Will Germany blink?

Wolfgang Munchau writes in the FT that Chancellor Merkel has rejected any proposal that might actually resolve the eurozone crisis. He notes the incentives for Spain, Greece and Italy to default and exit.

64 replies on “Will Germany blink?”

Jorg Asmussen has been plugging the 25 via his ECB slot … hence the “Ja” from Angela. Dr. Ian has been providing some consultancy and Helen Mirren has also been invited to tea.

A Bundesblink?

I think Germany is going to come under immense – immense – pressure at the G20 in Mexico. If nothing has changed at the end of that meeting, start buying $/KR/CHF/£/etc I reckon.

It’s not just Germany. Germany is broadly representing the views of most of the better-governed northern and central EU member-states. There is an impasse. The less well-governed PIIGS ( + FR and BE to an extent) are unwilling to accept the reforms of governance and the structural reforms that are required to allow governing politicians to secure the consent of their voters to the fiscal and monetary policies required to save the Euro project.

What makes it more difficult is that the necessary reforms of governance and structural reforms are being opposed by the disingenousness, dishonesty and hypocrisy of those on the so-called left. This highlights the problem in Ireland:
but it is equally relevant in the other PIGS.

The interests of the vast majority of citizens – sitting broadly in the middle of the spectrum, wishing to get on with their lives and desiring a more prosperous tomorrow for themselves and the next generations – are being trampled on by monopoly-profit gougers and rent-seekers on both the left and right. And many are being pushed in to the arms of the right (which is certainly not in their interests) by their disgust at the antics of the left.

And what is making it even worse again is that for the infrastructure and utility sectors, where there is huge scope for efficient investment and expansion – to counteract fiscal adjustment and to boost future economic performance – governing politicians, policy-makers and regulators are locked in to various manifestations of failed policy and regulatory models that are preventing this efficient investment and expansion. And the economists, not surprisingly, are loth to admit that the economic underpinning of these models is totally unfit for purpose.

Spanish 10 yr at 7.22, Italian at 6.10. More interestingly Spain 3 yr now 6.23, Italy 5.29.

Who buys, apart from domestics? How long can they credibly fund at these levels?

Dead cat expiring.

@PR Guy
Could you help Gilmore ?
He said ( rte news) that the Greek vote would stabilize the Eurozone.

Nobody told him about Spain ..10 yr now 7.153%.

@ Private Hi

If the RTE story is true I expect the champagne corks will be popping in Liberty Hall.

Most private sector people are demoralised, not by austerity but by a lack of austerity that is directed at public sector costs and reform.

The leniency of the Troika in dealing with bloated public spending has been an enormous disappointment and the cuts they have enforced have been minimal. Therefore, any revision of the bail-out terms will lead to already very soft conditions being eased even further. The only beneficiaries from this will be the public sector as the government will no doubt see fit to reward them for their “sacrifice” to date.

Any person that wants to see the emergence of a better country out of the ashes of the current failed state should be hoping for significantly more onerous bailout conditions than the current “hysterity” with its €15b deficits that has sheltered those that depend on the public purse from economic reality.

Munchau says “A break-up would be catastrophic”.
For some it would be.

But if I am Greek youth or a Spanish youth in a 50% unemployment black hole or an Irish youth staring into an unemployment abyss, do I really give a sh*t about that.
The situation is already catastrophic for me in relative modern European terms. My future has been destroyed on the alter of some moral crusade to make citizens pay for the debts of their well off bankers or corrupt politicians.

My youthful voices would tell me ‘roll on the revolution’ and let him that does not know catastrophy taste it at first hand.

@ Frank Barry

The question might be better be phrased as “can a compromise acceptable to all countries be found?”

Courtesy of the Telegraph, we have the outline of the conclusions of the European Council.


There are a number of very dubious assertions in the Munchau article e.g.

“Unfortunately, the 25 largest banks have no bearing on this problem. It is the other banks that matter. Ms Merkel has accepted the weakest and least relevant bit of Mr Hollande’s proposal”.

The 25 largest banks don’t matter!

His presentation of the options confronting the leaders is not exactly faulty but rather simplistic when the outline of what is being attempted is examined. The most interesting bits are, of course, the items that are missing from the outline document cf. in this connection the links at the end of the thread on Spain relating to the possible introduction of euro bills.

