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Speech Pulse of Europe: On some recent developments in the Euro Area

June 6, 2017 by andrew36 Leave a Comment

The following text in German is a slightly revised version of a speech at the Pulse of Europe event in Dusseldorf, 4 June 2017

Der folgende Text ist die leicht überarbeitete Version einer Rede bei der Pulse of Europe-Veranstaltung in Düsseldorf, 4. Juni 2017

 

Mit dem neuen monatlichen Pulse of Europe-Veranstaltungsrhythmus haben wir die Chance, mehr Gedanken über Inhaltliches zu machen, darüber wohin sich Europa treibt. Wir wollen auf unseren Kundgebungen über neuste Entwicklungen berichten, und Debatten initiieren.

Heute möchte ich einige Neuerungen des letzten Monats aufgreifen, die gemeinsam haben, dass sie alle mit der gemeinsamen Währung, dem Euro zu tun haben.

Griechenland

Anfang Mai wurde ein neues Maßnahmenpaket in Griechenland beschlossen. Das ist aber leider keine gute Nachricht. Denn es sind weitere erhebliche Kürzungen der Renten beschlossen worden. Und der Grundfreibetrag wird stark gesenkt. Das sind Maßnahmen, die die Masseneinkommen und die Nachfrage weiter schrumpfen lassen und damit die Fortsetzung – sieben Jahre nach Ausbruch der Krise im Lande – einer gescheiterten Austeritätspolitik.

Im Gegenzug konnte sich die Eurogruppe aber nicht auf ein Paket von Schuldendienst-Erleichterungen oder anderen Unterstützungsmaßnahmen für Griechenland einigen, nicht zuletzt wegen des andauernden Streits zwischen der EU und dem Internationalen Währungsfonds. Dieser Zwist zwischen den Kreditgebern muss umgehend beendet werden – am saubersten dadurch, dass die EU die Verbindlichkeiten Griechenlands an den IWF übernimmt. Am 15 Juni tagt die Eurogruppe erneut. Wir sollten eine klare Botschaft an die Finanzminister, auch den deutschen schicken: Es kann nicht sein, dass Griechenland weiter am langen Arm verhungert.

Das bringt mich zu … [Read more…]

Filed Under: Commentary Tagged With: current account, deepening, Emmanuel Macron, EMU, EU Commission, Euro Area, France, Germany, Greece, Pulse of Europe, reflection papier

The strange non-death of public spending

March 7, 2017 by andrew36 1 Comment

In 2011 (2013 update 7/3/17) Colin Crouch wrote a noted book entitled The strange non-death of neoliberalism. In it he discussed why neoliberalism had managed to avoid being killed by what had appeared to be its nemesis: the global financial and economic crisis. The title came to mind on reading  some recent work on the political economy of modern capitalism in general, and the European Union in particular, by some other well-known commentators. It seems that, actually, we are witness to the strange non-death of public spending, at least in the EU.

Let me first give two examples of a view that many readers will likely believe to be self-evident.

In Le Monde Diplomatique the reknowned historian and political economist Perry Anderson has just published an analysis of the driving forces behind populism and protest. Under the sub-heading “Draconian austerity” he writes:

From monetary union (1990) to the Stability Pact (1997), then the Single Market Act (2011), the powers of national parliaments were voided in a supranational structure of bureaucratic authority shielded from popular will, just as the ultraliberal economist Friedrich Hayek had prophesied. With this machinery in place, draconian austerity could be imposed on helpless electorates, under the joint direction of the Commission and a reunified Germany…

The economic sociologist Wolfgang Streeck has also been much in the news with a series of pessimistic books and shorter publications on a similar theme. Democracy is being weakened and, [Read more…]

Filed Under: Analysis Tagged With: austerity, consolidation state, democracy, EU, Euro Area, European Commission, Germany, neoliberalism, Perry Anderson, public spending, Wolfgang Streeck

Germany’s debt brake is not a model for Europe

September 6, 2016 by andrew36 Leave a Comment

My IMK colleagues Christoph Paetz, Katja Rietzler and Achim Truger have just issued an important analysis of experience with the German Schuldenbremse (debt brake) since 2011. If you read German I heartily recommend you to consult it. We will prepare an English translation, but given the importance of the debt brake for the fiscal policy discussion in Europe (and the fact that quality technical translations take time) let me summarise the main points of interest for European readers here.

The first key mesage is that the apparent successes of the debt brake – the over-fulfilment of fiscal targets, rapid consolidation and emulation by other EU governments under the fiscal compact – are in fact a mirage. The consolidation outcomes, in particular the fact that Germany has posted fiscal surpluses for the past two years, result from the favourable economic and labour market development in Germany, especially the unexpectedly rapid bounce-back from the Great Recession. On top of this came substantial savings in interest payments due to the fall in interest rates, as much of the remaining euro area was mired in recession and the ECB pulled out the monetary stops.

The second, more fundamental point is that the favourable business cycle since the introduction of the debt brake has so far concealed its most insidious danger. [Read more…]

Filed Under: Commentary Tagged With: cyclically adjusted, debt brake, Fiscal Compact, fiscal policy, GDP, Germany, IMK, multiplier, output gap, Schuldenbremse, structural balance

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