Noah denkt™  -
    Project for Philosophical Evaluations of the Economy
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ANGELA, PLEASE STAY FIRM, - Germany’s voters will support you !
Support for Angela Merkel in the face of Mr. Hollande's likely victory in France,
drafted and published  on May 4, 2012
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The likely victory of Franςois Hollande in the 2nd round of the French presidential election will considerably raise
the stakes both for the likelihood of sustainable European recovery as well as for the survival of the EURO itself. It
will take very strong minds and an ability to play the upcoming poker game well, to resolve the impending issues
peacefully. To achieve that there should be no lack of clarity on the following convictions:

  • First, austerity works. It may not be the quick fix that Krugman and others have in mind, but ultimately it will
    produce the more sustainable growth results. Germany itself is a case in point for this observation. If
    Germany is so extremely competitive today then this is largely due a) to the painful welfare reforms enacted
    in the Schroeder area, b) to a several year period of responsibly low wage levels (which actually resulted in
    a loss of purchasing power by your average employee) c) to a freeze in pension entitlement, d) to a raise in
    the pension entry age, and e) to the introduction of co-payment schemes in the national health insurance.

  • Second, if austerity hasn’t worked so far, then this has a lot to do with the fact that people fight it rather
    than embrace it. In other words, since a large part of our fellow Europeans is not willing to understand that
    all these cuts will ultimately improve our lives rather than depress them, said compatriots cannot develop
    any kind of optimism with respect to their future. At that in turn explains why people aren’t spending and
    investing under these circumstances.

  • Third, if people are unwilling to understand that austerity is necessary then this is largely because they are
    in a state of denial about the reality of the global market place. In other words, they would rather live in a
    protected fantasy land where you would nevertheless have access to all the latest gimmicks and
    achievements that a free society can produce then to confront the challenges of liberty head on.

  • Fourth, the election of Franςois Hollande in France will reinforce that state of denial which a large part of
    the European population is living in. In other words, the voices of reason and sensibility in Europe will come
    under even stronger psychological pressure to give up their well founded convictions then they have been
    under so far.

  • Fifth, in order to deal with this pressure, Ms. Merkel and her allies should prepare themselves mentally to
    play hardball with the emerging coalition of immature dreamers. In other words, they should under no
    circumstances agree to the issuance of Euro-bonds (yes, we have changed our position here!) until it is
    clear that Euro-zone governments are effectively prepared to subject themselves to the control of a
    Brussels-based fiscal government.

  • Sixth, in order to defend that position and to force the anti-austerity front to give up its state of denial it may
    well be necessary to eventually back up Germany’s No to the premature issuance of Euro-bonds with a
    credible threat of unilateral retreat from the Euro currency.  (Yes, this is a slight change of our
    earlier position too). In other words, it will probably be necessary to have a Cuba missile crisis moment
    in the Euro-zone in order to overcome the anti-austerity resistance and turn the page on the current debt
    crisis.

  • Seventh, it will certainly not be easy for Germany to play the bad cop’s role and turn, what isn’t a German
    diktat at this point in time, into one. But the good news is that German voters will ultimately support
    Ms. Merkel in her quest to enforce fiscal discipline at home and throughout the Euro-zone.

  • Eighth, at the end of this, when all the badmouthing of Germany has finally died down and the Euro-zone
    economy will slowly creep out of recession even the earlier opponents to Germany’s diktat will understand
    that Germany did the right thing at the right time. And so it will ultimately be for the common national and
    international good if Germany sticks to its guns here and makes others see the light by being strong,
    steadfast and firm.   
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Keywords:

German diktat, Merkel vs Hollande, politics of austerity, future of the EURO, Euro
crisis, support for Angela Merkel, unilateral retreat from the EURO currency, consequences of austerity in
Europe, pressure on Angela Merkel, austerity versus Keynes, survival of the Euro