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.”


Friday, November 2, 2012

Germanic Economic Mythology - update Jan 2013

Since the 2012 release of Quentin Tarantino's Django Unchained the global movie audience is familiar with the story of Brunhilde and Siegfried (i.e. the German Nibelungen saga) as told by Dr. Schultz. It is my personal pleasure today to present to you the economic sequel of this saga:

The economic sequel features the current German approach to economic policy making based on what can best be described as Germanic Economic Mythology:

It serves four gods and goddesses, namely

1.) the Swabian housewife [most revered for her budgeting skills]
2.) financial markets [the evil twin of the Schwabian housewife]
3.) competitiveness [the mother of exports]
4.) free and flexible markets [esp. as applied to labor markets]

Assisting the gods and goddesses are the invisible fairies, namely
  • the confidence fairy which helps motivate financial markets to invest
    and
  • the invisible hand which guides market participants toward the equilibrium between supply and demand, even if it means poverty-level wages.
The gods and their fairies live in dark forests filled with dragons and zombies (zombie banks, the inflation zombie, cockroach zombies). While zombie banks are regularly fed with corporate welfare payments in the hope that they can be reanimated, Germans desperately fear that the inflation zombie comes back to life because it might turn into a fire-spewing dragon. That is why they prefer to beat it down even when it shows no signs of life at all.


Germans also fear another, even more horrible dragon with three ghastly heads: the public debt. Its largest head is the federal government's debt, including the obligations of the national pension fund. The other two heads include the regional debt and the debt of the communes.  

To slay the three-headed monster dragon public debt and prevent the inflation zombie from turning into a fire-spewing dragon, draconic sacrifices are made on the altar of the most powerful gods, the financial markets and competitiveness.The sacrifices preferred by the most powerful gods are wages and social welfare benefits such as unemployment benefits, health care benefits, public pensions and the like. If the three-headed monster dragon public debt is really large and endangers the lifestyle of the gods, the ultimate sacrifice may be required:  human dignity and human life.  

Statue of Siegfried slaying the dragon, Bremen.
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)