Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
But probably you think that the root of this ancient conspiracy goes back to when Helmut Schmidt duped Giscard d'Estaing into a common european currency.
No, actually. It's pretty clear that this is all down to the political naivete (and overreaching ambition) of Jacques Delors.
> Germany opposed fiscal stimulus as the G20 in 2009 on the grounds that "automatic stabilizers were sufficient" only to spearhead the destruction of the EU's welfare state and social compact when the said automatic stabilizers pushed deficits well above 3% EU-wide as they couldn't possibly fail to do in a deep recession.>

That is a bit dubious history. In July 2009, when the summit happened, in Germany the stimulus was already enacted at about 1.6% of gdp in 2009. That was not really then the stimulus in the US, not to talk of the other G8 countries. And the argument that countries with big automatic stabilizers like Germany need a smaller explicit stimulus is at least plausible.

Hmm, I thought the summit took place in April 2009. And anyway, I didn't say that Germany opposed stimulus per se. What happened was that first, the US tried to get some sort of global agreement and was shunned by China on the one hand and Germany with the "automatic stabilizers" argument on the other.
Here's a message from Berlin to U.S. officials arguing that Europe's governments should pony up as much as Washington has to stimulate their economies: Germany's already doing it.

U.S. officials say they want to use the April 2 summit of the Group of 20 countries to persuade other economies to do more to boost flagging demand by passing bigger emergency government spending packages, similar in scale to the $787 billion that the U.S. administration recently pushed through Congress.


But the trans-Atlantic debate over stimulus packages has touched a nerve in Germany, which believes many U.S. critics fail to take into account differences between the U.S. and European economies. One big one: In Europe's generous welfare states,when recession strikes, governments automatically start paying out more than in the U.S. in the form of welfare checks and other so-called automatic stabilizers.

(WSJ, March 12, 2009) The "problem" was that, by the end of 2009, the said "automatic stabilizers" had demonstrated that the 3% deficit limit was bullshit. The "solution" adopted in 2010-11 has been to dismantle the said "generous welfare states", precisely in the countries where they are least generous (as a fraction of GDP).
Neoliberalism in action. Is e. g. Rajoy any different? Most of europe is governed by right.wingers. What do you expect?
May I ask you for the political affiliation and nationality of the person famous for the phrase crass Keynesianism (uttered at the end of 2008)?

What happened in July 2009 was that Germany passed its own "debt brake" constitutional amendment (see Berlin weaves a deficit hairshirt for us all), surely in an effort to rein in its own out-of-control "automatic stabilizers".

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Sat Feb 18th, 2012 at 10:18:38 AM EST
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