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the German public deficit reached 0% in 2008 and 3.1% in 2009, that of France 3.4% and 8.2% respectively; while Germany's trade surplus grew to 135 billion euros in 2009, France's trade deficit grew to 43 billion; German export market share in the heart of the euro zone went from 25% in 2000 to 28% in 2009, France's from 16% to 13%; Germany has managed to maintain a strong industry, the spearhead of its exports and representing 26% of its GDP, an increase since 2000, in contrast to 14% in France, where that number is declining; Germany spends 2.6% of its GDP on research and development, France 2%.

Both of them have been keeping aggregate debt to gdp ratios above 60%, for most of the decade, but the quote doesn't discuss that bit of their fiscal position. Germany should have been running budget surpluses in the boom years in order to bring the deficit down but instead they - together with France - forced a redefinition of the Growth and Stability Pact when it suited their excesses, and kept running deficits throughout.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue Apr 13th, 2010 at 08:46:04 AM EST
... nations, but rather large states within an economic sovereignty, they should on the one hand have been running a surplus during boom years to build up a cushion in case of a downturn, but on the other hand the Eurozone as a whole should have been running a balanced budget during the boom years and a substantial deficit from the onset of the recession.

Demanding that neither the Eurozone nor the individual nations in the Eurozone take on the responsibility of the economic sovereign for maintaining economic stability is indeed a trick of the plutocrats.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Apr 13th, 2010 at 02:54:20 PM EST
[ Parent ]
Demanding that neither the Eurozone nor the individual nations in the Eurozone take on the responsibility of the economic sovereign for maintaining economic stability is indeed a trick of the plutocrats.

And how about this?

Consolidated version of the Treaty on the Functioning of the European Union [PDF]

Article 123
(ex Article 101 TEC)
1. Overdraft facilities or any other type of credit facility with the European Central Bank or with
the central banks of the Member States (hereinafter referred to as `national central banks ') in favour of
Union institutions, bodies, offices or agencies, central governments, regional, local or other public
authorities, other bodies governed by public law, or public under takings of Member States shall be
prohibited, as shall the purchase directly from them by the European Central Bank or national central
banks of debt instruments.
2. Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the
supply of reserves by central banks, shall be given the same treatment by national central banks and
the European Central Bank as private credit institutions.
What kind of central bank is legally barred from assisting fiscal policy?

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue Apr 13th, 2010 at 04:05:55 PM EST
[ Parent ]
A central bank in the alternative fantasy universe of neoliberal belief.

It seems highly likely that there is some artifice by which the functional equivalent of an overdraft facility can be provided ... after all, when a government "borrows" to "finance" deficit spending, it is "borrowing" purchasing power brought into being by that deficit spending ... so someone who knows how the economy actually works may indeed be able to work out an instrument that follows the rules of the neoliberal fantasy while in fact relying on the actual working of a reserve banking chartalist money system in the real morning.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Apr 15th, 2010 at 12:23:25 PM EST
[ Parent ]
It seems highly likely that there is some artifice by which the functional equivalent of an overdraft facility can be provided

The Government gets an overdraft facility from a politically connected major private bank, and the private bank uses ECB repos to fund that facility.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Thu Apr 15th, 2010 at 12:28:40 PM EST
[ Parent ]
Bear in mind that the US central bank is not "a" central bank, but a network of regional central banks, de jure privately owned, but with their core central bank functions controlled by a majority government appointed external board of governors.

This evolved, of course, in the aftermath of an entrenched anti-central-bank ideology among agrarian populists, so that chartered "third Bank of the United States" would have been politically much harder to get established than the "network of clearing houses".

Quite the same trick could be done to provide for EU central commission overdraft facilities in some privately owned but publicly governed bank. The pretext, being a pretext, would be any useful function that would involve a subordinate clearing house role ... it could be related to trade promotion (say, with low-income nations), with regulating some variety of transaction, or insuring deposits in some class of institution ... , and with the privately owned shareholder banks being under some legal requirement to  hold some share of their Eurobank reserves on account with the subordinate clearing house by transfer to its own Eurobank reserve account.

That gets around the letter of the law regarding discrimination between public and private institutions.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Apr 15th, 2010 at 12:56:32 PM EST
[ Parent ]
Quite the same trick could be done to provide for EU central commission overdraft facilities in some privately owned but publicly governed bank.

Ah, we have found a use for the much maligned Spanish Cajas de Ahorros, German Landsbanken and Sparkassen, etc...

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Mon May 3rd, 2010 at 01:05:53 PM EST
[ Parent ]
A central bank in the alternative fantasy universe of neoliberal belief.

Thanks for confirming that the fantasy world of neoliberal belief is encoded in the European Union's treaties.

[Europe.Is.Doomed™ Alert] and I don't mean to snark.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Thu Apr 15th, 2010 at 12:29:51 PM EST
[ Parent ]
Germany was running a surplus before the crisis hit. France did not come even close, under right wing governments (the last time it even came close was with a 1.2% deficit under Jospin in 1999 or 2000).

Wind power
by Jerome a Paris (etg@eurotrib.com) on Wed Apr 14th, 2010 at 03:34:13 AM EST
[ Parent ]

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