Friday, November 28, 2014

The Threat of German Amnesia

BERLIN – Europe’s situation is serious – very serious. Who would have thought that British Prime Minister David Cameron would call on eurozone governments to muster the courage to create a fiscal union (with a common budget and tax policy and jointly guaranteed public debt)? And Cameron also argues that deeper political integration is the only way to stop the breakup of the euro.

A conservative British prime minister! The European house is ablaze, and Downing Street is calling for a rational and resolute response by the fire brigade.

Unfortunately, the fire brigade is being led by Germany, and its chief is Chancellor Angela Merkel. As a result, Europe continues to try to quench the fire with gasoline – German-enforced austerity – with the consequence that, in a mere three years, the eurozone’s financial crisis has become a European existential crisis.

Let’s not delude ourselves: if the euro falls apart, so will the European Union (the world’s largest economy), triggering a global economic crisis on a scale that most people alive today have never experienced. Europe is on the edge of an abyss, and will surely tumble into it unless Germany – and France – alters course.

The recent elections in France and Greece, together with local elections in Italy and continuing unrest in Spain and Ireland, have shown that the public has lost faith in the strict austerity forced upon them by Germany. Merkel’s kill-to-cure remedy has run up against reality – and democracy.

We are once again learning the hard way that this kind of austerity, when applied in the teeth of a major financial crisis, leads only to depression. This insight should have been common knowledge; it was, after all, a major lesson of the austerity policies of President Herbert Hoover in the United States and Chancellor Heinrich Brüning in Weimar Germany in the early 1930’s. Unfortunately, Germany, of all countries, seems to have forgotten it.

As a consequence, chaos looms in Greece, as does the prospect of subsequent bank runs in Spain, Italy, and France – and thus a financial avalanche that would bury Europe. And then? Should we write off what more than two generations of Europeans have created – a massive investment in institution-building that has led to the longest period of peace and prosperity in the history of the continent?

One thing is certain: a breakup of the euro and the EU would entail Europe’s exit from the world stage. Germany’s current policy is all the more absurd in view of the bitter political and economic consequences that it would face.

It is up to Germany and France, Merkel and President François Hollande, to decide the future of our continent. Europe’s salvation now depends on a fundamental change in Germany’s economic-policy stance, and in France’s position on political integration and structural reforms.

France will have to say yes to a political union: a common government with common parliamentary control for the eurozone. The eurozone’s national governments already are acting in unison as a de facto government to address the crisis. What is becoming increasingly true in practice should be carried forward and formalized.

Germany, for its part, will have to opt for a fiscal union. Ultimately, that means guaranteeing the eurozone’s survival with Germany’s economic might and assets: unlimited acquisition of the crisis countries’ government bonds by the European Central Bank, Europeanization of national debts via Eurobonds, and growth programs to avoid a eurozone depression and boost recovery.

One can easily imagine the ranting in Germany about this kind of program: still more debt! Loss of control over our assets! Inflation! It just doesn’t work!

But it does work: Germany’s export-led growth is based on just such programs in the emerging countries and the US. If China and America had not pumped partly debt-financed money into their economies beginning in 2009, the German economy would have taken a serious hit. Germans must now ask themselves whether they, who have profited the most from European integration, are willing to pay the price for it or would prefer to let it fail.

Beyond political and fiscal unification and short-term growth policies, Europeans urgently need structural reforms aimed at restoring Europe’s competitiveness. Each of these pillars is needed if Europe is to overcome its existential crisis.

Do we Germans understand our pan-European responsibility? It certainly does not look that way. Indeed, rarely has Germany been as isolated as it is now. Hardly anyone understands our dogmatic austerity policy, which goes against all experience, and we are considered largely off-course, if not heading into oncoming traffic. It is still not too late to change direction, but now we have only days and weeks, perhaps months, rather than years.

Germany destroyed itself – and the European order – twice in the twentieth century, and then convinced the West that it had drawn the right conclusions. Only in this manner – reflected most vividly in its embrace of the European project – did Germany win consent for its reunification. It would be both tragic and ironic if a restored Germany, by peaceful means and with the best of intentions, brought about the ruin of the European order a third time.

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    1. CommentedSeamus Martin

      "Continuing unrest in Spain and Ireland"?????? Whatever about Spain, I live in Ireland and have seen no unrest worth talking about.

    2. CommentedRaj Thamotheram

      We have another reprieve to do better.

