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This article is obviously proposing something that Germany would never agree to, but in doing so the article lays bare an important truth: the adjustments neces

by cs702 14y ago

This article is obviously proposing something that Germany would never agree to, but in doing so the article lays bare an important truth: the adjustments necessary to save the Euro zone should perhaps come from everyone -- including Germany. Along with Greece, Portugal, Spain, Italy and all other 'peripheral' Euro zone countries, Germany is partly responsible for the current crisis: it financed the consumption and housing booms in those other countries. Let me offer a poor analogy which I find insightful: Germany acted like a rich neighbor who irresponsibly lends a ton money to his poorer neighbors so they can throw a really costly, drunken, all-night-long party, and then demands to be repaid the next day without acknowledging that he knowingly made a really stupid loan. The main implication of the article: Germany is trying to force austerity and deflation unto the Euro zone's 'peripheral' countries, but the adjustment would be a lot easier and faster for everyone if Germany simultaneously forced profligacy and inflation unto itself. (A higher rate of internal inflation in Germany would have roughly the same impact as a revaluation of a newly reissued Deutsche Mark were the country to leave the Euro zone.)

deleted 14y ago
[deleted]
- cs702 14y ago
  jerf: I was deleting the old comment just as you posted this. I felt the substance of this comment deserved its own, separate thread. Sorry for any inconvenience this may have caused you.
o1iver 14y ago
Germany may have profited from the spending sprees of the southern nation, but it did not directly cause the problem. Lack of discipline is what caused the crisis. Germany passed difficult structural reforms in the 2000s and is now reaping the rewards, whilst the southern nations abused the availability of cheap money. Germany reformed and invested, whilst the southern nations didn't! And it is not like Germany was just sitting by doing nothing... That money going to Greece and Spain is coming from somewhere! German politicians are very hard at work keeping the German population from revolting about so much money being "transferred"! My personal opinion is that the correct way is austerity, but not like it is being forced unto Greece at the moment. The greek economy is in shatters as is, the current austerity measures are not helping. I think the solution is that Germany should lend Greece way more money than currently so that they can build up their economy, whilst enforcing structural and governmental reform (ex: taxes must be collected, bureaucrats fired, etc)... Finally the money should be paid back over the next 40 years, as the economy recovers.
- debacle 14y ago
  Germany has been exporting its inflation to other European nations since the inception of the Euro, and will continue to do so as long as it can.
  - nickik 14y ago
    You act like they degined it that way. In reality german was more or less forced into the Euro.
    - planetguy 14y ago
      How'd that happen? Why didn't it happen to the UK? Or Denmark?
      - nickik 14y ago
        It would be long story. Basiclly the DM stopped other contrys from devaluating (they had agreed to that). So most of all france wanted to get ride of it and have contoll over the euro. The would only vote for reunigicatin if germany agrees. This stuff is not well documented but it not a conspirecy theory either. I will update the post with some soures latter.
      - excuse-me 14y ago
        German politics is paid for by the manufacturing industry. They needed a weaker DM and a stronger Franc/Lira/Peseta to sell stuff. UK politics is paid for by the financial industry - they need more currencies to trade. A stable predictable and universal currency would kill the city. Denmark stayed out because it was forced to have a referendum and sensible people always vote against anything that politicians are all in favour of.
        nickik 14y ago
        Sorry not correct. Germany didn't want it. Im not sure about UK, I think they still have the pride of a I think they still have the pride of an empire. I know nothing about Denmark.
markokocic 14y ago
So, you are basically proposing that Germany should ruin its own economy just because some countries irresponsibly spent more money than they had, and are now in debt? That would make crisis even worse for everyone, and I can't see why Germany would do something like that. Just note a pattern. There are some countries that were spending more than they have, and those countries are in big problems. Just take a look at Greece, Italy, Ireland, and, to some extent Spain. Then, there are countries that didn't spend more than they were able to service, and they are doing fine. Take a look at Germany, Austria, Netherlands, Sweden, Slovakia, Poland. Then, there are some countries in between, that are neither too good, nor bad. It's easy to draw a conclusion what is the way out of crisis, and I hope Germany will be able to lead a way.
- excuse-me 14y ago
  Remember there is no such thing as 'Germany' in this case. There are German taxpayers who don't want to pay more tax/see their foreign holidays cost more/pay more for their mortgage. There are German banks who want back the money they lost in bad loans There are German politicians who are split between keeping the banks happy and not getting hung up on lamposts by the voters. -- just like every other country really.
  - danmaz74 14y ago
    Right - and add German exporters who don't want to double the Country's exchange rate.
    - excuse-me 14y ago
      Yes - it's easy to forget there are countries where manufacturing still has any relevance!~
- cs702 14y ago
  markokocic: when you say that some countries "spent more than they have," what do you mean? I ask because, with the exception of Greece, the governments of countries in the Euro zone's periphery were not profligate prior to the crisis. That's right, their governments were not profligate. Look at the data, not at the propaganda.[1] The private sectors of those countries, however, borrowed aggressively from the likes of German banks to finance unsustainable consumption and housing bubbles. And German bankers aggressively financed those bubbles. [1] Read this, for instance: http://www.cepr.net/index.php/blogs/beat-the-press/the-myth-of-profligate-euro-zone-countries http://www.cepr.net/index.php/blogs/beat-the-press/the-myth-...

