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Meddlesome Commissioner?

by afew Tue Aug 19th, 2014 at 08:04:19 AM EST

European Commissioner for Employment Laszlo Andor gave an interview to German conservative newspaper Die Welt (behind subs wall, and not much available in Eng-lang media as of posting):

Luxemburger Wort - Brussels pleads with Germany to let wages rise

AFP) Germany must increase workers' salaries to help its neighbours out of the economic slump, the European Union's employment commissioner Laszlo Andor said Saturday.

The Hungarian said Berlin's big foreign trade surplus was hurting its European partners, and urged it to stimulate domestic demand by increasing wages and public expenditure.

"The rise in salaries has fallen behind the rise in productivity in Germany" for more than a decade, Andor told the German conservative daily Die Welt, in an interview due to be published on Sunday.

Brussels was now urging Germany, the EU's economic powerhouse, to relax its iron grip on wages, which he said was "indispensible" for the recovery of the rest of the region.

"It would be better if salaries rise in parallel with productivity," Andor added.

His comments come amid signs of stalling growth in the 18-member eurozone, particularly its largest economies Germany and France, as the bloc struggles to recover from years of financial crisis.

Brussels now appears to be taking a view long championed by France that a rise in German salaries would give the struggling eurozone a much-needed stimulus.

France's President Francois Hollande this month called on Berlin to boost spending as "the best favour Germany could do for France and for Europe" to help growth.

"It's very important that Germany increases public spending, stimulates demand and reduces its excessive trade surplus, which is hurting its European neighbours," Andor said.

(emphasis mine).

Hollande (as reported) made feeble noises in this sense at the beginning of the month. Official communications in France, echoed by the MSM, say that Hollande's policy is to bring together European social democrats to militate for a change of direction on austerity. But Andor is particularly clear... and a Commissioner.

The ball is in Angie's court. Will she smash it? Ignore it? Send back a spin shot? Place your bets.


Display:
The evidence is massively that austerity does not produce growth and jobs, as touted.

But I doubt if Merkel sees anything but soggy anti-"reform" excuse-making in any attempt to back a change of policy.

And now, what price the SPD?

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Aug 17th, 2014 at 04:33:18 AM EST
The price of an Minimum wage.
by IM on Sun Aug 17th, 2014 at 04:15:18 PM EST
[ Parent ]
It may well be, and a reasonable minimum wage would have a beneficial effect, but it almost defines 'selling yourself short'.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 17th, 2014 at 04:24:06 PM EST
[ Parent ]
Nonsense. Not with this election result.
by IM on Sun Aug 17th, 2014 at 04:26:35 PM EST
[ Parent ]
Well, they could have build a coalition with the Left.

But still, the SPD has achieved quite a bit of results, since they entered government. I guess this is because the SPD positions are simply hugely popular even with CDU voters.

by rz on Mon Aug 18th, 2014 at 06:19:47 AM EST
[ Parent ]
We can try, as soon as the Left Returns from its excursion to Kurdistan
by IM on Mon Aug 18th, 2014 at 03:14:05 PM EST
[ Parent ]
I didn't know that Kurdistan was where you go when all you want is to reassure all that you support  the prevailing economic views. Social and economic issues defined the left for well over 100 years. But now careerism takes precedence over coherence. They should visit Lenin's tomb. He is still dead.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Aug 19th, 2014 at 11:19:31 AM EST
[ Parent ]
Social and economic issues defined the left for well over 100 years.

Not this party. Hanging around with nationalistic movements masquadering as "national Liberation movements is much more important for them´.

"They should visit Lenin's tomb. He is still dead."

Do they know? Most of them think propably Putin is Lenin reborn.

by IM on Tue Aug 19th, 2014 at 12:01:57 PM EST
[ Parent ]
Not this party. Hanging around with nationalistic movements masquadering as "national Liberation movements is much more important for them´.

Someone could remind them of Hitler's economic policies, but that might be a bit explosive. But then there is the question of who could take the role of Hitler. Might be best not to go there.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Aug 19th, 2014 at 04:10:56 PM EST
[ Parent ]
The return by Germany into negative growth will be seized on my Angela et al as all the more reason they should keep an iron grip on wage levels in order to improve German competitive vis a vis the world and thus to restore economic growth through "export led"(tm) growth.

