Never-the-less, todays effort:
So here’s the situation: the economy is facing its worst slump in decades. The usual response to an economic downturn, cutting interest rates, isn’t working. Large-scale government aid looks like the only way to end the economic nosedive.Is Mr. Krugman aware that Germany has (unfortunately) a "grand" coalition of government of left and right? The slicing and dicing started above but really grates here:
But there’s a problem: conservative politicians, clinging to an out-of-date ideology — and, perhaps, betting (wrongly) that their constituents are relatively well positioned to ride out the storm — are standing in the way of action.
No, I’m not talking about Bob Corker, the Senator from Nissan — I mean Tennessee — and his fellow Republicans, who torpedoed last week’s attempt to buy some time for the U.S. auto industry. (Why was the plan blocked? An e-mail message circulated among Senate Republicans declared that denying the auto industry a loan was an opportunity for Republicans to “take their first shot against organized labor.”)
I am, instead, talking about Angela Merkel, the German chancellor, and her economic officials, who have become the biggest obstacles to a much-needed European rescue plan.
As in the United States, monetary policy — cutting interest rates in an effort to perk up the economy — is rapidly reaching its limit. That leaves, as the only way to avert the worst slump since the Great Depression, the aggressive use of fiscal policy: increasing spending or cutting taxes to boost demand. Right now everyone sees the need for a large, pan-European fiscal stimulus.Anyone with a modicum (or a modem) of interest in European affairs knows that the person leading the charge on the German reluctance (not necessarily unwarranted) to jump in feet first and without thinking is indeed Peer Steinbrück. However, Herr Steinbrück is not "Mrs. Merkel's finance minister". Herr Steinbrück is the finance minister from the Social Democratic Party portion of the coalition government led by Frau Merkel.
Everyone, that is, except the Germans. Mrs. Merkel has become Frau Nein: if there is to be a rescue of the European economy, she wants no part of it, telling a party meeting that "we're not going to participate in this senseless race for billions."
Last week Peer Steinbrück, Mrs. Merkel’s finance minister, went even further. Not content with refusing to develop a serious stimulus plan for his own country, he denounced the plans of other European nations. He accused Britain, in particular, of engaging in "crass Keynesianism."
The point of the post goes back to the beginning of Mr. Krugman's piece:
But there’s a problem: conservative politicians, clinging to an out-of-date ideology — and, perhaps, betting (wrongly) that their constituents are relatively well positioned to ride out the storm — are standing in the way of action.Who knew, Peer Steinbrück and the left-wing Social Democrats in Germany are amongst the "conservative politicians clinging to an out-of-date ideology". Perhaps this post is rather dancing on the head of a pin, but shouldn't we expect more from our Nobel Laureates?
Just think it is sloppy work on behalf of Mr. Krugman, sure....