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So yeah, it really is the Germans' fault.

But of course in your world everything is the germans fault.

by IM on Sun Feb 12th, 2012 at 03:31:24 PM EST
[ Parent ]
Theo Weigels' merry men wrote the 3-percent deficit limit into the Maastricht Treaty.

Germany opposed any effort to work towards an EU-wide bank resolution scheme when the shit hit the fan in late 2008.

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.

Germany has for 2 years and increasingly transparently pushing a laundering a bank bailout through Greece, in the process destroying the Greek economy and making the Greek debt situation worse with each  crisis "resolution" proposal.

Germany is pushing treaty reforms and policy proposals at the EU level which have nothing to do with the causes of the crisis and do nothing to resolve it.

For "Germany" read "Merkel and her government" above if you must.

Now name another country and we can go through the ways it has contributed to the crisis.

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 Sun Feb 12th, 2012 at 06:09:07 PM EST
[ Parent ]
let me translate fthat.

Germany has resisted efforts by other countries to extract even more money from the German taxpayers.

It was clear from the very beginning that the Euro was not supposed a wealth transfer mechanism.

You are basiscally whining about not beeing able to steal more from us. If that's what Europe is about, this is not gonna work at all.

by cris0 on Tue Feb 14th, 2012 at 04:08:28 PM EST
[ Parent ]
Germany has resisted efforts by other countries to extract even more money from the German taxpayers.

If Germany does not like paying for keeping the Euro, then Germany must pay its workers enough that they can import as much from other Eurozone countries as Germany wishes to export to them.

It was clear from the very beginning that the Euro was not supposed a wealth transfer mechanism.

Current accounts surplus; no wealth transfer. Pick one.

You are basiscally whining about not beeing able to steal more from us.

No, you're whining about basic arithmetic:

Total exports to other countries
+ total wealth transfers from other countries to you
=
total imports from other countries
+ total wealth transfers to other countries.

And that's really not negotiable unless you want to abolish double-entry bookkeeping.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:18:29 PM EST
[ Parent ]
i am so fed up with this constant fake math.

Everbody has his own made up economic theory to explain why the most simple tenets of bsusiness, simple addition and subtraction don't apply any more.  Instead we get drowned in fuzzy make-belive mathg that explains away basic tenetes.

You work hard and live frugal, you create wealth. You have wealth.

You spend and waste and idle and don't work - you go bankrupt and die poor.

What applies to your house applies, by simple iterative logic, also to a village, a city, a nation.

Thats the simple reality. Everything else is panicking make-believe and charlatanery.

by cris0 on Tue Feb 14th, 2012 at 04:50:48 PM EST
[ Parent ]
Once again, if it makes you feel better, that's the main thing, isn't it?
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Feb 14th, 2012 at 04:54:19 PM EST
[ Parent ]
You work hard and live frugal, you create wealth. You have wealth.

Money is not wealth. It is not even a token representing wealth.

If Germany had accumulated real physical wealth instead of money claims on other people, we wouldn't be having this problem.

Instead it accumulated money, which has no value beyond the political power it commands, and is now attempting to claim a value that it believes the money should represent.

What applies to your house applies, by simple iterative logic, also to a village, a city, a nation.

Swabian Housewife Economics.

A house that has a suitcase full of money in its basement but no car is richer than a house that has a car but no money. A country that has a vault full of money in its vault but no factories is poorer than a country full of factories but with no money.

This should not be difficult to understand, but apparently Swabian Housewife Economists have difficulty grasping it.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:05:42 PM EST
[ Parent ]
the basis of international trade is actually the mutual agreement that money actually does represent value, and thus, wealth.

So, now, we abolish trade as well?

And your proverbial Swabian Housewife does not have the money in her basement - she has it in the bank. Where she gets decent interest. Which is practically the definition of wealth.

by cris0 on Tue Feb 14th, 2012 at 05:42:33 PM EST
[ Parent ]
the basis of international trade is actually the mutual agreement that money actually does represent value, and thus, wealth.

No, the basis of international trade is comparative advantage. International trade does not require that money retain its purchasing power any longer than it takes the exporter to exchange his foreign currency with the importer's domestic currency.

For the purposes of foreign trade, you only need money to retain its value for longer than that if you want to run an aggregate current accounts surplus. Which your trading partners have no particular obligation to support or encourage.

Running a trade surplus is a form of industrial subsidy. Other people don't have any obligation to pay your industrial subsidies.

And your proverbial Swabian Housewife does not have the money in her basement - she has it in the bank. Where she gets decent interest.

In other words, the state pays her a subsidy for doing fuck all with her money. That policy creates no wealth. Not a single meter of railway is built because she has money in the bank. Not a single ball bearing is cast because she has money in the bank. Not a single ship is launched because she has money in the bank. Money in the bank has, quite literally, no economic function until it is spent.

Tell me again why money in the bank should pay interest at all?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:51:39 PM EST
[ Parent ]
you are abolishing any single element of basic economics.

That money in the bank is money the bank does lend to someone who needs money to create wealth. Economy needs credit.

And comparative advantage doesn't create trade any more than gravity creates rivers. Yes, it is a necessary precondition, but in real life, without money there is only very very limited trade actually happening.

Money is the abstraction of wealth and value, and a great facilitator for every kind of economics.

Denying money's existence or value is a sure sign of crackpot economics.

by cris0 on Tue Feb 14th, 2012 at 06:21:21 PM EST
[ Parent ]
Economy needs credit so credit is created. Then credit may circulate as money. But credit is a precondition for money, and not the other way around.

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 Tue Feb 14th, 2012 at 06:24:06 PM EST
[ Parent ]
That money in the bank is money the bank does lend to someone

Loanable funds fallacy.

In the real world, banks create credit when someone borrows from them. They then turn around and get the central bank to sign off on that credit, thus turning it into legal tender.

There is no reason, save atavistic tradition, to even house deposit-taking and lending in the same institution.

Money is the abstraction of wealth and value, and a great facilitator for every kind of economics.

