German Economic Policy and the Euro 1999 - 2010

The aim of this paper is to assess to what extent Germany - whether by accident or design - has been a beneficiary of the Euro era, and what negative impact, if any, there has been on the Eurozone’s smaller economies.

Analysis shows that trade imbalances within the Eurozone centre upon Germany, the most important economy, and by far the largest exporting nation. Germany has substantial trade and current account surpluses with the other Eurozone members. In the last three recorded years for example, it was €114.3 billion in 2007, and €104.5 billion and €79.7 billion in the recession years of 2008 and 2009 respectively.

This situation is greatly exacerbated by the ECB’s exchange rate policy which (wittingly or not) favours German interests. This is because, at the outset, the German people gave up their beloved D-Mark under an implicit agreement that EMU would never lead to inflation in their country. For this reason the European Central Bank tightens monetary policy whenever the German economy is in danger of over-heating, regardless of the needs of the Mediterranean economies.

When the Euro was founded in 1999, it was fondly assumed that with Germany’s exchange rate ‘irrevocably fixed’, then there would be no more periodic crises such as those which repeatedly afflicted the ERM between 1979 and 1992. The ruling elite, now in total control, could sit back smugly anticipating economic convergence and the facilitation of political union, however ill-defined this concept is and no matter how unwanted.

It was never going to happen like this. Rather, German exchange rate policy, within the Euro, represents the most lethal danger to the survivability of the Single Currency. The fundamental reason for this is stark in its simplicity.

The Bruges Group - krækja:  German Economic Policy and the Euro 1999 − 2010 | PDF-skjal

Lissabon markmið ESB sem upprunalega áttu að tryggja líf evrunnar eru í molum og menn hafa ekkert lært af reynslunni

Europe’s Competitiveness Shell Game; Ann Mettler

BRUSSELS – For seasoned observers of Europe’s economy, the most recent European Union summit delivered a bizarre sense of déjà vu. Little more than a decade ago, European leaders announced to great fanfare the “Lisbon Agenda,” a policy blueprint to make Europe “the most competitive, knowledge-based economy in the world.” The new “Competitiveness Pact,” proposed at the EU summit by France and Germany, did not make the same pretensions to global grandeur, but was instead sold as a step required to ensure the survival of the euro.
. . .
Unfortunately, however, government leaders have apparently learned nothing from the lessons of the failed Lisbon Agenda. Indeed, the current plans seem doomed to fail for two reasons.

Krækja; Europe’s Competitiveness Shell Game by Ann Mettler - Project Syndicate

PS: Svona fóru Lissabon 2000 markmið ESB, sem er síðasta 10 ára áætlun Evrópusambandsins: Lissabon 2000 markmið Evrópusambandsins

Fólksflótti frá Írlandi - Wall Street Journal

Reikna með að 2,5 af hverjum hundrað Írum yfirgefi land sitt á næstu 24 mánuðum



Irish Workers Leave the Emerald Isle
The great recession has triggered yet another wave of Irish emigration. WSJ's Don Duncan reports on how that is playing out in the national election.

Evran vandamál en ekki lausn - mbl.is

Evran er hluti af vandamálinu en ekki hluti af lausninni á efnahagskreppunni í Evrópu. Kreppan er ekki aðeins efnahagslegs eðlis heldur er hún einnig af pólitískum toga. Þetta segir sænski þingmaðurinn Jonas Sjöstedt.

Krækja: Evran vandamál en ekki lausn - mbl.is

Grikkland - evrusvæðið: Anti-austerity protests spark violent clashes in Greece- France24

Clashes broke out between riot police and protesters Wednesday during a massive anti-austerity march in Athens,leaving three police injured - one after being set on fire by a Molotov cocktail.

The heavy use of tear gas broke apart a demonstration that had rallied some 18,000 protesters in the capital according to police, and over 60,000 according to union organisers.

