"Most notably, last week the European Central Bank declined to cut interest rates. This decision was widely expected, but that shouldn’t blind us to the fact that it was deeply bizarre. Unemployment in the euro area has soared, and all indications are that the Continent is entering a new recession. Meanwhile, inflation is slowing, and market expectations of future inflation have plunged. By any of the usual rules of monetary policy, the situation calls for aggressive rate cuts. But the central bank won’t move."
In conclusion, Krugman sardonically warns, "But don’t despair: at the rate things are going, especially in Europe, utter catastrophe may be just around the corner."
Is Europe indeed kaput? Can lower interest rates even begin to remedy the difficulties facing the Continent, which go unmentioned by Krugman, including:
• crashing birth rates;
• a dolce vita work ethic, other than in Germany;
• unsustainable social welfare programs;
• massive immigration from North Africa, Turkey and the Middle East, contributing mightily to unemployment.
The European Central Bank can lower interest rates, governments can hire more workers, but ultimately Germany will not be able to prop up this mess on its own.
Oh, Jeff. A dolce vita ethic? What are you talking about? I can assure you that the language spoken on all beaches of the world (including Israeli?) is probably not Italian, but you guess it - German. The regular, classic, leading Social-Democracy with all the usual good (or bad in some/not my eyes) stuff, such as vacations, sick days, pensions, etc. Personally, I prefer this to the ethic of "Arbeit macht frei" which I think ideologically could come from only one place - yes, you guess it - the place of Puritan work ethic, together with negative eugenics.
ReplyDeleteYeah, America is going (gone) to the traditional self (slavery is sooooooooooooo good), but it doesn't mean that the world always has to do what the Yankees dictate.
There are many causes of European problems, including the fact the rich countries, such as Germany, were abusing the poor countries, poorly designed integration and, of course, unsustainable immigration.
I don't understand those who dream of Arbeit macht frei.
Germans, a majority of whom probably identify with the recent Günter Grass poem, on the beaches of Tel Aviv? Not that I've ever noticed. But then, I only walk the sea shore during the winter. Over the years I have developed an "allergy" to sand, blistering heat and camping under the stars.
ReplyDeleteMy point was that Germans, who have long vacations and early retirement travel around the world, including Israel. Whether you notice or not doesn't matter. That there is an unfairness there, considering the fate of not only the Holocaust victims, but also of their descendents/relatives, is a different story.
ReplyDeleteDismantling of Social Democracy isn't a solution to Europe's (and the world's) problems. You didn't notice that serious European problems started when Europe embarked on "Americanization" forgetting that they already had America - just before 1914. An "interesting" half a century followed. Why repeat history, particularly such a charming history?
Unlike Americans, ancient Jews (like their ancient neighbors) knew that it was important to avoid extreme polarization of a society and had mechanisms meant to prevent it (jubilees and sabbaticals, for example)
Well, "executive pay rises 10% in Britain" ...
ReplyDeleteAnd this isn't a problem? In Britain and elsewhere.