Tuesday, August 16, 2011
German economy slows down abruptly: the result of so many cuts in the EU?
With all the cuts imposed on so many states with the less Keynesian approach to Capitalist economics ever, the EU's demand has been merely destroyed and the German econo-chickens are now going back home to roost.
What could have been done and what will probably be done soon, now that there is no other option?
(1) Devaluing the euro, so all European economies can compete internationally (and by internationally, I mean outside of EU's borders). Sure, inflation can be nasty but inflation is not a problem currently and is not likely to be even if the ultra-high euro (45% more expensive in relation with the USD than in 2001) is adjusted down a bit. Appealing to inflation right now is just hysteria.
(2) Nationalizing falling banks without the state assuming all their collateral, only the basics (current accounts and such). What Ireland did is suicidal, what Iceland did is the way to go instead.
(3) Let the private investors assume their loses, let the public sphere (EU, member states) manage public debt and money-printing with some ease. The public sphere should not be dependent of banks as it has been in the last years, with such disastrous results.
Will the far-right EU's leadership, or the center-right cross-dressed as "left" that still rules in some peripheral states, be able to do all this? It's not even revolutionary, just old-fashioned Keynesian policies, just burying the useless Reaganism so pervading and so harmful in the last decades...
I think they will not. Or that they will only act reluctantly and badly (too little, too late) because their interests are with the Big Capital and the banks, who are the ones who pay their electoral campaigns and their diverse bribes, as well as being the Moloch they worship.
So plan B: socialist revolution now!
Ah, by the way, the reference for the German economic collapse was BBC.