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German Bundesbank Opposes Euro Crisis Strategy - SPIEGEL ONLINE - 0 views

www.spiegel.de/...-crisis-strategy-a-852237.html german euro crisis strategy spiegel online
shared by Gene Ellis on 29 Aug 12 - No Cached
  • Gene Ellis on 29 Aug 12
     
    Good Der Spiegel article of late Aug 2012
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Bringer of Prosperity or Bottomless Pit?: Top German Economists Debate the Euro - SPIEG... - 0 views

www.spiegel.de/...-debate-the-euro-a-685018.html
shared by Gene Ellis on 09 Jul 12 - No Cached
  • No, of course not. Today, we live in a currency zone that, despite everything, is significantly more stable than where the dollar or yen are used. The euro has brought growth and prosperity to Europe.
  • Actually, the euro was a mistake with particularly serious consequences. A monetary union requires its members to pursue the same policies and be similarly productive. The so-called convergence criteria were meant to ensure that this would happen. But -- as the dramatic developments in Greece are now showing -- they didn't.
  • Unfortunately, our fears have become a reality. The monetary union was launched with real self-deception.
  • ...14 more annotations...
  • The euro was sold to us as a modernization program for Europe, and we were also told that it would push the Community toward stability. But, in reality, it has drifted apart and become a truly unstable entity.
  • The euro was sold to us as a modernization program for Europe, and we were also told that it would push the Community toward stability. But, in reality, it has drifted apart and become a truly unstable entity.
  • There is no reason why the euro should be coming under pressure. The decision to introduce it was smart and far-sighted.
  • thanks to the common currency, it's no longer possible, for example, to wage speculative attacks on individual currencies. This eliminates a key disruptive factor that massively destabilized markets in the past.
  • Still, thanks to the common currency, it's no longer possible, for example, to wage speculative attacks on individual currencies. This eliminates a key disruptive factor that massively destabilized markets in the past.
  • But that's exactly the problem! In the past, exchange rates served as a valve.
  • Starbatty: But that's exactly the problem! In the past, exchange rates served as a valve. Individual countries could control their economies by allowing their currencies to gain or lose value.
  • Today, there are two blocs within the monetary union: a strong currency bloc in the north and a weak one in the south.
  • SPIEGEL: What would happen if the old currencies were reintroduced in the euro zone tomorrow? Bofinger: It would be a catastrophe. The German mark would have to appreciate significantly -- I'd say by 10 percent to 20 percent. Everything that we've worked so hard to attain in terms of competitiveness would vanish overnight.
  • What would happen if the old currencies were reintroduced in the euro zone tomorrow? Bofinger: It would be a catastrophe. The German mark would have to appreciate significantly -- I'd say by 10 percent to 20 percent. Everything that we've worked so hard to attain in terms of competitiveness would vanish overnight.
  • SPIEGEL: Would it have been better if all countries in Europe had kept their own currencies? Starbatty: Yes. A community can't function when it's made up of unequal partners who are supposed to behave as equals. With the euro, Germany has created an artificial competitive advantage for itself, which has enabled us to conquer markets all over the world.
  • Starbatty: Yes. A community can't function when it's made up of unequal partners who are supposed to behave as equals. With the euro, Germany has created an artificial competitive advantage for itself, which has enabled us to conquer markets all over the world.
  • Since 1995, there have been almost no appreciable wage increases in Germany, partly as a result of pressure brought on from increases in subcontracted labor. Politicians have done everything to relieve employers of the burden of paying social security contributions because we fell into this strange panic, believing we weren't globally competitive. With our economic policies, we placed too much of a lopsided emphasis on exports.
  • Politicians have done everything to relieve employers of the burden of paying social security contributions because we fell into this strange panic, believing we weren't globally competitive.
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ECB Resisting Calls to Cheapen Euro as Currency War Rages - SPIEGEL ONLINE - 0 views

www.spiegel.de/...rrency-war-rages-a-882462.html
shared by Gene Ellis on 21 Feb 13 - No Cached
  • The central bank chief is coming under increasing pressure because he can't quite bring himself to embrace the concept of quantitative easing, the latest fashion in the world of finance. It involves central bankers engaging in the large-scale purchase of bonds issued by their governments and other securities, thereby injecting huge sums of money into the financial system. In this way, they hope to stimulate the domestic economy and keep their own currencies cheap, thereby strengthening exports.
  • The US central bank, the Federal Reserve Bank, has also been printing money to a previously unimaginable extent since the financial crisis. Calling its efforts QE 1 and QE 2, the Fed has pumped more than a trillion dollars into the US economy.
  • The country is in the process of "boldly rebuilding" monetary policy, Prime Minister Shinzo Abe declared. Indeed, the Japanese yen has lost 12 percent of its value against the dollar in the last two months.
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  • For years, China has defended its currency by pegging the exchange rate to the dollar, and the Swiss National Bank now only permits appreciation of the franc up to a certain limit, because investors have viewed the Swiss currency as one of the last safe currencies since the outbreak of the sovereign debt crisis in Europe.
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'Run For Your Lives': Printing Money with the IMF - SPIEGEL ONLINE - 0 views

