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Rolf Englund IntCom internetional
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Tidigare nyheter - Earlier news
How the euro was saved
In the French seaside resort of Cannes
To the astonishment of almost everyone in the room, Angela Merkel began to cry.
the man sitting next to her, French President Nicolas Sarkozy, and the other across the table, US President Barack Obama
Peter Spiegel, Financial Times 11 May 2014
Europe’s Plan Z - The Grexit gamble
Part two of Peter Spiegel’s series from behind the scenes on how the euro was saved
"no single Plan Z document was ever compiled and no emails were exchanged between participants"
Financial Times 14 May 2014
‘If the euro falls, Europe falls’ - How the euro was saved - the third part
Angela Merkel was handed the piece of paper Barack Obama had just passed around.
“What is this?” the German chancellor asked. “I haven’t seen this before.”
A full-scale endorsement of a plan for the European Central Bank to protect eurozone countries when they came under attack from financial markets by automatically buying their bonds.
In retrospect, it marked the beginning of the final turning point in the crisis.
Peter Spiegel, Financial Times, 15 May 2014
Om man har en sedelpress går man inte i konkurs.
Det var varit det till synes självklara budskapet på denna blog ett antal gånger, första gången i november 2011.
Rolf Englund blog
The /German Constitutional/ court concludes that OMT violates the German constitution.
It accuses the ECB of making a power grab by extending its own mandate.
It says the scheme endangers the underpinnings of the eurozone rescue programmes.
Worse, it says OMT undermined deep principles of democracy.
Wolfgang Münchau, FT 9 February 2014
Tim Geithner recounts in his book Stress Test: Reflections on Financial Crises just how far the EU elites are willing to go to save the euro, even if it means toppling elected leaders and eviscerating Europe’s sovereign parliaments.
The former US Treasury Secretary says that EU officials approached him in the white heat of the EMU crisis in November 2011 with a plan to overthrow Silvio Berlusconi, Italy’s elected leader.
"They wanted us to refuse to back IMF loans to Italy as long as he refused to go," he writes.
Ambrose Evans-Pritchard, May 15th, 2014
Geithner told them this was unthinkable.
The US could not misuse the machinery of the IMF to settle political disputes in this way. "We can't have his blood on our hands".The revelations about EMU skulduggery are coming thick and fast. Tim Geithner recounts in his book Stress Test: Reflections on Financial Crises just how far the EU elites are willing to go to save the euro, even if it means toppling elected leaders and eviscerating Europe’s sovereign parliaments.
The former US Treasury Secretary says that EU officials approached him in the white heat of the EMU crisis in November 2011 with a plan to overthrow Silvio Berlusconi, Italy’s elected leader.
"They wanted us to refuse to back IMF loans to Italy as long as he refused to go," he writes.
Geithner told them this was unthinkable.
The US could not misuse the machinery of the IMF to settle political disputes in this way.
"We can't have his blood on our hands".
internetional.se/lehman911.htm#geitner
Don't blame Germany for the eurozone's travails, blame the euro itself
Germany didn’t set out to design an economic model that impoverishes much of the rest of Europe
Any attempt to set a single interest rate for 17 politically and fiscally sovereign nations is almost by definition doomed to failure.
Perpetual crisis is more or less guaranteed.
Jeremy Warner, Telegraph, 11 Nov 2013
Germany’s path to competitiveness: cutting the cost of labour.
Make no mistake; that has been the basis of the nation’s export success in the past dozen years;
and exports have been its sole consistent source of growth in that period.
But low wages are not the basis on which a rich nation should compete.
Adam Posen, president of the Peterson Institute for International Economics, FT 3 September 2013
Angela Merkel
After all, the German chancellor had grown up and reached adulthood in communist East Germany and
then risen to be not only the elected leader of a united Germany but Europe’s most respected politician.
She more than others understands that the price for unification in 1990 was
Germany’s acceptance of a common currency, a project unpopular with Germans
and agreed to only after assurances that the euro would be as strong as the revered dee mark.
MarketWatch July 11, 2014
SPIEGEL: How long can Brussels continue to impose austerity on countries like Spain and Greece,
a policy that the majority in those countries does not support?
Merkel: Bla, bla, bla
SPIEGEL: Once again, what makes you so confident that the countries in Southern Europe will subject themselves to your austerity mandate in the long run?
Merkel: Bla, bla, bla
SPIEGEL: Youth unemployment in Southern Europe is above 50 percent in some cases.
The austerity policies you have imposed are having disastrous consequences.
Der Spiegel 3 June 2013
It is economic logic for the eurozone to break up. But since when has economic logic played a part in the EU? The political will has shown itself to be stronger than even I imagined.
Perhaps this attitude can best be summarised by a conversation I had with Angela Merkel, the German chancellor. I asked her if it would not be liberating for Greece to default and devalue its currency to get its economy back on track, as Iceland did?
Her reply was chilling.
“No,” Merkel said. “If Greece left the eurozone then other countries would want to leave
and that would be the end of our European dream.”
Nigel Farage, leader of the UK Independence Party, MEP, Financial Times 16 November 2012
What she meant was, whatever the suffering, the euro must survive at all costs.
Full text---
"You know, it's not over until the fat lady sings, as the saying goes," Ms Lagarde told reporters
when asked if she expected a deal to be forged at the meeting next week in Brussels.
Telegraph 16 November 2012
A crucial meeting of eurozone finance ministers next week will be key to getting Greece "back on its feet", IMF chief Christine Lagarde said, as she cut short her visit to Asia to attend the talks.
The president of the Bundesbank was once the mightiest central banker in Europe. No more.
In the council of the European Central Bank, Jens Weidmann is just one of 23.
He has only one vote – the same as Greece.
