22 May 2012


According to The Telegraph (here), it seems to be time to gang up on the Germans:
The coalition building against German Chancellor Angela Merkel is speckled. The British, Italians, and Poles are wary of relaxing fiscal austerity. They want the ECB to print money and take all risk of sovereign default off the table with unlimited bond purchases. The French want Keynesian spending. The Spanish want ECB action and a slower fiscal squeeze.
Between them they make up five of the EU's 'Big Six'. Their shared goal is to end the contractionary policy mix that has aborted Europe's recovery and tipped the South into 1930s debt-deflation. Mrs Merkel is "extremely isolated", said Greece's radical Syriza leader Alexis Tsipras.
Giles Merritt, head of the Brussels think-tank Friends of Europe, said the mood is ugly in the corridors of EU power. "The sheer anger directed against Angela Merkel is starting to shake the Germans for the first time. They are beginning to understand how deeply unpopular they have become, and how little time they have to act. The pressure from Beijing and Washington is mounting," he said.
The anti-austerity faction should be careful what they wish for.  It is not outwith the bounds of possibility that Frau Merkel would decide that the game's a bogey and take away her ball.  Few Germans would be uncomfortable if she decided to revert to the Deutschmark.  They might not sell as many BMWs to southern Europe, as their exports would become more expensive.  But, even faced with bank losses caused by their lendings to Greece, Spain and Italy, the Germans would survive and thrive.

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