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Eurocrash: the BBC misleads
Even the online report is neutral, telling us, against the background of the eurozone economy shrinking by 0.2 percent, that: "Europe's biggest economy, Germany, grew by 0.3 percent in the second quarter, helped by exports and domestic consumption".
We then get: "Germany has asserted itself thanks to growing exports to countries outside the eurozone," said Christian Schulz at Berenberg Bank. "It's hardly a surprise that consumption has increased due to low unemployment, rising wages and a low rate of inflation".
Go to the Speigel report, though, and the tenor is altogether different. Thanks to consumer spending and rising exports of consumer goods, the German economy grew in the second quarter, the paper says - "but only a bit". The 0.3 percent increase was lower than earlier this year and, already, the third quarter is facing a deficit.
There is no doubt that, compared with other eurozone countries, Germany is still doing well. In Italy, GDP was down 0.7 percent; in Belgium and in Spain by 0.6 percent to 0.4 percent. France's economy stagnated.
But the current statistics tell only part of the story. In the third quarter, the German economy is expected to decline. Exports, production and industrial contracts are all down and the Ifo business climate index is at its lowest level since March 2010.
The problem is that, while the German economy is in good shape, it cannot escape the recession in the eurozone and the weaker global economic growth. Thus, Commerzbank chief economist Joerg Kraemer, tells us that: "Until further notice, the current figures are the last good news from Germany".
Nothing of this came over in the BBC report, and although Flanders does concede that there are some problems, she also tells us that Germany's cumulative GDP growth since the start of the single currency is ahead of the rest of the eurozone.
So, it's finally official, the lady burbles: "After 13 years with the single currency, Germany has been one of the winners".
But, with Die Welt claiming that every federal citizen from baby to old man in the past five years paid an average of €3,125 for the crisis, we are paying a license fee for Stephanie's tosh?
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Richard North 15/08/2012 Eurocrash: don't wait too long
The only sensible solution is for Germany to escape from the eurozone. The euro would then depreciate heavily, giving the Mediterranean countries another chance to be competitive.
Ehrhardt also has advice for the politicians: do not wait too long before taking the necessary adjustment processes. The longer you wait, the more painful they become. Furthermore, he says, the claim: "The euro ensures peace in Europe" will turn into the opposite.
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Richard North 14/08/2012 The EU debate: predictable, stale and boring
Central to this debate was the assertion – so often heard and this time articulated by Sir Stephen Wall, "former diplomat and EU adviser to Tony Blair" – that only by remaining in the EU can we keep our place at the table where the rules are decided, input to which are vital to our status as a trading nation.
With this in mind, turn to Ambrose's report which charts the fate of global container shipping, an industry where Germany is the "superpower", controlling almost 40 percent of the global market.
Here, while the root cause of a "long-simmering crisis" is over-investment in new ships to take advantage of the boom in trade with China – the promise of which has not been sustained - the proximate cause is the drying up of funding. Over 100 German ship funds have already shut down and a further 800 are threatened with insolvency.
The reasons thus for the intensification of the crisis are not the trading conditions, per se but financial, and the essential reasons for this, according to market analysts, are "the high capital and rising liquidity requirements under Basel III".
Under this regime, banks are being forced to raise capital ratios too fast – and too soon – choking lending to the real economy. Most of the 20 top banks for the shipping industry have stopped all funding.
As to the linkage between this and the debate, is the issue of who makes the rules. We have in the squeeze on lending a set of rules which have had a massively damaging effect on Germany – to the benefit of Greece, according to Ambrose.
These rules, though, do not originate from the EU, but from the Basel Committee on Banking Supervision, where the UK is an extremely powerful player, alongside the United States. Germany is a committee member yet does not seem to have been able to tailor the rules to her own advantage.
One point, of course, is that membership of an organisation does not necessarily mean that the rules can be shaped to the advantage of any particular member. But the more important point is that this vital area of rule-making is outwith the EU. The EU is, in fact only an observer on the committee. The UK is a full member, and would remain so even if it left the EU.
This issue, we have touched on before, most recently with UNECE, and as we explore the role of such bodies, it becomes more and more evident that a huge amount of the rules attributed to the EU are in fact made by other bodies, and simply processed by the EU.