Josef Joffe, editor of Die Zeit and a fellow of the Hoover Institution at Stanford University, Financial Times 4 September 2012
This is the story of a historical bet gone badly wrong. After the fall of the Berlin Wall, chancellor Helmut Kohl offered the D-Mark to President François Mitterrand in exchange for French acceptance of German reunification.
The Economist, The Merkel Memorandum och Plan B
Rolf Englund blog 10 augusti 2012
Germany's chancellor, Angela Merkel, who is among those forcefully pushing Greece to meet its ambitious savings targets,
said that her "heart bleeds" for the Greeks facing hardship as a consequence of swingeing cuts.(But)
Guardian, 17 September 2012
"I won't take part in pushing Greece out of the euro. That would have unforeseeable consequences," Merkel told students
during a discussion in Berlin's Neues Museum after she held a speech on the future of Europe - exactly 20 years after the day European Union leaders signed the Maastricht Treaty
Click here
https://krugman.blogs.nytimes.com/2017/05/27/germanys-real-sin/?_r=0
Tyskarna gick in i EMU med en övervärderad kurs
Efter återföreningsbubblan som lämnade dem med en svag ekonomi i ett halvt decennium.
De arbetade långsamt tillbaka konkurrenskraften den hårda vägen, genom att pressa löner och driver upp produktiviteten.
Det är helt förståeligt att de nu tror att Club Med kan och bör göra samma sak.
De är helt fel, naturligtvis, eftersom Tyskland kunde sänka relativlöner under
a) en global boom, b) mot andra EMU-stater som inflaterade C) och med räntor som var låga även under de svåra åren.
Ingen av dessa faktorer gäller Italien eller Spanien nu.
Ambrose Evans-Pritchard, 2 December 2011
The Germans entered EMU at an overvalued rate
after the Reunification bubble, leaving them in semi-slump for half a decade.
They slowly clawed back competitiveness the hard way, by squeezing wages and driving up productivity.
It is entirely understandable that they now think Club Med can and should do the same.
They are profoundly wrong, of course, because Germany was able to lower relative wages during
a) a global boom, b) against other EMU states that were inflating c) and with benchmark borrowing cost that stayed low even during the dog days.
None of these factors apply to Italy or Spain now.
Ambrose Evans-Pritchard, December 2nd, 2011
Few have realised the most dangerous feature of Emu: it has locked Germany into a seriously uncompetitive real exchange rate
Martin Wolf, Financial Times, March 31, 1999
Wolodarski och Tysklands framgång med Ådalsmetoden
Merkel ändrar grundlagen för att lättare flytta makt till Bryssel
Rolf Englund blog 2011-11-14
Ms. Merkel,Madame Nein until she has persuaded her colleagues to amend the euro-zone treaty
to permit Brussels (spelled B-e-r-l-i-n) to control the tax, spending and fiscal policy of euro-zone members.
Work on that final piece of the still incomplete architecture of a united Europe will begin at the next euro-zone leaders' meeting on Dec. 9.
At that meeting, the shark that is the euro zone will resume its forward motion.
Unless, of course, many of the member nations prefer leaving the euro zone to becoming part of what they have taken to calling the Fourth Reich.
Irwin Stelzer, director of economic policy studies at the Hudson institute, Wall Street Journal 28/11 2011
The problem, as European leaders understand it, is that the European Council (composed of member-states) routinely blinked when it came to penalizing violators, including Germany and France.
Last week's deal supposedly makes the sanctions "automatic" by shifting enforcement authority to, of all places, the European Court of Justice.
The notion that justices in Luxembourg would levy and enforce financial sanctions on an already-bankrupt member-state is obviously absurd.
The actual enforcement mechanism remains what it is-the Germans' willingness to pay.
Put bluntly, credible enforcement means German puppet regimes in Rome, Athens, Madrid, and perhaps Paris.
Michael S. Greve, Timbros storastyster American Enterprise Institute, December 13, 2011
While there aren't going to be German tanks in Athens or anywhere else, the Brussels deal does illustrate the deeper, constitutional problem with heaping yet more authority on a government-over-governments.
We’re not occupiers, says Greek task force
Horst Reichenbach, who was appointed leader of the task force in September, acknowledged in an interview he had
underestimated how much his German nationality would inflame local sensitivities and complicate his mission.
Financial Times November 25, 2011
"The challenge of our generation is to finish what we started in Europe, and that is to bring about, step by step, a political union,"
Merkel told the party congress in the east German city of Leipzig, CNBC 14 Nov 2011
Making the European Monetary Union, by Harold James, Harvard University Press
It was an aspiration first formulated in 1970 in the so-called Werner plan
Review by Tony Barber, Financial Times December 16, 2012
It is sometimes said that the euro’s creation was the price demanded by Germany’s European allies for supporting German reunification during the collapse of eastern European and Soviet communism. Reunification supposedly filled Europe’s Lilliputian nations with such fright that they scrambled for a means to tie down the new German Gulliver. The single currency fitted the bill.
In his careful reconstruction of the political, financial and bureaucratic processes that led to the euro’s launch in 1999, Harold James demonstrates that the trail towards European monetary union was, in truth, blazed long before anyone dared even imagine the anti-communist revolutions of 1989-91.
It was an aspiration first formulated in 1970 in the so-called Werner plan, named after Pierre Werner, a prime minister of Luxembourg.
Om Maastrichts föregångare, den s k Werner-planen ur boken
"Vår framtid i Europa" (MUF, 1971) av Jan Brännström, Rolf Englund och Claes-Henric Siven
"The challenge of our generation is to finish what we started in Europe,
and that is to bring about, step by step, a political union,"
Merkel told the party congress in the east German city of Leipzig, CNBC 14 Nov 2011
Vi har glömt det nu – och då det begav sig försvann alltsammans i allmän segeryra och Europaretorik.
