Highway to Hell – Eurozone Edition

Yes, Krugsandra has issued another proclamation from his Fortress of Macroeconomics high on the slopes of Mount OMFGWTF.

Germany believes that its successful adjustment was the result of its own virtue, but in reality it was successful in large part because of an inflationary boom in the rest of Europe.

And here’s the thing: the Germans are now demanding that the European periphery replicate its achievement (and actually surpass it, because the required adjustment is much bigger) without providing a comparably favorable environment — they’re demanding that Spain and others do what they never did, which is deflate their way to competitiveness.

This is a road to disaster.

Germany benefited from happenstance and now expects the rest of the Eurozone to follow yet believes it was a virtue of their virtue and not a lucky alignment of the economic stars.  Nothing could be further from the truth.  But hey, what could possibly go wrong?

Pass the austerity please!


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3 thoughts on “Highway to Hell – Eurozone Edition

  1. Germany took advantage of the economic bubble to issue securities that have almost bankrupt countries after the world economic crash. They have used that advantage to issue policies that will keep Euro tied countries from extracting the kind of recompense the US tried to get from its financial system.

  2. Ask Sarkozy how that whole austerity thing is working for him. He’ll have plenty of time to answer in the near future.

  3. Germany took advantage of a favorable balance of trade in their favor to the very smaller European countries where they are forcing austerity.

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