      We should be glad that despite the AWFUL circumstances, only 7% of Greeks voted for the far-right.

      But a hungry man is an angry man and 7% is a lot of people and the symbolism of this news story - Black Shirts beating up a (Jewish) journalist whilst the public look on - quite haunting:

      We know how this happens, Germans better than most:

      “…when Germany went to the “Devil” in Nazism, people fell into it through their personal shadow. For instance, they didn’t want to lose their job because they were clinging to money. That was their personal shadow. But they then joined in with the Nazi movement for that reason and did much worse things than they would have done normally, under normal social conditions. So you can say the personal shadow is the bridge the collective shadow, or the open door to collective shadow. But the collective shadow comes up in those terrible mass psychoses. [It is] like there is one door that is not shut and there the devil can come in. If you know your personal shadow you can shut all the doors.”

      Dr Marie-Louise van Franz (Starts at 25:55)

      I hope some Germans with influence, and some people with influence over Germans like that, are reading and ready to act.

    3. CommentedH Gerken

      "Only in this manner – reflected most vividly in its embrace of the European project – did Germany win consent for its reunification." - the re-unification was a symbolic act, we didn't get back the core Prussian territory and its a reunification without Austria. However, the whole re-unification really didn't matter with a European perspective. Today we would be better off with three German states. Unification is a mere historical fetish of the late 19 century. In the course of the we made a very bad deal, Maastricht, and now have to pay again for the Euro. a vote of a German citizen counts much less in the EU than the vote of any other national. We are the Europayens, framed by financial fraudsters who ignored the austerity discipline. Not Brüning but Wallstreet caused 1929. Not Europe but Wallstreet caused the banking crisis. We have to fix the United States and the European regulatory regime. We owe the Europeans nothing but the need for rule and order. If they play their games and destroy our currency we should better crush them instead. Wallstreet has to tighten its rules. Bankers need strict rules for their financial operations and suffer the consequences when things go wrong. Eurobonds? No way, when they betray you once they have to restore their ability for satisfaction, their credibility first.

    4. CommentedC. Jayant Praharaj

      If Mr. Fischer believes that fiscal austerity is the reason for Europe's woes, and he does not present any detailed arguments to support this claim, he should also tell us what his views were about this 5 years ago, 4 years ago, 3 years ago etc. The policy space was limited then and it has become even more limited now in terms of the treasury bond market in Europe, debt to GDP ratios etc. Was he screaming this hard about the fiscal austerity thing, say, 3 years ago ?

    5. CommentedJim Basquiat

      Seems like the people commenting here would have little to lose in case of an economic breakdown. Their education and status would probably hepls them find opportunities in countries away from those agonising under the shock therapy they suggest...

    6. CommentedThomas Lesinski

      ...don't forget Mr. Cameron's very relevant comments on the need for the ECB to provide more stimulus.

    7. CommentedNuno Matos

      Very good article. It provides an interesting insight on the past while projecting the future. Indeed, the knowledge of History should be suficient for preventing us repeating the same mistakes all over again.

    8. CommentedGuenter Krause

      It is unfortunate that the economics behind the crises does not get more wide circulation though no one can fault Hans-Werner Sinn for not trying.

      The depression that Mr. Fischer laments is the economic instrument within the Euro which the cises countries need to cure their current account problems. They can start on an expansionary path again only with a currency of their own which will determine the value of their products (their exports) compared to the products they want from the rest of the world (their imports).

      No German government will be able to extract up to 50 Billion Euros a year (or more) for ever as texes to compensate for the trade imbalances of the crises countries (aka give the goods away as gifts to the needy citizens of the crises countries).

      Furthermore, history and economic game theory demonstrate that if you reward behavior like excessive consumption and indebtedness, you will get more of it. The people who are helped will start again and others will take a new look and change the structure of their behavior to the rewarded one.

      You can see this even within Germany, where within a federal structure with more power than brussels individual states can behave recklessly debtwize (the city state of Bremen) and with respect to tax collection (very few agents in the "tax police" in small German states)

      I hope that resposible voices will someday start to talk truth to the public and the people of Europe to prevent the functioning aspects of the European project (especially the long peace) to be infected or endangered by the silly and defective EMU.

    9. CommentedStefan Schuetzinger

      The man who threw stones on policemen in the seventiees, now wants to throw German money upon the European crisis. Will this help anyone ?

      Some fourty years ago, many policemen were injured seriously, but the taxi-driver made a great career by surfing the wave of the Green-party movement. He named himself the last rockstar-politician, what describes very well his provoking style.