The outline document suggest that a global package is being attempted which includes, for example, a commitment to reach agreement on the next Multi-annual Financial Framework before the end of the year. There is also a reference to the European Patent where the only issue outstanding is where the office is to be located.

The options are not, IMHO, either a federal Europe or the demise of the euro. The options are stopping the crisis of confidence or allowing the situation to deteriorate further. What will make Merkel blink is pressure from within the political system in Germany where respected opposition leaders now seem almost aghast at her conduct of affairs and the increasing isolation of Germany. By not agreeing the ESM, they are gaining some control of what she is up to (assuming that she is up to something, her former foreign minister, Steinmeier – one of the troika leading the SDP – decrying her inactivity and saying that she was in hiding).

Angie baby is correct.

We must look at the euro project as a enabler of globalization rather then as a tradional nation state construct with a clear internal chain of command (albeit the nation state experiment was a earlier form of globalization)

The Euros prime directive is the deconstruction of this now ancient (17th / 18th century) political / banking movement and the replacement of this architecture with what exactly ?
Bland non places on Bank Notes….. and Kaos of course.

Clearly it does not replace it with anything other then internal chaos while the nation state externalised the chaos outward towards its neighbours.

Europe is a funny place.

Unfortunately it overdosed on propertyitis, 700,000 units per year–distinguished members of the Society of Charteed Surveyors are standing by it’s bedside. The consultants have diagonised the very same disease as the Irish disease. Below is the link to how the overdose happened;

Professor Neil Crosby’s online response to this Irish Independent letter
“Bubble values” 29th February 2012

“The analysis may be simplistic but unfortunately it is not flawed.
Banks ask valuers to tell them what the market value/exchange price is
at a point in time and then lend vast amounts over time based on that
simple number. The surveyor gives them that simple number and do not
think it is their job to tell the banks that the question they have been
asked is stupid on its own and what they should have asked for is the
underlying value. It was obvious in 2005 and 2006 that prices in the
property market were higher than could be sustained by any rational cash
flow analysis. But in a culture that rewards individuals for short term
performance rather than longer term perspective, it was in neither the
bankers’ nor the valuers’ interests to stop it. I cannot see anything in
what the UK regulatory authorities have proposed that makes me think
they understand the role of property valuation in driving asset bubbles
and will prevent it all happening again sometime in the 2020s.”

Neil Crosby
Professor of Real Estate and Planning
University of Reading

John Corcoran – Neil Crosby is quite right to point out the critical and corrupting role of valuers and banks in the property bubble. RICS and other property related professionals should hang their heads in shame for not raising the alarm bells and not challenging landowners, banks and homeowners about the outrageous rise in property valuations which had no relationship with reality or ‘underlying value’. Their role is similar to that of ratings agencies which were paid to sign off triple A ratings by their clients for junk.financial instruments most of which related to property assets..Sadly it does not require a university professor to point this out.

Anyone with a modicum of experience in property and development knew we were headed for trouble and I am sure I was not the only person to flag it up. If these so called professionals had been held to account by their so called professional bodies ( as the General Medical Council regulates doctors) half of them would have been struck off. Their primary responsibilty should have been to the reputation of the valuation profession and not their commission. In many countries property is taxed and valuers are independent or are part of the state.

Radical reform is required or we will surely revisit this crisis again in the near future.

Another worthwhile article, though I think it fails to fully explore the reinforcing nature of the interaction between the ECB and the German right which has paralysed the EU.

A situation where a major European institution was more committed to the health of banks than to that of states was always going to create problems, and since the Germans are tied to the ECB by their fetish for hard currency we get no monetization of debt, no satisfactory bank resolution and no state led attempt to promote growth. All this goes on (or does not) while the private sector and the banks in particular are frantically deleveraging to recover from the excesses of the latest and greatest crisis of global financial capitalism.

The article then begs a question for those Eurozone countries not in the Rhine bloc.

Is there a point at which the economic costs of acquiescing to the intransigence of the current incarnation of the German right will be intolerable?

We know it is not 50% youth employment or debt/GDP ratios of 140% caused by baking bailouts but surely the rest of Europe has limits to how much they will debase themselves to keep membership in Germany’s industrialists paradise?

