The German elections will not change a thing in the Eurozone

merkel isolatedInterview with Italian economist Emiliano Brancaccio by Peter Vernizzi translated by Tom Gill

As far as austerity is concerned, even after the September elections Germany will not turn the page. The Germans have benefited from the crisis, and even if the Bundesbank itself has reservations about the general direction of European economic policy, Berlin has no interest in changing course.”

So says Emiliano Brancaccio, researcher and professor of Economics at the University of Sannio. A report by the Bundesbank said that Greece will need further aid by the spring of 2014, in a clear, if indirect criticism of the policies of German Chancellor Angela Merkel. Continue reading

Merkel’s Neo-Liberal Dream for Europe Will Be Crushed

Austerity is wrong, so much we know and have repeated to each other countless times. We actively remind each other that austerity is destroying public services, massifying poverty and unemployment and imploding the economy, all this while failing to deliver on its promise of solid public or private finances.

In all countries, bail-out programmes have failed miserably, on every parameter and by every standard, doing immeasureable and irreversible damage to these economies. We now know that the academic paper backing the vile economic experiment of austerity was technically flawed. We know austerity to be a successful offensive by the global neo-liberal oligarchy to push forward a massive civilizational retreat towards low-payed, precarious jobs and an inert State. Continue reading

Germany’s recovery is faltering

Germany is widely regarded as the motor of the European economy. GDP grew by just 0.3% in the second quarter of 2012 and is barely 1% higher than a year ago. The German statistical agency Destasis speak of a continuing export-led recovery. But that is not strictly correct. German exports are rising. But because imports are rising faster, net exports have subtracted from growth. Continue reading

Greek exit won’t save euro: fundamental restructuring needed

With the smart money on an early Greek exit, the two main questions to arise are: what will happen to Greece, and what future then for the Eurozone? If Greece leaves, the exchange rate will drop sharply from 340 drachmae to €1 at entry to the euro to perhaps 1,000 drachmae, a loss of value to the national currency of around 75% as happened to Argentina in a similar situation in 2002. But though in the latter case savings were decimated and import prices trebled, Argentina, released from an untenable dollar-peso parity, recovered strongly. So probably will Greece, given the introduction of capital controls and administrative controls to ensure vital supplies reach key enterprises. Removing the pressure of unbearable debt, boosting competitiveness from the intial collapse of the currency, lifting austerity, and paving the way for a much needed industrial restructuring should, after a painful transition, see Greece through. But what of the other 26? Continue reading