Much to my surprise, in the ongoing battle between the rest of the world and Germany (because of current account imbalances), Mario Draghi takes sides with Germany. In this article, he is quoted as saying:
"It is important to overcome imbalances in the Eurozone but it is the wrong premise to strengthen weaker economies by making the strong economies weaker. We must assure that the other countries improve their competitiveness so that they become as competitive as Germany is".
Well, Prof. Krugman's reply to this is probably already in the making...
"It is important to overcome imbalances in the Eurozone but it is the wrong premise to strengthen weaker economies by making the strong economies weaker. We must assure that the other countries improve their competitiveness so that they become as competitive as Germany is".
Well, Prof. Krugman's reply to this is probably already in the making...
Why does it surprise you? Draghi may be a southern European politician and a cynic, but he is also a pragmatic realist, unlike many other southern European political dreamers.
ReplyDeleteLennard
Draghi looks as slippery as an eel, the Karlsruhe verdict is pending, you might be surprised several times ....
ReplyDeleteH.Trickler
Why does this surprises you? Draghi (and Germany) want to make the euro the global currency (against the dollar) so they try to prevent the euro members from current account deficits in order to avoid printing money. While Krugman wants euro printing so that dollar would remain the global currency. In both cases the bankrupt banks take money to cover their losses (in the US by printing/inflating the dollar while in the EU by imposing austerity). As simple as it sounds.
ReplyDeleteNikos