By William K. Black
In the latest example of the New York Times’ reporters’ inability to read Paul Krugman, we have an article claiming that the “Growing Imbalance Between Germany and France Strains Their Relationship.” The article begins with Merkel’s major myth accepted as if it were unquestionable reality.
“It was a clear illustration of the dysfunction of the French-German partnership, the axis that for decades kept Europe on a united and dynamic track.
In Berlin this month, Chancellor Angela Merkel, riding high after nine years in power, delivered a strident defense in Parliament of austerity, which she has been pushing on Europe ever since a debt crisis broke out in 2009.”
No, not true on multiple grounds. First, the so-called “debt crisis” was a symptom rather than a cause. The reader will note that the year 2008, when the Great Recession became terrifying, has somehow been removed from the narrative because it would expose the misapprehension in Merkel’s myth. Prior to 2008, only Greece had debt levels given its abandonment of a sovereign currency that posed a material risk. The EU nations had unusually low budgetary deficits leading into the Great Recession. Indeed, that along with the extremely low budgetary deficits of the Clinton administration (the budget went into surplus near the end of his term) is likely one of the triggers for the Great Recession.
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