Money is an abstract representation of state power. An important point of being a sovereign state is that you reserve the right to revoke this power from foreign parties (either through strategic default or inflation) arbitrarily and without notice.

That's what "sovereignty" means: That you reserve the right to revoke political commitments to foreign entities.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:29:38 PM EST
[ Parent ]
Welcome to ET, cris0.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 12:33:15 PM EST
[ Parent ]
See fallacy of composition.

The very first example from the above wiki link:

In Keynesian macroeconomics, the "paradox of thrift" theory illustrates this fallacy: increasing saving (or "thrift") is obviously good for an individual, since it provides for retirement or a "rainy day," but if everyone saves more, Keynesian economists argue that it may cause a recession by reducing consumer demand. Other economic schools, such as the Austrian School, disagree.[

The Austrian School appears to subscribe to a view of wealth similar to that of the mythical German Dragon Joseph Campbell described, which stayed in its cave guarding its horde of wealth, for which it had no conceivable use.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 12:43:16 PM EST
[ Parent ]
The Austrian School, it should be noted, is not a school of economic thought, as it refuses as a matter of dogma to submit to empirical testing.

Insofar as economics is a scientific endeavor, therefore, Austrian moral theology does not qualify.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 15th, 2012 at 01:09:20 PM EST
[ Parent ]
Unfortunately that critique largely applies to all of "mainstream" economics, which considers itself a branch of moral philosophy and employs deductive reasoning from stated axioms.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 01:23:18 PM EST
[ Parent ]
If Germany had accumulated real physical wealth instead of money claims on other people, we wouldn't be having this problem.

Like, as I've argued several times earlier, channeling all that surplus cash into buying out ENI, Iberdrola, Santander, UniCredit, all the Greek shipping companies et cetera et cetera.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Feb 16th, 2012 at 08:13:38 PM EST
[ Parent ]
So, Greece must be rich because Greeks work harder than a great many Europeans and they have a very high savings rate (low private debt i.e. no credit card spending).
by Upstate NY on Tue Feb 14th, 2012 at 05:32:41 PM EST
[ Parent ]
Apparently Economics 101 never happened?

What applies to the finances in your house, village, and city does not apply to a nation, because the nation prints its own currency. It is a completely different situation, as is explained in tedious detail to thousands of college freshmen every year.

by asdf on Tue Feb 14th, 2012 at 05:52:59 PM EST
[ Parent ]
The solution to that problem is to for states to legislate their own money-printing privilege out of existence. Eurozone member states don't print their own currency, problem solved. We need new Economics 101 textbooks.

In fact, not even the Eurozone as a whole prints its own currency, because each Euro in existence is the result of the ECB president shitting a gold ingot. The Euro gold hoard is kept in Frankfurt by the Nibelungen.

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 Tue Feb 14th, 2012 at 06:00:37 PM EST
[ Parent ]
"You work hard and live frugal, you create wealth. You have wealth"

That is the most evidence-free statement about wealth I have ever heard. I know plenty, and I mean plenty of people who did exactly that and are now subsisting on 400 Euro pensions. This sort of way to create wealth, in the real world, is so rare as to be irrelevant. If you want to have wealth you inherit it, or steal it from someone, or set up fancy con-artist schemes such as Nth order derivatives etc. I mean take the Fortune 500 list of the wealthiest people on the planet, and see how many of those fit your description

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Tue Feb 14th, 2012 at 06:14:44 PM EST
[ Parent ]
You work hard and live frugal, you create wealth. You have wealth.

Of course not. You may create wealth to markets, but there is no guarantee, that the market returns you the wealth you created. You may i.e. pay all your surplus to a landlord.

by kjr63 on Wed Feb 15th, 2012 at 08:48:12 AM EST
[ Parent ]
One suspects he is talking about Germany. He works hard, he lives frugally, he creates wealth, and Germany has wealth. He has pride in the Top Nation status, and this apparently compensates from the lack of accrual of material benefits to those who create the wealth.

Or something.

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

by eurogreen on Wed Feb 15th, 2012 at 09:00:05 AM EST
[ Parent ]
But the euro is a wealth transfer mechanism. It transfers wealth from the poor to the stinking rich. So from the poor in both Germany and Greece to the stinking rich in both Germany and Greece.

If German workers got paid enough to keep Germanys trade balanced, they could afford more holidays in Greece and the workers in Greece could then afford more industrial goods from Germany. Instead we get Harz in Germany to push wages (though they call it inflation) down and slaughter of jobs, wages and rights for workers in Greece.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Feb 14th, 2012 at 04:27:30 PM EST
[ Parent ]
I still don't understand how welfare and unemployment benefits (aka Hart IV) are related to the rise of wages, or lack thereof.

Can you explain?

by cris0 on Tue Feb 14th, 2012 at 04:53:27 PM EST
[ Parent ]
Reducing unemployment benefits and making the unemployed jump through useless hoops will reduce wages, no?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 04:58:08 PM EST
[ Parent ]
Reducing welfare and unemployment benefits creates greater precarity for the less well-off, leading to employers being able to impose less advantageous working conditions and lower wages.

And in fact, unit labour costs in Germany have fallen in relation to those of other eurozone countries since the implementation of Hartz IV.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Feb 14th, 2012 at 04:58:18 PM EST
[ Parent ]
Germany has resisted efforts by other countries to extract even more money from the German taxpayers.

When you have an agreement to keep exchange rates pegged to each other, each side should be responsible from defending its own currency from appreciation, because trying to defend your own currency from depreciation is an untenable position. This is because you can always print more of your own currency to buy foreign currency, thereby devaluing your currency ("defending your currency from appreciation") but you cannot always buy your own currency with your foreign currency reserves, thereby increasing the value of your currency ("defending your currency from depreciation"). The recently established one-sided bound on the Swiss Franc's exchange rate is an example of this - the Swiss bound is unassailable if the Swiss Central Bank chooses to defend it. It will never run out of reserves, rather it will accumulate reserves, trying to enforce its stated policy.

