Thanks for visiting this blog, created in July 2012 out of great concern for the fate of the €uro currency area, once again on the verge of collapse due to the economically ill-advised and heartless austerity policies imposed on Greece, Spain and other heavily-indebted €uro area countries by a christian democratic German chancellor impressed with the budgeting skills of Schwabian housewives. Meant to reduce the public debt and put the countries back on a path to economic growth, these macro-economically idiotic policies are doing anything but cause "pointless misery" as Paul Krugman so aptly describes it (Bloomberg, July 23-29, 2012).

Instead of reducing public debt, the austerity measures set in motion a vicious cycle of economic contraction, rising unemployment and poverty, lower tax revenues, private capital flight, and rising public debt shares as the economy declines faster than the public debt. What’s more, the austerity-driven ‘blood, sweat and tears’ policies recommended to the European periphery derive from the same economic doctrine that brought us to the brink of disaster in 2008. These policies are not only misanthropic and counterproductive to economic growth and debt reduction in Europe, but will prove explosive for the €uro currency area unless a drastic change of course takes place - and soon.

While I do not pretend to have ‘the’ solution for the €uro crisis, I would like to offer alternative economic perspectives and views on current events, and hope to chart a more humane path toward a balanced, socially fair, and sustainable economic future for the €uro area.

On the origins of the 2008 Great Financial Crisis:
90+% of traders are men, and they bet all of our bank deposits on liar loans which froze credit leading to 40% average losses passed on to ordinary taxpayers; then begged for trillion-dollar bailouts upon which they paid themselves 50% higher boni.”


Sunday, August 18, 2013

The sorry state of Germany's election campaign

Compared with past national election campaigns in Germany, the current one seems to be designed to lull people into sleep, a kind of surrealistic sleep that can easily turn into a nightmare: Merkel’s CDU plasters the countryside with “Friede, Freude, Eierkuchen” [peace, pleasure, and pancakes] posters depicting smiling German families cooking together or enjoying the beautiful German country side. 


The main opposition party, SPD, runs a negative campaign against chancellor Merkel, yet shows her on every SPD-poster in a rather favourable light, repeating the statements she made about her government ("best government since unification"). The SPD’s own candidate remains invisible on the posters and nearly invisible on the campaign trail. While Merkel was on vacation, he tried to pick up his attacks against her disastrous economic management of the euro crisis – with little success as Germans do not (yet) feel the crisis.


Meanwhile, the Greens are making a fuss about the introduction of a “veggie day” to lower Germans’ meat consumption which harms animals and damages the environment. While this may be true, the German voter must be shaking her head, thinking “as if we don’t have other things to worry about”, fortifying the voter's perception of the Greens as quixotic Bionade elitists.

Even the left (Die Linke) is conspicuously tame, or so it seems as the party's messages are being completely ignored by the mainstream German press.

Yet, despite Merkel's continuing high popularity among the German people, her political standing could easily be challenged by spelling out the damage she has inflicted on the euro area (including Germany) since the start of the crisis, as I tried to do in my blog --->see the intro and many other posts describing the economic and human suffering Merkel's austerity policies have caused in Greece and other eurozone economies. The economic damage Merkel’s policies have caused will take years, if not decades, to repair.

Also: Merkel's perception as a good guardian of German taxpayers’ money is completely false. In fact, Merkel’s hesitant leadership at the very beginning of the crisis in Greece, combined with the economically idiotic austerity policies she and her finance minister Schäuble imposed on the Southern European periphery, unnecessarily cost German taxpayers a lot of money. And will do so in the future as Southern European economies continue to contract due to austerity, eroding tax bases and increasing (rather than lowering) public debt ratios, thus creating new financing gaps that need to be filled by European taxpayers. 

In addition to the economic damage, there is the political damage: within a short time span of 4 years, Merkel’s misanthropic handling of the euro crisis has eroded the trust and respect of our European neighbors that took Germany more than 60 years to painstakingly rebuilt after the horrors of the second world war. There is no telling yet whether Merkel’s policies have permanently damaged the European project, a project of peace, economic cooperation, and solidarity among European nations and peoples. But the arrogant, boneheaded demeanor of high-level German government officials and the heartless treatment of Germany's Southern European euro zone partners has no doubt negatively affected Germany's image in Europe and beyond. 

All these issues need to be addressed in a national election campaign, and openly discussed in public fora. Instead: silence ! Meanwhile the press contributes to the lulling in of the voter by disseminating the news that the eurozone’s economy has started to grow again, omitting to mention that, on an annual basis, the growth rate is still negative (see "Europe's False Recovery") .... and while 20 million Europeans (12.1%) remain stuck in unemployment, Merkel tells the voters that the euro crisis is nearly over.

Bloomberg's editors are right in saying that "Germans deserve a franker discussion of their situation than the comforting homilies about thrift she [Merkel] delivers on the campaign trail. They need to hear that exporting their savings to the rest of the euro area contributed to the crisis [and] that the bailouts are helping German banks as much as [more than] the recipient countries".... (see "Front-Runner Merkel Owes Both Germany and Europe the Truth" and my post of June 30, 2013, "Economic Rebalancing in Europe requires Germany to reduce Inequality at Home").


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