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The "debt brake" has now become a condition that Germany wants to impose on the entire EU as a conditionality for allowing enough money to be lent to get over the sovereign debt crisis.
Since the debt brake is economically harebrained, default and let the chips fall where they may is looking better by the day, to be honest. Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
And Germany did get somewhat better through the crisis, because it did talk austerity, but did do stimulus.
Just like everyone is doing austerity in 2010.
And if "doing stimulus" is how Germany got out of the crisis, countries that haven't still gotten out of the crisis should continue to do stimulus.
Nobody is claiming that the German debt brake caused anything before it was enacted. The claim is that the debt brake is strongly deflationary, which will only make growth more sluggish and debt more unsustainable in the future, and is therefore incredibly harebrained. Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
What is necessary, if it is necessary, is a new deal about the interest rate. But that is not the same as a default on sovereign debt engineered to hit only foreigners.
And am not sure why you want to argue about german economic policies 2008-2010: Clearly fiscal expansion, reaching their height in the first half of 2010. Is that really in doubt anymore?
This whole Ireland is insolvent meme is nonsense. There have be quite a number of countries with a public debt around 100% of gdp.
This whole Ireland is insolvent meme is nonsense.
Perhaps you should be arguing this point with the bond raiders, who seem unusually keen to assure everyone otherwise.
And if you swear fealty to "the markets", how do you think they will react to a default?
In the case of Ireland, if you think Ireland is solvent, then it is in fact being subjected to an irrational run (withdrawal of short-term liquidity). The proper response in that case is for the Central Bank to provide liquidity at a reasonable non-market rate.
Instead of that the Central Bank tells the Irish government to call in the IMF.
Also, when the European Council tries to organise a collective fiscal facility, Germany screams "no bail-out clause!". When the ECB tries to buy sovereign bonds in the secondary market, the (German) Chief Economist and the Bundesbank chair wrongly claim that is forbidden by treaty (the treaty forbids buying at issue, which is bad enough already). The European Commission, Council, Ecofin and Central Bank are all such neoliberal market-worshippers that they actually take the market's assessment of Ireland's solvency at face value.
The Irish "rescue package" entails, under any plausible scenarios, including the ones put together by the Ecofin, an actual increase in the Irish debt burden, while at the same time demanding IMF-style "conditionalities". Some "rescue". No wonder the Irish government didn't want to be "rescued" and had to be forced. Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
What's happening is that the Irish sovereign is being funded at 5.7 % when it should be funded at 0.0 %.
The fact that the ECB has finally woken up and started doing its job w.r.t. the private Irish banks (a decade late and a billion short) does not excuse the fact that the ECB still isn't doing its job and printing money on demand for the Irish government.
- Jake Friends come and go. Enemies accumulate.
Analogously, no individual Irishman is responsible for the economic policy of the Irish government. Or are they? You have argued elsewhere on this thread that they are. Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
Since the ECB is obviously unresponsive to the plight of Irish widows and orphans, the Irish state has a duty to protect Irish widows and orphans, and incentivise the ECB to start doing its fucking job and printing money on demand at 0.0 % to sovereigns needing stimulus. The easiest way to incentivise proper behaviour from the ECB is to cause pain to the ECB's political backers. Which means causing pain to the Frankfurt-based banks, and which means causing pain to Mrs Merkel's government.
You call it nationalist. I call it realpolitik. If you have some alternate suggestion for how to get the ECB to start providing unlimited stimulus money for the Irish economy at somewhere around the Frankfurt overnight rate, then I'm all ears. But so far you have presented no viable political strategy for how the Irish can continue to do stimulus without defaulting. And you have provided no political strategy - nevermind a credible one - for how the Irish state can obtain the necessary liquidity for continued stimulus without either leaving the -zone or threatening to default on foreigners first, in order to pressure those foreigners' governments to pressure the ECB.
Since you seem so keen on applying collective punishment to Ireland for electing Fianna Fail, you may think of it as applying collective punishment to any polity that doesn't pressure the ECB to start doing its fucking job and printing unlimited money for use in Keynesian stimulus.
I am not responsible for the policy position of the german government.
But the Irish pensioners and unemployed that you're happily throwing under the bus are responsible for the actions of their government?
You can't have it both ways. Either the Irish people don't deserve to suffer for electing evil morons to high office, or the German people don't deserve to get bailed out, because they elected evil morons to high office.
Don't you think there is collective responsibility?
I do believe in defeating neoliberal policies whenever and wherever they sully humanity with their depravity. In this particular situation, defeating neoliberal policies means defeating Austerity. Defeating Austerity means threatening Mrs. Merkel and Messrs. Weber and Stark with a sufficiently big stick that they start printing money wholesale. And the only stick Ireland has that is big enough to make Messrs. Weber and Stark shit their pants and start printing money wholesale is the threat of making several major German financial institutions insolvent.
And if a German pension fund or two is collateral damage in that fight, well then there's nothing wrong with insolvent private pension funds that better public pensions won't solve.
If you have a better plan for how to fight back against "Hartz IV For Ireland," then I'm all ears.
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