Merkel has resisted Stiglitz's calls for a Keynesian spur to recovery, including pooling debts in commonly-issued "Eurobonds" to allow members of the currency to borrow money at lower interest rates. Stiglitz should stick to his side of the pond. I'm sure that's Merkel's opinion of him, for it was the ability to borrow at low rates that was one cause of the euro crisis in the first place. Nations like Italy, France and (famously) Greece just went on a binge with all that cheap money they raised. Merkel hardly wants to give them a chance to do it all over again.
Having recently returned from Italy I can confirm Merkel's view of the Italians - they are living as if there was no recession. While many Italians are being forced to sell their second homes in the south they are still spending like there's no tomorrow.
Germany's persistent trade surplus with other EU countries is also blamed for undermining the recovery among the other 17 members, which import German goods but struggle to sell inside the EU's largest economy. This is a fairly constant refrain from The Guardian. Why blame the Germans for being successful? I think if Britain had a trade surplus with the rest of Europe neither the CBI nor Cameron would care tuppence about other countries whinging nor entertain the idea for one second of cutting back. A free market means a free market. So what exactly is the criticism meant to lead to? A controlled market where German artificially restricts its goods and buys in rubbish from her neighbours? Sounds like the old Soviet system to me. Merkel told Stiglitz and other Nobel laureates that monetary union needed to be married to fiscal union, which would provide the confidence and discipline for stained growth.
Inman of course means 'sustained'. Nevertheless this is the trap (if your a Eurosceptic) that Cameron is walking into. He thinks Merkel is an ally in 'finishing' the free market. Yes, she is, so long as there is in place greater fiscal union - harmonisation - to resurrect and old bug word from the nineties. That is the trade off Merkel is looking for from Cameron. Greater integration in return for market reforms. Something Cameron will pretend isn't on the agenda. And market reforms mean even more German goods being sold to her neighbours - including Britain. That means more household goods and more cars, and more machine tools. Just as Germany used the financial crisis to establish herself as second only to China in exports as the world recovered, so Germany will use a reformed market to cement her dominance in Europe.
Cameron can boast all he likes about the City of London, but the financial sector is no great mass employer and raiser of living standards. It is a select and narrow club of rich folk determined to make themselves richer....I find Merkel a particularly annoying personality. Overweening arrogance combined with base political cowardice (she is a former STASI officer hwo worked under Putin in East Germany). France and Italy have found the answer which is to run up their deficits to offset the huge surplus Germany is running. I think a subplot is also the emerging split on how to treat Russia. Clearly an even better way to deal with Germany is for France and Italy to develop their own relations with Russia independent from the EU dominated by Germany, Britain and the U.S.
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