Ongoing European Debt Crisis

What about Junker's investment plan?

Yes, it's all about those horrible stinking Greeks. Because the Greek economy is the linchpin of the Eurozone, apparently, it justifies imposing savage austerity on the entire region just to punish them. Punish, literally: beat them into submission; teach them to pay their taxes and keep their books clean. Destroy their economy to make a moral point.

And while we're at it, let's beat up the Spanish, Italians, French, Portuguese, Irish, and just about everyone else. Never mind that the crisis is almost entirely the making of German bankers in the first place. Everyone in Germany is too busy chanting "Deutschland Uber Alles" to bother to crack open an economics textbook.

Double Post: At this point, Germany's insistence on internal austerity is forcing deflation on the rest of Europe, which has been playing by the rules.

Hasn't Jean-Claude Junker launched an European Union investment plan?

I thought it was Bankers in the City of London?

edited 30th Nov '14 2:26:47 PM by Greenmantle

The global crisis was due to bankers in New York and the "Would be better as a carpark" City of London. However the argument can be made that the Euro crisis itself is only as bad as it is due to the interests of German banks being prioritised over the interests of the actual citizens of the Euro zone.

"Yes, it's all about those horrible stinking Greeks."

Please don't imply that this is my opinion. I have nothing against Greeks on a personal level.

"Because the Greek economy is the linchpin of the Eurozone, apparently"

Not really, but it doesn't matter how important they are in theory. People started to doubt the survival of the Euro once it became apparent that Greece was in deep trouble. It was more at stake than just the European economy, it was also about the European project as a whole.

" it justifies imposing savage austerity on the entire region just to punish them."

Austerity is the only doable way of letting them remain in the Euro. It was either that or having them leave the Euro. Now no one knows for sure what this would have meant for them, but it would have affected Greece badly either way.

"beat them into submission; teach them to pay their taxes and keep their books clean."

This would be a nice side-effect yes. Greece as a state will never properly function unless there are some major changes.

"And while we're at it, let's beat up the Spanish, Italians, French, Portuguese, Irish, and just about everyone else."

All those countries begged for help which Germany provided. Besides you can't seriously include France in your list since they have done pretty much the opposite of austerity so far.

" Never mind that the crisis is almost entirely the making of German bankers in the first place."

And Poland started WWII... . Just because you repeat this false claim doesn't make it any truer. For instance French banks borrowed Greece almost as much.

I am not denying that Germany bears some fault for the current situation. Germany should have vetoed Greece's ascension to the Eurozone, but European politics have always been a bit simbolical, and it was assumed back then that Greece, as the birth-place of European civilization should be part of the Euro.

Furthermore Germany broke together with France the Maastricht-criteria for the first time and thus set a bad precedence. While the reasons for doing so were understandable (German reunification was far more expensive than anyone could have predicted, and properly integrating East-Germany and thus preventing any radicalism to spread there was also in Europe's interest), it undermined the old treaties and shouldn't have been done.

But Germany is certainly not responsible for the weakness of the Greek economy, or forcing their politicians to borrow more than they could pay back.

"Everyone in Germany is too busy chanting "Deutschland Uber Alles" to bother to crack open an economics textbook."

It is true that Germany started to pursue her national interest and becoming a "normal" country just when the Euro-crisis started. There is however no reason to use such insulting comparisons like you do. Besides it is frankly hilarious when countries like e.g. France demand a more utilitarian approach from Germany to European policies since France has always put her interests before Europe. And as a recent interview with Wolfgang Schaeuble revealed, German politicians are actually listening to advice from economists. Just not from alarmists like Krugman's who is notorious now for having little insight into European politics and making wrong predictions about the life-span of the Euro. There is no viable to austerity if one wants to save the Euro, anyone who knows the basics about European and German politics would acknowledge this.

Of course it is easy to propose ex post would should have done to solve a certain problem. Some people say that the UK and France should have invaded Germany when Hitler let the German army march into the demilitarized Rhineland. But any historian will tell you that it would have been next to impossible for any British/French politician to get their people to support such an action. The same goes for the current situation. Even if European/German were interested in Krugman's advice, they simply could not follow him since his suggestions are simply impossible to implement given the political realities in the different countries.

@Greenmantle: "What about Junker's investment plan?"

Sounds good to me, but I've heard there are some doubts whether or not this will work.

@ Silas: "However the argument can be made that the Euro crisis itself is only as bad as it is due to the interests of German banks being prioritised over the interests of the actual citizens of the Euro zone."

Perhaps, but one could also argue that the survival of the Euro and the success of the European project is in the interest of every European country. Yes, even Greece.

edited 30th Nov '14 3:19:55 PM by Zarastro

"Just because you repeat this false claim doesn't make it any truer."

Why can't Greece be allowed to stay in the Euro with a massive crack down on tax evasion alongside quantitative easing by the ECB as required? If Greek banks were going to fail due to shoddy practises why couldn't they be nationalised? And I don't mean the half assed nationalisation that we did here in the UK, I mean proper "we're in large and everyone responsible for this mess is fired" nationalisation.

