Feeds:
Posts
Comments

Posts Tagged ‘Angela Merkel’

Amid growing risk of a Greek exit, the euro zone has yet to face up to the task of saving the single currency itself
 See for the full text  The Economist  –   May 12th 2012 | from the print edition

Jerry Mager May 17th, 2012  

 If only Achilles showed the eurozone his heels! This time the wrath of Achilles’s however could come upon us in quite a different shape and quality than it does in the Iliad. The contagion from a Greek exit would be mainly a psychological one and not primarily of an economic nature.
The worst thing to happen for the eurocrats would be Greece leaving the euro without the world coming to a horrible end. If this happens the intimidating narrative would have lost its power and other countries might start questioning if the ‘austere’ course is really inevitable and necessary and whose interests are really being catered to by Mr Barosso, Mrs Merkel, the Mssrs Draghi, Monti, Papademos (the Magi from Goldman Sachs ) and the other austerity fundamentalists.
As even president Obama’s changes of re- election are dragged into the discourse it seems apt to quote Paul Krugman on austerity in the New York Review of Books of May the 24th page 14: “Assessing the effects of austerity … requires painstaking examination of the actual legislation used to implement that austerity. Fortunately, researchers at the International Monetary Fund have done the legwork, identifying no fewer than 173 cases of fiscal austerity in advanced countries over the period between 1978 and 2009. And what they found was that austerity policies were followed by economic contraction and higher unemployment.” According to Krugman – who here is talking about the US, but nevertheless … – “The depression we’re in is essentially gratuitous: we don’t need to be suffering so much pain and destroying so many lives ….. all we need is to reverse the austerity policies of the past couple of years and temporarily boost spending ….. Keynes wrote that ‘the boom, not the slump, is the time for austerity’.” See http://www.nybooks.com/articles/archives/2012/may/24/how-end-depression/
In the case of eurozone the face saving ploy could be a quiet emphasis on ‘growth’ while trumpeting ‘austerity’ at the same time.

The Greeks have the edge on us by being battle hardened by now, they more or less got used to hardship and have learned how to adapt and make the best of it. On the other hand they have little to lose, little good to expect from the other eurozone members nor from the future with or without austerity measures.

Let me end with quoting from Marshall Sahlins’s Stone Age Economics’ (Ch. 1, The Original Affluent Society): “By the common understanding, an affluent society is one in which all the people’s material wants are easily satisfied. … there are two possible courses to affluence. Wants may be ‘easily satisfied’ either by producing much or desiring little. The familiar conception, the Galbraithean way, makes assumptions peculiarly appropriate to market economies: that man’s wants are great, not to say infinite, whereas his means are limited, although improvable: thus the gap between means and ends can be narrowed by industrial productivity …… But there also is a Zen road to affluence, departing from premises somewhat different from our own: that human material wants are finite and few, and technical means unchanging but on the whole adequate. Adopting the Zen strategy, a people can enjoy an unparalleled material plenty – with a low standard of living.”
Most Greeks may not be familiar with Zen but let’s not forget that Zeno of Citium was the founder of Stoicism and from Zeno to Zen may prove not so great a step altogether.
The question here seems to be whether the eurocrats are prepared to reframe their austerity approach and adept their narrative to reality in order to make reality comply.

LINKS

http://www.niburunews.com/index.php?option=com_content&view=article&id=1282:goldman-sachs-and-europes-inside-job&catid=19:finance&Itemid=38

Read Full Post »

De Economist van 14 april 2012 vraagt zich af of het Duitse economische model te kopiëren is.

“Germany’s economic model. What Germany offers the World.
Other countries would love to importGermany’s economic model. But its way of doing things is a lot less amenable to export than the wares it produces.

But is the model copiable? After a few days in East Westphalia-Lippe (now marketing itself to the world as OWL) you wonder. Beckhoff and its peers have global ambitions but their business culture has deep provincial roots. They look back as much as forward. “We have existed since 1825 and have been doing the same thing since then,” says Dieter Brand, chairman of the Sparkasse, or savings bank, in Bielefeld, the region’s biggest town. In some senses the same is true of his corporate customers.Germany may have reformed and rearticulated its model in recent years. But the underlying skeleton is ancient, and perhaps inimitable.”