      Fischer was Vice-Chancellor in the Schröder-government, which made important labour-market and pension-reforms. These reforms together with the wage restraint of the unions (German real wages and salaries were flat to negative during 2003 – 2009) are important fundaments of the current strength of the German economy.

      However, it was the Red-Green Government, which had Germany break the so called Maastrich-criteria (EU-Budget-deficit restrictions, price-stability,...), once “imposed” by Germans. The repeated violation of the Maastricht-criteria by a German government from 2002 through 2005, had no consequences other than the effect of the “bursting of a dam”. Who should care, if the Germans don´t care anymore ? And the criteria were broken in times when there was no need, but rather the opportunity to reduce deficits.

      To a high extent driven by the above mentioned reforms, the productivity of the Germany economy soured during the last decade, whilst the one of the countries in the periphery dropped significantly. The German real wages and salaries remained unchanged, but the Greeks, Italians, Spanish became richer and richer or in other words less and less competitive. Since the introduction of the Euro, the Southern-European not only enjoyed raising incomes, but interest rates were so low as never seen before. Who will travel to Greece, when comparable seaside-tourism costs so much less in Turkey ?

      And now Germany (I guess with other “Northern European countries”) should pay the price for this lost paradise ?

      In Europe we are at the Cross-roads: Either we learn from this crises, strengthen ourselves or all of us will end up in a disaster. The answer to the rather complex situation is not as easy as the EU-romantic Mr. Fischer believes: You can´t resolve deep structural and demografic problems, which we have in many European countries, by simply pouring German money into the system. When my kids are sick, I first and foremost believe in the strength of their nature, the sickness will mobilize their immun systems. But sometimes this is not sufficient and you need some medicine. The economy works in a similar way and comes in combination with the Schumpeter law of “creative distruction”. Thus, it will be important to find a good combination of reducing the costs of government, finding good answers for demografic problems and to reduce labour-market rigidities and at the same time strenghten innovation !

      Of the countries currently in focus of the markets, particularly the Italian and Spanish governments are working seriously to move their countries into the right direction. It is a difficult uphill battle for Monti and Rajoy, but I´m certain if Europe works together more closely, the European Union can still become a great success.

      I just don´t see Mr. Barrosos´and Mr. Rompuys´ passivity to vanish soon, Therefore, the European nations have to make a big step forward into more integration if we want to have a common future. Germany as the todays´ powerhouse of Europe can and will lead this process.

      We have to leave the distructive forces (Anti-German reflex vs the German superiority-complex, the Mafia and Berlusconism in Italy,..) behind us and release our common spirit of innovation. Europes´ future should be built on the long history of its´ inventitve talent (da Vinci, Galilei, Marconi, Siemens, Kepler, Watt, Newton, etc). We have to stop pouring our monies into rotten banks, inefficient governments, etc. but instead push for better education and more innovation and make Europe the most competitve continent in this world.

      Let´s build our future on our strenghts, we still have the best pre-conditions !

      I´d have expected the (former) green politician Fischer to push for green-investments to get Europe up to speed for the future, but dumping German money upon paralized countries, would be very stupid and would make the situation even worse.

    10. CommentedAnton Könen

      Fishers argumentation is both, careless and fragmentary. As a matter of fact Europe faces massive problems indeed. But Fishers consideration only starts were all of these problems are already known for a long period of time, not when they started. And he then concludes Germanys responsibility for Euro and Europe break up if they do not give up their economic pricipals that worked in Germany for decades. Isn` t that too easy? Greece is not suffering from an inefficent economy due to „German- enforced austerity“. They do have structural problems sice years, no competitive industries, low developed agriculture, inefficiant tax system s.o. Same or similar problems in Portugal. Spain is experiencing the worst property crisis in its history which led the leading national banks to „the edge of an abyss“. German enforced austerity? Fisher glamourises, as all europhile politicians do, europes economic capability and considers current problems to be temporarily. Virtualy, the overall unemployment rate in Europe is the highest since 15 years. Desastrous national dept situation in whole Europe. These problems and others are being built up since at least 10 years. All this due to German austerity? Fisher simplifies and missleads the situation in a irresponsible way. As a matter of fact Europe is experiencing the outcome of globalization. Printing money does not solve any of the problems, it just delays the consequences of them. The longer we wait to counteract the true problems the worse will be the economic result for the european nations. Fischer does not come up with a future vision in case that Germany would change it´s political course. What if we cover national debts by EZB supported by „Gemanys might and assets“. What kind of growth policy is he suggesting? It is loose talking, disguising Europes real problems. Instead he wears out the eternal delinquency of „Nazi Deutschland“ thereby prooving Thilo Sarrazin right who sees an connection between the Holocaust and the Euro(-responsability). It is kind of political fire raising what Joschka Fischer is doing. Agitating against Germany does not realy help to make the european thought more popular in the country which, for sure, contributed one oft he biggest shares to the developement of todays Europe. Political creativity and economic expertise would be of help, Mr. Fischer, not the cheap reeducation polemic you are using.

