A right royal row is brewing at the ECB. Basically the old guard theorists of the ‘one size fits all’ monetary policy are being challenged by more pragmatic observers of day to day realities. For the moments it is the politicians who are making the running (but there are plenty of competent economists in Germany and Italy who are ready to back them up), and yesterday the OECD joined the fray.
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Tag Archives: Germany
Lafontaine Muddies The Waters
Any opinions from Germany on this?
“Chancellor Gerhard Schr?der’s re-election hopes were dealt a fresh blow on Tuesday after a charismatic political rival said he would join leftwing groupings to run against the German leader.
Oskar Lafontaine, former chairman of Mr Schr?der’s Social Democratic party, said he would give up his party membership and enter the electoral battle if other SPD dissidents and neo-communists ran on a joint ticket.”
Is this a real issue, or a media event?
And this is also being floated:
Should the umbrella group win in sufficient numbers, it could rob both centre-right and centre-left of an outright majority, forcing the opposition Christian Democratic Union into a grand coalition with the SPD.
The Mysteries of Growth: France & Germany
The latest data on French household spending show that it rose rather faster than expected in April. This suggests that consumer spending is still supporting economic growth in sharp contrast with the pattern in Germany. In Germany the domestic economy actually *contracted* in the first quarter. True the German economy grew, but this was due exclusively to the export sector. So while the German domestic economy has been struggling France has been one of the eurozone’s best performing economies, with consumer spending and a booming housing market supporting growth. The French consumer is, it seems, considerably more robust than the German one.
So the big question is why the difference? They are both economies which according to the criteria of the Lisbon agenda are badly in need of reform. My own view, almost inevitably, is that this might well have something to do with the differing demographies of the two countries. Fertility is much higher in France – at nearly replacement rate – and over the years France has had a lot more long term immigration. Surely other factors are important: but which ones are they? Any constructive suggestions anyone?
Turkey On The Agenda In Germany
As if Turkey’s membership talks weren’t already under enough pressure from the French referendum, today we have the suggestion that a change of government in Germany will only serve to complicate the picture even further.
Germany On The Road To Reform?
“Voting for the C.D.U. Sunday meant putting a stop to Schr?der’s reform agenda…..But in the future, if the C.D.U. has power, there is no stopping the reforms.” says Morgan Stanley’s Elga Barsch (remember her?). This argument draws attention to an important enigma which must be puzzling a lot of people. As the New York Times puts it:
“If voters are angry about economic legislation that rolls back the social welfare state, and they take out their anger on the governing party, does that make more such legislation inevitable?
As undemocratic as that might sound, investors in Germany seem to think so. As financial analysts said chances of new legislation had increased, the country’s stock market rallied Monday after a stinging defeat in regional elections for the Social Democratic Party of Chancellor Gerhard Schr?der, which led him to call for national elections in the fall.”
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Schr?der Strikes Back
What better way to bury the news of your party’s ouster from power in a state it’s ruled for nearly 40 years than to up the ante?
Give this to Chancellor Gerhard Schr?der, he still knows how to dominate the news cycle like no one else in Germany. Angela Merkel didn’t hear the news until she was walking into the TV studios. I just saw Edmund Stoiber hem and haw about who would actually be the opposition candidate for chancellor. Squirming on the end of the moderator’s pointed questions, he was. Could not bring himself to say, “Yes, I support Angela Merkel.” Just couldn’t do it.
And there’s this:
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Schr?der: early elections in Autumn.
I suppose German politics aren’t entirely predictable anymore. A few minutes ago, German Chancellor Schroeder confirmed earlier statements by Franz Muentefering, the SPD’s chairman, that the current red-green coalition will seek a – constitutionally problematic – vote of no-confidence to allow the early dissolution of the Bundestag and hold federal elections in autumn this year.
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The Euro And The Vote
The euro reached its lowest level against the dollar in seven months last week dropping from a valueof $1.311 a month ago to $1.255 on Friday. This was the lowest level since last October. Undoubtedly there are a confluence of factors at work here: yesterday’s French growth numbers, longer term stagnant growth in Germany and Italy, Sunday’s elections in the Federal Republic, the up and coming referendum in France, rumourology about forthcoming ECB rate cuts etc.
This downward pressure will in reality be welcomed in many quarters, since it could give some useful relief to hard pressed exporters, and it may help those (eg Spain) with serious balance of payments problems by offering some kind of corrective impetus.
But all of this only draws attention to one underlying fundamental of the situation: there has never been a ‘strong euro story’, it has always been a ‘weak dollar’ one. And it is here that things get really complicated, since it begs the question of whether the US is able and ready to live once more with a ‘strong dollar’, and if it isn’t then this immediately poses the question as to what exactly the repercussions will be?
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German President Criticises UK ‘Stereotypes’
After the sorry incident of the Independent ‘racism scare’ yesterday, I really have to say I can sympathise with Germans who are getting tired of being treated as if they were all ‘Hitlers Children’.
“Germany’s federal president Horst K?hler called on the British people on Thursday to drop their “stereotypical” and “negative” views of Germany, in comments that look likely to revive debate on problems in British/German relations”….”Germans have a bigger affinity to Britain than the other way round,” he said. In unusually outspoken comments, he added: “I fear that German stereotypes in Britain are largely negative. Britain should take a more open view of Germany.” He criticised British schools for focusing only on the Nazi period when they taught German history..
Sometime I would write a longer post on all this. I am not sure that all German stereotypes in the UK are as negative as K?hler fears. Unless things have changed a lot recently there was always a tremendous regard for German craftsmanship, and efficiency. In the 70’s and 80’s the German model of social compact was extensively admired: Ralph Dahrendorf was brought in to head the LSE, for example.
This is why I was so jumpy about one commentator confusing the Telegraph with the Independent yesterday. I think maybe there were two schools of attitudes: those more on the right – like the Spectator and the Telegraph, who keep harping on about the nazi past, and those like the guardian, independent, economist, who have certainly all at one time or another been admirers of the ‘social economy’. That was why I was so shocked by the Independent yesterday. But then again there is the anglo-phobia to be found in continental Europe (although this is more likely to be found in France than in Germany). As I said, maybe one day a longer post…
Controversy Over Kosovo Refugees In Germany
This is an updated version of an earlier post. I first retain the post as it was, then I have added some reflections in the light of comments received.
The Independent is running the following story:
“Germany is deporting tens of thousands of Roma refugees to Kosovo despite clear threats to their safety and dire warnings from human rights groups that they will face “massive discrimination” on arrival.
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