Categories Uncategorized Germany Post author By Philip Lane Post date August 28, 2014 20 Comments on Germany Marcel Fratzscher writes in the FT here. Related ← France → Ireland 20 replies on “Germany” Angela Merkel – OrdoLiberal Shogun of all the EZ länder …. … and the Japanese Shoguns lasted 250 years – 1/4 of a Millenium. Time to tear down the walls of the ECB(undesbanke) …. …. and create a fully functioning European Central Bank. But where does one find the Samurai to take down this Shogun? @DOD That was the Irish Labour Party wasn’t it? Massive monetary stimulus would help but Japan’s recent experience shows that in itself it will only keep the situation from getting worse or maintain low-level growth. A 20% decline in the yen has not boosted exports while increasing the participation of women and raising immigration will only have long-term returns. Obvious solutions in Europe such as a massive infrastructure programme, gave Japan the best in the world but it did not have a significant economic impact. just like Michael Hennigans says, it would be investing just for the sake of wasting money, not because it would really pay off, according to some cost-benefit-analysis. And the FT author Marcel Fratzscher (german DIW, born 1971, the wiki sounds interesting, at first glance, but somehow in those bios “peterson institute” shows up very often) has more of such “interesting ideas” http://www.faz.net/aktuell/politik/inland/diw-schlaegt-privatisierung-von-autobahnen-statt-maut-vor-13126092.html He proposes privatizing german Autobahns. Now we had this recently here, a discussion with DOCM and me, about those bavarian plans (in the coalition treaty, mind you) to implemement a road tax in germany, indirectly primarily additionaly taxing foreigners, but made, of course, compatible to EU law. And that the administration cost of this, even with using existing road checking installations for lorry tax, and government billing systems, would still be very high, given the estimated additional income. So it would just satisfy the feelings of justice of the Bavarian voters, mad as hell paying that road tax in the south themselves, and achieve pretty little beyond that , besides annoying the Dutch : – ) Which might be seen as an added benefit by the Bavarians, but certainly not the German ruhrpott guys : – ) Now with a privatisation those administration costs and risk premiums for private capital would add very considerably. How and why would that then make sense ? Interesting, isn’t it This goes into the same direction: http://www.zerohedge.com/news/2014-08-29/krugman-and-keynesian-chorus-are-lying-japans-lost-decade-myth @ francis Fratzscher and others here outline the case that public and private investment has fallen in the past decade to the detriment of future growth. http://www.diw.de/documents/publikationen/73/diw_01.c.425761.de/diw_econ_bull_2013-08-2.pdf Just focusing on public investment (the government has limited potential influence on private sector decisions, what is your own view? Last year The Wall Street Journal reported on the month’s closure of the Kiel Canal, “a major international shipping lane, to fix badly worn-out locks has become a high-profile symbol of the decay. The closure to larger vessels, from March 6 until Thursday, was a first in the canal’s 118-year history. Instead of taking the 60-mile canal between the Baltic and North Seas, many cargo ships had to take costly detours of as many as 600 miles around the northern tip of Denmark.” Michael, Germany had an investment boom in the 1990, because of the reunification. Lots of stuff had to be (re)built in the East, and their were special tax subsidies, which ended in 1998. Some other “family” house buying subsidies ended in 2002. Productivity was expected to climb much faster in the East, kind of saturating now in the 75 -80% west area now. I would say half of the difference explained (more agriculture, shipbuilding malaise ….) the other not. Taking 1999 as the starting point is misleading, but people always do it because of the availablity of data in Euro foir all Euro countries. You in Ireland can not reasonably know this, but the head of the DIW must and does. He is intentionally misleading. “One key factor causing Germany to lag behind in construction investment is the years of underfinancing of new residential construction and the below average development of privately financed infrastructure development” If my population does not grow that much, I dont need so much new residential construction, especially if I just did this with lots of subsidies. “privately financed infrastructure development” Here we go again with the propaganda for that. There is zero reason for that, beyond that US investors try to get to the trough. There were similar attempts with “cross-border leasing” allegedly exploiting US tax loop holes. And then the law suits started, trying to shift juruisdiction to the US , etc. etc. Same with the Gagfah /Fortress deal here in Dresden. not enough investment in equipment (Fig. 7)?? Then why do we have a Current Account Surplus of 7% in comparison to Italy spending more on equipment ? The Kiel channel, well for 118 years small repair, which does not require closing it, were enough, excellent achievement, good german engineering. But now the locks have to be replaced, and that means closing. Soooo ? Fig. 17 TFP growth looks a little lower, because we go more people at the low wage (5% at 60% median, resulting in a “productivity hit” of 3%, distributed over the 6 years after 2006, gives the 0.5%/yr “lack”) end into work, the Bologna process got university folks 3 years earlier into work (5% at 80%) , both good things, which just show that way in the TFP. Same thing happened in the US after 2008. People here in Saxony complain that “we have by far not enough teachers”. But they get the highest PISA scores! Fratzscher et al. fail to make their case. @ MH There will be no change in German policy until the domestic downturn arrives decisively and starts banging on Merkel’s (and Schaeuble’s) door. That’s politics! http://www.sueddeutsche.de/wirtschaft/sparkurs-in-europa-kritische-fragen-an-mario-draghi-1.2110316 @ MH Stephanie Flanders (ex-BBC) on the general topic. http://www.ft.com/intl/cms/s/0/4219be52-2ec5-11e4-afe4-00144feabdc0.html#axzz3ByqoXOkL She must surely be correct in her conclusion that both the ECB and EZ governments must do more. There is evident