I am sure that Germany does not want to be responsible for the EU's collapse. It did not seek to dominate Europe, and is unwilling to accept the responsibilities and contingent liabilities that go with such a position. That is one of the reasons for the current crisis. Yet Germany has been thrust into a position of leadership. Europe would benefit from a benevolent hegemonic power. So would Germany.Germany is advocating a reduction in budget deficits while pursuing an orthodox monetary policy whose sole objective is to control inflation. This causes GDPs to fall and debt ratios to rise, hurting the heavily indebted countries that pay high risk premiums more than it does countries with better credit ratings, because it renders the former countries' debt unsustainable.
From time to time, they need to be rescued; and Germany always does what it must – but only that, and no more – to save the euro. As soon as the crisis abates, German leaders start to whittle down the promises they have made. So the austerity policy championed by Germany perpetuates the crisis that puts Germany in charge of policy. Japan has adhered to the monetary doctrine advocated by Germany, and it has experienced 25 years of stagnation, despite engaging in occasional fiscal stimulus. It has now changed sides and embraced quantitative easing on an unprecedented scale. Europe is entering on a course from which Japan is desperate to escape. And, while Japan is a country with a long, unified history, and thus could survive a quarter-century of stagnation, the European Union is an incomplete association of sovereign states that is unlikely to withstand a similar experience. There is no escaping the conclusion that current policies are ill conceived. They do not even serve Germany's narrow national self-interest, because the results are politically and humanly intolerable; eventually, they will not be tolerated. There is a real danger that the euro will destroy the EU and leave Europe seething with resentments and unsettled claims. The danger may not be imminent; but the later it happens, the worse the consequences. That is not in Germany's interest.
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Bond-market bears are taking their lumps—again.
A run of uneven economic data this spring has wrong-footed scores of investors—including some of the bond world's boldface names—who entered the year betting that an accelerating U.S. expansion would send Treasury prices tumbling, ending a three-decade-long fixed-income bull market.
Among those who have rolled back bearish calls are Bill Gross, founder and co-chief investment officer of Pacific Investment Management Co., and manager of the world's biggest bond fund, and Rick Rieder of BlackRock Inc., who oversees fixed income for the giant investment firm with $3.96 trillion in assets
Thousands of people took to the streets of Paris on Sunday to protest against François Hollande's first year in power, accusing him of betraying the left, as the latest poll shows him to be the most unpopular president in modern French history.
Support for the euro has dropped to a record low 9 percent in Sweden, according to an SOM-survey out on Monday. The Swedes have long been critical of moving the EU towards a kind of United States of Europe, but now just 11 percent say it is a good idea.
BERLIN - An Italian judge has convicted Deutsche Bank of fraud, as the bank struggles to save its reputation amid widening probes over tax evasion and rate-fixing after the departure of its former CEO Josef Ackermann.
Deutsche Bank was convicted together with US giant JP Morgan Chase, Switzerland's UBS and a German-Irish bank, Depfa, for their role in overseeing fraud by their bankers in the sale of interest rate bets to the city of Milan. About €90 million are to be seized from the four banks, who will also have to pay €1 million each in fines.
The case is only the first in a series of similar complaints: around 600 Italian municipalities had bought such derivatives and lost about €4 billion during the financial crisis, according to the Italian central bank.
In parallel, Deutsche Bank is part of a worldwide investigation for altering the British benchmark interest rate (Libor) and its euro-counterpart (Euribor). Once the European Central Bank takes over the supervision of eurozone's largest banks, Deutsche Bank will fall under the new scrutiny.
The Milan sentence, which can still be appealed, also comes after Deutsche Bank had its Frankfurt headquarters raided last week in a probe for alleged tax evasion on profits cashed in from trading with carbon permits.
Germany's largest commercial bank, once renowned for its solid and risk-averse business, has been transformed over the last decade into an aggressive investor and speculator with risky bets known as derivatives, largely due to the leadership of Swiss top banker Josef Ackermann, who stepped down earlier this year.
The US Senate named the German bank alongside Goldman Sachs as the two institutions that played a “key role” in the financial crisis.
But unlike Denmark's Danske Bank whose management apologised for its role in the financial crisis, Ackermann still got praise for it.
At his opulent farewell party, Ackermann received video-testimonials including from EU commissioner Olli Rehn, who praised him for "restoring confidence in the financial sector."
Ackermann's successor, Juergen Fitschen, who vowed to change the company's culture, has meanwhile also come under fire in Germany for having phoned up the regional governor to complain about the police raids which are denting his bank's reputation.
Economists have largely disregarded the environmental consequences of growth. For them, the key benchmark of prosperity is gross domestic product (GDP), the sum of all products and services produced in a given country. However, GDP does not factor in the overexploitation of resources, the destruction of biological diversity, air pollution, noise, the expansion of impervious surfaces known as soil sealing, and the poisoning of groundwater.
But for many people, a wealth model built on chronic growth is no longer a desirable goal. They are deciding to opt out of this model by establishing "repair cafés" or "transition towns," communities that try to run things differently at the local level. But doubts about the growth dogma are even beginning to creep into politics. For instance, German Finance Minister Wolfgang Schäuble, a member of Chancellor Angela Merkel's center-right Christian Democratic Union (CDU), recently argued that Western countries should "espouse limiting economic growth" at home.
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