The fact that this strategy damages other Eurozone economies is their problem, not Germany's A2A (according to Angela).

It is interesting to note that the only reason the ECB will ever contemplate unconventional measures to promote growth is if the German economy is in trouble. Nobody else matters.

As for the EU Commission - they're there to police the little  member states.  The big countries don't give a damn what they have to say.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Aug 17th, 2014 at 10:01:56 AM EST
Frank Schnittger:
The return by Germany into negative growth will be seized on

I'd expect so.

Frank Schnittger:

As for the EU Commission - they're there to police the little  member states.  The big countries don't give a damn what they have to say.

But with this kind of statement they're not going to be doing their policing job, and Angela won't be pleased. Meanwhile there are countries as big as France and Italy that probably are pleased to hear a Commissioner speak out like that.

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Aug 17th, 2014 at 11:53:26 AM EST
[ Parent ]
I have to agree with your and Frank's assessment of AM, though I hope you are wrong on the effect of the statement. A favorable comment from Hollande or from any high ranking Italian or Spanish politician would be very helpful, if that is not too much to imagine.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 17th, 2014 at 12:45:59 PM EST
[ Parent ]
We did have Pierre Moscovici the other day (minister of finance and incoming French Commissioner) saying that, since the promised growth is not there and France's deficit will therefore stay above 4%, ECB intervention is required. That is a ray of hope.

The tragedy is that, institutionally, the ECB is all they've got.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Sun Aug 17th, 2014 at 01:39:28 PM EST
[ Parent ]
And the ECB has consistently failed to reach it's own inflation target - without any consequences for it's leadership.  In fact Governments seem to be afraid to criticize it, even though its failure to reach it's inflation targets are making it much more difficult for debtor nations to get out from under their debt mountains.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Aug 17th, 2014 at 01:51:05 PM EST
[ Parent ]
The ECB continues to redefine the benchmark it uses to assess its inflation target. It's even informally redefined it from "over the medium term" to "over the medium to long term".

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Aug 18th, 2014 at 03:11:34 AM EST
[ Parent ]
If their computation of inflation is some long term moving average, then they would have to go back well before 2008 to find inflation rates that weren't abysmally low. And who believes any results from before 2008 have any applicability to today's inflation rates? We are in a different environment and they are in denial. They appear to have only one target - one that they think might not totally spook the German public opinion and policy makers' opinions, disguised as what ever they think they can sell.

Oh, I forgot! Hyperinflation is just around the corner. They will still be talking about how traumatized (dead) Germans were in 1922-3 as we slide into the coming (actually already here for most) depression.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 18th, 2014 at 09:33:03 PM EST
[ Parent ]
They are not talking about backwards-looking moving averages (which would be wrong in any case) but whether inflation "expectations" are "anchored", which they remain "firmly" so if you squint really hard in the direction of 5-year forward 5-year inflation swaps. (I'm not kidding)

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Aug 20th, 2014 at 02:10:44 AM EST
[ Parent ]
There go the inflation swaps... [Drew's WHEEEEE™ Technology]

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Aug 25th, 2014 at 04:18:42 AM EST
[ Parent ]
The fact hat undershooting the inflation target could actually be a problem hardly ever makes into the media discussion here in Germany anyway.

But what I find super hilarious is how many commenters suddenly switched from 'OMG, whatever the ECB does it is going to produce huge inflation!' to
'Well, the ECB clearly can't do anything anymore, so it certainly shouldn't try!'

by rz on Mon Aug 18th, 2014 at 06:22:46 AM EST
[ Parent ]
The ECB seems well able to produce deflation, whether they call it 'dis-inflation' or by its proper name. The problem with absolute monarchs has always been that they can be or go crazy. Democracy is no better if entire populations can believe and insist on absurdity, which they demonstrably can. Politics as the acting out of conflicting collective psychoses.


