Posted on 02/05/2012 3:18:23 PM PST by bruinbirdman
The half-century habits of Franco-German condominium die hard. It is a painful process for French elites to admit that monetary union is asphyxiating their economy and must inevitably trap France in mercantilist subordination to Germany.
The Carolingian union is all that anybody in French public life can really remember. It worked marvellously for two generations, levering French power on the global stage, and the euro was of course their own creation, intended to tie down a reunited Germany with “silken cords”. How can they now face the awful truth that this elegant strategy has blown up in their faces, enthroning Germany as undisputed hegemon?
Yet they can hardly ignore the evidence. While German unemployment has fallen to a post-Reunification low of 5.5pc, France’s jobless rate has crept up to a post-EMU high of 9.9pc and is certain to rise further as recession bites again.
While both countries had the same sorts of export surplus in the early 1990s, they have diverged massively since the D-Mark and franc were fixed in perpetuity. Germany has a current account surplus of 5pc of GDP: France has a deficit of 2.7pc, anathema for Colbertistes.
You can see from IMF data that the silent coup took place in the fat years of the global boom when Germany forced down unit labour costs; -1.7pc in 2003, -4.0pc in 2004, -3.3pc in 2005, -1.8pc in 2006.
France lost ground year after year due to wage creep and weaker productivity. Enough time has now gone by to leave it stuck inside EMU with a misaligned exchange rate, and talk of euro exit is at last starting to be heard.
“The single currency is condemned to an uncontrollable explosion sooner or later,” wrote 12 economists in a recent letter to Le Monde, calling for an orderly
(Excerpt) Read more at telegraph.co.uk ...
Y'know, things like a 35 hour work week.
Germany has provided a very clear example of how to create a growing industrial economy with a trade surplus. Relatively tight credit, relatively flexible labor markets, and relatively sane fiscal policy. The funny part is that Germany's policies aren't really all that marvelous -- they're just better than the others'.
It is only up to the French (and the Italians, Greeks, Spaniards, and Portugese) to emulate it. That they don't want to is all you need to know.
Thanks bruinbirdman.
It all has the fringe benefit of controlling inflation. It is rising wages and domestic prices due to monetary inflation that make cheaper foreign goods more attractive leading to trade deficits. The Germans (and the Japanese by the way) understand this very well.
Recalling the old saw from Margaret Thatcher that socialism works until they run out of other people’s money, now some people are finding out how hard life is going to be when the future they have worked so hard to achieve has finally arrived.
Not inevitable at all, IMHO. The article provides no supporting evidence for this assertion.
"Germany has overplayed its hand badly and will face a whirlwind diplomatic retribution".
On the contrary, money talks, not diplomacy. Colbert himself said:
"It is simply, and solely, the abundance of money within a state [which] makes the difference in its grandeur and power."
AEP calls all those who insist that Europe lives within its means "pub bores" with "an old meme".
Germany will not pay for profligacy of the Latin and Greek states no matter how old the "meme" becomes.
Germany is a single non-leftist (at least the Western states(lands) nation left in Europe. it is not surprising they are winning competition.
Of course, others are to blame Germany for their own faults but it has nothing to do with another unfriendly takeover.
Actually this competitiveness was achieved through a center-left/left (SPD/Greens) government under Schröder between ‘98-’05 and the center-left/center-right coalition (CDU/SPD) between ‘05-’09
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