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A cult is a religion that isn't socially respectable.

by Colman Tue Nov 29th, 2011 at 05:55:58 AM EST

I've come to hate this discussion:

It is fashionable for pundits outside Germany to lambast its government, the Bundesbank and the European Central Bank for being inflexible or stupid or both. (Reuters)
They're not stupid. They're not (unusually) evil. They're not even especially malicious.

They're religious: respectably deluded.


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Seriously, even their best friends run a high risk of ruin on the path they've taken. They're killing their own political careers.
by Colman (colman at eurotrib.com) on Tue Nov 29th, 2011 at 05:57:09 AM EST
At the same time you're saying all Merkel cares about is reelection.

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 Nov 29th, 2011 at 06:00:56 AM EST
[ Parent ]
That's her main motivation.

She may very well believe this is the best path to that end, since virtue is rewarded - see how the Irish economy is recovering due to austerity.

by Colman (colman at eurotrib.com) on Tue Nov 29th, 2011 at 06:19:32 AM EST
[ Parent ]
Where is that fashionable?  If by "pundits," they mean Martin Wolf, Paul Krugman, and Wolfgang Munchau -- then, okay, I guess that's true.  But since when has the consensus opinion of the punditocracy ever been reflected by Krugman?

And I love the term "fashionable" here, as if Dean Baker pointing out that the ECB doesn't know what it's doing is somehow the political equivalent to hipsters in skinny jeans and ironic t-shirts.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Nov 29th, 2011 at 06:33:00 AM EST
The quoted article is an attempt to argue that the German position is consistent and neither stupid nor evil. Therefore the need to open rhetorically with the "fashion of the day".

Since you mention it, I can't resist quoting Dean Baker again:

The European Central Bank (ECB) has been working hard to convince the world that it is not competent to act as central bank. One of the main responsibilities of a central bank is to act as the lender of last resort in a crisis. The ECB is insisting that it will not fill this role. It is arguing instead that it would sooner see the eurozone collapse than risk inflation exceeding its 2.0 percent target.

...

Of course this sort of intervention will look horrible from the standpoint of the eurozone countries. It will appear as though they cannot be trusted to manage their own central bank and deal with their own economic affairs.

Unfortunately, this is the case. They have entrusted the continent's most important economic institution to a group of ideological zealots who are infatuated by the sight of low inflation rates even as whole economies collapse in ruins and tens of millions of people needlessly go unemployed.



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 Nov 29th, 2011 at 06:36:39 AM EST
[ Parent ]
It is also a cult religion.

But they are stupid.

by cagatacos on Tue Nov 29th, 2011 at 07:34:36 AM EST
I do not believe they are simply stupid or simply cult all tho they may be both and certainly more. On the other hand as we know most of cults have hidden agenda and that is to deprive their members of many things but most importantly in the end of their wealth.

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Tue Nov 29th, 2011 at 07:55:25 AM EST
[ Parent ]
I've been thinking about a diary which makes the point that being a winger makes you stupid.

It's economic Lysenkoism. All authoritarian belief systems are destroyers of collective intelligence and entropy.

I got stuck at the relationship between information as entropy and information as intelligence.

(Further work needed. Send funding to the usual address. Thanks.)

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Nov 29th, 2011 at 06:01:13 PM EST
[ Parent ]
Don't leave Plan B too late | Hugo Dixon
Nevertheless, the policymakers in Frankfurt and Berlin still think that everything in Plan A is still necessary or at least desirable, even if it proves insufficient to solve the crisis. It is, for example, really important to keep the pressure on the new Italian and Spanish governments so that they deliver on their potential.

If this is true, they do not believe that this is worth doing because austerity will save the euro. But having people end up homeless, having hostpitals without medicines, etc are apparently a worthy goal in itself. Call it evil or call it malicious but I do not see how it can be called deluded.

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

by A swedish kind of death on Tue Nov 29th, 2011 at 08:05:26 AM EST
Dixon is the epitome of optimism...
Fingers crossed, such short-term palliatives will prevent an explosion until Germany implements Plan A and figures out that it isn't working. But even in the best case, such an approach probably won't be enough to prevent a nasty recession. Meanwhile, there's the ever-present risk that a panic could trigger a chain reaction which even a Plan B would be unable to contain.