"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 18th, 2014 at 09:40:14 PM EST
[ Parent ]
reports a similar phenomenon in the USA - everything the Govt. or FED does will produce huge inflation, and when inflation doesn't happen a new excuse is wheeled out.  The rationale keeps changing, but nothing can or should be done to interfere in the "free markets"...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Aug 19th, 2014 at 06:22:22 AM EST
[ Parent ]
Well, not exactly: Warum Deutsche fallende Preise fürchten (Wolfgang Münchau, Spiegel, 26.02.2014)
Die Mehrheit der Deutschen erwartet steigende Preise - um fallende schert sich dagegen kaum jemand. Das aber ist brandgefährlich.
Spiegel even said it with cartoons.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Aug 20th, 2014 at 02:06:44 AM EST
[ Parent ]
Yes, there is Wolfgang Münchau and the Herdentrieb blog on Zeit. But that is pretty much it.
by rz on Wed Aug 20th, 2014 at 07:44:19 AM EST
[ Parent ]
the ECB is all they've got

And the ECB is fatally flawed. Nothing will change until one of the major countries makes credible threats about breaking the EMU, hopefully France, but possibly Italy, referably both. What is sad is that it seems so unlikely.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Aug 18th, 2014 at 09:55:35 PM EST
[ Parent ]
ARGeezer:
What is sad is that it seems so unlikely.

What seems more unlikely is that Europeans will continue to allow this hijacking of all that's good in the concept of the EU, forcing its failure because we couldn't make enough folks aware of how we are inveigled into our present situation through the idiotic decisions of a few corrupt 'deciders'.

How sustainable can that be?

Italy could do it even alone, but that window is closing the longer we wait, (which I am increasing convinced is intentional). Dummies, foils, stooges, trolls and trojan equines are thick upon the Euro-ground.

They can't put off a real election for ever! Or can they?

The longer they wait the more Renzi's promises will be proved to be hollow. Charisma can't substitute for everything else missing. His reforms are just rearrangements of Titanic deckchairs.

Napolitano is on his last legs, and the next round of Berlusconi trials are looming.

It all depends on how numb they can keep the populace, presently -and (for many still) pleasantly- preoccupied with the vagaries of midsummer distractions. Beach mating rituals...

And welcoming our increasing number of Asian visitors. (By making them wait in a queue for 3 hours at the Uffizi!)

Watching Renzi gut the constitution is like watching an old, crusty engine getting steam pressure cleaned.

In theory it should work, but...

Threatening to pull Italy out of the Euro (and why not Nato while we're at it) is a card that should never have to be played. Greece was bad enough, I doubt Europeans will stomach more neolib lies if the IMF chopping block heaves into sight again.

Meanwhile taxes go up and GDP goes down, sure signs of a winning strategy.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Aug 18th, 2014 at 11:22:02 PM EST
[ Parent ]
It looks like 'boiling frog' syndrome. But I have also maintained that optimism can be a choice. It is just one that is increasingly difficult to maintain.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Aug 19th, 2014 at 10:27:43 AM EST
[ Parent ]
the ECB is all they[France]'ve got
And the ECB is fatally flawed.
and by their own design, too. Hoist on their own petard, I'm through feeling sorry for the French political class.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Aug 20th, 2014 at 01:53:15 AM EST
[ Parent ]
Nothing will change until one of the major countries makes credible threats about breaking the EMU, hopefully France, but possibly Italy, preferably both.
Funny you should say that...

Bill Mitchell: A rogue nation is needed to exit the Eurozone August 11, 2014

I plan to send my final manuscript for my Eurozone book to the publishers tonight. I have some final checks to make on the 390 pages. I hope it will be published in both English and Italian later in the year. Obviously I will promote it here once it is ready. The book contends that the Eurozone is structurally biased towards stagnation because of the neo-liberal rules that constrain national governments from dealing with large spending collapses with appropriately scaled fiscal responses. The crisis in now into its 6th year and there is little sign that the stagnation is over. Indeed, the latest data would suggest that some of its largest economies are going backwards still. Italy has just announced it is back in recession and factory orders to Germany have plunged. I have been saying it for years but repetition is no sin - they should dismantle the currency union in an orderly manner and allow the national governments to return to growth in their own way. The nations are incapable of doing that collectively given the neo-liberal Groupthink that has them in a vice. So, a rogue nation is needed to break out of the straitjacket and provide a blueprint for the others. Italy should be that nation. In many ways it has panache and flair - it is time to show it in this specific way.


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Aug 20th, 2014 at 01:58:56 AM EST
[ Parent ]
I just looked at his graphs... Triple-dip recession! We're there already.

