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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Euro zone deficit hawks out in force

Posted by WARREN MOSLER on March 12th, 2012

Says it all:

Schaeuble Says Deficit Spending Backers Have ’Learned Nothing’

(Bloomberg) German Finance Minister Wolfgang Schaeuble said that deficit spending is the wrong way to bolster economic growth.

People who believe you can generate growth without pursuing budget consolidation have “learned nothing from the experience of the crisis,” Schaeuble said in a speech in Berlin today.

Germany Turns Up Pressure on ECB

(WSJ) “I hope that the ECB acknowledges its limits and quickly rakes in the money later,” said Volker Kauder, the head of parliamentary group of Ms. Merkel’s conservative alliance of Christian Democrats and its sister party, the Bavarian Christian Social Union, in a Wirtschaftswoche interview on Saturday. Responding to warnings by Brazil about a “tsunami of cheap money” flooding global markets, Ms. Merkel, at the most recent summit of European leaders on March 2, said that she was certain that the ECB had now ended its program of issuing cheap 3-year loans to banks. Merkel also reassured critics that the ECB would not repeat such measures again.

ECB calls for tougher rules on budgets

(FT) The ECB has sharpened its hardline stance on eurozone fiscal policy by urging the still-tougher policing of member states’ public finances. In a report on proposed European Union regulations to monitor budgets better and strengthen the surveillance of countries in difficulties, the ECB makes clear it sees significant scope for further improvement. Among the proposals in the report dated March 7, the ECB suggests the surveillance of countries that run into difficulties in the future should be strengthened by public warnings for the most recalcitrant. Where a country under surveillance is threatening the eurozone’s financial stability, there should be an automatic recommendation that it seeks financial assistance, the ECB says.

7 Responses to “Euro zone deficit hawks out in force”

  1. SteveK9 Says:

    This summer will be interesting and potentially violent.

    Reply

  2. Neil Wilson Says:

    Do they understand what is happening?

    The problem is regulation of private banks. It appears to be much more profitable for them to finance ponzi speculation that real investment.

    So stop that from being profitable.

    Reply

  3. MamMoTh Says:

    Austerity macht frei!

    Reply

    roger erickson Reply:

    @MamMoTh,
    He’s just saying they’d rather export to China than to Europe. Maybe they have big plans for Russia too.

    Reply

  4. roger erickson Says:

    “The ECB cannot and must not finance state debt,” Schaeuble said in the interview. “The member states must do that themselves.”
    http://www.bloomberg.com/news/2012-03-12/third-greek-bailout-package-can-t-be-excluded-schaeuble-tells-de-morgen.html

    Best way to do that would be to re-issue their own currency?

    Schaeuble is either very confused, or very Machiavellian.

    A new term is called for “Schaeuble freut sich mit SchaeubleSchaden.”

    Hence, Schaeublefreude.

    Reply

  5. Monica Smith Says:

    Money is such a wonderful shield behind which to impose deprivation. Entirely objective. Nothing personal.

    Reply

  6. Matthew Arnold Says:

    Central banks exist to finance state debt, that has always been the case. If the ECB doesn’t, quite frankly, you’re doomed… Regulation is probably more a hindrance than not, via the silly parameters imposed by rating agencies vis a vis leverage requirements. So, encourage investment in the real economy while systematically disincentivising such investment? And Monica, one should talk about the political motives before discussing the irrelevance of “money”…

    Reply

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