Sure, but austerity isn't doing that. The Euro Zone is closer to collapse than ever, the European project has become more hated than ever before in large part due to the austerity being imposed. The interests of the German banks aren't the interests of the Euro zone, they're the opposite, they're what's killing the Euro zone and the European project s a whole.

edited 30th Nov '14 3:38:04 PM by SilasW

Or even fiscal stimulus to fix the core economic problem that's keeping their GDP depressed in the first place. The austerity that Germany is forcing on the Eurozone is exactly the opposite of the correct policy for escaping the zone's depression.

edited 30th Nov '14 3:39:02 PM by Fighteer

At this point, I think my country (Greece) should leave Euro altogether. Our entrance in the Eurozone was hastily done and fishy from the start anyway. Cooked books, people willing to overlook these cooked books, shady dealings, empty promises & half-truths. Caused more harm than good. After a period of artificial "prosperity", of course.

But yeah, I don't think much can be gained from us remaining in the Eurozone any longer. Society has reached a breaking point, economy is stagnant as ever and all the cash has dried-up ^note : people literally have no money to pay taxes. And the state itself doesn't have money to cover their wages and pensions. The proposed "changes" are unfeasible^note :down to a cultural level and, ultimately, unnecessary. Simply because they are just ain't gonna stick.

"Sure, but austerity isn't doing that. The Euro Zone is closer to collapse than ever,"

The Euro was close to collapse in 2012. Now it looks relatively stable.

"Or even fiscal stimulus to fix the core economic problem that's keeping their GDP depressed in the first place."

Southern Europe is suffering from structural problems and a fiscal stimulus would only postpone solving these problems in the future. Besides the ECB can't act this way due to the treaties. And the German government could never support an open breach of the treaties since that is just what eurosceptic politicians in Germany are waiting for.

"Sure, but austerity isn't doing that. The Euro Zone is closer to collapse than ever, the European project has become more hated than ever before in large part due to the austerity being imposed."

This is going to change in a few years once the recovery fully sets in. People would also hate the European project if European insitutions would act outside of the rules of the treaty, so there is no quick solution to this.

edited 30th Nov '14 3:56:23 PM by Zarastro

@ Fighteer: Do you know about this?

If I had a dime for everytime I heard this, I would've paid off the national debt by now.

edited 30th Nov '14 4:05:07 PM by LogoP

Can you define "a few years" for me? I fully expect to still be posting on TV Tropes in 3-4 years time and I'd like to hold you to this prediction if 3-4 years fits your timeframe.

@Zarastro: The Eurozone is a disaster and seems likely to remain that way for the indefinite future.

(FT, Wolfgang Munchau) The Juncker fund will not revive the eurozone: Wolfgang says that the fund is very similar to a synthetic collateralised debt obligation, a financial instrument that is basically a Rude Goldbergian device that attempts get something for nothing.

edited 1st Dec '14 5:25:43 AM by PotatoesRock

According to some articles I've read it was estimated by the German financie minister in 2013 that Europe should return to growth by the end of 2017. Now this assumption was obviously made without taking into account the impact of a possibly new Cold War, but I'd still stick with it since even I now that there have to be some positive results after such a long period of more or less strict austerity.

So yes you may hold me accountable then. I think that austerity could be called a success if by 2018 the Euro still exists, without any member state having left, and with Europe having returned to at least moderate growth and declining unemployment rates.

@Fighteer: You have to admire Krugman's persistency, he certainly likes to stick to his narrative of the "German problem". Whatever Germany's economic situation might look like, it is always German policies that threaten Europe. In his entertaining article "WHY GERMANY KANT KOMPETE" (1999) he criticized the bad shape of the German economy, because:

"For Germany is supposed to be the economic engine of the new Europe; if it is a drag instead, perhaps the whole train in the wrong direction goes, not so?"

Now it is supposedly the opposite. In your article, he fails to mention a few important details which he had acknowledged perviously:

He fails to mention that before! 1999, Germany had seen a very sharp rise in labor costs (which he acknowledges in his article from 1999).

Thus Germany merely "corrected" a trend that made her increasingly uncompetetive on the world market. Which is another aspect he fails to acknowledge. Germany is not just having a race to the bottom with other European countries in terms of labor costs, Germany is competing internationally with the rest of the world. Germany and Europe needs to stay competetive globally which is one aim of German policy.

edited 1st Dec '14 9:31:47 AM by Zarastro

Draghi: "We don't need unanimity" for QE and bond-buying.

In other words: it will happen with or without Berlin's support. This is encouraging. He's talking the talk, it remains to be seen if he walks the walk.

As for the German objections, well: das Leben is kein Ponyhof.

@Zarastro: When Germany underwent her labor cost correction, there was plenty of room in the brand new Eurozone to maneuver. Monetary policy wasn't up against the zero lower bound, in particular, which meant that the correction didn't require deflation and a reduction in living standards.

The same economic rules simply don't apply here. Germany cannot continue to pursue sub-1 percent inflation and expect the other Eurozone nations to deflate their economies to restore competitiveness. It's not mathematically possible, ideology be damned.

Greece election: EU finance chief flies into Athens as Grexit fears mount.

Frankly, I'm hoping that Syriza kicks the other parties' asses; Greece — Europe, even — is in desperate need of a strong leftist voice.

If Podemos gets a strong position in Spain in their next elections, said leftist voice will get stronger.

edited 14th Dec '14 2:42:06 PM by Quag15

The strongest anti-austerity voices in Britain are in the regional parties: The SNP in Scotland and Sinn Fein in Ireland^note  To the point of almost bringing down the NI Government, and as such part of the current round of talks at Stormont.

Belgian Unions launch national general strike against austerity

I still can't believe Belgium will have or is having austerity measures. Surely they're better than France, right?

Everywhere in Europe has had austerity measures. I doubt even Scandinavia is immune.