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Pacta sunt..? | 20 comments (20 topical, editorial, 0 hidden)
Re: Pacta sunt..? (4.00 / 14)
Steingart is right - Germany has freeloaded on the rest of Europe to build up the export machine while holding down the exchange rate and inflation.  Now the instability caused by German irresponsible mercantilism proves that the German economic attitude of living off the rest of Europe is not sustainable.
by Metatone (metatone [a|t] gmail (dot) com) on Fri Jun 8th, 2012 at 06:09:18 AM EST
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Re: Pacta sunt..? (4.00 / 5)
Worth noting, as I haven't seen it noted elsewhere that the Euro allowed Germany to export inflation to Spain and elsewhere...
by Metatone (metatone [a|t] gmail (dot) com) on Fri Jun 8th, 2012 at 06:11:20 AM EST
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Re: Pacta sunt..? (4.00 / 3)
But that's not what Steingart means, he means the rest cannot be living off Germany.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Carrie (migeru at eurotrib dot com) on Fri Jun 8th, 2012 at 07:21:34 AM EST
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Re: Pacta sunt..? (4.00 / 3)
Steingart counts a total of €416bn (including EU budget contributions as far back as 2000 -- shades of Maggie Thatcher!).

But, according to Bundesbank balance of payments statistics (pdf), the German current account surplus with the rest of the EU for just the past five years amounts to €564bn.

So, if we're going to get niggly about accounts, Germany is up by at least €146bn.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jun 8th, 2012 at 09:58:26 AM EST
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Re: Pacta sunt..? (none / 1)
Or he could see this for the euro area, also from the BuBa (PDF):

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jun 8th, 2012 at 10:15:18 AM EST
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Re: Pacta sunt..? (none / 1)
Here is another estimate of the cost of the Euro crisis to Germany.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Carrie (migeru at eurotrib dot com) on Fri Jun 8th, 2012 at 10:15:21 AM EST
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Re: Pacta sunt..? (none / 1)
Those are projections, not established numbers.

Anyway, if Germany's stupid policy blows up in their face, they will have no one else to blame.

Though, of course, they will try...

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jun 8th, 2012 at 10:22:53 AM EST
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Re: Pacta sunt..? (4.00 / 5)
Though this is interesting:

The whole problem being, of course, one of political will. In which it is clear that German power circles have no intention of respecting the essential stated principles of the treaties they signed.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jun 8th, 2012 at 10:39:08 AM EST
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Re: Pacta sunt..? (4.00 / 5)
That is what I was referring to.

The cost is, by now, several multiples of the maybe €50 billion it would have cost for the ECB to forcefully prop up Greek bond prices in February 2010.

But a small country had to be thrown against the wall to show that the Ecofin meant business, and here we are.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa

by Carrie (migeru at eurotrib dot com) on Fri Jun 8th, 2012 at 11:20:54 AM EST
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Re: Pacta sunt..? (4.00 / 5)
Right.

I don't think German governing and financial elites ever wanted Greece in the euro, and were happy to seize the wall-slamming opportunity. Yet there's a contradiction between their debt-sinner-needs-punishment attitude, and their manipulation of the single currency to their advantage -- both by using internal devaluation to gain a competitive advantage wrt euro area countries (and the "converging" countries whose currencies are euro-pegged), and in benefitting on world markets from improved terms of trade thanks to a softer currency than the DM would have been, as a result of the very presence of weaker economies in the euro-mix.

That contradiction is fundamentally Protestant: judgemental puritanism on the one hand, hard-nosed business attitudes on the other -- and some self-congratulatory bullshit about how you deserve your success because you are virtuous (not underhanded and greedy).

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jun 8th, 2012 at 12:16:13 PM EST
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Re: Pacta sunt..? (4.00 / 5)
I think the inflation story (which I personally only just realised in this thread) is even more important. Without the Euro, all the hot money that inflated the Spanish real estate bubble (and others) would have needed to stay in Germany - and it's hard to see how it would not have caused inflation in Germany...
by Metatone (metatone [a|t] gmail (dot) com) on Fri Jun 8th, 2012 at 12:28:01 PM EST
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Re: Pacta sunt..? (4.00 / 3)
I don't think German governing and financial elites ever wanted Greece in the euro, and were happy to seize the wall-slamming opportunity.

I wouldn't concentrate on Germany in this instance. It's clear from the record that it's the EU-wide economic policy establishment, irrespective of nationality, that has been responsible for the wall-slamming. The Ecofin and the Commission in particular.

The critique by Daniel Cohn Bendit in May 2010 is forceful and on point.



If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa

by Carrie (migeru at eurotrib dot com) on Sat Jun 9th, 2012 at 01:33:32 AM EST
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Pacta sunt..? | 20 comments (20 topical, 0 editorial, 0 hidden)
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