What is happening turns out to be pretty much what the proponents of Europe’s cool-headed crisis management predicted.No it isn't. Quite the opposite is true. It cannot be repeated enough. The country which saw the highest growth rate was Portugal. Portugal's Constitutional Court, ruled may of the austerity measures unconstitutional, and once the self defeating austerity was gone the country recovered at a pace of 1.1 percent in a single quarter. The other southern countries are still contracting.
Ambrose Evans-Pritchard wrote an excellent article explaining pretty well why Schäuble's claim is complete bogus.
Just a few nitpicks:
- The German Constitutional Court is in now way in the pocket of Schäuble. The laws that Merkel's government creates get mowed down faster than they can make their unconstitutional stuff they call laws up. In fact even the German voting law was unconstitutional and they barely managed to make a new one in time for the election on Sunday.
- Schröder's "reforms" "achieved" a lot of things e.g: they created a gigantic low wage sector, in which the work is subsidised by the government so people can make ends meet. More than every fifth worker is in that sector (meaning they get payed less than 9 euros an hour). Germany does not have a minimum wage, which has lead to some - let's call them - creatively low wages. The country now has two labor markets, one with secure jobs and one to exploit everybody else. Two are always better than one. Pension reform has made many in finance obscenely rich; and the best part is the money one is "saving" isn't yours anymore (in the so called Riester pension); it cannot be inherited, once a single payment to the pensioner is made. It created a strong leech industry with negative productivity, since those people are nothing but a tax on anybody that now is trying to save up for retirement.
- He should have emphasised more that even if austerity had been a success, then the depreciation of the currencies of Brasil, Russia, and India in the last month completely negated any competitiveness improvements in the South. Three years of chaos and destruction and it all went down the drain in a single month. Germany now has trouble exporting since Abenomics is doing exactly what it was supposed to. This might very well be the finishing blow for the euro.