Men Mitterrand fick Helmut Kohl att ge upp den tyska D-marken i utbyte mot den europeiska euron.
Richard Swartz, Kolumn DN, 24 november 2012
Svårt var det inte: Kohl tillhör den kanske sista generation av tyska politiker som utan reservationer sätter likhetstecken mellan tyska och europeiska intressen.
Euron – “tekniskt” illa genomtänkt i vad som kallas ett icke optimalt valutaområde – skulle bli Europas nya instrument att hålla Tyskland i schack.
While Germans celebrated the collapse of the Berlin Wall, Helmut Kohl and Francois Mitterand were at war over the consequences of a united Germany.
Secret government documents obtained by Der Spiegel appear to show that Bonn was forced to sacrifice the Deutschmark for reunification.
Presseurope, 1 October 2010
With link to Der Spiegel
The Price of Unity Was the Deutsche Mark Sacrificed for Reunification?
09/30/2010
Newly revealed German government documents reveal that many in Helmut Kohl's Chancellery had deep doubts about a European common currency when it was introduced in 1998.
First and foremost, experts pointed to Italy as being the euro's weak link. The early shortcomings have yet to be corrected.
Der Spiegel, 8 May 2012
It was shortly before his departure to Brussels when the chancellor was overpowered by the sheer magnitude of the moment. Helmut Kohl said that the "weight of history" would become palpable on that weekend; the resolution to establish the monetary union, he said, was a reason for "joyful celebration."
Soon afterwards, on May 2, 1998, Kohl and his counterparts reached a momentous decision.
Eleven countries were to become part of the new European currency, including Germany, France, the Benelux countries -- and Italy.
The euro was not a German project. Quite the reverse.
German voters wanted to hold on to their currency.
It was pressed by those, led by France, who wanted to break the D-Mark zone.
The euro was the price Helmut Kohl paid to Mitterrand to win his blessing for reunification.
Philip Stephens, Financial Times 18 April 2013
"The 50 Days That Changed Europe" explains how the EU grew
from a six-nation trade alliance to a 27-country behemoth with its own currency.
in Strasbourg on Dec. 9, 1989, after the Berlin Wall fell,
Germany agreed to monetary union in order to get President Mitterand to agree to German reunification
WSJ 23 Sept 2011
Mrs. Siebelink tells of one summit in Strasbourg on Dec. 9, 1989, after the Berlin Wall fell, which turned out to be the day that Germany agreed to monetary union in order to get French President François Mitterand to agree to German reunification.
But the difficulty of understanding the EU is that so many of its important days are not about history.
They're just about the EU and meetings and the normal tick-tock of an institutional bureaucracy at work
The European election results showed euroscepticism rising across most of Europe.
But the really shocking factor for the euro elites should have been the strength of the vote for the Front National in France.
For the EU’s history – and its future – turns on France.
President Mitterrand exacted agreement to the euro as the price of France’s support for German reunification.
This only made sense if it was believed that the euro was in French interests and against Germany’s.
This is not quite how things have worked out
Roger Bootle, 1 June 2014
Ville Kohl ha euron, som Rolf Gustavsson påstår, eller blev han tvingad?
Rolf Englund blog 7 oktober 2012
Twenty years after the Maastricht Treaty, which was designed not just to integrate Europe
but to contain the might of a united Germany,
Berlin had effectively united Europe under its control, with Britain all but shut out.
New York Times, 9 December 2011
Valutaunionens rötter, kommunismens fall för 20 år sedan kom att bli eurons definitiva startskott
Den franske presidenten Mitterrand ställde då ett ultimatum:
för att acceptera ett tyskt enande var landet tvunget att ge upp sin D-mark och gå med på ett stärkt EU-samarbete.
Tyskland ville egentligen inte ha en gemensam valuta, men accepterade samarbetet på villkor att det inte fick drag av en traditionell valutaunion.
Peter Wolodarski, Signerat DN 21 augusti 2011
Förbundskansler Helmut Kohl gick med på förslaget – landsmännens skepsis till trots – och ett fördrag undertecknades senare i den holländska staden Maastricht.
när medlemmarna vid upprepade tillfällen tillåter sig att bryta mot reglerna, och två av syndarna är Tyskland och Frankrike, då förlorar valutasamarbetet ram och stadga. Och i en finanskris blir centralbankens passivitet och bristen på ekonomisk politik snabbt fatal.
Den europeiska krisen handlar inte längre om att ge stöd till mindre länder som Grekland, Portugal och Irland.
Den har övergått till vad som händer med stora ekonomier som Spanien, Italien och Frankrike om marknaderna inte lugnas.
Eurokrisen är på väg att omfatta en tredjedel av hela valutaunionen eller 130 procent av Tysklands ekonomi.
Inte konstigt att börsen har fallit kraftigt på sistone.
Om Italien får problem, då innebär det också att franska och tyska banker som har skulder i Italien får problem
Charles Wyplosz, en av Europas ledande makroekonomer, pekar i likhet med allt fler på Europeiska centralbanken.
Det som akut krävs för att lugna marknaden är att ECB – som har obegränsad tillgång till euro – garanterar att inget euroland ställer in betalningarna
Angela Merkel, som har sin bakgrund i DDR, blev tysk förbundskansler som en konsekvens av den tyska återföreningen. Det vore en ödets ironi och en historisk galenskap om hon lät euron krascha.
Angela Merkel föddes i Hamburg i dåvarande Västtyskland i en prästfamilj.
Hon kom med sin familj som barn till staden Templin i dåvarande Östtyskland, där hon växte upp.
Läs mer här
Charles Wyplosz, professor of economics at the Graduate Institute in Geneva, warned that he saw parallels with 1980s-era Japan,
where so-called zombie banks weighed down with bad investments tried to improve their financial standing by simply withholding new loans.
