This is an excellent, MUST-READ blog, from Oxford economist, Simon Wren Lewis. Check it out!
via The view from Germany -Simon Wren Lewis – Mainly Macro.
I broadly endorse the views in this article and believe that Germany is applying political pressure on both the ECB and the European Commission.
How long will the European economic crisis continue?
Will German policy force the rest of Europe into deflation with a Japanese style lost decade?
Dr Alf and Simon Wren-Lewis are both right but we are already in a Japanese style “Year Zero” which will continue for at least a decade barring a World War or a big regional conflict.
The Euro needed £6 trillion gbp to be be fixed and only £1.6 trillion gbp was ever raised.
Angela Merkel went to China last year and every year since the Eurozone crisis started to ask the Chinese to bail out Europe.
They have refused to do anything other than lend money against secure assets and have pointedly said that “It is up to Europe to solve its own problems”.
Faced with that, Germany now wants other countries in Europe to bootstrap themselves to better economic health but without doing anything to assist the process.
We are now at stalemate, with Germany calling the shots, unless the rest of Europe finds it within itself to create its own salvation.