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 Nov 29th, 2011 at 08:29:25 AM EST
[ Parent ]
Given the consequences of bank defaults on their careers I suspect Merkozy are largely motivated by that fear and are so committed to trying to prevent the first domino from falling that they are unwilling to even consider what to do when, (if?!), it does. That would be a sort of combination of steadfast faith and resolute good works on behalf of their shared religion.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 29th, 2011 at 10:00:15 AM EST
[ Parent ]
'twas ever thus, a few controlling the many.

they are pushing for their optimum case scenario, where people are too intimidated to complain, and just suck it up, 'our leaders know more than we do, so must trust them'.

the riot cops will keep the hotheads either jailed or working for them to infiltrate peoples' legitimately peaceful movements for radical social change towards a more equitable society.

similar to a junkie with his thumb on the syringe plunger, they cannot see further than their immediate gratification and continued denial.

that, my bloggy friends, is the delusion they would have us all worship, on bended knees, grateful for their largesse in allowing us to exist at all, and daily daring us to do anything about it.

ultimately, their bad faith will doom them, just a question of time... they will have to reveal how democracy means zero to them, how force is all they know, if not effectively covertLy, then overtly, how retrogressive their ideas are, for the mass of people to fully understand what has happened to them, and quit extending the benefit of doubt to the pack of popinjays the PTB use to front their operations.

noting the contrast between the polite removal of the nuketrain protestors in fran-germany, and the casual pepperspraying in the USA is still remarkable. after fini's genova, and the growing discontent and violence around the continuation of the val de susa rail project, i hope it lasts. the unions in italy will not take the coming austerity lying down, and we know how the french mean business when they hit the streets.

what we have to go through to get to that day....gulp. it boggles the imagination. new territory, even if some contours of the geography seem shockingly familiar.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Nov 29th, 2011 at 11:40:01 AM EST
[ Parent ]
Spiegel: 'Germany As Isolated on Euro as US Was On Iraq'
"There is nothing inevitable about Europe's decline. But we are standing on the edge of a precipice. This is the scariest moment of my ministerial life but therefore also the most sublime," Radoslaw Sikorski said in a speech in Berlin on Monday evening. "I demand of Germany that, for your own sake and for ours, you help it (the euro zone) survive and prosper. You know full well that nobody else can do it."

"I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity," [Polish Foreign Minister Radoslaw Sikorski] said, referring to the troubled history of relations between the two nations.

...

The conservative Die Welt writes:

...

"With their focus on austerity and their refusal to permit a bigger role for the ECB, the Germans are as isolated as the Americans were with the Iraq war. Even euro allies are starting to distance themselves from Germany's rigidity. Berlin must examine its conscience and ask itself if it really has the better arguments on its side. Just referring to the German hyperinflation trauma of 1929 isn't enough."  



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 Nov 29th, 2011 at 09:25:59 AM EST
Well, religious people sometimes misquote the Bible. Here Die Welt puts German hyperinflation in 1929 instead of 1923, but, with Die Welt and Der Spiegel both chiming in perhaps dissent is becoming more Serious.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 29th, 2011 at 10:12:11 AM EST
[ Parent ]
Le Monde yesterday put it "seventy years ago", ie 1941.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 29th, 2011 at 12:22:19 PM EST
[ Parent ]
Only a generation off. But I thought it was the previous generation that we called "the lost generation".

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 29th, 2011 at 04:20:30 PM EST
[ Parent ]
Here is the text of the speech [PDF] (via the Economist).

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 Thu Dec 1st, 2011 at 05:51:07 AM EST
[ Parent ]
This is a noxious mix that can't be centrifugally separated. Whether it's ideology or lack of imagination, no one can look into another's heart and determine there's no malice, especially unconscious malice.

Schadenfreude is a German word.

I admit to feeling lots of it myself these days, from my comfortable perch in the USA.

If I'm feeling it, who's to say these elites aren't feeling it. There's plenty of anger and malice in everyone's hearts, if you ask me.

by Upstate NY on Tue Nov 29th, 2011 at 10:06:25 AM EST
Bankers have seized Europe: Goldman Sachs Has Taken Over  Paul Craig Roberts

In my opinion, the failed German bond auction was orchestrated by the US Treasury, by the European Central Bank and EU authorities, and by the private banks that own the troubled sovereign debt.

