Thursday, August 15, 2013

Krugman not happy about good news

Krugman is not happy about the reaction by European leaders to finally seeing some growth again:

It really is kind of pathetic to see European leaders claiming vindication after one whole quarter of positive growth, at the thrilling annual rate of 1.2 percent.
Agreed, still finally seeing some growth again is actually good news. The problem there is, is that the same politicians, who failed us miserably for three straight years now pretend that they are somehow responsible for only this first actual green shoot. The German government is by far the worst offender here. Official press release:

Germany - the locomotive in the euro area 
Yeah, Germany is a locomotive alright, it is a fitting picture for a industrial country; problem is that it wasn't going all that fast since 2011. What is more is that now economy minister Rösler claims to be the only responsible party here:

Federal economic minister Philipp Rösler attributed this development to "the reduction of taxes and social insurance contributions, which were enacted at the beginning of the year."

Oh goody, let's check this:

2012 2013
health insurance 15.5 15.5
nursing care insurance 1.95 2.05
pension insurance 19.6 18.9
unemployment insurance 3 3

 Philipp Rösler is living in some fantasy land where decreasing the pension insurance, through basically keeping the pensions in the West at the level of last year and therefore below inflation, aka taking from one hand and giving the other, somehow creates growth; and the German government is responsible.  Saying something like that should make one feel really embarrassed.
He seems to actually believe this stuff. See? Pension insurance payments fell by 0.7 percent and now we have growth of 0.7 percent - coincidence?! seems to be what he is saying. This one quarter will reassure them that all steps taken were correct. If only Greece were to reduce their pension insurance by 0.7 percent...

On to four years of growth through shifting money around. The euro zone finally seeing some growth is probably the worst thing that could have happened in the second quarter, when looking at who will be reelected because of this.

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