HOWARD SCHNEIDER The Washington Post 20 August 2011
Mr. Trichet may be remembered “as a charming and talented leader who failed to grasp the gravity of the crisis,”
said Charles Wyplosz, a professor of economics at the Graduate Institute in Geneva.
http://www.nytimes.com/2011/08/06/business/global/jean-claude-trichet-builder-of-the-euro-ends-his-career-on-a-bitter-note.html
Helmut Schlesinger, was president of the Bundesbank when sterling was forced out of the European Exchange Rate Mechanism in 1992.:
- And I would say that either we get the United States of Europe, that is an actual political union, and then that political union gets its own currency.
But then it is no monetary union any longer, but the currency of that new state.
Robert Peston, BBC Business editor, 17 May 2012
Förbundskansler Helmut Kohl gick med på förslaget – landsmännens skepsis till trots – och ett fördrag undertecknades senare i den holländska staden Maastricht.
Thatcher lade oförblommerat fram sin uppfattning för den man som hade makt att hindra den tyska återföreningen.
Gorbatjov svarade att Sovjetunionen var väl insatt i problemet, och hon kunde vara lugn.
Hans land ville lika lite som Storbritannien se ett enat Tyskland.
Det var värdefullt att de båda kände till varandras syn på denna ömtåliga fråga.
Till råga på allt lät François Mitterrand och fransmännen ledningen i Moskva förstå att de var inne på samma linje.
Timothy Garton Ash, DN
Mitterrand forderte Euro als Gegenleistung für die Einheit
Aus bisher geheim gehaltenen Protokollen geht nach SPIEGEL-Informationen hervor: Erst die Bereitschaft der Kohl-Bundesregierung, ihren Widerstand gegen die Einführung des Euro aufzugeben, ebnete den Weg zur Einheit.
Der Spiegel 25/9 2010
Der frühere Bundesbank-Präsident Karl-Otto Pöhl wurde noch deutlicher:
"Möglicherweise wäre die Europäische Währungsunion gar nicht zustande gekommen ohne deutsche Einheit."
Den tyske förbundskanslern Helmut Kohl tog denna oro på allvar och accepterade tanken på valutaunionen, som ett sätt att förankra det nya starka Tyskland i Europasamarbetet.
Resultatet blev Maastrichtfördraget.
Inför hotet om ett sönderfall kan man enas om åtgärder som vanligtvis ökar EU:s överstatliga karaktär.
Mats Hallgren, e24 21/12 2010
More Very important articles about EMU and the Financial Crisis
For those willing and able to examine our present situation with a reasonably open mind,
a comparison of the recent history of the Spanish and German economies can prove illuminating
As Wolfgang Munchau pointed out in the FT yesterday, Germany entered the eurozone at an uncompetitive exchange rate and embarked on a long period of (quite painful) wage moderation and deep structural reform.
A Fistful Of Euros, 31 August 2010 with many nice charts
Merkel’s Christian Democrats shellshocked after Bremen elections
A disaster for Angela Merkel’s CDU. Coming in third behind the Greens is traumatic for the Christian Democrats
Eurointelligence 24 May 2011
Frankfurter Allgemeine Zeitung and Süddeutsche Zeitung report on the soul searching within the CDU which comes to the depressing conclusion that it is no longer able to win majorities in an urban population.
Right now Europe may be embarking on a path that could tilt the union away from economic liberalism,
risking a split and, ultimately, even a British exit.
Mrs Merkel seems to be sleepwalking into this danger.
The Economist print 10/3 2011
Merkel följer folkets vilja
Kärnkraften har ingen framtid
Aftonbladet ledare, signerad Katrine Kielos, 2011-05-31
”Kärnkraften har ingen framtid... den är inte heller lämplig som en övergångsteknologi, tvärtom står den i vägen för nya och innovativa lösningar samt en framtidsorienterad omstrukturering av energiutbudet.” Citatet kommer varken från en trädkramande Greenpeace-aktivist, eller en miljöpartist med idéer om att framtidens välstånd ska växa på postindustriella träd.
Det är IG Metall, de tyska metallarbetarnas mäktiga fackförbund, som uttalar sig.
Natten till i går enades förbundskansler Angela Merkels regeringskoalition om att alla tyska kärnkraftverk ska stängas 2022. För Merkel var det ännu en politisk U-sväng
(”vår kansler är inte gjord av stål, hon är gjord av pudding”, som Der Spiegel nyligen skrev).
Förra veckan beslutade den schweiziska regeringen att fasa ut kärnkraften till 2034. Samtidigt har planerna för att bygga kärnkraftverk i Italien stoppats. Likaså i Thailand.
I Sverige sitter däremot en centerpartistisk miljöminister och beklagar den tyska avvecklingen.
Pakten löser inte eurons problem
Fredrik Reinfeldt vill inte uttala sig, och precis som statsministern påpekade: vad är det han ska uttala sig om?
Det finns inget papper och inga detaljer nerskrivna än. Men faktum kvarstår: Tysklands Angela Merkel och Frankrikes Nicolas Sarkozy föreslår en ”fransk-tysk konkurrenspakt” för eurozonen.
Allt ska vara bestämt om drygt en månad och nej, det finns inget papper.
Aftonbladet ledare, signerad Katrine Kielos, 12/2 2011
Någon verklig plan för hur man ska utjämna obalanserna inom EMU finns inte. Den underliggande politiska analysen handlar om att eftersom finanssektorn har orsakat krisen, så ska vanliga löntagare betala och förslaget går långt in och petar i nationella angelägenheter som kollektivavtal.
Skulle det genomföras är det naturligtvis ännu svårare att se ett euro-medlemskap för svensk del.
Katrine Kielos hos Aftonbladet
zc
Italy’s debts to European Central Bank near €500bn
Germany’s Target 2 surplus is on track to reach €1tn.