My opinion is based on the following facts. Goldman Sachs and US banks have guaranteed perhaps one trillion dollars or more of European sovereign debt by selling swaps or insurance against which they have not reserved. The fees the US banks received for guaranteeing the values of European sovereign debt instruments simply went into profits and executive bonuses. This, of course, is what ruined the American insurance giant, AIG, leading to the TARP bailout at US taxpayer expense and Goldman Sachs' enormous profits.

If any of the European sovereign debt fails, US financial institutions that issued swaps or unfunded guarantees against the debt are on the hook for large sums that they do not have. The reputation of the US financial system probably could not survive its default on the swaps it has issued. Therefore, the failure of European sovereign debt would renew the financial crisis in the US, requiring a new round of bailouts and/or a new round of Federal Reserve "quantitative easing," that is, the printing of money in order to make good on irresponsible financial instruments, the issue of which enriched a tiny number of executives.

Certainly, President Obama does not want to go into an election year facing this prospect of high profile US financial failure.  So, without any doubt, the US Treasury wants Germany out of the way of a European bailout.

The private French, German, and Dutch banks, which appear to hold most of the troubled sovereign debt, don't want any losses. Either their balance sheets, already ruined by Wall Street's fraudulent derivatives, cannot stand further losses or they fear the drop in their share prices from lowered earnings due to write-downs of bad sovereign debts.  In other words, for these banks big money is involved, which provides an enormous incentive to get the German government out of the way of their profit statements.



"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 29th, 2011 at 11:25:36 AM EST
What rate did Italy sell bonds at? What rate was Germany trying to sell them at?
by Colman (colman at eurotrib.com) on Tue Nov 29th, 2011 at 11:35:39 AM EST
[ Parent ]
What! You expect GERMANY to pay 3%? It would be interesting to see what was the cover on an auction of 2 year Bunds at 3%.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 29th, 2011 at 11:43:39 AM EST
[ Parent ]
ARGeezer:
Either their balance sheets, already ruined by Wall Street's fraudulent derivatives, cannot stand further losses or they fear the drop in their share prices from lowered earnings due to write-downs of bad sovereign debts.  In other words, for these banks big money is involved, which provides an enormous incentive to get the German government out of the way of their profit statements.

not to mention the run on the banks by the people! this impasse is the result of an immovable object (resisting inflation, a prussian honour hangover, ancient superiority complex, we know best, absolutely?) and an irresistible force, of constant yinyang flux, a water of dodgy capital ever seeking channels of profit, thoroughly self-referential, and as we see, even dementedly so.

i see petulant children upending the monopoly board, because they can't have it both ways, transparent democracy is in direct 180 degree opposition to the cloaked cabalism of the finance sector, just as open spirituality is pulling in the reverse direction than the similarly occluded machinations of purple eminences behind the vatican gates.

their reign of unreality is unwinding too as only the most backward countries are subscribing to their homophobia and judgmental intolerance of birth control.

old, rotten institutions crumbling under the weight of their own conniving ways, and a public eager to awaken from the gloomy worlds offered by the religion of money with its eminences grises, or the obscurely superstitious hocus pocus of the remnants of catholicism, scourge of europe for centuries, suppressing knowledge and denying women their due.

bad religion, or no religion? the world is waking up to the subterfuges used by the 1% to keep the rest keeping on keeping on, while they live in the lap of luxury.

all politics seems disingenuous, if ingenious distraction, unless and until it serves to accentuate and improve our pact of existence with our habitat, where presently it is divided at best, frankly suicidal at worst.

/rant


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Nov 29th, 2011 at 01:53:08 PM EST
[ Parent ]
The goal that all the European leaders are working towards is to see that the cost does not fall on the banks. It is hard to imagine that they cannot see that then it comes out of the average citizens. Worse, it is costing any real vestige of democracy. How can they NOT see that? Only by steeling themselves to their perceived There Is No Alternative doctrine. The real danger is that they will succeed. The best hope is that there is an uncontrolled default that wipes out the debt holders. If we are going to suffer, we might as well get something out of the suffering. Destruction of Goldman and their colleagues would constitute a very big "something".