by cs702 14y ago

deleted 14y ago

[deleted]

cs702 14y ago
jerf: I was deleting the old comment just as you posted this. I felt the substance of this comment deserved its own, separate thread. Sorry for any inconvenience this may have caused you.

o1iver 14y ago

Germany may have profited from the spending sprees of the southern nation, but it did not directly cause the problem. Lack of discipline is what caused the crisis. Germany passed difficult structural reforms in the 2000s and is now reaping the rewards, whilst the southern nations abused the availability of cheap money. Germany reformed and invested, whilst the southern nations didn't! And it is not like Germany was just sitting by doing nothing... That money going to Greece and Spain is coming from somewhere! German politicians are very hard at work keeping the German population from revolting about so much money being "transferred"! My personal opinion is that the correct way is austerity, but not like it is being forced unto Greece at the moment. The greek economy is in shatters as is, the current austerity measures are not helping. I think the solution is that Germany should lend Greece way more money than currently so that they can build up their economy, whilst enforcing structural and governmental reform (ex: taxes must be collected, bureaucrats fired, etc)... Finally the money should be paid back over the next 40 years, as the economy recovers.

debacle 14y ago
Germany has been exporting its inflation to other European nations since the inception of the Euro, and will continue to do so as long as it can.
- nickik 14y ago
  You act like they degined it that way. In reality german was more or less forced into the Euro.
  - planetguy 14y ago
    How'd that happen? Why didn't it happen to the UK? Or Denmark?
    - nickik 14y ago
      It would be long story. Basiclly the DM stopped other contrys from devaluating (they had agreed to that). So most of all france wanted to get ride of it and have contoll over the euro. The would only vote for reunigicatin if germany agrees. This stuff is not well documented but it not a conspirecy theory either. I will update the post with some soures latter.
    - excuse-me 14y ago
      German politics is paid for by the manufacturing industry. They needed a weaker DM and a stronger Franc/Lira/Peseta to sell stuff. UK politics is paid for by the financial industry - they need more currencies to trade. A stable predictable and universal currency would kill the city. Denmark stayed out because it was forced to have a referendum and sensible people always vote against anything that politicians are all in favour of.
      - nickik 14y ago
        Sorry not correct. Germany didn't want it. Im not sure about UK, I think they still have the pride of a I think they still have the pride of an empire. I know nothing about Denmark.

markokocic 14y ago

So, you are basically proposing that Germany should ruin its own economy just because some countries irresponsibly spent more money than they had, and are now in debt? That would make crisis even worse for everyone, and I can't see why Germany would do something like that. Just note a pattern. There are some countries that were spending more than they have, and those countries are in big problems. Just take a look at Greece, Italy, Ireland, and, to some extent Spain. Then, there are countries that didn't spend more than they were able to service, and they are doing fine. Take a look at Germany, Austria, Netherlands, Sweden, Slovakia, Poland. Then, there are some countries in between, that are neither too good, nor bad. It's easy to draw a conclusion what is the way out of crisis, and I hope Germany will be able to lead a way.

excuse-me 14y ago
Remember there is no such thing as 'Germany' in this case. There are German taxpayers who don't want to pay more tax/see their foreign holidays cost more/pay more for their mortgage. There are German banks who want back the money they lost in bad loans There are German politicians who are split between keeping the banks happy and not getting hung up on lamposts by the voters. -- just like every other country really.
- danmaz74 14y ago
  Right - and add German exporters who don't want to double the Country's exchange rate.
  - excuse-me 14y ago
    Yes - it's easy to forget there are countries where manufacturing still has any relevance!~
cs702 14y ago
markokocic: when you say that some countries "spent more than they have," what do you mean? I ask because, with the exception of Greece, the governments of countries in the Euro zone's periphery were not profligate prior to the crisis. That's right, their governments were not profligate. Look at the data, not at the propaganda.[1] The private sectors of those countries, however, borrowed aggressively from the likes of German banks to finance unsustainable consumption and housing bubbles. And German bankers aggressively financed those bubbles. [1] Read this, for instance: http://www.cepr.net/index.php/blogs/beat-the-press/the-myth-of-profligate-euro-zone-countries http://www.cepr.net/index.php/blogs/beat-the-press/the-myth-...