FT 9 July 2018
Germany even gave up its fabled deutschmark, a totem of hard-earned postwar affluence,
to forge a monetary union and satisfy French and British fears over its post-reunification muscle.
Bloomberg 27 June 2018
...
In Strasbourg on Dec. 9, 1989, after the Berlin Wall fell,
Germany agreed to monetary union in order to get President Mitterand to agree to German reunification
WSJ 23 Sept 2011
Germany is the largest guarantor of the European Central Bank’s credit default insurance, known as the OMT,
and provides by far the largest stock of “target” overdraft credit to other European countries, currently €956bn.
Hans-Werner Sinn FT 27 June 2018
Fortunately, Ms Merkel does not endorse a common deposit insurance scheme
ECB should abolish its OMT program – which, according to Germany’s Constitutional Court, does not comply with EU treaty law anyway
Hans-Werner Sinn, Project Syndicate 22 October 2014
Germany increased its competitiveness
by keeping wage growth muted in the worst years of the global financial crisis.
Deutsche Welle 19 june 2018
It managed to push unemployment to record lows, but this came largely through the creation of low-paying, low-skill jobs, resulting in a decline in labor productivity, the researchers insisted.
...
Germany’s path to competitiveness: cutting the cost of labour.
Make no mistake; that has been the basis of the nation’s export success in the past dozen years;
and exports have been its sole consistent source of growth in that period.
Adam Posen, president of the Peterson Institute for International Economics, FT 3 September 2013
The euro may be approaching another crisis.
Italy, the eurozone’s third largest economy, has chosen what can at best be described as a Euroskeptic government.
This should surprise no one.
Joseph E. Stiglitz, Project Syndicate 13 June 2018
EU gör Europa till en krutdurk
Unionen slits just nu åt olika håll. Alternativt på god väg att förvärra situationen.
EU-fantaster applåderar Macrons imperiedrömmar, men de skulle bara öka bara de klyftor som öppnat sig mellan öst och väst, syd och nord. Problemet är att ingen verkar kunna formulera alternativ med politisk kraft.
Det enda som kommer är lite mildare varianter av Macronmodellen.
Johan Hakelius Fokus 4 juni 2018
EU har i drygt tjugo år målmedvetet valt en strategi som går ut på att stänga alla nödutgångar.
Priset ska göras så högt att ingen vågar backa.
De enda valen ska vara att låta nationalstaterna smälta samman, eller att kasta sig handlöst ut i en avgrund, utan synlig botten.
The head of Germany’s central bank Jens Weidmann, who is seen as a leading candidate to become the next president of the ECB,
has taken aim at plans for creating new eurozone funds to help crisis-hit countries, urging governments to instead make greater efforts to put their finances in order.
FT 5 June 2018
ECB president Mario Draghi last month called explicitly for the eurozone to equip itself with “an additional fiscal instrument to maintain convergence during large shocks, without having to overburden monetary policy”.
Merkel Teaches Macron the Art of the Possible
This is a minimalist agenda but, unlike Macron’s, it’s detailed and actionable.
It’s also largely in line with the European Commission’s ideas.
Leonid Bershidsky Bloomberg 4 June 2018
Germany’s finance minister’s obsession with surpluses will damage EU neighbours
Germany has been running current account surpluses of around 8 per cent for the past couple of years.
Wolfgang Münchau FT 6 May 2018
Mr Scholz’s ambition is to push the budget into a surplus of 1 per cent of GDP or higher.
Such a surplus would, over time, eradicate all public debt.
At that point Germany will have reached ordo-liberal utopia: it will have become like Nicolae Ceausescu’s Romania,
which boasted a surplus of $9bn in 1989, just before the dictator was overthrown.
The Germans made a choice. They will get what they voted for. But the policy will affect millions of people who did not have a vote because the budget will set the path for the rest of the eurozone.
U.S. Trade and Current Account Deficit
Mr Macron has made a big bet on persuading Germany to take the next leap towards “ever closer union”,
in particular by agreeing to a eurozone budget and finance minister.
Gideon Rachman FT 30 April 2018
Yet the undoubted warmth felt towards Mr Macron in official Berlin has not proved enough to get Germany to move towards him. The suspicion that the Macron plan is just a fancy way of getting German taxpayers to fund an over-extended French state remains powerful and prohibitive
Central Europe looks even worse. The French president has led the way in condemning “authoritarian democracy”, an unmistakable reference to the current governments of Hungary and Poland.
His frankness is welcome and bold. But it is not winning many friends in central European chancelleries.
The one part of the EU where Mr Macron gets full-throated support is Brussels. In the corridors of the European Commission, the French president is regarded as a hero.
Treaty Change
A snub to Emmanuel Macron ahead of the French president’s trip to Berlin this week
Ms Merkel endorsed the idea of turning the European Stability Mechanism, the eurozone’s financial rescue fund, into a regional version of the IMF.
But she said it would have to be created through treaty change.
FT 17 April 2018
Ms Merkel does not say “no” to eurozone bonds. She says: “Not without treaty change.”
The German constitutional court in Karlsruhe would never allow Germany’s sovereign guarantee to be given to its eurozone partners without them submitting to effective and centrally budgeted discipline.
Financial Times 31 May 2012
Heinrich Brüning
Popular mythology in Germany has it that the Weimar hyperinflation of 1922-23 led directly to the rise of Hitler. This is not true.
Frances Coppola 31 August 2014
Martin Schulz calls for ‘United States of Europe’
German SPD leader says EU member states must sign up to a federal union or leave the bloc
FT 7 december 2017
Germany risks boom-bust havoc as zero rates cause overheating
Ambrose Evans-Pritchard, 24 November 2017
Germany’s council of ‘Five Wise Men’ issued a stern rebuke to the ECB earlier this month over its loose money habits. The danger is not just the “risk of excessive asset prices” but a more insidious process of “fiscal dominance” where the high-debt states become so dependent on monetary coddling that the ECB dares not tighten policy in the future. This is a classic central bank ‘debt trap’.
