German Chancellor Angela Merkel is well known for her opposition to
further aid for crisis-stricken euro countries without additional controls, but
what do German voters think? A new SPIEGEL ONLINE survey reveals that a narrow
majority is opposed to any more bailouts, and almost three-quarters of Germans
want stricter fiscal oversight from Brussels.
Europe is now in the third year of its sovereign debt crisis and the prospect
of a breakup of the single currency no longer seems as farfetched as it once
did. But from the perspective of most Germans, the euro crisis is still
something that mainly affects other countries, namely Greece, Spain, Portugal,
Italy, Ireland and now Cyprus.
But
although the German economy has shown itself to be surprisingly robust, with
unemployment falling and tax yields rising, Germany will not be able to
withstand the negative trend in the euro zone for ever. "The crisis in the euro
zone is catching up with the German economy," commented Ferdinand Fichtner,
chief economist at the German Institute for Economic Research, earlier this
week. Indeed, the institute has just dropped its growth forecast for the German
economy for 2013 from 2.4 percent to just under 2 percent.
5 comments:
I've been wondering about Norway; for many the model to emulate. Many of the numbers here come from Norsk Industris Konjunkturrapport 2012. It's an employers' association, so expect a center-right bias. I'd be delighted if a Norwegian were to comment.
Norway's Sovereign Wealth Fund means the country has no insolvency problems. Unemployment is a low 3%. One out of three jobs is in the public sector. The Norwegian oil industry is expected to show a revenue growth of 15% next year, and is hiring. But Norway's traditional export sectors - industry and mining - will grow only 0 to 2%, and are firing people. And these traditional sectors employ about five times as many people as the oil sector.
There is a clear dichotomy in Norway's industry: on the one hand a booming oil sector which keeps the currency strong and wages high; and on the other hand an export-oriented industry which are suffering from the combined effect of the high kronor and high wages.
Surprisingly enough, given the strong sense of crisis in Europe, Norwegian companies actually increased their exports to the EU in 2011 by 12%. Exports increased to all EU countries except the PIGS countries in the south. Norway is not whining demand is weak. Exports to the UK increased +6.2%. Exports to the US dropped -4.3%. These are data for the whole of 2011.
80% of Norwegian exports go to the EU, 2% to China. Being outside the EU, Norway is free to make its own free-trade agreements with China, but China is not interested. Negotiations broke off when Norway gave Liu Xiaobo the Nobel Prize back in 2010.
Norway had its banking crisis, following a period of financial deregulation. Small banks began to fail in 1988. The crisis peaked in 1991, and ended in 1994, six years after it began. Just imagine the Guardian running a "Norwegian Banking Crisis Live Blog" six years on end.
What's my take on Norway?
There are two Norways. The oil industry is booming; the export-oriented industry is suffering. The kronor-euro exchange rate is causing discomfort for Norway's export industry.
When a overvaluation of the Swiss franc threatened Swiss exports the Swiss National Bank intervened, and the Swiss franc has been at exactly 1.20 euro since. Of course, this means a large part of Swiss monetary policy is no longer determined in Bern, Switzerland but rather in Frankfurt, Germany. Nevertheless, pegging the franc to the euro is seen by many Swiss as a pragmatic solution.
Norway's future may be Switzerland's past. We may see the Norwegian kronor pegged to the euro sooner than we think. Yes, such a move would be political suicide in the UK. So what?
In Germany, it's all just basically waiting for the Constitutional Court.
Europe hangs on a signature (FAZ, German)
pointing out that, if the Court forbids President Gauck to sign ESM + Fiscal Pact by granting the injunction, then the ESM can't come into effect until the main process is finished, which will probably take some months.
And if they don't, then Germany is bound by its ratification, under international law. There's no way back from these contracts, which have no exit clause.
They also note that internationally, the fact that a Court can stop this is not exactly popular. "If I hear the words "Constitutional Court" once more, I'm leaving the room!" they quote Ms. Lagarde of the IMF saying.
Politicians put pressure on Constitutional Court Judges (Spiegel, German)
But note that it's not the Government doing this, it's politicians from the second rank, mostly. President Gauck also expressed some sympathy for the constitutional challenges before the court, while saying that he supported the government's efforts to find a solution, in an interview over the weekend.
It won the approval of all MPs of the three parties backing the coalition, which wants to keep Greece in the euro.
Eurozone ministers are due to meet in Brussels to discuss how to carry out measures agreed at a summit in June to tackle the debt crisis.
It comes amid renewed fears that Spain and Italy could struggle to pay the interest on their debt.
Divisions have emerged, between the northern and southern eurozone on how to implement the decisions of the June summit.
At the summit, EU leaders agreed to use the eurozone's planned bailout fund to support struggling banks directly in a manner that does not add to government borrowing.
Spain and Italy want the agreements put into effect as soon as possible, but other states, particularly Finland and the Netherlands, are reluctant to accept rapid moves towards collective responsibility for other countries' debts
Monday's eurozone meeting will also assess the policies of the new Greek government, which won the approval of parliament after three days of tense debate.
The vote was seen as largely symbolic, as the coalition has the support of 179 out of 300 members of parliament.
In his final speech before the vote, Prime Minister Antonis Samaras appealed for unity.
"Things will be difficult from here on in, and what we ask is unity, from different sides, from disagreeing sides, but unity," he told MPs.
The coalition, which is supported by Mr Samaras' conservative New Democracy, the Socialist Pasok and the Democratic Left, was agreed following elections on 17 June, which were called when an earlier vote failed to produce a viable government.
Mr Samaras' government has pledged to adhere to strict targets on spending and economic reforms in return for a 130bn euro ($171bn) EU rescue package aimed at keeping debt-laden Greece in the euro.
But it has asked for some of the terms to be renegotiated, in order to restore economic growth and help employment.
The austerity measures have caused widespread economic hardship, and the recent months of political instability have only added to the strains.
Monday's eurozone meeting will also assess the policies of the new Greek government, which won the approval of parliament after three days of tense debate.
The vote was seen as largely symbolic, as the coalition has the support of 179 out of 300 members of parliament.
In his final speech before the vote, Prime Minister Antonis Samaras appealed for unity.
"Things will be difficult from here on in, and what we ask is unity, from different sides, from disagreeing sides, but unity," he told MPs.
The coalition, which is supported by Mr Samaras' conservative New Democracy, the Socialist Pasok and the Democratic Left, was agreed following elections on 17 June, which were called when an earlier vote failed to produce a viable government.
Mr Samaras' government has pledged to adhere to strict targets on spending and economic reforms in return for a 130bn euro ($171bn) EU rescue package aimed at keeping debt-laden Greece in the euro.
But it has asked for some of the terms to be renegotiated, in order to restore economic growth and help employment.
The austerity measures have caused widespread economic hardship, and the recent months of political instability have only added to the strains.
Post a Comment