The question is simple, or perhaps, simply difficult, whatever, but would you want this woman as your bank manager?
The Kaiserin: "Vee haf vays of cutting your overdraft!"
Whilst I'm not sure I would like her as my bank manager I wouldn't mind her as my wife given her track record in keeping the German credit card under lock and key and her warning injunction to her nation that she 'vill shoot anyone who borrows money!' Well, of course, she didn't say that - and, he added quickly lest some rat fink snitches on me, the 'Memsahib' is anything but profligate!
All this arises from an article 'SoD' pointed in my direction written by 'A E-P' in The Telegraph which somehow I missed. The essence of A E-P's essay lies in its heading and sub-heading:
German model is ruinous for Germany, and deadly for Europe
France may look like the sick man of Europe, but Germany’s woes run deeper, rooted in mercantilist dogma
The Germans, being on the whole an obedient people, have allowed their wages to be held down in the mutual interest of ensuring that their commerce thrives. The quid pro quo has been that the government would match that restraint by not allowing itself to borrow anything beyond ultra strict limits. In fact, limits to German government borrowing is set in law:
Marcel Fratzscher, head of the German Institute for Economic Research (DIW), makes a parallel critique (more Keynesian in flavour) in his new book, Die Deutschland Illusion, no translation needed. It is a broadside against the fiscal fetishism of finance minister Wolfgang Schauble, now written into the constitution as a balanced budget law from 2016 onwards, making it almost impossible to override. It is the self-deception of a country “resting on its laurels”, prisoner of the “household fallacy” that economies are like family budgets, and falsely reassured by the misplaced flattery of foreigners who rarely look under the bonnet at the German engine below.
Needless to say, this is in direct contrast to the 'club Med' countries of Europe who borrowed, spent and then borrowed yet more in order to pay their huge government (non)work force generous salaries and pensions. The flap that occured in 2008 was the sound of chickens coming home to roost!
However, according to A E-P and the experts he quotes, the German model is equally riven with faults:
Prof Fratzscher says the chief effect was to let companies compress wages through labor arbitrage. Real pay has fallen back to the levels of the late 1990s. The legacy of Hartz IV is a lumpen-proletariat of 7.4m people on “mini-jobs”, part-time work that is tax-free up to €450. This flatters the jobless rate, but Germany has become a split society, more unequal than at any time in its modern history. A fifth of German children are raised in poverty.
Philippe Legrain, a former top economist at the European Commission, says Germany’s “beggar-thy-neighbour economic model” works by suppressing wages to subsidise exports, to the benefit of corporate elites. This is “dysfunctional”, and the more that EU officials try to extend the model across the eurozone, the more dangerous it becomes.
If A E-P and his experts are right then something has to give. Somehow, I feel, 'Das Kaiserin' is not for turning! Like boy racers testing their mojo by driving their cars directly at each other, the likelihood of a head-on smash is high. The end result, according to A E-P is somewhat startling:
Within five years it will surely become obvious to everybody that Germany is in deep trouble, and a balanced budget will not prove any defence. Within 10 years, France will be the dominant power of continental Europe.
Crikey - someone pass the Burgundy!