    11. CommentedPierre ratcliffe

      a bit of history may be useful to further understanding the challenge Europ is facing: Keynes "the economic consequences of the peace (1919)" revisited:

    12. CommentedUlrich Hofmann

      Well, this is Mrs. Fischers opinion! I don’t share it! Why? It’s a lot of assumptions, not really based upon an economically based background. Its more of the worn out summery of statements and treads that everything is going down the drain. No word upon the real sources of the problems – Economic Strength and Strength of the Currency needs to mach! If it does not match countries could have devaluated there currency. If this is not possible, only changes of wages AND reduction of Interest (cost) can help. An Economy which is not able to adjust those economical screws will not be able to survive. In the light of those facts, considering that those Countries are also not being able to set up new fields of business where they could compete with stronger Economies face the only possible Solution: Stepping out of the currency and having its own one, and having the most important tool back in the hands – mastering there on Currency Value. That is what weak Economies have to do, Mr. Fischer!

    13. CommentedMichael Griffin

      Is the breakup of the Euro always a bad thing, or just when done the wrong way? What if, instead of breaking the Euro apart into national currencies, it was broken apart into currencies based on region and/or economic strength? Given that one of the causes of the current crisis was the lumping of countries with radically different economies together under one currency, it might work better. It would certainly be more palatable to Euroskeptics than the closer union argued for here.

      Mind you, I'm neither a European nor an economist so I can't say this is THE best solution. I just think that it is a solution that I haven't seen discussed enough. I also wonder if useful lessons might be found in my own country, the US. Among individual states can be found at least as much diversity of economic base and prosperity as amongst the countries of Europe, yet a budgetary crisis in California does not trigger panic in New York. Is this the result of our own closer union? Am I just not paying close enough attention? Or are there details in our monetary and financial system that are worth examining and -possibly- imitating by European authorities?

    14. CommentedPaul A. Myers

      The eurozone will most likely hold together but Europe is going to evolve into two unusual zones--one powerful and dynamic and the other anemic and flaccid.

      The Greater German Economic Zone consisting of Germany (and its "provinces" of The Netherlands and Austria) and the non-euro countries of Denmark, Sweden, Poland, Czech Republic, Slovakia and extending east into the Ukraine and Romania and the Baltic Republics, etc. This zone will become one of the most dynamic and economically powerful economic blocks in the world economy.

      The non-German euro zone ("Subsidy Nation") led by France and Italy which will subsist within the eurozone based upon credit subsidy and fiscal transfers from Northern Europe. The ECB will evolve into something like the old General Motors Acceptance Corporation as a provider of credit support to the consumer-credit nations of the euro zone. Germany will negotiate on-going subsidy and credit arrangements with these countries because they are consumers of German goods and and providers of goods into the German economic machine. But they will be non-dynamic economic partners.

      But it is Germany and its northern and eastern neighbors not in the euro zone who will be the big economic producers in the New Europe. Warsaw will be the new Paris!

    15. CommentedPeter Mich

      Well, well ... we all know what to make of advise from taxi drivers (after all that's Mr. Fischer's professional background before living of taxpayers money as a politician or lobbying funds from BMW more recently).

      The article is the typical scaremongering that is voiced by euro-romantics. The fact is that the EU works just as well with Sweden, UK, Poland, Czech Republic etc who all have their own currencies, interest rates and are responsible for their own debts.. no war, no catastrophes, no misery.

      On the EU and fiscal unity, ... well the people of Europe don't want it. The Scots want to cede from England, Belgium wants to split and the Catalans want to cede from Spain, the northern Italians want to cede from the southerners. .. Europe is rich for its diversity and the only ones who want Brussels and centralization of power are politicians and their sponsors (lobbyists) as prices for their "favours" go up with the degree of power.