Or are these just the decreasing oscillations before growth and inflation just stabilise at zero?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Aug 20th, 2014 at 06:15:10 AM EST
[ Parent ]
High-ranking Spanish politicians are Merkel toadies and extreme conservatives themselves. So, no luck there.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Aug 18th, 2014 at 03:10:26 AM EST
[ Parent ]
As an interesting side note, I noticed, that the GDP per capita in Germany has actually been performing quite well. While overall growth has been slow, the population has declined. Taken together the GDP per capita has grown.

Japanization all around!

by rz on Tue Aug 19th, 2014 at 06:55:28 AM EST
[ Parent ]
 The iron grip on wages is what is crippling german growth. You cant increase the size of your economy without increasing the size of either the workforce or the compensation of labor.

This is simple logic - aggregate wages is what the monetary economy is. If they dont go up, the economy doesnt grow, so germany is keeping a direct stranglehold on it's own economy.. Because.. well, honestly, I figure it is simply a case of management being trained by their personal experience to be blind to this. If a particular firm succeeds in restraining wages and raising productivity, it prospers. If a nation does, it falters.

by Thomas on Mon Aug 18th, 2014 at 02:58:05 PM EST
[ Parent ]
Meddlesome Commissioner?   ---  Finally!

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 17th, 2014 at 01:56:09 PM EST
Finally he makes the news, I suppose...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Aug 18th, 2014 at 03:08:49 AM EST
[ Parent ]
Will she smash it? Ignore it? Send back a spin shot? Place your bets.

I vote 'spin shot' - the response of choice until it no longer works with domestic public opinion. What are the chances that German domestic public opinion will turn against ECB austerity policies?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 17th, 2014 at 02:12:00 PM EST
" What are the chances that German domestic public opinion will turn against ECB austerity policies? "

But german public opinion does  oppose ECB policies.

It considers them as too pro inflationary.

by IM on Sun Aug 17th, 2014 at 04:13:11 PM EST
[ Parent ]
What's the motivation? So Mutti und Papi's savings hold their value?

Is that what this is hinging on? Or horrors of hyperinflation taking over if they open the door even a 2% crack?

Another 'Triumph of the Will' from Mittel-Deutschland?

Do they sincerely believe that's worth all the austerity for the rest of us?

Because Bild taught them we are lazy and deserve our fate?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun Aug 17th, 2014 at 08:28:42 PM EST
[ Parent ]
It's a combination of incoherent requirements.

On the one hand, yes, Oma's and Opa's savings should keep their value. But they should also bring in a sizable interest income. So Germany wants low inflation and high interest rates. In normal times that's the way it's supposed to work, but when the bottom has fallen out of the banking system and the private sector is in a balance-sheet recession, you're going to get low inflation and low interest.

Schäuble wants to eliminate deficit and reduce debt, and at the same time he wants high yields for German bonds (so Oma and Opa can get their rendite). But this means that he wants to reduce the supply of bonds and increase their price. Something is wrong with this at a very basic misroeconomic level. But if the laws of supply and demand don't conform to morality, too bad for the law of supply and demand.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Mon Aug 18th, 2014 at 03:08:16 AM EST
[ Parent ]
So Germany wants low inflation and high interest rates. In normal times that's the way it's supposed to work

Well, according to Streeck, "normal times" ended in the 1970s, and it's been various flavours of smoke and mirrors since then. The horrible moment of truth has arrived : it's physically impossible to keep the system running merely by dicking over the work force, and now it's time for capital to suffer. (Surely.)

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Mon Aug 18th, 2014 at 04:08:40 AM EST
[ Parent ]
A very good description of German opinion. What make this especially perfect that these ideas are shared by so many people who consider them themselves strongly 'pro-free market'. But hey, but the believe and supply and demand goes immediately out of the window if it is about financial assets.
by rz on Mon Aug 18th, 2014 at 06:25:49 AM EST
[ Parent ]
It's completely rational for net creditor nations to want low inflation and high interest rates and for net debtor nations to want the opposite.  For German rentiers to prosper peripheral workers must suffer. The ECB gets criticized by one side or the other, or both, depending on what it does.

The problem is that under capitalism this divide is fated to grow ever wider, and ever more contradictory unless there is some super-arching statal authority to rationalism the process and regulate the financial flows. Monetary policy can only do so much and the EU has little fiscal authority. The Brits already want to leave even though their net contribution is already so miserly.