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Nov 29th, 2011 at 04:26:53 PM EST
[ Parent ]
The thing is, markets and GS and Wall Street accepts Germany as "evil", an "evil" country willing to take over Europe. What they do not accept is a stupid germany which does not know that you can print money and not generate inflation in these circumstances. They seem to forget that you must print money to act as lender of last resort.

wall Street and the US accepts anything Germany wants for Europe, if it is austerity, unemployment and killing growth, so be it. But not using the printing press in deflation conditions? This is it. This is the end. bye bye.

That's how the world/markets work:

-Banks should be always off the hook.
-Important states and their debt must be also off the hook.
-citizens and very small countries? well, don't care.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Tue Nov 29th, 2011 at 05:14:11 PM EST
[ Parent ]
But not using the printing press in deflation conditions?

If we are under deflationary conditions, why is inflation over the 2% target?

by oliver on Wed Nov 30th, 2011 at 03:36:41 AM EST
[ Parent ]
Inflation as in Consumer price inflation should not be confused with inflation as in debt deflation.

We're in a vicious cycle where, for instance, governments hike VAT, this filters through to inflation statistics, consumers retrench, tax revenues fall, and governments hike taxes again.

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 Wed Nov 30th, 2011 at 04:00:37 AM EST
[ Parent ]
Also, prices can rise due to rising imported input costs. Raising taxes won't stop it, but that does not stop austerians from raising taxes. Also, due to an excess of available labor,  increased government spending up, to a limit, to employ that labor would not cause wage inflation. It is both possible and important to dis-aggregate total inflation when selecting a response.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Nov 30th, 2011 at 06:27:43 AM EST
[ Parent ]
And on that topic, lets not forget the ongoing financialisation of the raw materials markets, and the resulting price hike, that Chris repeatedly reports about.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Wed Nov 30th, 2011 at 07:39:28 AM EST
[ Parent ]
If we are under deflationary conditions, why is inflation over the 2% target?

Because consumer price inflation contains both imported inflation from deterioration of terms of trade with RoW (which is a real price adjustment, and thus should not be targeted by the CB), and product and consumption taxes (e.g. VAT), which it is not meaningful to target either.

The meaningful index to target (inasmuch as one believes that inflation targeting is meaningful at all, which is far from obvious) is the producer price index.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Nov 30th, 2011 at 11:59:34 AM EST
[ Parent ]
lip service to democracy is all they have left as the systems collapse, and that will go too, as the cognitive dissonance between narrative and reality widens.

i actually feel really sorry for the germans, their country's corruption is likely legal, and most germans would not willingly countenance the sort of everyday, casual, endemic corruption that greece and italy take for granted.

i understand their rage, and yet it's directed towards the countries they perceive as being thieves, while ignorant that they have just as boggy a problem with their own banks' solvency and transparency.

the tabloid media is prime sinner in this regard, deflecting the rage due their own bank regulators onto 'lazy parasite southerners', who certainly deserve blame, but not outright hatred or rejection.

most germans wish they could bugger off somewhere warm where the living is easy, so there's a bit of reverse schadenfreude at work here too.

their own sense of civic solidarity does not permit this until they have become the 1% (except for short holidays), so they like to go south to relax and drink rotwein.

a friend realtor told me when germans buy a house in italy their top request is that it should not have any german neighbours so there's a little self-hatred in there too, though there are examples to the contrary, where a bunch of them have bought a borgo, and have arranged for german teachers to come and raise little germans abroad.

my visits to germany have helped me understand why so many want to leave, though i have loved some people and things i experienced there.

they have fantastic qualities, the germans, but it is intense up there, the relentless work ethic, and a somewhat grim vibe from history's shadow still stretched over the place.

enough blame to go around, the germans for being once again too easily hoodwinked by forces behind the their own scenes, and southern lands' corruption.

the combo is horrible, as we see, and the solution could come from greater integration, where germans learned to be a but freer and spontaneous, less 'alles in ordnung', and southerners learn from the germans how much more efficient society can be without such widespread backhanding and unremarked unmeritocratic patronage.

meet in the middle!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Nov 29th, 2011 at 06:40:36 PM EST
[ Parent ]


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