If the euro breaks up that’ll be the end of the neoliberal programme and the 30 year long downward trend of interest rates

@ Richard M

Having lived under the DM pre-Euro (and paid all my taxes, health insurance, federal & state taxes) and saw the level of services offered at first hand at an efficient rate relative to tax, I like you it seems would ‘trust’ the fiscal & political union of the German. would be a change of sorts. Only by coupling this with the the new (alleged) Troika deal can any headway be made in adjusting the public sector pay/pensions/numbers/work practices in this jurisdiction. Did the bureaucracy expand to meet the needs of the expanding bureaucracy. My feeling is that the public sector need to stop doing things that don’t need to be done at all, embrace technology and work smarter.

@ Frank Barry

Steinmeier, who is also leader of the opposition, gave a major interview in the large circulation Welt am Sonntag yesterday in which he ruled out a repeat of the Grand Coalition with the CDU/CSU. The following is the Google translation of what he had to say on the crisis with some rather free corrections.

“World on Sunday : The Chancellor of Germany warns against overstrain. What are the limits of endurance?

Steinmeier : Germany’s course has limited options. And of course, there must be two-way solidarity. But that should not be an excuse to again see any red lines that can not be defended at the end. This policy of Mrs. Merkel has brought us into the present mess.

One thing is clear: we do not live on an island of the blessed. Just as we are the largest and most successful export country in Europe to rely on our European neighbors. It is in our interest to stabilize the crisis countries.

World on Sunday : What does that mean exactly?

Steinmeier : The current crisis is not only a sovereign debt crisis. It is also a banking crisis. Therefore, we first need an emergency program to stabilize the banking system. It also includes specific proposals for deposit insurance, as now in many European countries creeping bank runs are underway.

Second, we need a solution to the problem of debt. Only if investors believe again that the money will be repaid, can the states get more money.

The German Advisory Council has said how to do it. It proposes a debt repayment fund, as it existed in Germany for the financing of German unity. All debts over 60 percent of economic output is put into a common fund for the redemption of its interest remains, however, each state remains responsible.

I expect Germany to get serious dealing with this idea and discussing it with its European partners. Without such an instrument we will not get a grip on the crisis.

World on Sunday : This Sunday Greece decides . What would a victory for the left-austerity opponents mean?

Steinmeier : We would have to adapt to new, violent shocks to the euro zone. I hope that Greece will get a government that is willing to maintain the common European currency and to make the necessary efforts.

World on Sunday : Is Greece staying in the euro zone really the best solution?

Steinmeier : Many believe that afterthe withdrawal of Greece from the euro in Europe, all is well again. The truth is that the biggest problems would begin – and not just in Greece. One consequence would be a massive devaluation of the assets remaining in Greece. What kind of political stability in the country would this lead to?

World on Sunday : The forecast, please: Who will be in ten years, yet have the euro?

If we are now wise and courageous and do the right thing, it will be more than 17”.

The widespread monolithic view of Germany in Ireland does not stand up to examination. Such a view, curiously, is never imposed on other countries.


Your conversion to social democracy is noted; does Paul H know about this? Could this be the end of the beautiful affair?


Trap recalled him with Terry Mancini to beef up for the Irish back_4 and get the Italian 10yr over 7% before kick off.

@Kevin O’Donoghue

Why has Colm McCarthy disappeared from the list of UCD people? W

Colm is attending a compulsory closed door ECB economics workshop in Frankfurt.

The workshop is intended for all EU economists who have displayed difficulties understanding any of the importance of the stability of the financial sector and investor confidence, the moral necessity of rule based fiscal policy making, the complex modalities of the reverse incrementalist EU approach to economic strategy and the crucial role of discipline, strong determination and faith in economic analysis.

He will be free to return to his academic post only when he truly loves Lorenzo Bini-Smaghi.

It’s interesting that it is assumed that Germany is the only big power with resources on the line.

Now that M. Hollande has got his parliamentary majority, governing has to begin and France has to also show its money in support of the PIIGS, to match its words.

It’s boring I know to say that growth problems in the Med countries and Ireland predated the launch of the euro (Ireland did have a brief spurt in FDI and then it gave way to the leprechauns).

If the yield on eurobonds rose to 7% (assuming an ECB benchmark rate of around 1%) because there was no appetite for reform in most of Europe and like most recent presidents before him, Hollande opts for a quiet life, what would the excuse be?

