In Q4 2008 people like me were seeing aggregate demand plummet in the Eurozone in real time and wondering why people like Merkel and especially Steinbrueck were sitting on their hands, After all, they had an even more comprehensive look at aggregate demand in their countries than some of us in industries  which, while well correlated to overall economic growth, were in single industries all the same.

And that is indeed what I was seeing in Q4, starting in the second half of October and accelerating in November of 2008, making obvious the case for government demand to bridge the output gap, or government action of some sort to cushion coming shocks.

Not doing anything in the face of the biggest downturn since the 1930's may not be Hooverian...if the American moniker is off-putting, perhaps you would prefer "Austrian"...  this being said, it was not a particularly social stance, and coming from so-called "social democrats" like Steinbrueck belied a certain rhenish conservatism which had nothing to do with the left or with worker's progress.

Devaluating the currency is indeed what is in order. As is higher inflation targets. That is the pragmatic and, yes, left approach to the crisis which is still about us., and in this sense a strong Euro was bad policy (and still is).

Today's criticism is something different however. Rather than criticizing the ECB's legendary tightfistedness and economically stupid no-growth and instability act (as we will soon see in Greece and perhaps elsewhere) pact...this time the criticism is of the EU's legendary lack of central economic stabilizers and economic governance vacuum at the center. This is the explanation for the weak Euro now, which I still think is a good thing.

It's hard to argue in my view with the first criticism. The second different one also has a point, but the counter point is that it is precisly from such crises that the need to fill the power vacuum in Bruxelles becomes obvious, and stabilization mechnaisms and further fiscal coherence are likely now to be formalized. (And if they are not....then there is no need for Bruxelles...)

 

The Hun is always either at your throat or at your feet. Winston Churchill