Recently I watched Paul vs. Paul i.e. Senator Ron Paul and Nobel Prize winner Paul Krugman on television helplessly discussing how to remedy our economy. Their debate only confirmed my conviction that there is no cure to the economic situation the world is suffering from. The German economy often taken as a example that still works is mostly thriving on export. That makes the situation worse for the euro because our European trade partners finance their balance of trade deficits in making more debts. And what to think about my country that will loan 20 billion euros on the money market in these fat years of low unemployment and high tax revenues to keep this year's federal budget in balance?
That even Germany is not keeping to the strict norms of the European fiscal pact has given newly elected French president François Hollande the idea of asking for fresh i.e. borrowed money to stimulate the European economy just like Paul Krugman had said on television it should be done in the States. Printing euros is an easy process but where does that fresh money really go? We know that the euros Greece has received so far out of the Eurozone bailout fund were used to keep the Greek bank system afloat. I guess that the money François is asking for he has already earmarked to finance the re-lowering of the age of retirement in France from 62 to 60 years as he has promised. In the States there is no age of retirement. Contrary to me who was forced to retire at the age of 65 many of my American friends continued working beyond that age. So let us hope that in the States the financial stimulus Paul Krugman has asked for will be used to create new jobs.
New jobs are needed in Europe too especially in Spain were many young people are unemployed. Their No future outlook is social dynamite! So again with all the pressure building up it seems that the end of Merkosysm is near and public spending will heap more debts on the already unbelievable accumulated amount. Hastily our finance minister declared: It is the wrong way to take money one does not have to stimulate economic growth. Instead, he asked for more saving and reforms both at home and in Europe. With those different viewpoints in France and Germany will Merkollande replace Merkozy? We shall see when François will visit Angela in Berlin on May 15.
|François pouring his Hollandaise sauce over Merkel's fiscal piggy bank pact ©Haitzinger|
I shall end my story with a personal anecdote. When in my young years I wanted to build a house I needed a mortgage and consulted several banks for offers. One was particularly advantageous. When I asked the guy how come that my monthly installments will be so low compared with the proposals of the other banks he answered: O, you just pay the interest rate there is no back-payment. I said but then my children will inherit my debts. In those days such a situation was unacceptable for me so I choose the classical variant with another bank paying interest and amortization. Would I have acted the same in today's situation knowing that inflation will water down my children's debts?