Okay Don, its been two days now, plenty enough time to digest and research. The tickling is over and I and Francis are waiting for your advice on how his government should be running his country. Don't feel too pressured, you still have 48 hours to respond, after that there will be fines and levies imposed upon you and possibly some liens on your property if Fran doesn't like what you have to say. I know there is a lot of meat in the OP but I doubt very highly that you are a vegetarian. ;-)
On Mar 24, 4:01 pm, Don Johnson <[email protected]> wrote: > There's a lot of meat in this post Slip. I need to read it again and digest > it and do a bit of research. Thanks for tickling my brain. When I come > back I'm going to tell Fran how his government should be running his > country. > > Ha! > > dj > > On Tue, Mar 23, 2010 at 11:37 PM, Slip Disc <[email protected]> wrote: > > Tell us what you think after you check out this Interview conducted by > > Thomas Tuma and Alexander Jung of Spiegel Online International > > with......... > > > Peter Bofinger, 55, a member of the German Council of Economic > > Experts, a respected panel of five economists who advise the federal > > government in Berlin. The economist, who lives in the Bavarian city of > > Würzburg, founded a pro-euro initiative in 1997. > > > AND > > > Joachim Starbatty, 69, a professor emeritus in economics at the > > University of Tübingen in southwestern Germany. In 1997, he and three > > other academics filed a lawsuit against the introduction of the euro > > at Germany's Constitutional Court, though it was ultimately > > unsuccessful. > > > The Interview is titled: > > Bringer of Prosperity or Bottomless Pit? > > Top German Economists Debate the Euro > > > SPIEGEL: Mr. Bofinger and Mr. Starbatty, do you think it was a mistake > > to introduce the euro? > > > Peter Bofinger: No, of course not. Today, we live in a currency zone > > that, despite everything, is significantly more stable than where the > > dollar or yen are used. The euro has brought growth and prosperity to > > Europe. > > > Joachim Starbatty: Actually, the euro was a mistake with particularly > > serious consequences. A monetary union requires its members to pursue > > the same policies and be similarly productive. The so-called > > convergence criteria were meant to ensure that this would happen. But > > -- as the dramatic developments in Greece are now showing -- they > > didn't. > > > SPIEGEL: Do you feel vindicated today? > > > Starbatty: Unfortunately, our fears have become a reality. The > > monetary union was launched with real self-deception. > > > Bofinger: Excuse me? > > > Starbatty: The euro was sold to us as a modernization program for > > Europe, and we were also told that it would push the Community toward > > stability. But, in reality, it has drifted apart and become a truly > > unstable entity. > > > Bofinger: Unstable? The inflation rate has been very moderate, > > hovering at around 2 percent since 1999, and it is significantly lower > > than it was when Germany used the mark. We have a lower budget deficit > > than the Americans, the Japanese and the British. Our debt-GDP ratio > > is also lower than it is in the United States and Japan. There is no > > reason why the euro should be coming under pressure. The decision to > > introduce it was smart and far-sighted. > > > SPIEGEL: Without any drawbacks? > > > Bofinger: Sure, the euro zone is currently looking a little worse for > > the wear. But that's to be expected, given the storm the global > > economy has gone through. Still, thanks to the common currency, it's > > no longer possible, for example, to wage speculative attacks on > > individual currencies. This eliminates a key disruptive factor that > > massively destabilized markets in the past. > > > Starbatty: But that's exactly the problem! In the past, exchange rates > > served as a valve. Individual countries could control their economies > > by allowing their currencies to gain or lose value. Now, this > > adjustment mechanism no longer works and, as a result, a completely > > different sort of dangerous imbalance has emerged. Today, there are > > two blocs within the monetary union: a strong currency bloc in the > > north and a weak one in the south. The robust north has joined forces > > with countries that have constantly devalued their currency throughout > > their histories. Just look at the Italian lira, for example. At the > > end of the 1950s, I paid 6.70 German marks for 1,000 lire. The final > > exchange rate was less than one mark for 1,000 lire. > > > SPIEGEL: What would happen if the old currencies were reintroduced in > > the euro zone tomorrow? > > > Bofinger: It would be a catastrophe. The German mark would have to > > appreciate significantly -- I'd say by 10 percent to 20 percent. > > Everything that we've worked so hard to attain in terms of > > competitiveness would vanish overnight. There would be wailing and the > > gnashing of teeth in Germany. And Europe would be making a serious > > mistake if it were to revert to regionalism and nationalism during > > this phase of advancing globalization. > > > Starbatty: I see things completely differently. The euro was also sold > > to citizens as an instrument for securing peace. I never understood > > that because, if that really were the case, you would have to open the > > monetary union to everyone. Instead, in light of its failure, we are > > now witnessing just how nationalism arises in the first place. EU > > flags have already been burned in Greece. > > > SPIEGEL: Would it have been better if all countries in Europe had kept > > their own currencies? > > > Starbatty: Yes. A community can't function when it's made up of > > unequal partners who are supposed to behave as equals. With the euro, > > Germany has created an artificial competitive advantage for itself, > > which has enabled us to conquer markets all over the world. But this > > has also led to the buildup of massive excess capacity in our export > > industries and, consequently, the export-oriented companies in the > > southwestern state of Baden-Württemberg are hurting. The monetary > > union changed the structure of economies in an unhealthy way. > > > Bofinger: Oh, come on! You can't blame the euro for these imbalances! > > The blame primarily lies with economic policies. Since 1995, there > > have been almost no appreciable wage increases in Germany, partly as a > > result of pressure brought on from increases in subcontracted labor. > > Politicians have done everything to relieve employers of the burden of > > paying social security contributions because we fell into this strange > > panic, believing we weren't globally competitive. With our economic > > policies, we placed too much of a lopsided emphasis on exports. The > > Irish, Greeks and Spaniards, on the other hand, put too much emphasis > > on domestic demand. > > > 'Putting the Virtuous in the Dock Rather than the Real Offenders' > > > SPIEGEL: In recent days, French Finance Minister Christine Lagarde has > > repeatedly criticized Germany's export surpluses for being high > > compared with those of other EU countries. Is she right to do so? > > > Starbatty: No. I think it's strange that Madame Lagarde is putting the > > virtuous, who have always been oriented toward stability, in the dock > > rather than the real offenders. > > > Bofinger: But the Germans have sinned just as much as the Spaniards, > > for example. The Spaniards made their wages too high, while we in > > Germany practiced the opposite by not increasing the purchasing power > > of workers for years. > > > Starbatty: So what? It made us successful. It arose from the concern > > that jobs would migrate abroad. And Germany's moderate wage policy has > > made the country attractive to companies again. > > > Bofinger: You should look at it more holistically. We wouldn't have > > been able to increase our exports if the other countries had behaved > > like us and had not increased their demand for an entire decade. In my > > view, the monetary union is like a relationship: To function properly, > > its participants must orient their behavior toward the general good. > > If each participant only contemplates his or her own benefit, it leads > > to the kind of relationship crisis we are currently experiencing. > > > SPIEGEL: Such crises occasionally also end in divorce. Would that be > > an option at some point in the future for Greece, a euro-zone member? > > > Starbatty: I think that step would make the most sense. The Greeks > > should voluntarily leave the monetary union and reintroduce the > > drachma. If they did, they would export more and could replace foreign > > products with domestic ones. Likewise, tourists would travel to Greece > > instead of Turkey because it would be the cheaper alternative. > > > Bofinger: Excluding Greece from the Union would be the completely > > wrong approach. Greece's problem is its inefficiency in terms of > > public finances. That can be corrected. Compared with other countries, > > Athens has always collected too few taxes. The government's budget > > wasn't even balanced in the good years, when there was strong economic > > growth. That's not the way to manage a country. Greece's government > > could, for example, raise the top tax rate from 40 percent, where it > > is today, to something much higher. After Germany's reunification, > > when Helmut Kohl was chancellor, our top tax rate was 56 percent. > > > Starbatty: And you seriously believe that would help? Following that > > approach, the Greeks would save themselves to death, just as the > > Germans did in the early 1930s under then-Reich Chancellor Heinrich > > Brüning. What you expect the Greeks to do is Brüning squared. The real > > problem is that Greece shouldn't have been accepted into the monetary > > union in the first place. The country submitted doctored numbers, as > > anyone who read the newspapers knew. And others did the same thing. > > But officials in Brussels, who were worried that the Greeks would go > > public with the fraud, said: 'Let's forget it!' > > > Bofinger: But that's all water under the bridge now! We have to deal > > with the current situation. In the Council of Experts, we proposed a > > consolidation pact, under which each country would be required to > > specify a fully verifiable path that it will follow as it puts its > > financial house in order. It wouldn't just be a solution for Greece; > > it would be for everyone. In return, the Community would be expected > > to provide guarantees to problem countries that they will be able to > > raise money in the capital markets at favorable, rather than extremely > > high, rates. It's unacceptable that governments have spent the last > > few years spending billions upon billions and > > ... > > read more » -- You received this message because you are subscribed to the Google Groups ""Minds Eye"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/minds-eye?hl=en.