So without the development of a pan European Demos and social solidarity - the project is doomed, and that is precisely what the Brits say they do not want.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Aug 18th, 2014 at 08:31:45 AM EST
[ Parent ]
For German rentiers to prosper peripheral workers must suffer.

But this is not actually what we are doing! We are imposing huge suffering on e.g. Greece, without enabling them to pay their debts! How should a country with 25% unemployment pay its debts?

Current policies are not simply 'unfair', current policies are completely nuts and suicidal for everybody involved.

by rz on Mon Aug 18th, 2014 at 08:54:43 AM EST
[ Parent ]
Greece is paying its debts. The Greek current account position has moved substantially closer to balance than it used to be.

The government's debt relative to GDP continues to grow, of course, as the bottom falls out of GDP and absolute primary deficits cannot be brought down because every attempt to do so comes straight back out of the topline, courtesy of the paradox of thrift.

But that is an internal Greek problem, that Oma and Opa do not need to care about (until the refugees start arriving from the civil war that lies down that road).

The focus on government, rather than foreign, debt is just smoke and mirrors pushed by anti-government fanatics and people who have a vested interest in keeping cross-border financial flows off the policy radar.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Aug 18th, 2014 at 01:18:28 PM EST
[ Parent ]
Schäuble wants to eliminate deficit and reduce debt, and at the same time he wants high yields for German bonds (so Oma and Opa can get their rendite). But this means that he wants to reduce the supply of bonds and inincrease their price. Something is wrong with this at a very basic misroeconomic level.
and I thought I was being careful precisely on the yield increase/price decrease point...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Aug 20th, 2014 at 01:45:11 AM EST
[ Parent ]
There is now a second in that incrementally increases the increase?
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Aug 20th, 2014 at 02:00:01 AM EST
[ Parent ]
A thousand times Gah

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Aug 20th, 2014 at 02:15:37 AM EST
[ Parent ]
The Germans are right: prices never decrease. :-P

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Aug 20th, 2014 at 02:16:52 AM EST
[ Parent ]
Like my shirts, then.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Wed Aug 20th, 2014 at 05:08:32 AM EST
[ Parent ]
Mine do. Shrinking fabric must be the only explanation.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Aug 20th, 2014 at 07:30:46 AM EST
[ Parent ]
The Germans are right: prices never decrease.

Just wages and living standards.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Aug 20th, 2014 at 11:47:08 AM EST
[ Parent ]
Can central bankers succeed in getting global economy back on track? | Anatole Kaletsky

As Stanley Fischer, the new vice chairman of the Federal Reserve Board, lamented on August 11 in his first major policy speech: "Year after year, we have had to explain from mid-year onwards why the global growth rate has been lower than predicted as little as two quarters back. ... This pattern of disappointment and downward revision sets up the first, and the basic, challenge on the list of issues policymakers face in moving ahead: restoring growth, if that is possible."

The central message of Fischer's speech -- that central bankers and governments should try even harder than they have in the past five years to support economic growth -- was closely echoed by Mark Carney, the governor of the Bank of England, at his quarterly press conference two days later.

(...) Even at the European Central Bank, the once taboo idea that monetary policy can be used to stimulate growth is suddenly open for discussion -- if not yet conventional wisdom.

Draghi, in his recent policy statements, has unequivocally promised that the European Central Bank would keep interest rates at zero far longer than the Fed and has openly welcomed the weaker euro this policy should produce. There has also been no criticism for this ultra-dovish policy from German Chancellor Angela Merkel or the Bundesbank -- if only because the German economy is reeling from the body-blow of the sanctions war with Russia and the violence in Ukraine.

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Aug 17th, 2014 at 03:20:47 PM EST
Some politicians will support the call for higher wages, some will be silent. As they did with the simlar deman of the Bundesbank.

But neither the Bundesbank remarks nor the commissioners remarks will influence in any way the negotiations between employers and unions about wages.

So the wage level will not be influenced in any way.

by IM on Sun Aug 17th, 2014 at 04:22:19 PM EST
IM:
negotiations between employers and unions about wages

So, are you saying that Germany's export gearing has never been government policy, but the simple outcome of negotiations between employers and unions (in the sectors that have collective bargaining)?

