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German elections: the North Rhine-Westphalians… — 17 Comments

  1. There is nothing other than austerity for the moment. Before economic growth comes a settling of accounts. Absent the consequences of gargantuan debt — default or repayment, businesses/banks will not gamble; unless of course Eu Central Banks back the gamble (with the promise of future taxes/tax revenues or severe austerity, aka vicious circle). It will be a long time before this is played out — it wouldn’t be nearly so long if the Eurocrats weren’t so damned sure they’d successfully repealed the laws of economics and altered the nature of humans.

  2. All austerity really means (in the real world, at least) is living within one’s means.

    With the modern welfare state, neither governments nor individuals are used to that.

  3. Here is the WSJ take on the election. I agree.

    http://online.wsj.com/article/SB10001424052702304192704577402052723856514.html

    The CDU candidate was terrible, and local issues like childcare were important. Germans are, as usual, schizophrenic. They certainly don’t want to spend anymore on Greece, but they also still believe in the terrible energy policy pushed by the Greens, which will cause higher prices and possibly even insufficient electricity.

    I’ll see what else I can come up with and try to give a synopsis later.

  4. Here is another very informed take on the mood in Germany.

    http://online.wsj.com/article/SB10001424052702304203604577393821952841442.html?KEYWORDS=josef+joffe

    It should be noted that Gerhard Schré¶der has endorsed Peer Steinbré¼ck as SPD candidate to oppose Angie. He is a common sense, financially sensible possibility, far better than Steinmeier. Merkel has some do-gooder types in her government that can blur the distictions between SPD and CDU. I just hope the Greens lose votes.

  5. “All austerity really means (in the real world, at least) is living within one’s means.”

    We are entering the Catch-22 stage of the global economy. I don’t see how a huge contraction in the global economy can be avoided, and the last 4 years have only made the eventual contraction all the more dangerous.

    “It will be a long time before this is played out — it wouldn’t be nearly so long if the Eurocrats weren’t so damned sure they’d successfully repealed the laws of economics and altered the nature of humans.”

    The same is true of the bureaucrats, politicians, and voters here at home.

  6. Neo:

    Well, if by “the monetary union” he means the EU–and I believe he does–many would say “good riddance,” and I’d be among them.That is what tied the economies of member countries together so tightly, and put nations such as Germany in nearly the same boat as Greece.

    While Greece gamed the system, borrowing and borrowing, the system also benefited Germany. When the Euro replaced low-value currencies such as the Greek drachma, Germany was able to export more goods than before.

    I don’t see any solution but for Greece and other countries to leave the Euro. When the Germans and the French learn to accept that reality, they may come up with some realistic solutions. Will the Euro completely collapse? Don’t know.

  7. This is the problem that a democracy will always have. The people don’t want austerity, they want their dreams to come true. The voters paid no attention for the 20-30-40 years that the politicians taxed, taxed, taxed and spent, spent, spent. The politicians stole our prosperity and gave us austerity. Now we get to vote and most will vote to continue the dream, continue to borrow, to tax the other guy. You promise to lower retirements, cut working hours, increase pay and tax the rich to pay for it and the suckers will vote for you. Those who are ignorant of history are forced to repeat it. It won’t be nearly as pretty this time though. The great depression lasted 11 years while FDR did little or nothing meaningful to stop it. If WW II hadn’t happened we would probably still be in the great depression. But there were less people then and they lived on the land or close to it. If you live in the big city, look around. Where will you get food after the collapse?

  8. The European public just can’t stop believing in the tooth fairy. It will take a major financial collapse to change that.

    FWIW, the Euro is rolling over and heading towards long time lows. The markets didn’t like the results of that election. Nor the French one.

  9. Gringo,
    Your point about Germmany profiting from the exports is a prime example of the schizophrenia I mentioned. There is probably no German who is not proud of the Export Weltmeister title. Yet few realize that exports to other EU lands, including Greece, figure in the exports counted. And aside from the ridiculous Spanish building bubble, there were also the enormous investment in solar energy there, which cost jobs. Of course the Greens (and no one else) talks about this. It wasn’t that many years ago that I saw young people on TV saying that they were Europeans first, Bavarians (or whichever state they were from) second, and Germans third. I’m not sure that holds up any more because I haven’t seem any demos supporting brotherhood with the Greeks.

    The Greenie movement stiil holds many in its grip, and now there is the Pirate Party to contend with. This is a bunch of internet types who want more transparency and citizen participation in government (via internet, of course), but they don’t seem to know enough about any issues to state other positions. They are a big enough force that they will somehow have to be accomodated in the next campaign.

    It’s looking like Merkel is still holding firm with Hollande, and he has been attacking her. But she cannot ignore the smaller parties, which will continue to push for their incoherent dreams. The media is still in the tank for the apocolyptic utopians. Just yesterday they gave a nice little hunk of time to a WWF report about the world using up all its resources. With this going on, no one can say what policies will develop. Don’t expect coherence, though.

  10. Gone With The WInd,

    To answer your last question: at the nearest organic food market, of course.

  11. To be honest, regardless of what is put into print as possible solutions (by any political party, regardless of it’s real ends, goals), you can better see by what they have done. You can look at the American “left” and see exactly what is proposed by the European left. Exact policy? Maybe not, there are many roads to the Kremlin.

    If you want to know what they are going for, you need look no further than the more extreme Democrats here in America. Taxes will increase, on everybody. Control of the economy (and other areas) will be, as much as possible, assumed by the state (and that power handed out to unelected “officials”). Laws will be created to keep the rich from dealing with competition, which makes it easier to steal from them (or simply eliminate them and make what is private “public”). It’s not tricky. It isn’t even calculus, let alone brain surgery or rocket “science”. Nail meet hammer. Hammer, do your job. Done.

  12. expat says, “The media is still in the tank for the apocolyptic utopians.”

    Yep. Its the I must be able to buy whatever I want because I still have checks in my checkbook mentality.

    I get so weary of discussions about what happens if Greece defaults. Greece has already defaulted and we can all plainly see what happens. I will gladly pay you Tuesday for a hamburger today has morphed into I will gladly pay you Tuesday for a hamburger today if you will loan me the money to repay you on Tuesday. Wimpy, the new avatar of the leftists, rules until he doesn’t.

  13. I have sad news for you.

    It’s not going to be hard for Europe to abandon “austerity”, mainly because they’ve never touched it.

    Warren, over at Coyoteblog, has a summary piece derived from Cake Hayek.

    The graph alone spells it out.

    For the Euros, as much as with Congress — “austerity” means “not increasing our spending this year.”

    Actually cutting anything?

    BWAAAAAAAAahhahahahahahahahahahaaaaa!!!

  14. Growing an economy isn’t easy, but it’s an easy formula:

    Remove barriers to private enterprise (deregulate)
    Keep your labor force competitive (reform)
    Maintain liquidity in the banking systems (plenty of that right now)
    Reward productivity and make poverty hurt

    In our particular situation there is an added problem that everyone else has already cited, and that is that our own capital is tied up in other things – debt. Demand suffers because of our own consumer level debt. Injecting transactions into the economic stream does very little because the extra money is just used to reduce debt, not build investment.

    Currently, we are doing none of these things other than keeping the banking system liquid. As corporations pile up mountains of cash, they’re not going to use it until demand strengthens and/or tax laws are revamped to allow them to repatriate the funds back to the US. Any attempt to mask this massive deleveraging, though, is just an expensive bandaid.

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