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.”


Thursday, August 16, 2012

Message to Mme La Chancelière: STOP this austerity non-sense, you are destroying the €uro !

With all due respect for all your hard work in the interest of Germany and the German people, may I remind you that as the leader of the largest economy of the €uro currency area, you are responsible for ALL the people in the €uro area, not just the Germans. So, instead of partying with Friede Springer* I suggest you take a trip to Greece to see the needless human misery caused by the austerity policies you insist upon. Have you no heart ? And where is your Christian conscience?

Assuming that you are well informed about the pain and misery in Greece and also Spain, your latest pronouncements out of Canada are infuriating and ignorant. Praising Canada for its budget discipline and for "not living on borrowed money" and recommending the country as "the right solution for Europe" (Bloomberg press, Aug.16) shows that - with all due respect - you don't know what you are talking about (see para below). I hope you listened to Prime Minister Harper when he said at the end of the news conference: "we can't loose sight of the necessity...to focus on the creation of jobs and growth." Take that home to Europe, Madame la chancelière.

According to IMF data, Canada's public debt has continued to grow in absolute terms. The only reason why it did not grow in relative terms is because economic growth recovered quickly after the financial crisis, in large part thanks to the huge stimulus in the United States, Canada's largest trading partner. But the key difference between Canada and Europe lies in Canada's well regulated banking sector. Canada's banks are sound and financial markets are stable because they did not allow private debt levels and the financial casino to  get out of hand as in Europe. As reported today in the Frankfurter Allgemeine Zeitung, European banks hold €1000 bln (Milliarden) of credits at risk of default, of which €196 bln are held by German banks. THAT is something you should worry about and do something about - the European banking sector should have been cleaned up long time ago.

While dilly-dallying on the truly urgent problem of the €uro currency area, you insist upon imposing your moronic austerity policies which only damage the economy and the social peace of the countries, punish innocent people who had nothing to do with the financial mess, and cause massive capital flight out of the euro zone.  

If you don't want to listen to me, listen to the internationally respected Co-CEO of PIMCO, Mr. Mohamed El Erian:

"IMF [austerity] programs so far have allowed the exiting of private capital as opposed to crowding in of private capital. And that is really problematic."..."Every time the IMF has supported a European country, it has been a signal for the private sector to completely disengage." 
(Bloomberg interview of Mohamed El Erian, August 13, 2012)

I suggest you read up on the history of IMF austerity programs in developing countries, Madame La Chancelière. Perhaps you will then understand the havoc you are wreaking in Europe.
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* Friede Springer is a former housewife-turned millionaire who inherited the Springer media empire from her late husband.
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