Monday, 2 April 2012

Leading by the wrong example!

Watching CNBC news this morning the scroll said :

German Budget deficit to drop to 0.9% of GDP in 2012 - Finance Minister
That is leading by the wrong example!!  That explains all my arguments in my previous post about why Spain and other countries in distress should gang together and refuse the crazy EU fiscal pact to have permanent neutral budgetary positions.   Ireland has a good chance to do so in their referendum.

Germany should not be trying to balance their budget at this point of the economic cycle.  They should be expanding their deficit by putting more spending power in their consumers' pockets so as to balance out the contraction of economic activity of countries in distress whose austerity is causing contraction of domestic demand.

The Euro can only survive if the chronic surpluses and deficits are balanced out.   We cannot all aim to be Germans and aim for chronic surplus.   Germany's surplus is somebody else's deficit.

Germans are attempting to defy the rules of mathematics!

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