      Finally, the claim that combating a slowdown with more debt has worked based on the post Lehman efforts by the US and China ... is more than ridiculous. Germany has been an export powerhouse for over 50 years and had sizable surpluses even under the DM. Looking at today debt dynamics, it is too early to call it "all clear" on the US debt sustainability .... this is where markets are going to focus next after Europe - and its going to get very unpleasant when the foundations of our economic and financial systems will start showing the strains of too much debt.

      ...however, as with every politician the long run effects are hardly anything of Mr. Fischer's concern. As long as the checks from BMW and other lobbyist are coming steadily in the mail.

    16. Portrait of Christopher T. Mahoney

      CommentedChristopher T. Mahoney

      The problem with EU federalism is governance. Northern Europe cannot give a blank check to southern Europe with no strings attached. The providers of funds must have control over their expenditure, as Merkel and Weidmann have argued. There is no such infrastructure in Europe, no machinery for the thrifty to control the shiftless. Greece is a third world country that should have its own currency and be in an IMF program. Germany and Greece do not belong in the same country.

    17. CommentedJ. M.

      Don't expect a former politician to properly analyse the causes. What is worrying me more, is that we have the same speech from all kinds of economists, who are clearly overrated. One has to be epistemically truly limited to come with the same ideas ("more Europe" & inflation) in order to solve the problems described above by you.

    18. CommentedProcyon Mukherjee

      Buttonwoods's blog in The Economist on 24th and 25th May brought out an essential point that the Euro zone has not grown in the last five years, while Germany has not only grown, but is the world's star performer on all counts, unemployment, inflation, budget deficit with respect to 2007 numbers versus 2011 numbers, every advanced economy pales in comparison to their numbers.

      The world has chosen to chastise Germany, with a suggestion that Germany should pay-back by acquiring all the under-performing assets of the continent as a recourse to the advantage it enjoyed from the Euro monetary union.

      Now Mr. Fischer has gone one step further with references to last century's ills, which is rather preposterous.

      Procyon Mukherjee

        Portrait of Christopher T. Mahoney

        CommentedChristopher T. Mahoney

        The Federal Republic is a successful democratic country with a clean record. It doesn't owe anybody anything. Germany should seek its own interests.

    19. CommentedC. Jayant Praharaj

      In the previous comment, read " all that impressive when it comes to the effects of following the opposite of austerity. " instead of " all that impressive when it comes to following the opposite of austerity ".

        CommentedCharles Travis

        Germany's laudable economic performance does not necessarily require any degree of deference to their policy prescriptions in the current crisis.

        While it may be true that more of their European brethren should emulate the German model, this is neither a solution to an immediate content wide crisis nor a useful short term solution to the discrete ills of Greece et al.