Bundesbank refusal to hold its end of a stable exchange rate deal (granted: nobody made it explicit that it was everyone's obligation to defend their own currency from appreciation) ejected the Pound and the Lira form the European Exchange Rate Mechanism 20 years ago. The EU should have recognised that this made stable exchange rates within it unsustainable and stopped pursuing them as a policy goal. The Euro project should have been abandoned by the French side. Unfortunately for us all, the Bundesbank did defend the DM from appreciation when it looked like it was the French Franc that would be ejected next.

Therefore, contra your claim I quote at the start, the Euro is a huge wealth transfer mechanism towards intra-EU net exporters (notably Germany, but also the Netherlands and Finland) because it put all the economic burden of the fixed exchange rate regime on the shoulders of the deficit countries (which would naturally see their currency depreciate if if were allowed to float).

Keynes recognised that devaluation, deteriorating terms of trade and indebtedness are in themselves a penalty that deficit countries have to pay, so at Bretton Woods he proposed that, in order to restore a sustainable fixed-exchange-rate system (then the Gold Standard) this system would have to impose some sort of penalty on surplus countries. The US, then the world's exporter of last resort, "took the position of absolutely no". This is typical of exporters of last resort in international trade crises (see China and Germany at the G20 in 2009).

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 Tue Feb 14th, 2012 at 05:21:02 PM EST
[ Parent ]
IIRC the Euro was set up so that there should not be "deficit countries". It was stressed quite loudly that it needed a coherent fiscal policy by all its members. Thus the deficit and debt criteria.

So the case you describe should just not happen because all countries run the same deficits.

by cris0 on Tue Feb 14th, 2012 at 06:32:25 PM EST
[ Parent ]
No, the Euro was set up so that there was no constraint on the creation of current accounts deficit countries. Specifically, there was no mechanism by which current account surplus countries would be forced to repatriate that surplus.

Current accounts is the surplus/deficit that actually matters. This pathological obsession with inflation, government bonds and government spending is an Austrian-school cargo cult, not any form of economics conventionally recognised in the social sciences.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:37:44 PM EST
[ Parent ]
The 3% deficit limit is macroeconomic nonsense, as demostrated by the fact that in 2009 because of the depth of the recession the average Eurozone deficit was well above that just form "automatic fiscal stabilizers" (the social safety net).

You cannot legislate recessions deeper than 3% out of existence.

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 Tue Feb 14th, 2012 at 06:38:57 PM EST
[ Parent ]
In the case of Spain, the government kept to the 3% deficit limit "impeccably, impeccably". Too bad that this implied the country's trade deficit had to be financed by private debt. The EU's asymmetric concept of debt (public debt: toxic; private debt: okay) coupled with the refusal to acknowledge you cannot have a surplus without someone else having a deficit, caused the current crisis. And, by the looks of the policy response, will cause the next crisis, too.

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 Tue Feb 14th, 2012 at 06:43:04 PM EST
[ Parent ]
What is "other countries"? It isn't "other countries" that "extract wealth" from the German taxpayer. It's European (and prominently German) banks. Greece for example saw precious little of the first loan deal money, and is assured not to see any money from the latest deal. It all goes to service unserviceable debt, which should have been repudiated (or generously restructured) in early 2010. That the German government decides to bail-out the banksters claiming that it has to do that because of the "lazy Greeks" or all the other racist stereotypes that a Bild reader can be driven on, is a game a couple of centuries old at least: nationalism and racism in the service of local elite interests. In fact most sane people (Die Linke prominent among them) were against the first loan, on exactly these grounds.

I would be very careful about using the term "steal" in the context of Greco-German relationships. First of all Greece was among the countries that helped German recover in the 1953 debt settlement (without which Germany would never have gotten back on its feet), and also Germany has never repaid back the forced loan that the Nazi occupation forces forced on the Bank of Greece, taking pretty much all of the gold in its treasury. The loot was kept by the FRG without repayment, pending reunification. After reunification it became "old history". This is not about war reparations (a separate matter) but about an actual debt, never repaid but never forgiven also by the Greek state. At this stage of Greco-German relations it is a sure bet that the (quite defendable legally I'm told) loan claims will be put on the table by the successor gvt, especially if it is of the left.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Tue Feb 14th, 2012 at 06:10:44 PM EST
[ Parent ]
It isn't "other countries" that "extract wealth" from the German taxpayer. It's European (and prominently German) banks.

Shhh!! You wouldn't want to disturb the (German) children. They are sleeping so nicely through the looting.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 17th, 2012 at 02:33:54 PM EST
[ Parent ]
I didn't wanted, but since it is discussed anyway.

<Theo Weigels' merry men wrote the 3-percent deficit limit into the Maastricht Treaty.>

No. They proposed it; and 1< other governments accepted it. What about their agency?

 <Germany opposed any effort to work towards an EU-wide bank resolution scheme when the shit hit the fan in late 2008.>

Now you are just making things up. There was no effort to work toward a EU-Wide resolution scheme. Every country - and that was the problem - acted for themselves. As usual the main culprit and trigger were the Irish with their idiotic blanket guarantee.

> 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.

 <Germany has for 2 years and increasingly transparently pushing a laundering a bank bailout through Greece, in the process destroying the Greek economy and making the Greek debt situation worse with each  crisis "resolution" proposal.>

You mean Germany and the other EU-countries, I hope. And the greek economy was hardly in a healthy state in 2009. There was and in same sense is a global crisis starting in 2008, even if you like to pretend it isn't.

 >Germany is pushing treaty reforms and policy proposals at the EU level which have nothing to do with the causes of the crisis and do nothing to resolve it.>

True. Neoliberalism in action. Is e. g. Rajoy any different? Most of europe is governed by right.wingers. What do you expect?

 >For "Germany" read "Merkel and her government" above if you must.<

No, that would misconstrue your argument: You don't mean Merkel, you don't mean right-wing policies, you mean Germany, going back to at least Waigel. 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.

 

by IM on Sat Feb 18th, 2012 at 09:59:37 AM EST
[ Parent ]
<Theo Weigels' merry men wrote the 3-percent deficit limit into the Maastricht Treaty.>

No. They proposed it; and 1< other governments accepted it. What about their agency?

