“Merkel knows best what’s happening in Europe”
These are the words of European Commission President José Manuel Barroso in a recent interview with Die Welt, a German newspaper. Rather than translate this article in full, I want to put it in context given Barroso’s outburst about austerity hitting its social and political limit in response to journalist Matina Stevis. As I indicated at the time, Barroso was not denouncing austerity, as was assumed in the media. Barroso was calling for backloaded austerity instead of the front-loaded variety. And the Die Welt interview makes this clear.
Regarding his own position, Barroso said, “I am also a victim of these experiments. I will also be made a scapegoat. The Commission is perceived very differently in the countries of southern Europe than in Germany, namely, as an apostle of austerity.” And I think this gets at why Barroso responded as he did to Matina Stevis. He believes his position as both a Portuguese and as the EC President puts him in the conflicted role of having to defend austerity views that both are deeply unpopular and create social and political turmoil in the periphery.
In actual fact, Barroso supports austerity, however. In the Die Welt interview he says so unequivocally: “This crisis, with its problems, is not the result of German policy or EU mistakes. It is the result of excessive spending, lack of competitiveness and irresponsible behaviour in the financial markets.” This has been the standard EU position right from the start. You remember the wolf pack talk back in 2010? This is what Barroso is channelling.
So, what Barroso said in that interview was that Germany has acted. He said that Merkel was one of the European leaders who best understood what is happening in Europe. He said Germany is deeply invested in the European project and that it has not selected the lead role in the crisis but has been pushed into it.
My translation of these events, therefore, is that austerity is being lessened in order to accommodate the facts on the ground not because of some grand ideological transformation of European policy makers. Ideologically, it is the same as it ever was: the crisis is the result of profligacy, lost competitiveness and speculation. Ergo, the solution will be austerity, internal devaluation and better financial regulation. And this will continue to be the case, the pace of reform slowed only because social and political opposition. Austerity will continue.
Germany-related links below
Lob von Barroso : “Merkel versteht am besten, was in Europa passiert” – Nachrichten Politik – Ausland – DIE WELT
“This crisis, with its problems, is not the result of German policy or EU mistakes. It is the result of excessive spending, lack of competitiveness and irresponsible behaviour in the financial markets.”
Soros versus Sinn: The German Question by George Soros and Hans-Werner Sinn – Project Syndicate
“The euro crisis has already transformed the European Union from a voluntary association of equal states into a creditor-debtor relationship from which there is no easy escape. The creditors stand to lose large sums should a member state exit the monetary union, yet debtors are subjected to policies that deepen their depression, aggravate their debt burden, and perpetuate their subordinate position. As a result, the crisis is now threatening to destroy the EU itself. That would be a tragedy of historic proportions, which only German leadership can prevent.”
Germany’s politicians seek distance from Bayern Munich president – FT.com
“Mr Hoeness, now president of Bayern Munich, admitted to telephoning the bank “day and night” to trade, even tracking his portfolio via a pager during boring moments of a football match. “From 2002 to 2006 I really gambled . . . they were sums that are hard for me to understand today . . . it was a kick, it was pure adrenalin,” he told Die Zeit. “I’ve paid a damn lot of taxes. At least €50m of taxes. It does not justify my tax evasion, I know. I’ve donated a lot more than the amount that I’ve evaded,” he told the newspaper.
The image of a tax evader with a virtual addiction to gambling in shares has amazed the public. Mr Hoeness, while often arrogant and combative towards sporting rivals, had latterly come to epitomise dearly held German virtues of hard work, leavened by social compassion. Politicians of all stripes were keen to be associated with a robust, straight-talking man of the people who once survived an aircraft crash and a few years ago said: “It may be stupid but I pay my taxes.””
Bayern President Uli Hoeness May End Up in Jail For Tax Evasion – SPIEGEL ONLINE
“Uli Hoeness, the president of Bayern Munich and an icon of German club soccer, could end up behind bars for tax evasion. The case has highlighted the dark side of the skilful entrepreneur and philanthropist whose burning ambition made Bayern what it is today — and has now triggered his fall from grace.”
France Declares Austerity Over as Germany Offers Wiggle Room – Bloomberg
““We’re witnessing the end of the dogma of austerity” as the only tool to fight the euro debt crisis, Moscovici said yesterday on Europe 1 radio. “We’ve been pleading for a growth policy for a year. Austerity on its own impedes growth.”
The gap between the French Socialist finance chief’s view and the election-year positioning of Germany’s Wolfgang Schaeuble underscores the divergence between their economies and the wrangling that has marked the crisis fight since Francois Hollande replaced Nicolas Sarkozy as French leader a year ago.”
ekathimerini.com | Germany’s Merkel not to blame for austerity, says EU’s Barroso
“Barroso defended the policies of austerity and said growth built on debt was not sustainable, while reiterating his view that “pure austerity” measures were no longer acceptable.”
German service sector contraction sounds alert for recovery in eurozone – Telegraph
“Germany’s services industry contracted in April for the first time in five months and a broader measure of the service industry in the 17-member eurozone remained in negative territory.
The German PMI Services index, which is compiled by surveying about 1,000 German business leaders, shrank to 49.6 in April from 50.9 points in March, according to data from financial information company Markit.
Any reading below 50 indicates a contraction, but the figure was better than economists’ expectations of 49.2.”
German euro founder calls for ‘catastrophic’ currency to be broken up – Telegraph
“Oskar Lafontaine, the German finance minister who launched the euro, has called for a break-up of the single currency to let southern Europe recover, warning that the current course is “leading to disaster”.”
Report Cites Rise in Low Wage Workers Dependent on Welfare Benefits – SPIEGEL ONLINE
“Despite Germany’s low unemployment rate, a growing number of the working poor in the country are not earning a living wage and are therefore in need of supplemental welfare payments, according to a newspaper report on Wednesday.
Citing data from the Federal Employment Agency, the Süddeutsche Zeitung reports that the past four years have seen a steady increase in the number of individuals who require state money to get by despite working full- or part-time jobs.
The agency registered a 2012 average of 323,000 households in such situations — 20,000 more than in 2009. The figures were more striking for singles, showing a 38 percent increase over the same time period to 75,600.”
Southern Europe Job Seekers Head for Germany – WSJ.com
“Christos Karoustas and his wife, Varvara, never thought they would move away from their village in Northern Greece, much less leave the country.
But when he lost his job as an accountant amid Greece’s economic meltdown and they could no longer support their three teenage children, the family decided to go where the jobs are: Germany.
“We came here to forge a new path all together,” said Mr. Karoustas, 46 years old, sitting with his wife and youngest son, Nikos, in their modest new apartment in Pfullingen, about 25 miles (40 kilometers) south of Stuttgart.”
The German model is not for export – FT.com
“Germany is reshaping the European economy in its own image. It is using its position as the largest economy and dominant creditor country to turn members of the eurozone into small replicas of itself – and the eurozone as a whole into a bigger one. This strategy will fail.”
ekathimerini.com | Dijsselbloem blames Cypriot banks for exposure to Greece
“He also blamed Bank of Cyprus and Popular Bank (Laiki) for their huge exposure to Greek bonds and loans.
“It was a risk they took and they have faced the consequences,” said Dijsselbloem.”
AfD : Euro-Gegner könnten Schwarz-Gelb die Macht kosten – Nachrichten Politik – Deutschland – DIE WELT
The anti-Euro AfD could cost Angela Merkel her job this article says.
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