level" that disanchors inflationary expectations."

Draghi also said he doesn't see deflation in any Euro country.


Seeing is believing. German leaders can only see inflation. Draghi knows for whom he works and because Drahgi doesn't believe there is deflation he can't see deflation. Goldman conditioning may also be at play.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jul 5th, 2012 at 10:49:29 AM EST
[ Parent ]
A big problem is that "inflation" and "deflation" are badly defined technical concepts.

Thus, we had asset price inflation in the run up to the crisis, but it was not recognised as "inflation" because, well, it didn't fit the definition.

So again here, we have destruction of economies which is not recognised as "deflation" - basically because international oil prices have not collapsed.

by Metatone (metatone [a|t] gmail (dot) com) on Thu Jul 5th, 2012 at 11:11:58 AM EST
[ Parent ]
Moving on to macro-prudential supervision from a parallel universe: @dlacalle
Grandisimo Draghi "any new task in supervisory area should be separated from monetary policy".
<facepalm>


If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2012 at 11:31:13 AM EST
[ Parent ]
Migeru - reading Draghi so we don't have to...
by Metatone (metatone [a|t] gmail (dot) com) on Thu Jul 5th, 2012 at 12:19:29 PM EST
[ Parent ]
A big problem is that "inflation" and "deflation" are badly defined technical concepts.

I am apparently incapable of the number of mental contortions necessary to conclude that this was just an accident. Seems to me that, if you intend to blow a bubble, the first step is to remove the indicators dealing with the subject of the intended bubble from the definitions of 'inflation/deflation' or to categorically deny the relevance of the intended subject. Bernanke did just this in an oft cited paper from +20 years ago with respect to debt.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jul 5th, 2012 at 01:31:45 PM EST
[ Parent ]
A big problem is that "inflation" and "deflation" are badlypolitically defined technical concepts.

FIFY.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jul 5th, 2012 at 06:32:55 PM EST
[ Parent ]
OECD CPI figures released on Tuesday show, for May 2012 against previous month, all items :

G7: -0.1
OECD Europe : -0.1
France : -0.1
Germany: -0.2
Greece: -0.3
Ireland: 0.0
Spain: -0.1
Italy: 0.0
Portugal: -0.4

HICP for the Euro area : -0.1
HICP for the EU: 0.0

Did Draggy notice oil prices had gone down, taking the (minor) oomph out of the price indices?

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jul 5th, 2012 at 11:40:42 AM EST
[ Parent ]
"But at the same time they lack their American and British counterparts' understanding of balance sheet recessions"

Wow. Have you met David Cameron? George Osborne?

Timothy Geithner?

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Thu Jul 5th, 2012 at 02:40:27 PM EST
[ Parent ]
Far from me to praise Timmy Geithner in any ordinary course of events, but Geithner understands what's going on much better than Merkel or Cameron do. If he did not, General Motors would be dead, and the UAW along with it. And it isn't, so he does.

Granted, "better than Angie and Dave from Marketing" is not a high bar to clear...

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jul 5th, 2012 at 06:37:23 PM EST
[ Parent ]
Just like Bernanke and Trichet.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2012 at 06:45:11 PM EST
[ Parent ]
I am not convinced. Surely, it would have been better for German pols to have reasoned straight up with their electorate by pointing out they were recapitalizing their own banks. That argument worked in America, and judging from average man/woman in the street interviews with Germans, they are every bit the sheeple that Americans are. They would have gone along with it.

How, pray tell, is the narrative going to be turned around now? Germans are going to "really" bail out the periphery? I don't see it. Merkel will be out on her ear and it will then take years to unravel the political mess as it extends to the Netherlands and Finland and Austria.

by Upstate NY on Thu Jul 5th, 2012 at 10:01:33 AM EST
The problem is explaining that the banks need bailing out because they've been taking Germans savings and the excess profits that can't be invested in Germany because Germans have no money to buy stuff with since we've been pushing down wages and they've been gambling it in the periphery. Sort of awkward.
by Colman (colman at eurotrib.com) on Thu Jul 5th, 2012 at 10:07:13 AM EST
[ Parent ]
Well, then, maybe the American people are really much dumber than the Germans.

After all, we fell for that argument, nuanced as it was, because the alternative, they told us, was a Great Depression.

by Upstate NY on Thu Jul 5th, 2012 at 10:28:05 AM EST
[ Parent ]
And a Great Depression is what we're having in Europe since the argument was not made to the German public.