In most ethical systems, the quack and the con-man is held to a higher standard of foresight than his marks.

> 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.

Which is chickenshit compared to the magnitude of money printing needed to restore private sector solvency.

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.

Only if you do not then proceed to destroy those automatic stabilisers when they start working.

<Germany has for 2 years and increasingly transparently pushing a laundering a bank bailout through Greece, in the process destroying the Greek economy and making the Greek debt situation worse with each  crisis "resolution" proposal.>

You mean Germany and the other EU-countries, I hope.

No, Germany and France.

If you start holding mini-summits with Merkozy and presenting their conclusions as fait accomplis that Germany will not deviate from, then Germany and France are to blame for EU policy.

And France will get its comeuppance soon enough, so again we're back to the problem of con-men and marks.

And the greek economy was hardly in a healthy state in 2009.

Irrelevant when the German response was to do everything in its power to make the crisis worse.

There was and in same sense is a global crisis starting in 2008, even if you like to pretend it isn't.

Irrelevant to the Eurozone. The Eurozone would have been fully capable of burying the crisis in newly printed money if the Bundesbank assholes and Frau Merkel and her merry band of Swabian Housewife Economists had not pitched a hissy fit every time an actual workable solution was proposed.

You don't mean Merkel, you don't mean right-wing policies, you mean Germany, going back to at least Waigel.

Germany has been consistently conducting right-wing policy at least since Weigel. So, yeah.

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, it goes back to when Schmidt duped d'Estaing into accepting that the Bundesbank's Lysenkoist economic theology was used as a foundation for that common currency.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 10:12:43 AM EST
[ Parent ]

In most ethical systems, the quack and the con-man is held to a higher standard of foresight than his marks.

That is just nonsense. Your picture of an europe where all other countries are not only powerless but not even able to understand what they sign is a fairy tale.

 >Which is chickenshit compared to the magnitude of money printing needed to restore private sector solvency.<

And that is shifting the goalposts. Tgere was a very considerable fiscal stimulus in Germany, perhaps the biggest in the G8.

 <Only if you do not then proceed to destroy those automatic stabilisers when they start working.<<p> The automatic stabilizers in Germany are unchanged.

 >No, Germany and France.

 If you start holding mini-summits with Merkozy and presenting their conclusions as fait accomplis that Germany will not deviate from, then Germany and France are to blame for EU policy.

 And France will get its comeuppance soon enough, so again we're back to the problem of con-men and marks.<

What about the Netherlands or Finland? or Luxemburg? All german puppets? Once again, you are denying the agency of all other EU countries.

 <Irrelevant when the German response was to do everything in its power to make the crisis worse.>

 Irrelevant to the Eurozone. The Eurozone would have been fully capable of burying the crisis in newly printed money if the Bundesbank assholes and Frau Merkel and her merry band of Swabian Housewife Economists had not pitched a hissy fit every time an actual workable solution was proposed.

And here you are denying the agency of all other members of the governing council. Was Trichet a stealth keynesian or what? And neither the fed nor the BoE was able or perhaps willing to bury their great recession. Do want to blame Merkel or the "Bundesbank" for that result, too?

 >Germany has been consistently conducting right-wing policy at least since Weigel. So, yeah.

 No, it goes back to when Schmidt duped d'Estaing into accepting that the Bundesbank's Lysenkoist economic theology was used as a foundation for that common currency.<

And I thought I was joking. You really think everything is a german conspiracy. Have you worked in templars and jesuits yet?

by IM on Sat Feb 18th, 2012 at 10:52:05 AM EST
[ Parent ]
Your picture of an europe where all other countries are not only powerless but not even able to understand what they sign is a fairy tale.

As a matter of fact, given the quality of public debate, this is exactly what happened.

It is apparently a matter of national pride that Spain "will be in the core Euro" (that's just laughable given the fundamentals, in the case of France it's equally wrongheaded but at least borderline), just like it was a matter of national pride to get into the Euro in 1999. A lot of it must have had to do with "showing those Germans and Dutch" (do you remember the rhetoric of the late 1990s about undeserving Southerners? Not that different from Rutte's and de Jager's this past year)

Another example, when in late 2008 there were discussions about having a G20 there was a huge brouhaha in Spain about whether Spain would have a seat at the table or not. It was all about national pride again. There was not a single discussion of what it was that Spain wanted to say from that seat, if it got it (which it did, and we apparently had Sarkozy to thank for that, or something).

I mean, European politics is at the level of a nursery school playground.

In addition, as I have pointed out repeatedly, there is an issue of "European inadequacy complex" on the part of Greece, Portugal and Spain, which were kept out of the European Communities on account of, first, underdevelopment and then, until the mid-1970s, because they were dictatorships. Presumably Italy got in early because of its industrial North, because Italians also contributed greatly to the Gastarbeiter in the 1960s like the other Mediterranean countries.

Around 1990, only the lyrical left opposed the Maastricht treaty and, boy, were they right (and for the right reasons, too). By the time 1999 rolled by, the Euro wasn't debatable in serious company.

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 11:04:29 AM EST
[ Parent ]
>As a matter of fact, given the quality of public debate, this is exactly what happened.<

Do really think the quality of public debate in Germany is higher? The other european countries have professional governments, professional administrations, armies of economist, jurist etc. too. So they shuold have been as bale or unable as germany to understand what they were doing. It is not as if Germany is the only professional government in the EU facing a bunch of prt.time village councils.

 >It is apparently a matter of national pride that Spain "will be in the core Euro" (that's just laughable given the fundamentals, in the case of France it's equally wrongheaded but at least borderline), just like it was a matter of national pride to get into the Euro in 1999. A lot of it must have had to do with "showing those Germans and Dutch" (do you remember the rhetoric of the late 1990s about undeserving Southerners? Not that different from Rutte's and de Jager's this past year)<

You can't blame idiotic nationalistic pride in other countries on Germany.