At least 36,000 people according to police took part in protests held in Athens, Thessaloniki and the port of Piraeus to reject economic policies dictated by Greece's narrow bankruptcy rescue by the EU and the IMF last year.

"Nobody believes in the government and in the (austerity) plan," said Yiannis Albanis, a computer technician joining the protest."





Krækja: France24

FT.com / Comment / Analysis - Ireland: A vote in a void

Tiger has fallen. The debate was dubbed: “Ireland – A Broken Dream?”

. . .

"Like other small countries, it has traditionally looked to the Commission as its protector. But the Commission’s relative power is in decline. The European parliament is increasingly powerful, but only 12 of its 736 members are Irish. Meanwhile, the first full-time president of the European Council, which unites EU governments, is Herman Van Rompuy, a Belgian perceived in Dublin to be instinctively close to France and Germany.

. . .

In the short term, Ireland appears to have almost no freedom of manoeuvre. EU authorities rule out bondholder write-downs for the present because of the risk of creating a funding crisis for banks across the eurozone. "

Krækja: FT.com / Comment / Analysis - Ireland: A vote in a void:

Return to the Drachma?: Economists Warn Greece May Have to Quit Euro - SPIEGEL ONLINE

"Greece's debts are rising rapidly despite radical austerity measures. Now a group of leading European economists has warned that creditors might have to write off more than 30 percent of their loans. Greece might even have to reintroduce the drachma to overcome its debt crisis, they argue.

The European Economic Advisory Group (EEAG), a group of leading European economists, has warned that Greece may need another bailout by 2013 at the latest."

[..]

New Worries About Portugal, Spain

Krækja: Return to the Drachma?: Economists Warn Greece May Have to Quit Euro - SPIEGEL ONLINE - News - International:

FT.com - Ireland needs help with its debt

What caused this calamity?

As Philip Lane of Trinity College notes: “There was a genuine Irish economic miracle, with very rapid output, employment and productivity growth during the 1994-2000 period.” Without entry into the eurozone, this might have petered out. But the fall in interest rates increased the risk that a credit-fuelled property bubble would emerge. So, indeed, it did.

Prof Lane observes: “The flavour of this boom was very different to the ‘Celtic Tiger’ years. In particular, it was dominated by a surge in construction activity.” Moreover, this “expansion in property investment was fuelled by rapid credit expansion”, not just to the household sector, but also to a “small group of property developers”."

FT.com / Comment & analysis / FT Columnists - Ireland needs help with its debt: "

Axel Weber, the Last Man Standing: Europe’s reforms may come at a high price

[. . ]

"The current crisis has challenged the founding principles of EMU. Still, EMU can emerge stronger and more resilient than before. To that end, the decisions on EMU governance have to reinvigorate rather than circumvent the basic principles of subsidiarity, responsibility of individual member countries, and no-bail-out as laid down at the launch of monetary union. This is an opportunity that must not be lost."

The writer is outgoing president of Germany’s Bundesbank

FT.com / Comment / Opinion - Europe’s reforms may come at a high price:

Germany must choose EMU fusion or fission - Telegraph

"German Chancellor Angela Merkel is teasing Europe and deluding herself.
For all her fiery language in defence of the euro - as if a currency trading so high against the yuan, dollar, and sterling could be under meaningful external attack - Chancellor Angela Merkel has not yet agreed to pay one cent in help to crippled debtor states. Nor has she faced up to the elemental question hanging over monetary union.

Her own Bundesbank argued years ago that EMU is unworkable without fiscal union, and it has been vindicated by the events of the past two years. Either creditor states agree to an EU treasury, 'Transferunion' and debt pool, or EMU will be subject to unending stress and ultimately fracture or shrink to a viable core, or so goes the argument."

Germany must choose EMU fusion or fission - Telegraph

Amagerbanken den største fejl i Danmarkshistorien

Det er formentlig den største udgiftspolitiske fejltagelse, der nogensinde er sket i kongeriget Danmark, siger professor Finn Østrup, CBS, om forløbet omkring Amagerbankens krak.

