tag:blogger.com,1999:blog-2761684730989137546.post8685544460687909854..comments2024-03-29T09:16:03.245-04:00Comments on Mike Norman Economics: Jörg Bibow — On German Public Opinion and Illusory ECB Power mike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2761684730989137546.post-63158811570978964612014-02-26T23:55:53.340-05:002014-02-26T23:55:53.340-05:00I've recommended Germany's withdrawal from...I've recommended Germany's withdrawal from the euro as probably the best way to save a failing system at least temporarily by doing the least damage. But Germany would not escape pain either, since a return to the DM would see Germany with a much stronger currency than under the euro and this would adversely affect is export-driven economy. I don't see it being catastrophic though. Germany could even withdraw temporarily and resume the euro later when things are worked out. But it's difficult to work things out now, since Germany in particular has a veto on what would help everyone else but might not appear to be in Germany's interest. What we see in the EZ is the blue states in the US having a veto on fiscal transfers to the red states. Germany is not alone in this in the EZ but it is the biggest obstacle in integrating core and periphery. One problem with this, though, is that a political objective of the EZ was to integrate Germany rather than opposite, given Germany's history. So this is an issue with many levels, and no clear solution that is optimal, or perhaps even workable in the long run. So maybe the best thing to do is look at more temporary fixes.<br /><br />What would be catastrophic is a failure of the euro in which German banks take a bit hit as primary creditors. What I think is happening is a game of chicken with the neoliberal eurocrats seeing just how far they can push their program. Experience shows that when they feel a limit has been reached they retrench a bit. However, I don't think that this is sustainable politically over the long run. There will be more crises, since that is of the nature of capitalism, and the EZ will be going into the next one in a weakened position. <br /><br />Something's gotta give, and I just don't see how the neoliberal eurocrats can game this forever. Some changes are going to have to be made, either going forward toward fiscal hence political union, or else backtracking on neoliberalism and relaxing austerity. <br /><br />This could be patched up with some tweaks — in principle. The devil is in the details politically as well as economically. But perhaps a game plan with temporary iterations could be worked out. I can see Germany withdrawing for awhile as an option.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-59100364389996446742014-02-26T22:33:45.017-05:002014-02-26T22:33:45.017-05:00I agree, Ralph. What catastrophic consequences? Ma...I agree, Ralph. What catastrophic consequences? Marshall Auerback wrote articles a couple years back about how a German exit would be the best immediate, likely thing for both Germany and a rump Eurozone. Let's hope "the anti-euro brotherhood" grows and grows. <br />The ECB's powers are not at all illusory, as the markets, but not Bibow discerns. Calgacushttps://www.blogger.com/profile/06031818010224747000noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-66394212535620484032014-02-26T15:04:25.501-05:002014-02-26T15:04:25.501-05:00Doesn't China have a small role in Germany'...Doesn't China have a small role in Germany's success?Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-37455195799329055192014-02-26T14:10:06.534-05:002014-02-26T14:10:06.534-05:00What exactly are the “catastrophic consequences fo...What exactly are the “catastrophic consequences for Germany itself in case of euro breakup”? Granted there’d initially be some dislocation. But Europe was a wealthy place prior to the formation of the Euro. It could go back to that set up.<br /><br />Even better might be for excessively competitive Germany to leave the EZ, while the “uncompetitive” other EZ countries remained in a currency union. <br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com