 >Another example, when in late 2008 there were discussions about having a G20 there was a huge brouhaha in Spain about whether Spain would have a seat at the table or not. It was all about national pride again. There was not a single discussion of what it was that Spain wanted to say from that seat, if it got it (which it did, and we apparently had Sarkozy to thank for that, or something).<

Like german as working language in the EU or the eternal german quest of a permanent seat in the security council.

 >In addition, as I have pointed out repeatedly, there is an issue of "European inadequacy complex" on the part of Greece, Portugal and Spain, which were kept out of the European Communities on account of, first, underdevelopment and then, until the mid-1970s, because they were dictatorships. Presumably Italy got in early because of its industrial North, because Italians also contributed greatly to the Gastarbeiter in the 1960s like the other Mediterranean countries.>

I am reasonably sure a similar complex exists in most eastern european countries.

 

by IM on Sat Feb 18th, 2012 at 11:33:28 AM EST
[ Parent ]
I am reasonably sure a similar complex exists in most eastern european countries.

Luckily for them, they joined the EU in 2004.

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 11:48:33 AM EST
[ Parent ]
Do really think the quality of public debate in Germany is higher?

No, but Germany is benefiting from the delusions in question.

Again: Does Scientology magically become not a pyramid scam just because the people running it happen to believe in the bullshit they're selling?

Does a homeopath suddenly become blameless for killing people through malign neglect, just because he believes that his magic water will cure their cancer?

Does Jim Jones becomes blameless for lacing his kool-aid with cyanide, just because his followers swallowed it?

If the answer to any of those questions is "no," then why the fuck should we cut Germany a break for wrecking the Eurozone?

I am reasonably sure a similar complex exists in most eastern european countries.

And this makes it OK for Germany to exploit it?

Just so we're clear on that. Because if it's OK for Germany place its own narrow national interest above the interests of the European community, then it would also be OK for, say, Ireland to selectively default on only German holders of Irish government bonds.

Sauce for the goose, and all that.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:48:40 AM EST
[ Parent ]
The  tax-haven and neo-liberal casino of Ireland has done damage enough, including  sending european commissars pushing neo-liberalism.

Do you really want to argue that out of 27 EU-Countries only one has a national interest?

>then it would also be OK for, say, Ireland to selectively default on only German holders of Irish government bonds.<

careful here, the mask is dropping-

by IM on Sat Feb 18th, 2012 at 11:54:44 AM EST
[ Parent ]
And now the half of the Irish population that never touched Fianna Fail with a barge pole must be punished for McCreevy, eh?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:59:40 AM EST
[ Parent ]
Oh, no nationality doesn't matters, what?
by IM on Sat Feb 18th, 2012 at 12:18:59 PM EST
[ Parent ]
My point is that why did they join is not an argument. They did it ostensibly for the wrong reasons.

Also, countries have not opposed Merkel more forcefully because doing so "might be un-european" or something. In the Spring of 2010 Sarkozy reportedly (later deniedly) threatened to quit the Eurozone there and then if Germany didn't agree to a Greek bailout. Also Zapatero should have realised the "European friends" were not his friends at all, but he probably couldn't fathom it (Here is a fully sourced contemporary diary to anger you). Less than a year after that, Socrates and Zapatero even saw it fit to shun a PES summit in order not to be seen as "not playing ball" with the Eurozone powers that be.

I call this Stockholm syndrome. You may disagree. What it isn't is a rational macroeconomic policy.

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 11:56:44 AM EST
[ Parent ]
And I call it blame shifting. And scape goating.

The actual policies of the european countries - as opposed to the policies you thin they should pursue - matter very much.

>You may disagree.<

Very generous.

>What it isn't is a rational macroeconomic policy.<

Have I said so?

by IM on Sat Feb 18th, 2012 at 12:04:54 PM EST
[ Parent ]
And I call it blame shifting. And scape goating.

Accusing Zapatero of being spineless and clueless is blame shifting?

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 01:33:07 PM EST
[ Parent ]
Yes. Of the "the emperor is good-intentioned. But just listening to evil councilors. These evil councilors being in the pay of foreign interests" sort.
by IM on Sat Feb 18th, 2012 at 01:42:23 PM EST
[ Parent ]
Funny you should say that.

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 01:52:52 PM EST
[ Parent ]
 Jordi Sevilla, alias Jürgen Schulze, german agent.
by IM on Sat Feb 18th, 2012 at 01:54:17 PM EST
[ Parent ]
He's just as neoliberal as the SPD.

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 02:03:54 PM EST
[ Parent ]
As to ZP's cluelessness, do you know about the anecdote of the "two afternoons"?

There was a notorious "open mike" gaffe between Sevilla and Zapatero. Zapatero had made some rookie mistake in a public statement as opposition leader and Sevilla said to him "don't worry, I can teach you all you need to know in two afternoons".

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 02:06:22 PM EST
[ Parent ]
To teach the tenets of practical neoliberalism, two hours will do. Perhaps another hour for the third way dressing.
by IM on Sat Feb 18th, 2012 at 02:14:01 PM EST
[ Parent ]
Well, I could also conclude that ZP was evil or traitorous. Would that be better?

After all,

The day after ZP won the elections on March 14, 2004, the cry of the youth on the street was Zapatero, no nos falles (Zapatero, don't let us down). [After May 15, 2011], it's Zapatero nos falla y nos reprime (Zapatero lets us down and represses us).


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 02:29:03 PM EST
[ Parent ]
>As a matter of fact, given the quality of public debate, this is exactly what happened.<

Do really think the quality of public debate in Germany is higher?

Patently not, as you know from my commenting here.

But what is the implication of that? That we should just accept that the body politic is stupid and stop criticising stupid policy?

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 02:11:27 PM EST
[ Parent ]
In most ethical systems, the quack and the con-man is held to a higher standard of foresight than his marks.

That is just nonsense. Your picture of an europe where all other countries are not only powerless but not even able to understand what they sign is a fairy tale.

Caveat emptor, eh?