www.spiegel.de/...of-last-resort-a-796280-3.html
shared by Gene Ellis on 21 Feb 13 - No Cached
  • Most European leaders have nothing against using the central bank's reserves as a source of financing, as became evident at the Cannes summit. Important politicians like European Council President Herman Van Rompuy and French President Sarkozy proposed making IMF "special drawing rights" available
  • It appears that the euro crisis is approaching its endgame. Many promises made when the common currency was introduced have already been broken. The initial stipulation that only stable countries be allowed in, for example, quickly proved illusory once Italy and Greece were accepted.
  • German taxpayers were also promised that they would never be held liable for the debts of other countries in the euro zone. But then came the first and second bailout packages for Greece and the European bailout fund.
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  • The question the German government now faces is whether to preserve the monetary union or have a stable currency.
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Bringer of Prosperity or Bottomless Pit? 'Putting the Virtuous in the Dock Rather than ... - 0 views

www.spiegel.de/...ebate-the-euro-a-685018-2.html
shared by Gene Ellis on 09 Jul 12 - No Cached
  • You should look at it more holistically. We wouldn't have been able to increase our exports if the other countries had behaved like us and had not increased their demand for an entire decade.
  • Excluding Greece from the union would be the completely wrong approach. Greece's problem is its inefficiency in terms of public finances. That can be corrected.
  • Starbatty: In my experience, speculators are only successful when political promises diverge from economic reality, as has become clear in Greece.
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  • In the German Council of Economic Experts, we proposed a consolidation pact, under which each country would be required to specify a fully verifiable path that it will follow as it puts its financial house in order. It wouldn't just be a solution for Greece; it would be for everyone.
  • And you seriously believe that would help? Following that approach, the Greeks would save themselves to death, just as the Germans did in the early 1930s under then-Reich Chancellor Heinrich Brüning. What you expect the Greeks to do is Brüning squared. The real problem is that Greece shouldn't have been accepted into the monetary union in the first place.
    • Gene Ellis
      Gene Ellis on 09 Jul 12
       
      An important point:  the role of German policy in allowing 1.3 million short-term workers into the labor market, and its role in lowering the tax on labor.
  • But such a pact would be circumscribed to helping countries help themselves.
  • But government debt is still growing considerably. Doesn't this also increase the risk of inflation? Starbatty: That's what I assume. Inflation would be an elegant means of reducing debt, and many academics are discussing this scenario. But it becomes truly problematic when government bonds eventually lose their status as a safe haven. If China or Japan arrive at this conclusion and sell their bonds, a bubble could burst that is far more dangerous than any other bubble. If that happens, markets will plunge, and interest rates will shoot up.
  • Likewise, when it comes to assistance, I think we have a clear legal framework, according to which neither any member state nor the entire Union can be held liable for the debt of another member state.
  • its 1.3 million short-time workers do not find regular employment again,
  • The European Central Bank would never, ever contemplate using inflation to eliminate debt.
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Leading German Economist Peter Bofinger: 'Germany Has a Vital Interest in Ensuring Iris... - 0 views

www.spiegel.de/...g-irish-solvency-a-729819.html
shared by Gene Ellis on 11 Jul 12 - No Cached
  • However, Irish companies and banks are very highly indebted to foreign banks -- three times more than the Greeks.
  • According to Germany's central bank, the Bundesbank, German banks are Ireland's biggest creditors, to the tune of €166 billion ($226 billion), and that includes hundreds of short-term loans to Irish banks. How dangerous is the Irish crisis for Germany?
  • The situation is very dangerous. The German government has a vital interest in ensuring the solvency of the Irish state and its banks.
  • ...3 more annotations...
  • Well, let's put it this way: If a grandmother is lying in hospital and her family is already looking for a headstone -- does that create trust?
  • The arrears that Irish debtors owe to foreign banks amount to around 320 percent of Ireland's gross domestic product. One has to ask oneself if the Irish state would ever be in a position to meet such huge commitments.
  • I'm not saying that the idea of creditors sharing in the risk is fundamentally wrong.
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Shipping Boom: Hamburg's Port Sees Fruits of German Upturn - SPIEGEL ONLINE - 0 views

www.spiegel.de/...of-german-upturn-a-720267.html
shared by Gene Ellis on 21 Feb 14 - No Cached
  • Shipping Boom: Hamburg's Port Sees Fruits of German Upturn
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