But I'm afraid the problem is not the German public so much as a substantial part of the German economic policy establishment. They're the ones that need to stare into the abyss of a Great Depression.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa

by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2012 at 10:49:17 AM EST
[ Parent ]
First they will have to believe it can happen. Only then can they see the abyss.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jul 5th, 2012 at 10:53:02 AM EST
[ Parent ]
Migeru:
need to stare into the abyss opportunity of a Great Depression.

fify

It's a fine line between homage, parody, and consumer opportunism. Jess Walter

by melo (melometa4(at)gmail.com) on Thu Jul 5th, 2012 at 05:08:23 PM EST
[ Parent ]
You don't need to tell people that. You only need to say that the banks have screwed up badly, and if they aren't recapitalised everyone thing will go to hell. And of course, the state will be getting shares in return of the money it puts into the banks, so no-one is "bailed out", "saved" or anything like that. The state has just decided to buy some newly issued bank shares.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid (arvid.hallen at gmail.com) on Thu Jul 5th, 2012 at 04:19:38 PM EST
[ Parent ]
If it were that easy, why has the German leadership preferred to channel a bailout of German banks through usurious loans to debtor countries?

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2012 at 04:33:10 PM EST
[ Parent ]
Because you should not waste an opportunity for doing some shock therapy?

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
by A swedish kind of death on Thu Jul 5th, 2012 at 05:29:45 PM EST
[ Parent ]
Or because the German public wasn't falling for "we must save our banks or else"?

Spiegel: The Bottomless Pit: Germany's Faltering Bank Bailout Program (12/23/2008)

The German government whipped its €480 billion bank bailout package through parliament in record time, but now the program has run into trouble. The banks are still fighting for survival, the money market isn't functioning properly, and taxpayers' money is being burned.

...

Her new job as head of the financial stability measures is far more complex. In addition to protecting German financial institutions from failure, she has been charged with ensuring that the banks can continue to pursue their central purpose -- injecting money into the economy.

If this doesn't happen, government stimulus programs, no matter how large, will fail, and the foundations of the German economy will begin to crumble.

More abdication of fiscal policy - if banks won't lend, the government must spend (or lend directly)... gah...

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Thu Jul 5th, 2012 at 05:34:09 PM EST
[ Parent ]
Migeru:
because the German public wasn't falling for "we must save our banks or else"?

Not that it wasn't falling for that line, but, more importantly, that a foundation stone of the (West) German public's sense of itself is that Germany is a country that deserves and achieves economic success. Tell them it ain't so and that there are serious shortfalls, and you are blundering into taboo territory.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jul 6th, 2012 at 02:03:56 AM EST
[ Parent ]
But also, we live in a time where it's ideologically unlikely for a right of centre politician to nationalise a bank.

So, at some level, I think the German public looked at the bailout as a bailout, thinking (perhaps correctly) that when the crunch time came Angie was much more likely to give Deutsche Bank the money as a never-ending loan than actually nationalise it.

by Metatone (metatone [a|t] gmail (dot) com) on Fri Jul 6th, 2012 at 03:52:11 AM EST
[ Parent ]
That's funny. The Wall Street guys thought their game was cooked back in 2005-2006 until they hit upon the idea of selling more dreck to the German banks.

"The Japanese and Brits won't buy any more, who can we sell to?"

"How about the Germans?"

by Upstate NY on Fri Jul 6th, 2012 at 09:40:23 AM EST
[ Parent ]
Because they don't want to do it.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid (arvid.hallen at gmail.com) on Fri Jul 6th, 2012 at 08:13:27 AM EST
[ Parent ]
Electoral rise of SYRIZA in Greece was a wake-up call?

Ever since I learnt about confirmation bias I've started seeing it everywhere
by ATinNM on Thu Jul 5th, 2012 at 10:48:38 AM EST
I don't think so. In the bubble-world these people live in, Syriza is an anti-Euro party.

More like Spain and Italy having their Niemöller Moments. Italy isn't the swing vote at the ECB (Greece, Ireland, Spain, Portugal, France, Italy, Cyprus is only seven, you need nine to start the printing press and tell the BuBa to shrivel and die if they object), but with Italy, Spain and France flipping sides in the space of a few months a majority of the Eurozone's population and GDP is now against the German line.

This looks like an attempt to bribe Spain and Italy (who have EPP resp. Troika governments) back into the austerity coalition.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jul 5th, 2012 at 06:47:54 PM EST
[ Parent ]
Does Spiegel have the answer? The World from Berlin (German Press Review):'The EU Is Threatened by a Corrosive North-South Conflict' (07/05/2012)
German Chancellor Angela Merkel made an important visit to Rome Wednesday after her setback at the latest summit in Brussels, orchestrated by Italy and Spain. Although many in Berlin think Merkel's concessions made her the loser in the talks, some German editorialists believe the current shift in the balance of power could actually help the European Union.