In point of fact, they did not understand what they were signing. This is a matter of public record. Nowhere in the Eurozone was there any substantive public debate on the consequences of accession. And what sorry excuse for a debate there was adopted Lysenkoist economics wholesale.

Suppose, now, that Germany was, in fact, acting in good faith. What is the good-faith response to realising that you have proposed a system that manifestly does not work?

It is to say "oops, sorry, let's fix this." In this case, to support unconditional fiscal defence of full employment, backed by the full seigniorage power of the central bank.

Germany has not made this good-faith response to the crisis. On the contrary, Germany has been the loudest and most hysterical voice decrying any and all reasonable plans, and proposing one Rube Goldberg-esque bullshit pseudo-solution after the other in order to avoid negotiating in good faith.

The fact that Germany is not the only Eurozone country to do so does not detract from the fact that it is both the largest, the most vocal and the most extremist in insisting that others bow down before its inflation neurosis.

And that is shifting the goalposts. Tgere was a very considerable fiscal stimulus in Germany, perhaps the biggest in the G8.

No. To be "considerable," it has to bear some considerable relationship to the magnitude of the problem. Defining "considerable" as "considerable relative to what the Swabian Housewife Economists at the Bundesbank would have liked," by contrast, is moving the goalposts.

What about the Netherlands or Finland? or Luxemburg?

Were they invited to the Merkozy mini-summits?

No, I thought not.

If you presidentialise the EU around Frau Merkel, then you don't get to play the victimisation card and the "but they do it too" card when people assume that Merkel is the president of Europe.

All german puppets? Once again, you are denying the agency of all other EU countries.

I am noting that under current treaty arrangements they have no power to overrule an obstructionist German position.

And neither the fed nor the BoE was able or perhaps willing to bury their great recession.

The US Fed/Treasury are doing an almost reasonable job of fighting their recession.

The BoE can't tell the Exchequer to spend more money. But it sure as Hell isn't telling the Exchequer that it can't spend more money.

The central bank and the treasury have to work together to bury a downturn in newly printed money. In the UK, it's the Tory-controlled Treasury that is obstructionist. In the Eurozone, it is the BuBa-dominated ECB that is obstructionist.

And I thought I was joking. You really think everything is a german conspiracy. Have you worked in templars and jesuits yet?

I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.

The fact that the Swabian Housewife Economists believe in the bullshit they peddle is not an excuse, any more than being a fervent believer in homeopathy is an excuse for pretending that it can cure disease. Nor is the fact that the rest of Europe believes it as well.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:13:04 AM EST
[ Parent ]
>Caveat emptor, eh?<

Among professionals that is indeed the legal principle. And the other european governments are as professional or non-professional as the the german one.

 >In point of fact, they did not understand what they were signing. This is a matter of public record. Nowhere in the Eurozone was there any substantive public debate on the consequences of accession.<

But this nowhere in the eurozone includes Germany doesn't it?

>Suppose, now, that Germany was, in fact, acting in good faith. What is the good-faith response to realising that you have proposed a system that manifestly does not work?

 It is to say "oops, sorry, let's fix this." In this case, to support unconditional fiscal defence of full employment, backed by the full seigniorage power of the central bank.<

Hold on. is there a single, I repeat a single european government proposing that? You see the problem?

>No. To be "considerable," it has to bear some considerable relationship to the magnitude of the problem. Defining "considerable" as "considerable relative to what the Swabian Housewife Economists at the Bundesbank would have liked," by contrast, is moving the goalposts.<

That is not what I said. Considerable compared to all other G8 countries, including the US and considerable measured in gdp.

 >I am noting that under current treaty arrangements they have no power to overrule an obstructionist German position.<

Of course they can. Theres is no German veto not shared with any other Eu country. In every majority voting case, there is a possibility to out-vote Germany. And at the ECB, the center of your complaints, is is really easy to outvote two german members on the council.

 >The US Fed/Treasury are doing an almost reasonable job of fighting their recession.<

Nonsense. The stimulus was much to small. But even you can't refashion republicans or moderate democrats into german agents, so you rather paint a rosy picture.

 >I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.<

In other words, you are postulating a conspiracy. And I thought blaming les anglo saxons is simple minded.

 >The fact that the Swabian Housewife Economists believe in the bullshit they peddle is not an excuse, any more than being a fervent believer in homeopathy is an excuse for pretending that it can cure disease. Nor is the fact that the rest of Europe believes it as well.<

But a fact; a fact you tend to ignore in preferment to your nationalistic narrative.

by IM on Sat Feb 18th, 2012 at 11:51:05 AM EST
[ Parent ]
>I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.<

In other words, you are postulating a conspiracy.

Well, no. The German economic establishment is wrong but powerful so it can spread its wrongness.

I mean, the conventional wisdom at street level is that anything Germans say on economics must be right.

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 12:00:36 PM EST
[ Parent ]
I mean, the conventional wisdom at street level is that anything Germans say on economics must be right.

But back in the far-aywy day of say 2004 that wasn't conventional wisdom. Back then the celtic tiger was the model.

Or Slovakia or Estonia or whatever.

by IM on Sat Feb 18th, 2012 at 12:07:11 PM EST
[ Parent ]
No. It is a modern variation of 'Might makes Right.' Germany is the modern European economic superpower. 'It must be because they are doing things right.' Not only are the poor honest, but they are also generous. They would not think that the reason Germany is doing so well, comparatively, is that they are manipulating the rules to their advantage.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 19th, 2012 at 07:46:18 PM EST
[ Parent ]
Among professionals that is indeed the legal principle.

Except when it comes to government bonds, apparently. You're not allowed to tell the buyer to fuck off and die on those, are you?

But this nowhere in the eurozone includes Germany doesn't it?

It does.

Believing in fairy tales is not an excuse for murder.

And let's be perfectly fucking clear here: What Mr. Schauble is doing is murder. Clear, cold-blooded murder. Before this crisis is over, he and his friends will have murdered tens of thousands of Greeks and God only knows how many Spaniards, Irish and Italians.

Major industrial depressions are not a fucking game that you get to play over drinks in the country club.