room to find some common ground. The situation is not black and white; or as bad as some commentators have painted it. @ All Two examples (posted on another thread). FYI Will Hutton and Dan O’Brien on France; and the euro! http://www.theguardian.com/commentisfree/2014/aug/30/francois-hollande-economics-gamble-with-europe http://www.independent.ie/opinion/comment/future-of-the-euro-in-grave-doubt-as-francogerman-core-crumbles-30549580.html The euro did not create France’s economic problems. What it did do, however, was remove the safety valve of devaluation which had been used in the past to mask the failure of the ruling elites to deal with them. Hollande, like his only recent socialist predecessor, Mitterand, has done a volte-face and in about the same timescale. This was, however, before the introduction of the euro and its unexpected role as a drag anchor in the relationship with Germany. DOCM, in your flanders link http://www.reuters.com/article/2014/08/31/us-eurozone-draghi-merkel-idUSKBN0GV0DN20140831 Schaeuble said last week that he believed Draghi’s comments had been “over-interpreted”. “The ECB has a clear mandate to ensure currency stability. It doesn’t have a mandate to finance states,” the minister told reporters on Sunday. “All those who can’t manage within their budget want to cross that boundary. They would like to get (financing) from the ECB.” : – ) btw, Election Results in Saxony: CDU 40%, anti-Euro AfD 10%, so far not a single direct mandate not gone to the CDU http://www.spiegel.de/politik/deutschland/landtagswahl-in-sachsen-alle-ergebnisse-a-986694.html#startTab=1 looks very pluralistic, doesn’t it. if the right wing NPD would be a tiny bit below 5%, Stanislaw Tillich could do a coalition with the Greens, whose lead candidate Antje Hermenau laid down her Bundestags mandate in 2004, because “Schröders Agenda 2010 was too soft on financial discipline” Update Ukraine: Text from Paddy Zhukov somewhere in Novorussia – worth reading http://vineyardsaker.blogspot.ie/2014/08/august-29th-1535-utczulu-ukrainian.html text from Blind Biddy in Gaza: Pictures worth thousands of words – take the tour http://www.kolor.com/virtual-tours/20140818-kolor-lewis-whyld/#s=pano110 http://www.theguardian.com/business/2014/aug/31/russia-economic-warfare-rip-free-market-new-world-order the “preliminary final results” are in, see my link above Some more More integration is still the right goal for Europe By Karl Lamers and Wolfgang Schäuble http://www.ft.com/intl/cms/s/0/5565f134-2d48-11e4-8105-00144feabdc0.html#axzz3C038ZwS3 Industry not happy with to much goodies http://www.ft.com/intl/cms/s/0/10a7e2b0-2d15-11e4-8105-00144feabdc0.html#slide0 @David O’Donnell re: Ukraine The idea of the ‘EU’ or others getting involved in military assistance to the Ukraine, in order to force Russian speaking people and regions in what was the Ukraine to submit to its western ethnically Polish/Lithuanian oligarchs that have been engaged in ripping off region for the past 20 years, is just nuts. If ever there was a case for breaking up a country, peacefully through negotiation, then this is it. If there is a fear of Putin’s ambition, and a line that Putin must not cross, it is certainly not east of the Dneiper river. @ Joseph Ryan So it’s OK for Putin to support breakaway republics in neighbouring countries but with a Muslim majority in the federation like Chechnya, bringing ruin to the place was fine? @ francis Its deja vu all over again! The two politicians in question belong to the wrong generation. There is simply no political appetite for the changes they are proposing. Much of what they are seeking could be brought about without any further institutional upheaval. The trade-off is as identified by Flanders. Schaeuble’s insistence on running a balanced budget is the equivalent of turning off the fire hose in the middle of a conflagration. How about we open a thread topic “Ukraine” ? like we have ireland, france, germany now. And I babble here a little more about german details, the latest elections with those interested in that “Germany” topic It seems to get hot now http://www.spiegel.de/politik/ausland/ukraine-kiew-meldet-kaempfe-gegen-russisches-panzerbataillon-a-989153.html and all the talk and maps about novorussia One last thing to this especially for David, this Zbigniew Brzezinski wrote a book “The Grand Chessboard” which relates to “Heartland Theory” of some Mc_Kinder in 1904. This guy is still active, e.,g. IISS, and a lot of US folks like Greenspan, Bernanke, Krugman come from this area. in the vicinity Applebaum, Madeleine Albright, Soros, just saying … : – ) @Michael Hennigan re: Ukraine: No, It was not ok for Putin to lay waste to Chechnya, or anywhere else for that matter. Pity the EU did not consider some response at the time, but perhaps the Chechens were just penniless Muslims. But there are harsh realities at play here. Neither the EU nor the US nor any other alliance can or should try to force Russian speaking people in the Ukraine to live under a western umbrella. The inhabitants will not want it, and any such alliance is incapable of enforcing that position. Its that simple. If one is going to draw a defense line, then at least have the common sense to draw it where it can be defended. To add to the nonsense of the attempting to hold an indefensible defense line consistent with existing Ukrainian borders, we have the issue of energy supplies. The current EU strategy of saying to Russia that- ‘we are imposing sanctions on all your exports, except of course your energy that we absolutely need to heat ourselves and run our economies’- has a bozo the clown sound to it. [On the subject of Chechnya, the strategic overview is that Russia will never concede its hegemony north of the Caucus barrier. Its treatment of the Chechen people was appalling and should have been subject to sanctions, as should many other international war crimes. Whenever sanctions are imposed, however, they always seem directed more at the general population, rather than at serious attempts to sequester all the assets of the elites who perpetrate these outrages] one more links to the Saxony, Germany election results final, complete count after 5 hours last night: http://www.wahlrecht.de/news/2014/landtagswahl-sachsen-2014.html#absolut and since Joseph brought the clown theme: http://www.zerohedge.com/news/2014-08-31/these-clowns-are-dragging-us-war Comments are closed.