Professor Richard Werner, a German economist from Southampton University, said zero rates are fatal for Germany.
“We’re are going to have a massive misallocation of resources and a property bubble just like Japan in the late 1980s. The negative interest rate policy and bond purchases are disastrous,” he said.
Germany digs in heels as world anger mounts over its toxic trade surplus, the world’s largest in absolute terms
Ambrose 18 January 2018
The Bundesbank, the finance ministry, and the Council of Economic Experts, said Germany requires huge savings to prepare for an ageing crunch and a future collapse in the trend rate of economic growth, even if its current policies are distorting the global economic system.
Maury Obstfeld, the IMF’s chief economist, said Germany’s current account surplus – 8.5pc of GDP, and the world’s largest in absolute terms at almost $350bn (£252bn) – is 4.5 percentage points of GDP beyond what can be justified by demographic arguments.
The currency claim may raise eyebrows in Washington, where some suspect that the European Central Bank’s negative interest rates (-0.4pc) are a disguised way to hold down the euro – bad etiquette for a currency bloc running a surplus near $430bn, three times that of China.
Basil Fawlty’s “Don’t mention the war!” has given way to something nasty:
non-German macroeconomists over the euro and global reflation — with epithets like “ordo-liberal” and worse flying around.
Former IMF staffer Peter Doyle, FT Alphaville 17 October 2017
Well, the preferred German take on the crisis at least has the merit that it requires no such rethinking of economics: indeed, emphatically the opposite. It says that the “three looses” — fiscal, monetary, and financial — spawned the crisis.
And the MIT gang and their pals, having blessed a little symbolic Basel III regulatory jiggery-pokery, now say we all must double-down on the other “looses”: fiscal and monetary. i.e., the cure is, pretty much, a lot more of the same things that generated crisis in the first place!
Thus, Mr Schäuble has just spent his valedictory appearance at the IMF annual meetings wishing everyone a hail and hearty farewell while prophesying doom.
At this point, à la Alan Beattie, you may be inclined to hurl your favourite Martin Wolf broadside or Krugman “sadomonetarists” blog at “those #### Germans”.
De ekonomiska principer som kom att bestämma västtysk ekonomisk politik redan under 1950-talet gick under benämningen "ordoliberal ekonomi".
Principerna för denna tankeinriktning utvecklades först av professor Walter Euken vid Freiburg universitetet.
Läs mer här
Germany overtakes China as largest surplus economy, IMF data show
Germany ran a current-account surplus of $289bn, or 8.3 per cent of GDP in 2016
while China’s fell to $196.4bn, or 1.7 per cent of GDP.
The US had a current-account deficit of $451.7bn, or 2.4 per cent of GDP.
FT 28 July 2017
How hard it will be for France to replicate Germany’s transformation
The Economist 27 May 2017
The popular narrative of the German turnaround begins with the “Hartz reforms” — enacted from 2003 to 2005.
They transformed a wildly generous system of unemployment and welfare payments, which allowed some workers to collect indefinite benefits equivalent to about half their previous salary, into one which paid fixed amounts for a limited time.
Growth in employment soared, but growth in total hours worked did not.
To a great extent, Germany redistributed working hours rather than created new ones.
Though wages for the better-paid climbed rapidly, especially in manufacturing, they fell for the lowest-paid.
France’s disenfranchised may end up feeling even more alienated. If so, the euro zone may suffer another existential crisis,
this time possibly terminal.
Efter återföreningsbubblan som lämnade dem med en svag ekonomi i ett halvt decennium.
De arbetade långsamt tillbaka konkurrenskraften den hårda vägen, genom att pressa löner och driver upp produktiviteten.
Det är helt förståeligt att de nu tror att Club Med kan och bör göra samma sak.
De är helt fel, naturligtvis, eftersom Tyskland kunde sänka relativlöner under
a) en global boom, b) mot andra EMU-stater som inflaterade C) och med räntor som var låga även under de svåra åren.
Ambrose Evans-Pritchard, 2 December 2011
The Hartz IV reforms did not raise productivity
The legacy of Hartz IV is a lumpen-proletariat of 7.4m people on “mini-jobs”, part-time work that is tax-free up to €450.
This flatters the jobless rate, but Germany has become a split society, more unequal than at any time in its modern history.
A fifth of German children are raised in poverty.
Ambrose Evans-Pritchard 8 Oct 2014
Germany’s path to competitiveness: cutting the cost of labour.
Make no mistake; that has been the basis of the nation’s export success in the past dozen years;
But low wages are not the basis on which a rich nation should compete.
Adam Posen, president of the Peterson Institute for International Economics,
FT 3 September 2013
Ms Merkel said that the EU should not be afraid of treaty changes
“I would be ready to do this, but first we will work on what we want to reform.”
FT 15 May 2017
Mr Macron, visiting Berlin the day after his inauguration, said that for France, too, treaty change was no longer “taboo”.
In 2016, Germany ran a current-account surplus of roughly $ 297 billion, or 8.6% of GDP
Changing the exchange rate would not diminish the incentive for Germans to save.
In the current European environment of near-zero interest rates, there’s little risk that additional public investment will crowd out private investment.
Barry Eichengreen, Project Syndicate 14 May 2017
If a man as enthusiastic about the European project as Mr Macron is ignored /by Germany/,
Marine Le Pen and the death of the European project wait in the wings.
That would be a disaster for Germany.
Martin Wolf FT 9 May 2017
Germany’s trade surplus is a threat to global stability
Amounts to 9 pc of GDP.
