Daily Archives: May 21, 2012

Will the New York Times’ Reporters ever admit that European Austerity is the Problem?

By William K. Black

The New York Times’ reporters covering Europe’s financial, social, and political crises continue to channel Berlin and demonstrate an ignorance of economics so profound that it rivals the Wall Street Journal’s editorial writers and columnists.  On May 18, 2012 the NYT published “Rising Greek Political Star, Foe of Austerity, Puts Europe on Edge.”  The problem begins with the title.  It is austerity that has put Europe over the edge.  The Greek leader the article discusses is one of the best hopes from pulling Europe back from self-inflicted disaster.  Most of the euro zone has been thrown into a gratuitous recession and the periphery has been cast into Great Depression levels of unemployment.  The title reverses the analytics and implies that if only the peoples of the periphery would silently embrace economic catastrophe all would be well with Europe.

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Today Germany is the Big Loser, Not Greece

By Marshall Auerback 

Given the German electorate’s long standing aversion to “fiscal profligacy” and soft currency economics (said to lead inexorably to Weimar style hyperinflation), one wonders why on earth Germany actually acceded to a “big and broad” European Monetary Union which included countries such as Greece, Portugal, Spain and Italy.Clearly, this can be better understood by viewing the country through the prism of the Three Germanys, which we’ve discussed before:Germany 1 is the Germany of the Bundesbank: the segment of the country which to this day retains huge phobias about the recurrence of Weimar-style inflation, and an almost theological belief in sound money and a corresponding hatred of inflation. It is the Germany of “sound finances” and “monetary discipline”. In many respects, these Germans are Austrian School style economists to the core. In their heart of hearts, many would probably love to be back on an international gold standard system.

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