Hold on. is there a single, I repeat a single european government proposing that? You see the problem?

No, I do not see any problem with attacking the most stridently insane country of the lot.

When Germany starts acting less insane than the Netherlands, I will happily begin going after the Netherlands. Until and unless that happens, however, you are making pathetic excuses.

>I am noting that under current treaty arrangements they have no power to overrule an obstructionist German position.<

Of course they can. Theres is no German veto not shared with any other Eu country.

My emphasis.

See the problem here?

In every majority voting case, there is a possibility to out-vote Germany. And at the ECB, the center of your complaints, is is really easy to outvote two german members on the council.

And every time they do that, the Bundesbank immediately goes to Frankfurter Allgemeine BildZeitung and shrieks and whines about how unfair everybody is treating Germany until it stops.

>The US Fed/Treasury are doing an almost reasonable job of fighting their recession.<

Nonsense. The stimulus was much to small. But even you can't refashion republicans or moderate democrats into german agents, so you rather paint a rosy picture.

The stimulus was much too small, certainly.

But I note that no American state has seen 34 % drops in government outlays, 15 % drops in nominal wages and unemployment percentages in the high 20s. Even after you strip out all the lies the Americans put in their statistics, they're still outperforming the Troika by five to ten percentage points on all important measures.

>I am not postulating a German conspiracy. I am noting that Germany has been peddling toxic economic Lysenkoism to the rest of Europe for four solid decades now.<

In other words, you are postulating a conspiracy. And I thought blaming les anglo saxons is simple minded.

I am blaming the Hayekians. I am noting that Germany is the foremost peddler of the Hayekian cancer in Europe today.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:18:03 PM EST
[ Parent ]
>Except when it comes to government bonds, apparently. You're not allowed to tell the buyer to fuck off and die on those, are you?<

As far as I understand the legal situation, it is not any different. But you don't really want to hear that, do you?

 >It does.

 Believing in fairy tales is not an excuse for murder.<

And hyperbole doesn't replace an argument.

 >No, I do not see any problem with attacking the most stridently insane country of the lot.

 When Germany starts acting less insane than the Netherlands, I will happily begin going after the Netherlands.<

Ad calendas graecas or so.

 >My emphasis.

 See the problem here?<

No.

 >And every time they do that, the Bundesbank immediately goes to Frankfurter Allgemeine BildZeitung and shrieks and whines about how unfair everybody is treating Germany until it stops.<

But that, like the two resignations, is actually a sign of weakness and waning influence.

 >The stimulus was much too small, certainly.

 But I note that no American state has seen 34 % drops in government outlays, 15 % drops in nominal wages and unemployment percentages in the high 20s.<

As far as I understand the states and local governments have almost offset the federal stimulus with their balanced budgets requirements. and the resulting fiscal austerity.

by IM on Sat Feb 18th, 2012 at 12:36:45 PM EST
[ Parent ]
Believing in fairy tales is not an excuse for murder.

And hyperbole doesn't replace an argument.

The closest point of comparison to what the Troika is inflicting on Greece is Russia under Yeltsin.

That experience killed roughly 1 % of the Russian population. If Greece performs similarly, and there is no, a priori, any reason it should not, you're looking at somewhere on the order of fifty thousand preventable deaths.

Yeah, I call that murder.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:42:35 PM EST
[ Parent ]
As far as I understand the [US] states and local governments have almost offset the federal stimulus with their balanced budgets requirements. and the resulting fiscal austerity.

And yet they are still doing measurably better than the Troika.

In other words, the Troika confidence fairie performs worse than a placebo stimulus.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:45:30 PM EST
[ Parent ]
Because of - may I mention that once again - automatic stabilizers. The federal spending on Social security, medicare and medicaid keeps places like Nevada afloat.
by IM on Sat Feb 18th, 2012 at 12:53:24 PM EST
[ Parent ]
Automatic stabilisers which Germany is busy dismantling in Greece.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 01:57:03 PM EST
[ Parent ]
Let me remind you that Greece was running deficits even before the crisis hit and the automatic stabilizers kicked in. Look, if you want to run Keynesian policy, either through automatic stabilizers or stimulus programs, you need to have at least semi-sound public finances before the crisis hits. And after the crisis, you need to pay down debt, so you have a space financial space available to borrow heavily during the next crisis.

Sadly, politicians far prefer spending during bad times than they enjoy saving during good times (try to convince the Swabian housewifes that taxes must rise during good times to increase the size of the budget surplus), which is likely why Keynesians has gotten such a bad reputation.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat Feb 18th, 2012 at 02:24:43 PM EST
[ Parent ]
That's only true under a commodity standard or pegged ForEx policy.

It is true that ideally you would attempt to deter inflation whenever this is consistent with full employment. But under a floating FX regime and absent atavistic commodity pegs, nothing about having spent yesteryear prevents you from spending this year.

Yes, spending yesteryear may have created inflation. But it makes no sense to encourage deflation today just because because there was inflation yesterday. For the same reason it makes no sense to shoot a man in the back after he has been shot in the front, on the theory that "the average bullet velocity through his chest will be zero."

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 03:39:48 PM EST
[ Parent ]
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
[ Parent ]
>No, actually. It's pretty clear that this is all down to the political naivete (and overreaching ambition) of Jacques Delors.<

Yes, Jacques Delors, famous spineless political yes man, just a lost babe in the woods. But perhaps he was a long-term german agent.

>Hmm, I thought the summit took place in April 2009.<

Finance ministers, probably.

>And anyway, I didn't say that Germany opposed stimulus per se.<
What about: "Germany opposed fiscal stimulus"?

>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.<

I am a bit irritated. Why do always assume that "automatic stabilizers" is some german excuse cooked up on he spot in 2009 and not a age old economic concept?
And the german argument: we are already doing what you demand, was right. Especially if you remember that the impressive looking american stimulus was full of non-stimulative things like the ATM fix.

And is that argument:

<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.>

not largely right?

>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)?>

That would be the finance minister responsible for the biggest stimulus package in german history?

