Tuesday, May 28, 2013

Fear Not - We Got It Covered

Prof. Krugman is deeply worried about the nightmare happening in Portugal:
And anyone playing any role in our current economic debate, whether as an actual policy maker or as an analyst giving advice from the sidelines, should be focused, above all, on how and why we’re allowing this nightmare to happen all over again three generations after the Great Depression.
 Well, Schäuble recognized the danger and has a solution according to FAZ; he even wrote a letter to his college the economics minister Rösler stating:
I think, that we should additionally offer bilateral German help. [This will lead to] a noticeably faster working support with visible, also psychologically effective results in reasonable time.
Rösler had a spokesperson answer:
The real economy in southern Europe will be helped if especially small and medium sized companies have easier access to the capital marked.
 This is in my opinion a rather awkward form of communication, but who am I to question the geniuses that believe that one billion euros in a little cheaper credit will produce visible results in Spain. Nothing is decided, yet, but the German government are discussing "intensively" and we don't have any numbers on Portugal, but it's probably not the time to hold one's breath.

Also, Germany might (pretty unlikely though) see a SPD led government in September. They are all for reduced austerity and higher taxes. Yeah, that "plan" comes from combined thinking of the Greens and Steinbrück (SPD's chancellor candidate who called Grillo a "clown". So the chances for even a small expansion in the core are zero.

Awesome times if you are a cynic in Germany. Not only are right and left competing about who has the better non-plan, no, we, gladly, also do not have to read articles about what our current policy is actually doing to the crisis countries. Yes, they do write about the high youth unemployment but just the numbers. Cold, efficient, German reporting. Want feely, feelings? Go read this story about how some fox was saved somewhere. Youth unemployment actually isn't all that bad. If you also count those who are currently at university and therefore not yet out of a job, you will see that only 20 % of young people are unemployed in Spain. This reporting is so efficient that recession isn't mentioned anywhere in the article. But "new deal" is, as if this idea actually had any chance of doing anything(this has nothing to do whatsoever with the actual new deal, it is, well a cynical joke) .

So fear not Prof. Krugman - Germany has it covered. No actual change in policy is necessary, all we needed was to steal a few words, relabel some funds, add one billion euros, stir occasionally and everything will be fine. So, yes the euro will go, but in the mean time we are doing everything necessary to ensure that it will do so with a bang.

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