In discussions about the UK leaving the EU, the Norwegian model is often mentioned, with the claim that this country has to accept all the rules of the single market, without the ability to shape them.
Yet, if one searches "Norway" and "UNECE", there are thousands of references. Norway, as a country, is very actively engaged in rule-making, at a level upstream of the EU. When the EU gets involved, it is in taking the "soft law", decided by countries such as Norway, which it then processes into local law. This body takes its "orders" from UNECE, not the other way around.
In this context, another relevant issue raised in the broadcast debate was social protection for employees. But, as in so many initiatives, the EU is once again a downstream rule-maker. Many of the EU's programmes actually originate from the International Labour Organisation, another treaty body of which the UK is a member, and which feeds the EU with standards which it turns into law.
The points made by Stephen Wall, therefore, simply do not stand up. We do not need to be members of the EU in order to influence the laws which we adopt. But neither does being a member of any organisation, per se, guarantee our influence.
However, there is yet another interesting issue which arises. With UN bodies, the tendency now is for the UK to work with other EU member states to work out a "common position" on most items. The UK's seat at the table, therefore, is increasingly used to represent the EU rather than the British position. If we left the EU, we would be speaking for ourselves again. The national interest would be strengthened, not weakened.
Despite this, Wall was allowed to make his argument a centrepiece of his presentation in the debate, unchallenged on these points by the panel. What came from them was depressingly familiar, the same old arguments that we have heard for twenty years or more.
It does seem to me that the arguments on the EU have ossified. Groups and individuals have developed their narratives which have then become fixed in time, beyond the reach of change or development.
For instance, the "place at the table" meme run by Wall is wearily familiar, but easily countered. Yet none of the established groups is even trying to do so. They remain in their comfort zones, each side then trotting out the same old mantras, predictable, stale, and boring – talking largely to themselves.
If we are to engage the wider public – and win any possible referendum – we are going to have to do much better.
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Richard North 14/08/2012 Eurocrash: problems multiply
Even then, with the volume of material being produced, I am not even beginning to cover the territory as much as I would like, and can only hope to convey les grandes lignes. However, days after I reported that Germany held the key to the escalating crisis, it is good to see Reuters trailing in our wake - to say nothing of the Irish Times - and reporting: "Euro many fall victim to German internal politics".
The news agency also picks up on the importance of the derogatory use of the term "liability union", which we noted those days ago, now telling us that, when a former German finance minister characterises the eurozone as a Haftungsgemeinschaft - a community of liabilities - even the most fervent euro supporters might have pause for thought.
The Germans, however, are showing themselves to be less than enthusiastic supporters of the euro and it is quite ironic that, for all the eurosceptic rhetoric from Britain, the eastern half of the "motor of integration" looks to be the most likely nemesis of the project.
But out of left field come the Irish to assist in the process, this time in the form of MP Thomas Pringle who, last month, had sought and failed to get the Irish supreme court to block ratification of the ESM.
Pringle, though, was able to get the case referred to the ECJ and now a group of Germans, led by professor Markus Kerber, has filed a constitutional complaint, including an emergency petition, calling for the constitutional court in Karlruhe not to deliver a judgement on the ESM until the ECJ has ruled.
Although the Karlsruhe judgement was expected on 12 September. Handelsblatt now regards that date as "untenable", setting back the introduction of the ESM even further.
Says the paper, the decision of the Federal Constitutional Court is of crucial importance for the euro bailout policy. Without the consent of the judge, Germany cannot its share of the ESM bailout fund, and will also prevent further ECB bond purchases.
This can only rack up the pressure, which is already reaching intolerable levels, not least by the newsthat, as Italian bond yields are soaring, the investment banking giant Goldman Sachs has almost completely withdrawn from its involvement in Italian government securities.
Perhaps yesterday, Spiegel was tempting fate by listing Merkel's five biggest problems. Already, the list is out of date and growing. And there is no end in sight.
UPDATE: Germany's Constitutional Court has stated it will rule on 12 September.
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Richard North 14/08/2012
Wednesday, 15 August 2012
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