...

With the support of the leaders of Spain and France, it was Monti who prevailed over the chancellor. But, during their meeting at Rome's Villa Madama, both leaders tried to play down any major discord between their countries. Monti said that "unanimous decisions" had been made at the summit, while Merkel added that they were "solutions that are satisfactory for everyone." The leaders spoke of "excellent" relations between Rome and Berlin, and Monti even claimed "our two countries can together relaunch Europe." As face-saving language, it couldn't have been any better.

Monti also assured the chancellor that Rome remains "determined to continue along the path of containing the budget (deficit), fiscal discipline and structural reforms with a view (toward achieving) growth that will hopefully come as soon as possible." Just one week ago, Italy passed a package of labor reforms that will make is easier for companies to hire and fire employees, and it is planning to introduce public-sector spending cuts. Merkel praised Italy's structural reforms as "excellent."



If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Fri Jul 6th, 2012 at 01:58:52 AM EST
Eurointelligence Daily Briefing: Welcome back to the crisis (July 2012 edition) (06.07.2012)
Merkel's popularity among voters is the highest in three years

Angela Merkel's popularity among voters is at its highest level in three years, according to a poll published on Thursday that also confirmed strong support for her stance in the euro zone debt crisis, Reuters reports. But the Infratest-ARD survey suggested Merkel's FDP coalition partner would fail to get elected to Bundestag after next year's election, complicating her hopes of securing a third term.

I see no reason to change my prediction of a Grand Coalition with Merkel as Chancellor.
The poll, conducted after an EU summit widely seen by German media as a setback for Merkel's tough euro zone policies, showed 66% of Germans were satisfied with her performance, an increase of eight percentage points from a month before and the highest reading since 2009 when she won a second term. Her nearest rival, Frank-Walter Steinmeier, parliamentary leader of the SPD, had an approval rating of 61%. He was level pegging with Wolfgang Schäuble. Some 58% of Germans believe Merkel's stance in the euro crisis is correct and decisive, although 85% of those polled also expect the crisis to get worse.


If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Fri Jul 6th, 2012 at 04:23:36 AM EST
SPD+CDU coalition around "no money for lazy Southerners, no ECB flexibility for anyone."

Feels like the Euro is doomed.

by Metatone (metatone [a|t] gmail (dot) com) on Fri Jul 6th, 2012 at 06:30:18 AM EST
[ Parent ]
Feels like the Euro is doomed.

Do you see a treaty violation on the horizon?

I think I have to agree with Juncker: the Euro is not doomed, Europeans are.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa

by Migeru (migeru at eurotrib dot com) on Fri Jul 6th, 2012 at 07:01:37 AM EST
[ Parent ]
Did you have a particular violation in mind? Or just (as per the Bootle plan) that any exit is going to involve lots of treaty and law violations as a practical matter.
by Metatone (metatone [a|t] gmail (dot) com) on Fri Jul 6th, 2012 at 07:17:06 AM EST
[ Parent ]
And now Finland is threatening to leave the Euro. A Scandinavian union seems more attractive for every passing day. On the other hand, national currencies and nation-states seems like a great idea too, after all.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid (arvid.hallen at gmail.com) on Fri Jul 6th, 2012 at 08:16:09 AM EST
[ Parent ]
And now Finland is saying they are committed to the Euro. Fun and games...

Though maybe, just maybe, this is a diversionary tactic.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa

by Migeru (migeru at eurotrib dot com) on Fri Jul 6th, 2012 at 08:24:28 AM EST
[ Parent ]
What criteria do you use to determine if a country is under attack? Specifically why Austria?

Austria sticking to debt issue plans despite demand | World | Reuters

The average yield of 2.36 percent on the 2022 bond - down from 2.63 percent at the previous auction - was an all-time low at a 10-year tender since Austria started keeping records in 1949, Oberndorfer said.



Von überall könnte das Volk, Urbrut alles Undemokratischen, Zelle des Terrors, über die gewählten Hüter von Wachstum und Wohlstand® kommen. - flatter
by generic on Fri Jul 6th, 2012 at 09:12:13 AM EST
[ Parent ]
I added Austria to the list when it got downrated by the rating agencies.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Fri Jul 6th, 2012 at 11:28:38 AM EST
[ Parent ]


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