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, November 11, 2012

Best-case economic scenario postponed

In my post "What do recent events mean for economic policy in the eurozone ? Part III" I defined the best-case scenario as a "new approach in economic policy", away from the current deflationary austerity toward a more humane, job-creating growth strategy, "with a completely different political coalition in Germany" and argued that the feasibility of such a scenario depended on the outcome of the primary of Germany's Green party.

Well, the Green party's primary results are in and suggest, unfortunately, that a U-turn in economic policy making in the eurozone is highly unlikely. Let me explain why:

Germany's Green party members have elected Jürgen Trittin and Katrin Göring-Eckhardt as their leaders for the 2013 parliamentary elections, two veteran politicians who during the last red-green government from 1998-2005 supported the economic policies of Agenda 2010: an employer-friendly, supply-side economic program of labor market reforms prepared by the global media conglomerate Bertelsmann Group and broadly supported by Germany's corporate interest groups (see my post: "Blueprint of labor reforms in Greece: Germany's Agenda 2010").

Katrin Göring-Eckhardt, a trained evangelical theologian without academic degree, career politician and Agenda 2010 supporter apparently does not see a conflict between the humanitarian values of the evangelical gospel and her support for the inhumane policies of Agenda 2010 which have thrown millions of German citizens into poverty and forced them into accepting menial jobs paying €1 an hour. Everybody can be excused for making mistakes, but the fact that she has not distanced herself from the inhumane Agenda 2010 policies, in my eyes, makes her untrustworthy and unelectable.

Trittin (a trained sociologist, career politician, and one of this year's invitees at the Bilderberg conference) is making some politically correct noises designed to attract progressive voters. Nevertheless, when push comes to shove, he would not shrink from making compromises with Germany's powerful corporate and financial 'elite' to gain and remain in power. While compromises are per se not objectionable, they are at a minimum questionable, if not criminal, with a German 'elite' that insists upon imposing its Schwabian housewife policies of deflationary austerity in the eurozone's Southern periphery, against all evidence that such policies throw the economies into a depression, worsen the debt ratios, and create a humanitarian crisis so severe that criminal charges have been filed against Ms. Merkel and the leaders of the troika for crimes against humanity.

Given that the only feasible alternative to a Merkel government in Germany is a red-green coalition led by a social (!) democratic chancellor candidate Steinbrueck who is currently engulfed in a controversy about his €1.5 million earnings from speaking engagements while many of his fellow party members barely make ends meet with yearly salaries of €25.000 (an amount that Steinbrueck received for just one speech), doesn't make me very optimistic for a positive change in economic policies in the eurozone.

Sadly,I guess the only viable alternative is to keep up the democratic pressure to force real change. As President Roosevelt said to the union leaders when they proposed plans to include in the New Deal: "I agree with you, I want to do it, now make me do it !" (FDR, 1932)
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