    20. CommentedC. Jayant Praharaj

      One of the biggest mistakes one can do while analyzing an economic crisis is to assume that the crisis is exactly like some previous one. The current crisis in the Eurozone may have similarities with the Great Depression, but any astute policy maker needs to keep in mind that the crisis in unique in character, just like the Great Recession in the United States. When the Western economies were in crisis during the Great Depression, Russia was charting its own course. Today, China continues as a major engine of growth in the world despite the problems in the West. Clearly, everything is not the same. The Soviet Union then, China now. The Soviet model then, the new Chinese model ( or models ) now. Mr. Fischer would do well to keep in mind that the real estate bust and the construction sector bust that led to the current problems will lead to significant adjustment times. Mr. Fischer does not mention the effect of European Central Bank policy after the beginning of the global financial crisis and its effect on European economies. In fact, Mr. Fischer should probably demand a high level inquiry into ECB policy and its effect on the current crisis. As for fiscal austerity, Mr. Fischer would do well to remember that some of the crisis-ridden countries have very high public debt to GDP ratios and high fiscal deficit to GDP ratios. Clearly, these countries need to balance both the long-term aspects and the short-term aspects. The policy space is limited. The belated injection of liquidity by the ECB after carrying out a contraction in money supply will clearly show in the way economic events unfold in Europe. Blaming the problems on fiscal austerity, while ignoring the monetary and structural aspects, will lead to a wrong understanding of the problem. If Mr. Fishcer thinks that doing the opposite of austerity will lead to quick short-term recovery, he should look at the example of the United States. The United States, in addition to massive monetary expansion, kept the elitist Bush tax cuts in place and carried out other policy measures that are the opposite of austerity. While official statistics indicate recovery from the deep recession following the financial crisis, the risk of a double-dip recession in the United States still remains. And the unemployment scenario is even grimmer than the official GDP growth number scenarios. And the structural adjustments of the real estate and the construction industries still continue at a slow pace. And the public debt of the United States climbs at a brisk pace with each passing year, possibly setting the stage for a sovereign debt crisis in the United States about ten years from now, may be earlier. So, if the opposite of fiscal austerity has led to nothing spectacular in the United States and while the long-term picture gets worse with each passing day, why should Mr. Fischer expect anything different in the European countries ? Also, individual European countries, with economies that are much smaller than the United States, have their own bond markets to contend with. They do not have the same policy space when it comes to increasing the level of public debt. Is Mr. Fischer assuming that the opposite of austerity will necessarily improve short-term growth ? But the record in the United States has not been all that impressive when it comes to following the opposite of austerity. Each crisis is different and there are both similarities and differences between the various European countries. Also, Mr. Fischer does not go into the details of how the fiscal austerity policies that are being followed in some European countries has been or needs to be divided between the taxation side and the spending side. In fact, Mr. Fishcer's leftist credentials may well depend on what stance he takes about taxation and spending in fiscal policies in European countries. Clubbing the two together into one term called " fiscal austerity " won't do. Ignoring the long-term constraints won't do. Germans and Europeans will judge Mr. Fischer's leftist credentials not just on what he screams about the short-term, but also on how judicious he is about both the short-term and the long-term. Mr. Fischer needs to keep in mind that historically rare situations need innovative thinking at a much higher level of complexity. Mr. Fischer's harping on short-term austerity can seriously jeopardize the long-term prospects of the same leftist aims he claims to fight for. It seems some segments of the left in Europe needs to their historical role in the midst of these crises. The crisis cries for an astute balancing of the short-term and the long-term. Traditional leftist stances won't do justice to the broader leftist objectives in the current scenario. The German and European left needs to realize that politics, which is often dominated by short-term dynamics, and economics, which has its own logic and dynamics, can pull in different directions. Mr. Fischer may end up sacrificing long-term leftist objectives by stressing the short-term aspects of fiscal austerity too much. If Mr. Fishcer thinks that there is a solution where all the Eurozone countries can ensure long-term stability and long-term socio-economic objectives without going through any economic hardship like what fiscal austerity is causing, he needs to outline very specific policy measures that encompass fiscal policy, monetary policy, short-term public finance, long-term public finance, the labor market etc. Any attempt to ascribe problems to one aspect of fiscal policy while ignoring or paying scant regard to other aspects of fiscal policy and other aspects of economic policy will fail to convince and will not lead to any meaningful policy suggestions. Mr. Fischer's criticism of fiscal austerity in some European countries is not accompanied by any serious analysis of the short-term and long-term effects. This will not do any justice to any kind of aim, be it leftist, centrist or anything else.

        CommentedC. Jayant Praharaj

        Add " the inability of the ECB to prevent a rather prolonged dip in the growth rates of M1 and M3 around 2008-2009 in the eurozone. "

        CommentedC. Jayant Praharaj

        Read " Clearly, the somewhat belated injection of liquidity by the ECB in the latest phase and the ECB's helpless witnessing of a contraction in money supply around 2009 will show in the way economic events unfold in Europe. " in place of " The belated injection of liquidity by the ECB after carrying out a contraction in money supply will clearly show in the way economic events unfold in Europe. "

        Also, read " all that impressive when it comes to the effects of following the opposite of austerity. " instead of " all that impressive when it comes to following the opposite of austerity ".

    21. CommentedTristan de Inés

      Dear Mr. Fischer,

      it surprises me that you provide all the answers to Europe's problems without properly reflecting on the causes of why we are in this mess. It seems to me that the source of this crisis was never the lack of money, but the lack of control over money. Italy is a state of rampant corruption. Spain has invested billions into real estate that nobody can afford to buy. Greece has a hugely inflated, ineffective government that is not even able to collect citizens' taxes.
      These are financial black holes that suck up anything you throw into them. What exactly should improve by Germany providing guarantees to this broken systems, except artificially prolonging their lifespan even further?

      Nobody was doing their job. The banks were gambling with their customers money. The EU was happily pushing money around without regard where it actually arrives. The politicians were having parties with Gogo dancers, and the rating agencies were sleeping through everything, and have been spectacularly catching up lately.

      The problems are structural and institutional. Let's not support this with more guarantees and ever more money. It's about time these systems collapsed.