Measured by capita, it is roughly three times the size of the Chinese trade surplus
Matthew Lynn, Telegraph 15 April 2017
In early February, Germany announced a new record trade surplus: $281bn, versus $210bn for China.
Peter Navarro, Mr Trump’s chief trade adviser, has accused Germany of exploiting the “grossly undervalued”
implied Deutschmark exchange rate to the detriment of both its European neighbours and the US.
Effectively he is saying that Germany has gamed the whole European project in order to ensure extreme competitiveness for German exports.
Whilst the German plebiscite may not appear so immediately headline worthy as the elections in France, the outcome could be equally binary for the fate of Europe.
U.S. Trade and Current Account Deficit
Either political integration catches up with economic integration, or economic integration needs to be scaled back.
As long as this decision is evaded, the EU will remain dysfunctional.
The Germans, eager to gain France’s agreement to German reunification, went along.
Dani Rodrik, Project Syndicate 14 March 2017
One of the defining characteristics of the Trumpites is that they are locked in the 1980s.
They believe that the Euro is an invention by the Germans to pursue higher exports by stealth.
But if that were the kind of tactic that Schaeuble were pursuing,
he would answer his American critics by denying that Germany’s imbalance is at all relevant.
Adam Tooze, 6 February 2017
He would take cover behind the Euro. And he would say that what matters from the US point of view is not its imbalance with Germany but its trade deficit with the Eurozone as a whole.
This is tiny (c. $ 100 bn), especially when the size of the two economic blocs is considered.
Indeed, if the germans were the stealth mercantilists that we generally take them to be, they would be asking Washington to stop counting the German trade surplus at all. The Eurozone balance is the only thing that should matter.
Adam Tooze holds the Shelby Cullom Davis chair of History at Columbia University and serves as Director of the European Institute. He is currently at work on a history of the global financial crisis 2008-2018, which will appear in time for the anniversary in September 2018.
Why are German banks the only ones backtracking on integration?
One possible reason is that domestic financial authorities, skeptical about the euro’s future, have instructed banks to cut their exposure to the rest of the eurozone.
German banks received €239 billion ($253 billion) in state aid between 2009 and 2015.
Federico Fubini, Project Syndicate 30 January 2017
Trump has (mainly) got it wrong about Germany manipulating the euro
The country has amassed €1.5 trillion in net foreign assets (half of this through poorly secured intra-ECB Target-2 lending)
David Marsh, MarketWatch Feb 6, 2017
Germany trade surplus of nearly $300bn outpacing China by more than $50bn
Schäuble blames ECB for euro that is ‘too low’ for Germany
FT 5 February 2017
Is Germany a Currency Manipulator?
Will the administration call for Germany’s exit from the euro?
Jeromin Zettelmeyer (PIIE)February 1, 2017
Jeromin Zettelmeyer, senior fellow at PIIE, is a former director-general for economic policy at the German Federal Ministry for Economic Affairs and Energy.
As a matter of strict objective fact, Donald Trump’s trade guru is correct.
Germany is the planet’s ultimate currency manipulator.
Ambrose, Telegraph 1 February 2017
“currency manipulator” ? - definition in the Trade Facilitation and Trade Enforcement Act of 2015, that Obama signed...
Mish 2 February 2017
Eurointelligence explains
krugman.blogs.nytimes.com/2017/02/01/germany-the-euro-and-currency-manipulation
As a matter of strict objective fact, Donald Trump’s trade guru is correct.
Germany is the planet’s ultimate currency manipulator.
Ambrose, Telegraph 1 February 2017
Germany is using a “grossly undervalued” euro to exploit the US and its EU partners,
Donald Trump’s top trade adviser has said in comments that are likely to trigger alarm in Europe’s largest economy.
FT 31 January 2017
Peter Navarro, the head of Mr Trump’s new National Trade Council, told the Financial Times
the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main partners.
IMF insists on debt relief, but Germany resists.
Germany trapped in the lie that Greece is solvent,
which is what their own backbenchers were told.
Without that lie, Greece would no longer be a eurozone member.
The IMF and calling Berlin’s bluff over Greece
Wolfgang Münchau, FT 22 May 2016
All of Europe’s problems - the flood of Syrian refugees, the euro crisis, Vladimir Putin’s belligerence,
the euro zone’s anemic growth, Eastern Europe’s drift toward rampant nationalism, Brexit - keep landing in Angela Merkel’s lap.
Bloomberg 18 May 2016
Germany’s chancellor has usually found some way to cope, most obviously by kicking each problem down the autobahn.
But she lacks the power (and too often the inclination) to lead Europe, while her partners, even when they don’t obstruct her, do very little to help.
So the problems drift, and frustration in Berlin mounts.
The European Central Bank has come under renewed pressure in Germany,
after a group of academics and business people filed a complaint at the country’s highest court
over the monetary policymakers’ mass bond-buying programme.
FT 16 May 2016
Mario Bothers: Germany Takes Aim at the European Central Bank
- In hardly any other euro-zone country is the financial investment sector so dominated by savings accounts and insurance policies.
It is mostly life/retirement insurance policies that are suffering. Insurance providers have primarily invested their customers' money in sovereign bonds. But returns are extremely low, in part because of the massive ECB purchases of such bonds.
German money being thrown out of a helicopter: It would be difficult to find a more fitting image to show people that the money they have set aside for retirement may soon be worth very little.
A few weeks ago, Finance Minister Wolfgang Schäuble warned the ECB head that his ultra-loose monetary policies could "ultimately end in disaster."
Germany should leave the euro zone in order to save the union,
former Bank of England Governor Mervyn King, CNBC 21 March 2016
Keep an eye on Austria, with an increasingly unstable banking system,
and the Netherlands, with slow growth and a massively over-indebted household sector.
