Adding to the economic insanity promoted by Berlin, is an ECB which is focused like a laser on inflation. News flash to Frankfurt – inflation is not even a looming threat on the horizon. Unemployment (now having risen to 10.3% - 20% among youth) is and represents the TGV (in the US otherwise known as the 5 o’clock express) heading straight at everyone. Frankfurt, under the ever watchful eye of Berlin, is following policies established by Herbert Hoover and is the opposite of the actions taken by every other central bank in the world. It’s not too fine a point, I guess, to note that France, tied as it is to whatever the current economic policy whim is at the ECB and the Euro, lost its credit rating of AAA while the UK – not in the best economic condition and not in the Eurozone – did not. And no, S&P is not part of some Anglo-American conspiracy to attack the Euro as some German and EC representatives have claimed.
And just in case the technocrats in Brussels or the great deciders in Berlin and Paris think the EU or the Eurozone is a popular place to be these days, 70% of Czechs oppose joining the Euro; 49% in Lithuania (43% are pro-euro); and in Poland only 16% support joining the Euro. Oh, and to cap the pyramid of euro-skeptics, almost 80% of Norwegians don’t want to join the EU. Paris can stop worrying about 8% annual growth rate Turkey.
Now last week, with the unfortunate idea to abolish nations who don’t comply with their austerity requirements, Germany and the ECB may have alarmed Greece, Ireland, Portugal and Spain to the point of permanent alienation. The fact that this idea arose in Germany was not ideal PR for some rather obvious 20th century reasons.
Germany is not going to let the ECB do what it must and abandon its expansionary-austerity program – one of the more stupid ideas of the hard line technocrats in Brussels. But it has now been hoisted on its own petard. Historically, Berlin actually did not want other nations to indulge in fiscal prudence because they have an interest in promoting consumption and demand for their exports. The currency union allowed other countries to get credit at much lower rates so they would have more to spend. Germany encouraged this spending to absorb exports and cannot now have it both ways.
The fanciful idea that somehow Greece deceived everyone is absurd. If any deception existed, Germany deliberately ignored reality for its own benefit. Whether the Eurozone begins to break up is an open question. Certainly, Greece would be better off outside the Eurozone. Germany cannot overplay its hand and the pre-Cambrian thinking of the Brussels-Frankfurt-Berlin axis needs to be radically changed or it will be changed for them.