You know the austerians are panicking when the temple devoted to the worship of austerity, the Wall Street Journal, runs a story with the subtitle: “Eurozone’s Largest Economy Has Its Worries, but Isn’t on Brink of Collapse.” We can all sleep well at night because while Germany has screwed up its economy and the eurozone economy with self-destructive austerity it “isn’t on brink of collapse.”
“August’s shocking 4% decline in German industrial production versus July doesn’t signal an economy falling off a cliff. But the outlook for Germany—and by extension for the eurozone—is far from bright.
Germany’s second-quarter gross domestic product was disappointing, registering a contraction of 0.2% on the quarter. August’s data put in question the modest rebound many economists are expecting in the third quarter. Surveys of economic sentiment have been declining: Markit’s manufacturing purchasing managers index for September entered contraction territory, at 49.9. Weaker global demand and concerns about the tensions between Russia and Ukraine are to blame. If this unpleasant mix persists, then growth seems unlikely to pick up.”
The New York Times’ coverage of EU austerity has been as bad as that of the WSJ. I wrote recently about the fact that one of its reporters had finally admitted that “many economists” opposed austerity as a response to a recession. My article also (gently) explained why her article was weak on the subject of austerity. In particular, she ignored demand and the causes of recessions. In her most recent column she discusses demand and the causes of recessions. There are still clunky sentences that demonstrate that she is instinctively an austerian, but she is finally quoting opponents that explain why austerity is self-destructive. It is early in the process (a mere six years late), but if the major papers continue to drift away from their cheerleading for the economic malpractice of austerity (the analog to the medical malpractice of bleeding the patient) then Germany’s war on workers’ wages and Merkel’s delight in extorting any ruling party of the left to betray through austerity its principles and ruin its economy will face vigorous opposition within the EU.