Chinese exports to non-US, EU and Japanese markets rose 17% in May compared to a year earlier – – a trend that has intensified over the past year. Chinese exports to the EU fell 0.8% in the first five months of 2012 from the same period last year, according to HSBC. In the same period of 2011, exports grew 18% year on year, which in itself was a deceleration from the 34% growth recorded the previous year.

The global market is no longer Western Europe, US/Canada and Japan and the EIB will not provide a solution to sustainable growth.

Of course Ireland has little if any influence on these issues and here again we are obsessed about what Germany should do or not while at home, an emergency continues for the largely invisible folk in the private sector.

Up to 80% of defined pension schemes are in deficit and the benefits of 200,000 employees, 200,000 former employees who have not retired, and 85,000 pensioners are in peril.

In the period 2001-10 in the 34 mainly OECD developed countries, real (inflation adjusted) pension fund performance was a paltry 0.1% yearly on average.

Some companies including a Swedish multinational I worked for, are using the crisis to negate previous commitments.

John McManus in The Irish Times today highlights what could likely be an example of financial repression – – political leaders and policymakers at the NTMA, members of special public pension scheme linked with earnings — are seeking to have private pension funds invest in Irish bonds.


Issues like septic tanks are bigger priorities for the Oireachtas and academics are also sheltered from the realities faced by many in the private sector.

Responsibility for semi-State and university pensions was assumed directly under the Financial Measures (Misc. Provisions) Bill which was rushed through the Dáil in just three days in 2009. The National Pensions Reserve Fund is now responsible for these funds and the deficit in the funds exceeded €1bn according to a 2010 response to a Dáil question by the then Minister for Finance, Brian Lenihan.

The university deficits amounted to about €630m led by Trinity College at €315m.

The general taxpayer of course carried the bill. It’s cake for outsiders.

I am beginning to doubt Wolfgang Munchau’s analysis. He has been saying that doomsday is around the corner for almost two years – that there are only x amount of days or weeks left to solve the crisis. Italy and Spain are not going to leave the Eurozone next week if a deal is not done. This is not how European politics works.


“The widespread monolithic view of Germany in Ireland does not stand up to examination.”

It is shared with the UK, IMO. The way Germany is portrayed in the tabloids in the UK is a joke. Contrast the view of the Germans with the default setting for the French- sensual, sophisticated, modern.. French mothers don’t shout at their children and so on.

Did you ever come across “the speckled people” by Hugo Hamilton? His mother was German.

“It would be win-win were it not for the fact that the high interest rate that the Coalition is offering reflects the fact that there is a far from trivial chance that the Government will default on the bonds. The country is, after all, broke.

Consequently, the attraction of such high-yielding assets to a struggling defined benefit scheme is tempered and the entire scheme has not really got off the ground.”
From the article in the IT linked by MH.

David Murphy was indicating on the lunchtime news that the Troika were prepared to accept “pain” in a restructuring of our bailout.
It seems clear that if Official funding sources are prepared to contemplate this course then Private funding can expect similar “pain”
Is this dangerous territory given our supposed return to markets?
Isn’t it also clear that a trustee of a pension fund would be courting legal liability if pension funds were invested in the new annuity bonds which would have a less than stellar rating.

@ seafóid

I was referring to the curious view in Ireland that politics exist everywhere; except in Germany!

Despite the best efforts of Derek Scally, the media coverage – notably by the national broadcaster – of EU issues in general, and Germany in particular, is almost laughable.

As to the UK and Irish views of Germany as a nation, I do not think that are comparable (as any reading of the historical record will serve to underline).

@MH et al

François Hollande’s European reponsibilities
18 June 2012 Presseurop Le Monde, Les Echos

In the wake of general elections, President François Hollande’s Socialist Party (PS) has a majority in both houses of the French parliament – a particular situation which, as Le Monde points out, means that the newly elected president will have a “historic responsibility with regard to Europe” –


Let’s see what he is made of …


“He said ( rte news) that the Greek vote would stabilize the Eurozone”

I didn’t see it but did he also mention that more Greeks voted for anti-bailout parties than bailout? Not that the bailout parties are necessarily going to get up a government between them. I think Syriza are playing a game of let them form their coalition then we will come in on a sweeping victory at the next election when it all goes t1tsup. I think the bailout parties know that. What’s a boy to do? PASOK must be wondering that’s for sure. They know they will be blown away in those circumstances.

