Tuesday, April 24, 2012

Michael Stephens— Will Germany Break Out of the Box It Has Put Itself In?

Dimitri Papadimitriou speculates that Germany might just end up being the eurozone country that decides it’s not worth staying in the union.
 Germany, says Papadimitriou, has boxed itself in such that, as one of the only eurozone countries that’s growing, it must ultimately bear the major responsibility for the rescue packages that are being offered for troubled countries like Portugal, Greece (x2), and Ireland—and that may soon have to be put in place for Spain.  While an exit is unlikely as long as Angela Merkel is in power, Papadimitriou reminds us that she’s up for re-election next year, and the winds of political change have started blowing in Europe.

Read it Multiplier Effect

Will Germany Break Out of the Box It Has Put Itself In?
by Michael Stephens

That Germany will be first out has been my bet from the get-go. The Bundesbank will never go for what fiscal union would take and going forward would not be possible politically in Germany anyway. It's only going to be possible to punt for so long before the reckoning. And Germany has the DM to fall back on.


Anonymous said...

My concern about Europe - and the US to some extent - is that the pathetic failure of the center-left and left to articulate a coherent, democratic and progressive economic alternative to neoliberalism has left a gaping opening for right-wing parties to capture portions of the disaffected left by proposing populist, pro-employment, pro-state policies while continuing the right-wing culture war.

Now that Romney doesn't any longer have to fight hard to win right-wing votes, I expect he will move to the center and even attempt to selectively outflank Obama to his left when opportunities present themselves.

TheArmoTrader said...

Unrelated: But here's a GREAT (read: sarcastic but hits the nail on the head) post showing how to solve the "Social Security Crisis" ..............I know Mike's going to like this post: "How to Fix the Social Security Solvency Crisis for Just $49.99"

David said...

Good comment, Dan.
I think the dangers are a little different for the Euros and the U.S., though. The danger for Europe is, as always, a reversion to excessive nationalism. This sort of nationalism will be combined with a quite sensible call to secede from the monetary union, which the left parties will not have the cojones to call for.

As to the U.S., I've been waiting for years for some Republican to try to outflank the D's on the left on economic issues. It still hasn't happened. Gingrich flirted with some economic populist rhetoric, ala George Wallace, but I don't think Mitt Romney is even capable of feigning populism. My biggest fear is that momentum will build for some asinine "solution" like a balanced budget amendment and ever more severe authoritarian crackdowns on dissent.

Matt Franko said...

I'll just point out that the last fiscal policy adjustment made under a GOP admin was the $650 bottom up (ie high earners did not get it) tax rebate checks sent out under Bush/Cheney in June/July 2008 in response to the high fuel prices and a SMALL uptick in the UE rate.

Not followed up on as fall election season came and then GOP lost.

Ever since then GOP has pounded the Dems on fiscal, and as team Obama has too many morons on it, they could not counter.

I have no doubt that IF the GOP wins, the first thing they will do is more fiscal adjustments to get things rolling...