….and America isn’t doing badly out of it either
In the midst of European debt turmoil and a ClubMed economy-destroying austerity programme driven from Berlin, German exporters are pulling in €100 billion+ of extra business every year. That’s according to Nathan Sheets, Citigroup’s chief economist based in New York. And this export bonus represents almost twelve times the €8.7bn the country is contributing each year to the ESM rescue fund.
Heavily criticised by many (including me) for being inflexibly mad, the real plus for her national economy is now audited for all to see: Greece, Spain, Italy and Portugal may be crippled by enormous bond yields and socio-economic scorched earth, but when it comes to German exporters, their private view will be, “the longer it goes on, the better for us”.
Germany enjoys a euro that’s 20% weaker than the Deutschmark would probably have been; and if one adds the inflow of low-cost safe-haven bond money, the benefit for Berlin is around 30%.
Of course, the high cost of borrowing in Europe based on debt doubts is also a boon for the country with the biggest debts of all, the United States of America. Its bonds too are trading at almost unprecedentedly low yields, and nobody pushes the need for continuing euro-austerity more than Christine Lagarde, head of the US-controlled IMF – and the woman Tim Geithner refers to in private as “our gal”.
I’ll say she is: almost completely Americanised, Lagarde worked for over 30 years in the States as a heavy-hitting corporate lawyer, and never forgets for a second where her loyalties lie. For the US too, a lingering austerity programme that never comes to a head (and never causes a bank failure) is the win-win solution: no Wall Street collapses, cheap US sovereign borrowing….and Europe neutered as a competitor in a shrinking world market.
This is not to suggest a conspiracy or anything approaching it. Germany is over-exposed to potential EU write-offs, and the US Fed knows perfectly well that eurobank failures are still near-inevitable.
I record these Citigroup and other facts purely for the usual purpose of evidenced bollocks deconstruction: next time you hear Merkel complaining about the stress being put on Germany by lazy Clubmedders – or Geithner saying that the US economy and deficit were in great shape until Yerp screwed it up – remember those recorded factual realities.
While there is a lack of real brainstorming to help solve the EU’s appalling problems, blamestorming is no substitute for that.
The German, Brussels, Frankurt ECB, and American elites bent the law to either get ClubMed into the eurozone, or flog them cheap sovereign loans they could never afford to repay. The blame should be evenly spread for this mess between all participants in banking, politics and government. The last place it should reside is with the ordinary citizens of any of those countries…almost all of whom are paying through the nose (via their taxes) for the megalomania and corrupt greed of their leaders.
The Slog 