Re your telegraph link.

What’s going on? Rte have been repeating the story all afternoon. Wonder who the “source” is.
In the meantime your favourite person AEP doesn’t think much of the current strategy…
“If the Devil wanted to guarantee that Greece is pushed out of the Eurozone, he and his evil handmaidens could not make up the above, satanic, scenario. Meanwhile, the same happens in Spain, where the government is forced to borrow money (at nearly 7%) it can hardly raise in order to shore up banks that are borrowing from the ECB (at 1%) to lend to the Spanish government (at 7%) so that the latter can… bail them out. Not even the sickest of minds could make this up!”

Hard to argue!

It’s getting serious…
“15.41 European Central Bank Governing Council member Ewald Nowotny: “Policymakers must avoid repeating “single-minded” focus on austerity that helped bring Nazis to power in 1930s German economic crisis.” …telegraph.
No comment necessary.

Btw, just watching President Bono presenting awards to that nice Burmese lady.

David Murphy sticking with the “pain” comment on RTE six one news. They added a bit about EU denying same.
I take it pain= haircut.


Has Bono paid his VAT? Did he park illegally at Dublin Airport? Was he spotted with Shawnee, Dinny O’B. PJ & PD_Mac in Gdansk? Did he reallly give the papal blessing to/in Croke Park yesterday? Is he the man to save the euro?


Go on RTE yourself ….

““15.41 European Central Bank Governing Council member Ewald Nowotny: “Policymakers must avoid repeating “single-minded” focus on austerity that helped bring Nazis to power in 1930s German economic crisis.” …telegraph.”

Quite extraordinary from a an ECB council member. Some of the ECB council members are beginning to realise that they have liathroidi. Or like the astute people that they are ‘positioning’ themselves for the post regnum.

Angela Time:

Setback for Merkel’s Pet Project
German States Blackmail Berlin over Fiscal Pact

The fiscal pact, designed to impose budgetary discipline on the EU, is one of Chancellor Merkel’s pet projects for fighting the euro crisis. But she needs the support of Germany’s 16 states to get the treaty through parliament. The governors are selling that support at a high price.


(Indekon failed to get the contract on a survey of the 16)

Merkel’s International Isolation
World Turns to Unwilling Germany to Save the Euro

The euro is in trouble and only Germany can fix it. That appears to be the consensus as Chancellor Merkel attends this week’s G-20 summit in Mexico. So far, she has stubbornly opposed most crisis solution proposals coming from Brussels. But the risks are now so great that she may soon have to backpedal. By SPIEGEL Staff


But abandoning the euro is also not an alternative. The costs would be too high, not least for Germany. According to calculations by Jens Boysen Hogrefe, an economist at the Kiel Institute for the World economy (IfW), the financial risk amounts to about €1.5 trillion. The greatest share of that risk likely lies with the Bundesbank. Within the framework of the ECB payment system, the Bundesbank has accumulated claims amounting to about €700 billion, of which it could probably only recoup a small portion if the euro fails. German Finance Minister Wolfgang Schäuble would have to give up for lost up to €100 billion in bailout funds promised to countries like Greece, Portugal and Spain.

[NOTE: One and a half Trillion for Germany is equivalent to Irish Insane Banking Guarantee of 45% GDP … I’m sure Enda and Lucinda and Eamonn and Michael are into the explanatics …. ]

Worth a read …

I am afraid – the Fascists are in Power.
They merely change their game theory and rate of extraction to suit the present tactical envoirment.


@David O’Donnell

IMHO, the Kiel Institute have got it completely wrong.
The German public purse may be on the hook for ~1trillion but it has several offsets against that.
Does anybody seriously think that all the foreign capital that has flowed in banks and bunds over the past four years will be handed back in Dmarks, while official Germany whistles for its money.

But the real loss to Germany will be loss of export competitiveness.
Having experienced an avalanche of bad debts in the past number of years I have found that loss of loans is not nearly as bad as the continuing loss of a customer and his business.