Don’t assume that Germany can sail through this crash unscathed either. Its economy has been driven by exports to China, worth $100bn a year.
If China slows down dramatically, we may well find that the German economy is a lot weaker than we thought.
Matthew Lynn, Telegraph 24 Aug 2015
Unless Gordon Brown turned out to be right after all, and 'boom and bust' actually has been abolished, it was always going to come to a stop sometime. That’s how the market works
The eurozone was in a bad enough state already. But in a bear market, fresh cracks will emerge, just as they did in 2009 and 2010 in the wake of the last collapse.
When the French finance minister Mr Sapin arrived in Brussels at midday, he received a shock:
Wolfgang Schäuble, the German finance minister, was armed with a one-page paper advocating
a Greek “timeout from the eurozone” for “at least the next five years”
if Athens did not accept the bloc’s exacting conditions for a new bailout.
FT 17 July 2015
Weimar and Greece
Paul Krugman, 15 February 2015
Weimar, it’s never about the deflationary effects of the gold standard and austerity in 1930-32,
which is, you know, what brought you-know-who to power.
Är det tyskarna som är The Good Guys inom Euroland?
Rolf Englund 15 Februari 2015
Athanasios Orphanides, a former member of the ECB’s governing council, said it potentially broke EU rules.
“It is as if it’s accepted that the euro area’s modus operandi is to clear things with Germany,
and for the ECB to constrain its actions to what is best for Germany,” he told the Financial Times.
“This is inconsistent with and violates the [EU] treaty.”
FT 20 January 2015
The destruction of the Reichsmark’s value is an important historical lesson.
But missing from that narrative is the painful deflation that followed hyperinflation.
In 1923, at the height of the hyperinflation, 751,000 Germans were without work.
By 1932, as deflation began to bite, unemployment hit 5.6m.
Financial Times 18 January 2015
The European Court of Justice has declared
legal supremacy over the sovereign state of Germany, and therefore of Britain, France, Denmark and Poland as well.
If the Karlsruhe accepts this, the implication is that Germany will no longer be a fully self-governing sovereign state.
"This Union" - meaning the Union to which EU integrationists aspire
- is currently blocked by the German court, the last safeguard of our nation states against encroachment.
Ambrose Evans-Pritchard, 14 Jan 2015
What must change is the way in which nations are treated like wayward children.
People not just in the periphery, but in Italy and France, the euro’s second and third countries,
and the EU’s co-founders, are fed up with being dictated to.
It does not help when the orders themselves are wrong-headed,
as in the case of universally applied demand-destroying economic policies.
Financial Times editorial December 29, 2014
2015 must be the year when the eurozone’s most influential leaders lift their eyes from technocratic fixes to the wider horizons of politics.
That does not mean fiscal or political union.
If all the euro’s member states and, more importantly, their peoples,
were freely willing to take such a step, this newspaper would welcome it.
But the tolerance for further integration is at rock bottom.
This is due in part to the antagonising politics and contractionary policies with which the eurozone chose to confront the crisis.
It is also because of the overdone claim that “there is no alternative”.
The current path instead converges on a German model, not just in fiscal matters but more critically in the nature of structural reforms. Germany’s are credited with growth and employment, but they brought under-investment, precarious jobs and wage stagnation.
Top of pagePolicy makers remain wilfully blind to the reality that the debt problem is unresolved,
and that the eurozone’s outstanding public sector borrowings will never be repaid in full.
The West German economic miracle was launched from a clean balance sheet while the Allies remained heavily indebted.
John Plender, FT December 29, 2014
Some are born great, some achieve greatness, and some have greatness thrust upon ’em.
Germany did not seek the euro. On the contrary, it was a price others foolishly asked Germans to pay for unification.
German policy makers understood the political and economic implications of a currency union.
Those of almost all other would-be members did not.
Martin Wolf, FT December 9, 2014
The economic doctrines central to German conventional wisdom are those of a small open economy.
Debt restructuring must now be on the table, starting with Greece. Ireland, similarly, should be freed of the onerous burden of bailing out the foolish foreign creditors of its banks.
"The 50 Days That Changed Europe"
In Strasbourg on Dec. 9, 1989, after the Berlin Wall fell,
Germany agreed to monetary union in order to get President Mitterand to agree to German reunification
Wall Street Journal, 23 Sept 2011
“Be not afraid of greatness. Some are born great, some achieve greatness, and others have greatness thrust upon them.”
William Shakespeare, Twelfth Night
Germany’s policymakers deny the eurozone’s crisis-ridden countries a more active fiscal policy;
refuse to support a European investment agenda to generate demand and growth;
have declared a fiscal surplus, rather than faster potential growth, as their primary domestic goal;
and have begun turning against the European Central Bank (ECB) in the struggle against deflation and a credit crunch.
On all four counts, Germany is wrong.
Marcel Fratzscher, Project Syndicate 21 November 2014
Marcel Fratzscher, a former head of International Policy Analysis at the European Central Bank, is President of DIW Berlin, a research institute and think tank, and a professor of macroeconomics and finance at Humboldt University.
To be sure, Germany is justified in rejecting narrow-minded calls by France and Italy for unconditional fiscal expansion.
After all, fiscal stimulus can work only if it supports private investment and is accompanied by much more ambitious structural reforms – the kind of reforms that France and Italy are currently resisting.
The key to ending the European crisis is a stimulus plan that addresses deficiencies on both the supply and demand sides.
That is why Germany’s refusal to help find a way to finance the proposed European investment agenda – which, for a limited time, would fund productive private investment – is a mistake.
Equally problematic is Germany’s focus on maintaining a fiscal surplus.
The Germans have a name for their unique economic framework: ordoliberalism.
Wolfgang Münchau FT 16 November 2014
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