Det er fuldstændig utroligt, at Finansiel Stabilitet giver en garanti på 13,5 milliarder kroner, og efter blot tre måneder er en stor del af beløbet forsvundet, siger han.

Amagerbanken den største fejl i Danmarkshistorien

Armageddon Bank - Amagerbanken

"Amagerbanken is a small bank in Denmark — but its failure could end up having big consequences for investors in bank debt. It might end up being a relatively rare instance of a bank’s senior unsecured investors (and depositors) taking a hit."

Financial Times FT Alphaville Armageddon Bank

AFP: EU, IMF auditors should learn their place: Greece

"ATHENS — Greece on Monday kept up the heat on auditors from the European Union and the IMF who said the government should sell 50 billion euros in state assets to lessen the country's runaway public debt."

AFP: EU, IMF auditors should learn their place: Greece:

"The biggest bank robbery in the history of this country" - Irish leaders clash on economy in TV debate | euronews, world news

1
“All of the other parties on this platform – Fianna Fail and the Greens who brought it in, Fine Gael and Sinn Fein – supported that bailout on that night. It was the biggest bank robbery in the history of this country, and it was the banks that robbed the people,” he said;
Irish leaders clash on economy in TV debate | euronews, world news

2
“It was the biggest bank robbery in the history of this country and it was the banks that robbed the people,” he said; No clear winner from leaders’ debate

Moody's nedgraderer Danske Bank og fire andre

Kreditvurderingsbureauet Moody's Investor Service sænker sin langsigtede kreditvurdering af fem danske banker, hvoraf tre sættes på observationslisten for yderligere nedjusteringer. Det sker i kølvandet på Amagerbankens kollaps, som har ændret ved det systemiske støttebillede af den danske banksektor.

Moody's nedgraderer Danske Bank og fire andre:

Mortgage Rates Rising | Money Guide Ireland

Þróun ársverðbólgu á Írlandi; Hagstofa Írlands

9,1% vextir á húsnæðislánum á Írlandi í 1,6% verðbólgu

Vextir á bæði 7 og 10 ára húsnæðislánum á föstum vöxtum á Írlandi hækka. Vextir á tíu ára lánum frá PTSB hækka úr 6,1% í 9,1% fyrir þá sem eru að endurnýja eldri lán á föstum vöxtum. Ársverðbólga á Írlandi mælist nú 1,6 prósent, samkvæmt tölum írsku hagstofunnar.

Mortgage Rates Rising | Money Guide Ireland:

The the 7- and 10-year rates both rise from 6.1% to 9.1%."

MaltaToday - Only 37.2% think we’re better off

Ekki alveg nýtt. En segir samt sína sögu. Frá 2009.

Frétt MaltaToday 3. maí 2009: "Five years after EU membership, and only 37.2% think Malta is faring better than it was before membership. This is what emerges from MaltaToday’s latest survey, which also revealed another third of respondents think the country is actually faring worse, while 19% have seen no change at all."

Bein krækja á PDF

Axel Weber Drama Needs Explanation - The Source - WSJ

WSJ

"We will probably have to wait for Mr. Weber’s memoirs to find out what really happened. The German government is made to look not a little silly after the man they quasi-officially backed for the job suddenly bolts. After all, following a Dutchman and a Frenchman, this was deemed Germany’s term for the ECB top job." - Krækja

Germany's Steinbrueck doesn't want ECB job - Bloomberg

"'I am not available for this job.'"

Krækja

Weber: saw credibility problem with ECB job - BusinessWeek

"Weber had voiced unease over the ECB's program, launched last year, to buy bonds of troubled eurozone countries and called for the program to be stopped.

Weber, 53, was quoted as telling the weekly Der Spiegel that he had taken 'clear positions that I still stand by.'"; Krækja