Opinion – The wacky economics of Germany’s parallel universe – Wolfgang Münchau – FT.com – Best Blogs Series

This was first published in November 2014.


This is an outstanding, must-read article by Wolfgang Münchau, published in the FT. Check it out!

via The wacky economics of Germany’s parallel universe – FT.com.

Having been close to this subject for over three years, I commend Wolfgang Münchau on his clarity of explanation.

Personally, I agree with the conclusions namely:

Germany is exporting ordoliberal ideology to the rest of the single currency bloc. It is hard to think of a doctrine that is more ill suited to a monetary union with such diverse legal traditions, political system and economic conditions than this one. And it is equally hard to see Germany ever giving up on this. As a result the economic costs of crisis resolution will be extremely large.

In recent months, I have been respectful of the German position that Southern Europe (including France) needs structural reform, like freeing up labor markets. I have been optimistic that with a little genuine structural reform from Southern Europe, Germany will countenance massive Keynesian stimulus in the form of investment. This is further supported by the European Commission’s changed position too.

Now I fear that I am close to admitting defeat. With Germany still at the economic helm in the Eurozone, it will be continued pain for all. Once again, the winners will be the privileged and the wealthy. If economic policies are unworkable, there will soon be social and political crises – this will include the increasing power of both the Far Left and the Far Right of the political spectrum.


How Spain Recovered from the Economic Crisis – SPIEGEL ONLINE

English: Map of Spain

English: Map of Spain (Photo credit: Wikipedia)

This is a powerful and insightful article from Spiegel. It’s a recommended read. Check it out!

via How Spain Recovered from the Economic Crisis – SPIEGEL ONLINE.

Spain, like Ireland and Portugal is a case study on the effectiveness of reform and austerity policies. Economically, Spain is becoming a model, with powerful, internationally competitive industries. Unfortunately, unemployment continues to be a deep problem in Spain. The current conservative government in Spain has been responsible for the strong policies, in contrast to the deep damage done to Spain by the previous socialist government.

Spain, of course, is contrasted to Greece where there has also been austerity but less real reform. Meanwhile, socialists in Spain are looking to Greece as an example.