Mathew D. Rose: When European Politicians Cannot Read the Handwriting on the Wall
In the category political economy or maybe the politics of economics, this is a very good article. Worth reading! In short:
One thing is certain: The denizens of Europe, with the exception of the Germans, have lost faith not only in the confidence fairy and an EU economic recovery, but the EU as well. For many it has become a collection of corrupt politicians and quislings of the Germans.
…but probably they don’t. Just like the majority of Finnish politicians, they have a fantasy view of causes of the eurocrisis and don’t comprehend/allow any other interpretation. Many of the things Rose writes apply to Finland as well – although Finland doesn’t have a trade surplus anymore (we do know why). But the moralizing? Check. Export-obsession? Check. Weak domestic demand? Check. Infrastructure falling apart? Check. Local governments in financial trouble? Check. Similar view of the superiority of Finnish over foreign products? Check (true – in many fields Finland does have world-class products).
Read the whole thing. A summary could be: Germany is so obsessed with its surplus that it changes from a technology leader to a leader in cheap labour (aka working poor.) This will collapse at some point. But the section below shows the utter conservatism considering debts and debt responsibility. Ireland is Germany’s debtor’s prison! (sarcasm)
Following the crisis in 2008 of Ireland’s six domestic banks – these were private banks – German and French banks were dangerously exposed due to imprudent lending to these institutions. The Irish government was dragooned into accepting these private bank debts, probably saving the Germans and French financial institutes from a financial meltdown. It will be seen if the Irish will ever be able to repay these debts, an excessive burden, having increased the public debt by over threefold to 110 percent of GDP. Schäuble’s response to a query if making taxpayers stump up for the irresponsibility of the finance sector was simply: “If everyone sweeps in front of their own house then the whole neighbourhood will be clean”.
http://m.guardian.co.uk/world/2013/apr/22/eu-near-austerity-limit-barroso Heyhoo, a positive sound from Brussels. I would add that is mostly the timing of austerity which right now makes it so destructive. And what is debt-fueled growth? Firms sometimes have to borrow big to make new investments? Barroso surely not means that public investment and education etc. should be paid from a tax surplus?