Wednesday, September 13, 2017

Yanis Varoufakis: Germany needs a frank debate, not this tepid election campaign

The Greek people are paying dearly for having been lulled into a false sense of security, writes former Finance Minister Yanis Varoufakis. Germans, he says, are laboring under the same illusion today.
Complacency is a country's worst enemy.  My compatriots were, once upon a time, lulled into a false sense of having "made it." I very much fear that a majority of Germans feel their land is "doing fine."
That the federal election campaign is proving such a tepid affair is a reflection of the false sense of security generated by Germany's three surpluses: Companies save, households save, the Frankfurt banks are awash with monies sent to them from other European countries, even the federal government budget is in surplus. But these surpluses are the sign of weakness, not strength. They are the harbingers of significant current and future hardship for most Germans now and in the future.
Think about it for a minute: A current account surplus of almost 10% of national income means that the nation must take its savings and send it abroad to be invested in deficit countries. Is this a prudent thing to do, especially when German capital abroad is creating bubbles bound to burst (like they did in Greece and Spain)?
Also, how smart is it to rely on the money influx into the Frankfurt banks to cover up their insolvencies, especially when this tsunami of foreign monies is flooding Germany because their Italian or French owners are losing hope in their own countries' economy? Finally, how rational is it for the federal Finance Ministry to celebrate a budget surplus that is due to the negative interest rates which (a) are crushing German pension funds and (b) causing the famed Swabian housewife to lose faith in the German political establishment?

1 comment:

Matt Franko said...

Sounds like YV thinks banks lend out the deposits