That Germany has yet worked this out amazes me. In fact it leads me to believe that Germany is still doing very well and still having a very good ‘crisis’ and has more that enough offsets to compensate for the Kiel Institute estimated ~€1.5 billion losses.

@michael h

The house is on fire, but in Ireland having a gawk over the fence at the neighbour’s fire engines has a fascination defying reason.

Promised insolvency legislation is around the corner like the promise of good weather. Presumably, the banks haven’t signed off on it yet, thinks the cynic in me.

There can be no debt forgiveness for the citizen yet in the Siteserv deal over 100 million was written off. Not a whisper of protest from any government minister.

I have long given up hope that the public interest directors might actually tell the great unwashed how exactly they are looking after the public interest.

Many of the the once mighty barons of concrete and glass are suffering terrible hardship in the UK and elsewhere in bankruptcy arrangements.

Still no assessor for Anglo Irish shareholders.

Democracy, Irish style. Ignore the voters.
I laugh every time I hear about the ‘feckless’ Greeks.

@ ceterisparibus

Indeed! What is going on?

Timing is everything in politics, it seems to me, and the problem is not that Ireland needs, and deserves, some assistance on banking debt but that an incompetent and divided government insists on repeatedly choosing the worst possible moment to seek it.

Interesting silver movements recorded in UK External trade statistical bulletin for April 2012 (gold is not recorded in these accounts)

Any Monthly movement over 200 million deserves a mention – be it volatile goods such as Aircraft etc.

– Increase of 200 million silver imports from China etc

This after the previous year Y2011 of major Silver exports from the UK recorded as 3.008 Billion……..getting into number 27 of the top 30 Exports for the first time in a while at least.

Something happening ?

@The Alchemist

“Presumably, the banks haven’t signed off on it yet, thinks the cynic in me.”

Maybe not so cynical as you think. More than once in the past month I’ve been asked how I might position something related to banks and PIL.

There’s an Irish team on the telly. Playing some game where every time the opposition loses the ball, the Irish lads give it back to them. What’s it called? Polite ball?

Doing some further research in this polite ball game, I notice that Greece are playing Germany in the q-final on Friday.

You couldn’t make it up could you?

Some info for our capable national planners that may be useful if / when we leave the Euro

Passengers journeys on the UK rail network

Post war peak Y1957 : 1,101 million (Suez crisis ?)
Y1982 : 630 million (beginnings of the oil glut depression)
Y1985 /86 : 686 million (oil glut proper)
Y2010 /11 : 1,354 million (oil / BTU shortage)


And the return of the Tram

Germany cannot afford to guarantor on any more debt. Germany can only afford to let the ECB open the taps and directly recapitalize banks. It certainly can’t afford Eurobonds.
Germany struggled with 16 million east Germans. How would it manage with 50 million Spanish!

Will Germany Blink? They seem pretty staightforward to me, the mystery is why others don’t take them at face value. If Italy and Spain decide that the price of staying in the euro is not worth it to them, then that’s their choice and it has to be seen as definitive. For Germany to pay would be like paying for someone else to eat in an expensive restaurant where they don’t particularly like the food.

When Germany stares the loss of a hundred million market in the face it will do more than blink. German popular media has worked the people of Germany into a lather about the overpaid, tax evading, early retiring PIIGS. I hear this in my own house from visiting Germans who should know better. Nobody has told the Germans about the PIIGS adult and youth unemployment rate, slow bank runs, declining GDP and tax revenues. When the accelerating, self reinforcing downward spiral is pointed out to them they tend to agree albeit reluctantly, that Germany will be hoist by its own petard. Popular perception is that if the PIIGS disappeared off the face of the earth tomorrow Germany would not suffer. Nobody told them that the German Sovereign and banks are up to their ears in bad loans to the PIIGS and that the PIIGS could pull out of the EZ and default on sovereign and bank debt. Add to this the gathering hostility toward Germany amongst the PIIGS and one sees Germany creating an anybody but Germany mentality when the PIIGS start to recover and become attractive to foreign investors.

Is Germany that stupid? I think Willem Buiter got it right when he said European leadership needs a real crisis before they take decisive and positive action.

@PR Guy

“how I might position something related to banks and PIL”.

