Germany’s Historical Euro Responsibility : (Page 3)

January 25, 2012

Germany’s proposal seems fixated on a new treaty to put in place tough limits on deficits through austerity regimes and constitutional balanced budget amendments in each country, which in the short term the market considers irrelevant and in the long term likely to make things worse. The Euro problem is not only one of austerity in the South of Europe, but also one of trade balance adjustments in the surplus countries, particularly Germany.

If even the committed Euro-skeptic Martin Feldstein writing in the latest Foreign Affairs magazine can admit that the “Eurozone is likely to continue with almost all its current members,”[ix] European leaders can certainly decide that countries as diverse in political and social culture, productivity and taxation as the Eurozone members can come together to establish finally a European Monetary Union with the Euro as its currency. That union agreement will set the path for a more integrated Europe for the next century.

 

[i] Wolfgang Muenchau in the Financial Times and Helmut Schmidt, Speech: “Rede Helmut Schmidt auf dem SPD-Bundesparteitag am 4. Dezember 2011 in Berlin.

[ii] Sikorski, Radek, Foreign Minister of Poland, Speech: “Poland and the future of the European Union”, DGAP, Berlin, 28 November 2011

[iii] Sikorski

[iv] Marsh, David, The Euro, p.99.

[v] Marsh, p. 135.

[vi] Marsh, David, The Euro, p.99.

[vii] Marsh, p. 137

[viii] Schmidt, Helmut, Speech: “Rede Helmut Schmidt auf dem SPD-Bundesparteitag am 4. Dezember 2011 in Berlin.

[ix] Feldstein

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1 Comment

  1. avatar Christian Deubner says:
    January 22, 2012 at 12:27 pm

    Yes, unfortunately too many eyes are turned to Germany, including those of Ambassador Bindenagel. And not enough eyes are turned towards the private creditors of overdebted Euro-States, engaged in a battle of blackmail with the taxpayers of Germany and other AAA-Euro-states, over who will assume the losses which the devaluation of the respective states’ sovereign bonds will bring about. Private creditors are intent to force taxpayers once and for all into covering all their present and future losses on such sovereign bonds and they make everybody the (anglo-saxon) world over understand that the one pivotal EU government which still refuses this blackmail, namely Germany, does not assume its responsibility “for Europe”.
    Why would the United States’ Ambassador Bindenagel want to create a fiscal-economic union with binding obligations on Euro-States’ fiscal policy, plus a bail-out system for overdebted euro-states, as condition for a successful Euro, when neither the US- nor the Canadian dollar or for that matter the Swiss Frank have something like this ?
    This absence of federal fiscal policy dominance vis-a-vis the states, and of a federal bail-out guarantee, is the most important cause of a situation where the US states have much lower debt ratio differentials among themselves than the euro-states, motivated by ratings and yield differentials on the financial market, which are high enough to push them to borrowing discipline, but not so high as to render existing debt unsustainable.
    It is this kind of situation which the Euro zone should strive for as a long-run solution, and it is worth political crisis and conflict, plus substantial financial efforts, and the attendant resentments against a Germany which pushes for it, if it could be realized at the end of the present sovereign debt crisis. Because we hope to live with the Euro and a sustainable fiscal coordination system for many decades or longer, whereas the present crisis will be forgotten in a very few years.

    Best regards, C.D.

    Reply

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