The European Council, dominated by Germany, thinks that fiscal discipline could have stopped all past and future problems in the Eurozone.
Not only is this not true in Ireland and Spain, argues Martin Wolf at the FT, the very claim suggests an untenable position in Europe.
Germany’s idea of fiscal discipline is a deflationary vacuum that is desirable only for an export powerhouse with low consumption — in other words, Germany:
Worse, Germany does wish to see a sharp move by its partners towards smaller fiscal deficits. The eurozone, the world’s second largest economy, would then be on its way to being a big Germany, with chronically weak internal demand. Germany and other similar economies might find a way out through increased exports to emerging countries. For its structurally weaker partners – especially those burdened by uncompetitive costs – the result would be years of stagnation, at best. Is this to be the vaunted “stability”?
This is a freightening analysis for Europe simply because it suggest that all of the “fixes,” bailouts, Maastricht treaties, austerity budgets, you name it won’t solve the problem.:
Evidently, Germany can get its way in the short run, but it cannot make the eurozone succeed in the way it desires. Huge fiscal deficits are a symptom of the crisis, not a cause. Is there a satisfactory way out of the dilemma? Not so far as I can see. That is really frightening.
In other words. The EU doesn’t work. Countries as diverse as Greece and Germany can’t share a common central bank.
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