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Aug 18th, 2014 at 04:44:44 AM EST
[ Parent ]
I also have to disagree with your statement here IM. The overall public mood shapes very much the wage negotiations. The fact that many institutions, from the the Comission the  Bundesbank (!)  are calling for higher will have an impact.

Keep in mind that higher wages are obviously popular. Now clearly if Germany falls back into recession, things will get more interesting. But substantially higher are quite possible.

by rz on Mon Aug 18th, 2014 at 05:18:22 AM EST
[ Parent ]
 "The fact that many institutions, from the the Comission the  Bundesbank (!)  are calling for higher will have an impact. "

No it won't. That depends a bit on the intentions of the unions and the employers. And much more on the power of the unions and the employers.

The power hasn't shifted at all. The attitude of the employers won't shift either. So nothing will happen in the service sector.

Regarding manufacturing - here the unions have some power. But since manufacturing means exporting the unions are very susceptible to competition arguments. So they won't deman enough.  

by IM on Mon Aug 18th, 2014 at 03:10:52 PM EST
[ Parent ]
Export gearing has been government policy since the early fifties. Didn't prevbent rising wages during the trente annees glorieuses.

Wages are the result of low unionization - services and higher leverage  of employers - relocation threat more plausible - in manufacturing.

by IM on Mon Aug 18th, 2014 at 03:26:04 PM EST
[ Parent ]
One should never be afraid to be ignorant in the presence of those who know of which they speak, so could someone kindly point out to this dunce exactly how raising German wages helps the peripherals (everyone except for Germany!).

Because then the Germans will have more benjamins to buy stuff from the rest of Europe?

Is that all there is to it, or is this not even wrong?

And if German entrepreneurs make more money exporting stuff than selling it to domestic markets they'll lobby politicians to keep wages low, threatening to skip producing in Germany, won't they? Is this the quandary AM is faced with?

That all of Europe is faced with?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun Aug 17th, 2014 at 07:28:23 PM EST
Pretty much.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Aug 18th, 2014 at 03:01:07 AM EST
[ Parent ]
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Aug 18th, 2014 at 05:13:27 AM EST
[ Parent ]
Hollande should not be allowed to take credit for Andor's position. The Commissioner has been increasingly assertive against austerity for a number of years, and particularly in the last year or so.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Aug 18th, 2014 at 02:59:47 AM EST
No, Hollande should not take credit. But, if the prospect of endless stagnation coupled with the rise of the far right finally looks to Merkel like something she will be blamed for, and she agrees to loosen the austerity belt, you can bet he'll claim he has been fighting for this all along.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Aug 18th, 2014 at 04:42:05 AM EST
[ Parent ]
Laszlo Andor's articles:
Job-Krise: EU-Kommissar will europäische Arbeitslosenversicherung (13/06/2014)

Europa streitet über den neuen Kommissionschef - doch welche Inhalte soll er voranbringen? Sozialkommissar László Andor fordert im Interview, die Kosten der Arbeitslosigkeit unter den Staaten der Euro-Zone aufzuteilen.

Job crisis: EU Commissioner wants a European unemployment insurance (13/06/2014)

Europa bickers over the new commission head, but what policies should he bring? Social affairs Commissioner László Andor demands in an interview, to share the costs of unemployment among the Eurozone member states. (Interview with Spiegel Online)

And more...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Aug 18th, 2014 at 03:17:49 AM EST
So, who gets the portfolio in the new Commission?
Doesn't matter much I suppose, if their hands are tied anyway.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Mon Aug 18th, 2014 at 04:16:12 AM EST
[ Parent ]
A great idea. Insurances, or 'automatic stabilizers', are the best way for Europe to get a fiscal union, to make the Euro workable.

But this is not going to happen. German public opinion is dead set against such ideas.

by rz on Mon Aug 18th, 2014 at 05:21:08 AM EST
[ Parent ]
Elsewhere we are discussing the legitimation crisis of capitalism.  If the EU wants to recover it's legitimacy and start delivering in real terms for it's citizens - as well as mitigating the worst excesses of regional and social inequalities) then the new Commission needs to start promulgating policies for Common European Health, Education and Social Policies including Unemployment assistance and social housing to counteract the unequalizing effects of the common market.


Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Aug 18th, 2014 at 05:21:21 AM EST


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