 >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".<

Sticks and stones will break my bones, but words will never hurt me. What actually happened in Germany in 2009 and 2010 was a classical keneysian stimulus. The whole crisis was successful seventies revival in germany, including unions and employers.

by IM on Sat Feb 18th, 2012 at 11:09:08 AM EST
[ Parent ]
I am a bit irritated. Why do always assume that "automatic stabilizers" is some german excuse cooked up on he spot in 2009 and not a age old economic concept?

It is extremely annoying that you keep misrepresenting this argument.

The point is not that the German argument did not make sense in 2009. The problem is the hysterical shrieking that the German Seriöse Leute began emitting the second those automatic stabilisers actually started making any meaningful contribution.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 11:18:00 AM EST
[ Parent ]
>The point is not that the German argument did not make sense in 2009.<

But that was the argument; a opposition in 2009 to fiscal stimulus, using the automatic stabilizer argument. So you admit that the argument was indeed right in 2009?

by IM on Sat Feb 18th, 2012 at 11:57:37 AM EST
[ Parent ]
I believe it was, yes.

But that's because I believe that the hysterical children didn't realise in 2009 that their automatic stabilisers would certainly breach their magical voodoo 3 % deficit limit.

The other possibility is that they had realised this elementary fact that anybody who took the time to add the numbers together would realise. In which case they were lying when they said that automatic stabilisers would suffice, because they clearly didn't intend to let them work.

I'm going with stupidity here, but it's almost equally easy to make a case for malice aforethought.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 18th, 2012 at 12:04:01 PM EST
[ Parent ]
Unity!

Well, almost.

I remember the policy discussion in late 2008 early 2009 around quite good and as far as I was aware nobody thought that after the impact of the crisis and the stimulus where would be a german deficit inside the Masstricht rules.

by IM on Sat Feb 18th, 2012 at 12:17:20 PM EST
[ Parent ]
Then what was the debt brake amendment and the deficit panic of late 2009 all about?

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 12:49:50 PM EST
[ Parent ]
God if I knew I would already told.

 The debt brake is a imitation of the debt brake in Switzerland introduced in 2001, the concrete german rule a result of commission working from early 2007 to early 2009. So I think we are talking less about a reaction to the crisis and ore about a manifestation of a long term obsession of the german body politic with public debt.

by IM on Sat Feb 18th, 2012 at 01:05:51 PM EST
[ Parent ]
So I think we are talking less about a reaction to the crisis and ore about a manifestation of a long term obsession of the german body politic with public debt.

And what we're arguing is that it's toxic for the rest of the Eurozone to have by far the largest and currently most solvent country in the Eurozone acting on that obsession.

One thing we have pointed out is that after the summer of 2011 even France had lost any of the political leverage it may have had (and, again, reportedly Sarkozy got to make credible threats in the Spring of 2010 - now Merkel thinks she needs to help him with his reelection). So now it's just a Germany with a decades-old unhealthy obsession with public debt alone in the driving seat. Or do the Netherlands, Finland and Luxembourg set EU Council policy independently of Germany?

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 01:42:50 PM EST
[ Parent ]
See, I tried you answer your question and you just use is as a cudgel.

"Or do the Netherlands, Finland and Luxembourg set EU Council policy independently of Germany?"

A straw man. The three and others Austria e. g, share the "decades-old unhealthy obsession with public debt".

Why do deny this simple fact? The government of say the netherlands is not a bunch of fanatic keynesians forced on a difference course.

by IM on Sat Feb 18th, 2012 at 01:52:39 PM EST
[ Parent ]
For all the apparent disagreement I think it's been pretty well established that the Eurozone cannot work as structured and with its current membership.

At  which point one wonders if the inevitable conclusion is not that the Eurozone will shed its members one by one until all that's left is, well, Germany, the Netherlands, Finland and Luxembourg.

The problem is that it's one thing to say that the countries South of the Alps should never have joined a currency union with Germany, and a very different thing to say the proper thing to do now is to throw them out. But that's what appears likely. And the rump Neurozone would probably not enjoy having their currency appreciate by maybe 50% with respect to the old broad Euro average.

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 02:03:00 PM EST
[ Parent ]
Well, it'll be good for Sweden, as the majority of our exports go to the Neurozone... ;p

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Feb 18th, 2012 at 02:26:39 PM EST
[ Parent ]
It may have been right in the first half of 2009, but a bigger stimulus wouldn't have hurt ('adequate' is not an exaggerated size). And the argument was symptomatic of a general opposition to fiscal stimulus, as we saw by the "crass Keynesianism" "argument" (ahem) of late 2008, the debt brake of mid-2009, and then the panic over EU-wide breaches of the deficit limit at the end of 2009, to be followed by liquidationism and "expansionary austerity" since.

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 12:45:41 PM EST
[ Parent ]
but a bigger stimulus wouldn't have hurt ('adequate' is not an exaggerated size).

That is a much weaker claim and you could say the same with more justification about the american stimulus. As far as I remembered krugman admitted grudgingly that the (german) stimulus was big enough for Germany and then aargued oit was to small for the whole EU.

I thought is was to small back then too, but are not so sure now. That said, there was a bot of top on off the original stimulus

 >And the argument was symptomatic of a general opposition to fiscal stimulus, as we saw by the "crass Keynesianism" "argument" (ahem) of late 2008,>

The stimulus in Germany did indeed came months to late, but the resistance had crumbled around the time of the inauguration of Obama.

As far as I remember the stimulus in other european countries wasn't timely too.

by IM on Sat Feb 18th, 2012 at 01:11:47 PM EST
[ Parent ]
The real problem is that the stimulus was withdrawn and then reversed in 2010.

Only now are they starting to make noises about the need to have "jobs-friendly growth and growth-friendly fiscal consolidation". The "growth-friendly fiscal consolidation" is akin to "circle-friendly squaring".

So we're still withholding the necessary stimulus because, you know, 0.1% growth still destroys jobs and physical capital. So the criteria for fiscal stimulus should not be that growth is negative but that jobs are being destroyed.

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 01:37:37 PM EST
[ Parent ]

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