Jerry Mager (April 16th 2012 / 13:45 GMT) legt uit dat aan het Duitse economische succes een ethos, een waarden- en normenpatroon ten grondslag ligt, dat zich niet zondermeer laat kopiëren.

AN OFFER YOU CAN’T REFUSE.
door Jerry Mager

“It requires years of consistently excellent performance to acquire a reputation and to establish it as a financial asset. Thereafter a still greater effort is required to maintain it: a company cannot afford to risk its years of investment by letting down its standards of quality for one moment or one inferior product; nor would it be tempted by any potential ‘quick killing.’ ” These words were written in August 1963 by Alan Greenspan in an article for The Objectivist Newsletter with the title “The Assault on Integrity” (reprinted in Ayn Rand’s “Capitalism: The Unknown Ideal“- Signet Book, 1967). At hindsight these are ironic, even cynical, words from a man who supervised a financial industry that choked the world with junk bonds and flooded her with subprime mortgages, packaged, concealed and wrapped up in all sorts of disguises, meant to mislead and dupe. All over the globe and from day to day we now are dealing with the ensuing mess and the end of the misery is not to be perceived yet.
Good for the Germans that Germany is not like America (yet?). Good for the Euro countries too.|

As the subtitle of this Economist article on Germany’s economic success precisely states: it all is about “its way of doing things” and the solid reputation and high self esteem it gains thereby. For, sound self esteem and a healthy reputation are two sides of the same coin.
One may copy whatever model, but that doesn’t mean that one does copy it lock, stock and barrel, that is to say: model, mentality and moral together in one sweep. I guess that the Germans learned this lesson the hard way when they dabbled with “American- style standardised production” and to that purpose imported unskilled guest workers. It resulted in Frau Merkels outcry that the multicultural experiment had dismally failed – “Multikulti ist völlig gescheitert!”
Not only are the elements of the “co-ordinated market economy so tightly meshed that it would be difficult to replace any one of them with an alien component” as Werner Abelshauser writes. Even mixing it with the slightest trace of alien components (“Fremdkörper”) will result in dilution and a lessening of its effectiveness exponentially. Thus, not only tightly meshed but imbued, saturated with that particular ethos as well.
This article scratches at the surface of what is the gist of the argument: culture, ethos, and maybe religion (see T.S. Eliot’s “Notes toward the Definition of Culture” for some inspiring thoughts on this matter; I can also recommend “The Puritan Gift” by the brothers William and Kenneth Hopper).

In this article the pivotal role of the German ethos shines through in sentences like: “… trust, relying on the principle that nobody will make full use of his freedom by grabbing everything he can” and “The point is not to maximise short-term profit [Markus Miele] but to aim at where we want to be when we hand over to the next generation.” Hans Beckhoff declares himself against debt and according to him: “Families behind the ‘Mittelstand’ live in an acceptable, modest and healthy way.” This mental-ethical orientation of the German “Mittelstand” seems to be local and global at the same time. “Gemeinschaft” and “Gesellschaft” combined (please, google Ferdinand Tönnies for this pair). So the world is their oyster. Their point of reference concerning regard, esteem (“Achtung” is an interesting German word) and reputation is local, provincial, and global at the same time. (John le Carré wrote interestingly about at least one of those “small towns in Germany” being Bonn)
The German vocational training system – besides imparting highly professional skills and knowledge – serves as a vehicle for transmitting, passing on and instilling these values from generation to generation. If this is what Germany has to offer the world indeed I would say that the world is hardly in a state and position to refuse.

Read Full Post »

A pact to cut budget deficits is achieved at the cost of a growing democratic deficit
The Economist Magazine  –   Feb 4th 2012 | from the print edition

THOU shalt not incur a structural deficit. Thou shalt pay down thy excessive debt. Thou shalt adopt a balanced-budget rule in thy constitution, and subject it to the European Court of Justice…
It took just a little more than 40 days and 40 nights for Angela Merkel to bring down the tablets of fiscal law. At a summit in Brussels this week, 25 European leaders pledged to observe this covenant and made burnt offerings of their economic sovereignty. But the children of Europe are crying into the wilderness: “How long, Lord, must we be tormented by austerity?”
……………
(more…)

Read Full Post »