After PIL Mr Rotten worked with Leftfield

This song works for the banks


you lied, you faked
you cheated, you changed the stakes
magnet Toss that pie in the sky
unrehearsed, let the bubbles burst
all in all, a three-ring circus
of unity with parody
tragedy or comedy
probably publicity

It is a funny old world alright. Merkel preaches thrift and austerity but on the other hand…

Hollande is talking about a bumper stimulus. Monti is talking about a bumper stimulus. Howlin is talking up a stimulus.

The latter is most curious as the minister has rejected ESRI criticisms of the value of a domestic stimulus.

Just as the ESRI belatedly recognized the ‘better off unemployed’ time-bomb, it has failed to appreciate the importance of such stimulus packages.

It is a very serious faux pas.

Stimulus packages, ‘economic’ stimulus packages, are essential in political life. Strolling around the streets of the local town with your pockeets turend out is not the image the sucseesful TD wishes to project.

Government politicians simply cannot go back to their constituencies, especially ministers, without having wheelbarrow loads of dosh to throw away on publicity attracting follies. It is vital to have a stimulus beginning, say, 18 months to a year before the next general election.

Roads to nowhere, industrial parks with no tenants, vacant ‘decentralised’ offices, additional ‘special’ county boards, report generators, lots of wind and hot air energy sources, additional cronies required, staff sorry, to oversee the ‘investment’ of the ‘stimulus’ funds. And along the way a few bob to the social partners to keep them from kicking up a racket.

There brazenness of the ESRI to question the value of a stimulus is truly eye-opening. Shocking. Hard to credit it is an Irish institution.

Spain paying a tad over 5% for 1 yr cash today. German ZEW survey components much,much lower than consensus expectations.

9.22am: Germany’s constitutional court has upheld the case against the European Stability Mechanism, the permanent rescue fund to replace the EFSF. The court said Angela Merkel’s government had not consulted parliament sufficiently about the configuration of the scheme.

The ESM is supposed to come into effect in July but has not yet been ratified by many eurozone member states, including Germany. This ruling does not bar the ESM from taking effect, but it can’t be helpful in terms of getting it through parliament.

Is this what we voted for?


The ESM has yet to be put to a vote in The Dáil … afaik

In Germany the Fiscal Corset needs 2/3 in both houses [see link for yest above] and has yet to be ratified in de stag or de stat …. :essentially, Angela’s and Wolfgangs’ spin has returned to trip them up locally ….

@the Alchemist

Local ministers and their departments appear to operating from silos in little turf wars … not good. There has been no [real; significant] change in g_over_nance

So, the Germans may not be blinking at the G20 but there’s a definite twitch going on there.


Hey – no surprise but many of those Germans citizens have gone to Speksavers

Germany driving up wrong side of the road
19 June 2012 Der Spiegel Hamburg

But no panicking, please: No one seriously wants Germany to pay the debts of Europe. The days of the gold standard ended when the payments between the central banks were cleared in Fort Knox, and the gold bars were shifted from one vault to another. A banking union and euro-bonds should integrate Germany into a system of mutual security. Without such a system, Europe will break down. [,,,]

Merkel the Tentative
It is a historical shame that during this crisis we have a chancellor for whom Europe is not an affair of the heart. In such moments, moments that one can in good conscience call historic, it is important to recognise the political realities – but only in order to change them.

So it’s worth thinking about what might have been under different circumstances. Nietzsche wrote: “The question ‘What would happen if this and not that occurred’ is almost unanimously rejected, and yet it is precisely the cardinal question.” We like to put the march of history down to impersonal forces. But at the turning points of history there always stands an individual. Had the “99-day Emperor” Frederick III not died of throat cancer, and had Bismarck stayed longer by his side, would the Great War perhaps have been prevented?

One can assume that an SPD [German Social Democrat Party] Chancellor would have behaved differently at the start of the crisis than Merkel the Tentative. And one can hope that a new chancellor – or a new woman chancellor – will behave differently after the next election. Small note: Hannelore Kraft has replaced Angela Merkel as the most popular politician in the country. Europe just needs to hold out till then.


Blind Biddy says Hi!


Oh Dear!

What will I do without The Conflationist Fallacy?

When the banks and the dodgy financials are severed from the sovereign The Aesthetic Turn will take its place in the annals of political economy, and perhaps, just perhaps, Patricia the Irish_Sovereign_in_Exile will come home.

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