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, September 15, 2013

Analysis of Bavaria's state election results and its significance (or lack of) for Germany's national election

The state election results in Bavaria have little to NO significance for next week's national election in Germany as the conservative values and structure of Bavarian society is not representative of Germany as a whole. A leading German politician put it this way today: "the clocks are ticking differently in Bavaria", namely slower and more sedate since one cannot move very fast with a belly full of beer :-) [last part of the sentence = author's interpretation].

However, there is one clear pattern recently repeated in several German states: the liberal democratic party (FDP), champion of free enterprise and markets unconstrained by government regulation and interference, was unable to surmount the 5% minimum voting share and thus will not be represented in state parliament. If the same happens next week on the national level, it would mean that the current governing coalition of CDU/CSU and FDP could not continue and Merkel would have to look for another coalition partner. 

That's when it gets interesting: 
If the Greens have similar weak voting results as in Bavaria, we will get a new grand coalition of CDU (Merkel) and SPD (Steinbrueck) as the two parties together would have a stable, comfortable majority of 60% or more. If, on the other hand, the Greens were to attain strong results of 12% or more, it would still not be enough to form a stable coalition with the CDU, not to speak of substantial differences in their political programs. However, a Green showing of 12% or more PLUS 25% or more for the SPD plus 8% or more for the Linke together would be enough (45%) to truly threaten the formation of a new Merkel government. Because at that point the left wings of the SPD and the Greens would push their party leaders to beginn discussions with the Linke to form a progressive coalition instead of going into opposition of a third Merkel government. (see my post "The progressive option for Germany and the euro zone"). 

These discussions could divide the party members of the SPD and the Greens but, in my view, are necessary as one cannot simply ignore the democratic choice of nearly 10% of the German population that support the Linke and the power option they open up ---> see the discussion among leading German journalists and party members chez Anne Will:


I shall end my last post before next Sunday's national election by wishing each voter in Germany godspeed in making the right decision at the ballot box, for Germany AND for Europe as well. Let us remember that we, as descendants of a country that brought unimaginable horrors and suffering over the peoples of Europe, have a special responsibility to our European euro partners and neighbors. I pray that the good in us will prevail and NOT confirm the impression Thomas Mann had of Germans right after the end of world war II:

Alle meine Eindrücke und viele direkte Nachrichten deuten darauf hin, das sich in Deutschland wenig oder nichts geändert hat, dass es das alte Nazi-Land ist, überheblich wie je, frech gegen die Sieger, ich erfüllt, einzigartig, ohne jedes Eingeständnis von Schuld, unverschämt und nicht bereit, sich ‚umerziehen’ zu lassen. Es wäre dort ein so schlechtes Wohnen wie um 1930, dessen bin ich gewiss.“ (Thomas Mann, „Essays VI 1945-1950).

My imperfect translation of Thomas Mann's words: 
All my impressions and many direct news reports indicate that nothing much has changed in Germany, that it has remained the old Nazi country, arrogant as ever, insolent vis-à-vis the victors, narcissist, one-of-a-kind, without any confession of guilt, impertinent and not prepared to be re-educated. It would be a miserable life there like around 1930, of that I am certain. 

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