Matt O’Brien is gobsmacked that Germany continues to promote the virtues of austerity even as Europe edges ever closer to a triple-dip recession:
Germany should stop obsessing about its short-term deficit, and start spending more on roads and bridges and schools instead. Markets are all but begging it to….But out of some misplaced sense of fiscal self-righteousness, Germany would rather let its critical infrastructure fall into disrepair than take this free money.
….But Germany is stubbornly sticking with spending cuts instead, and it’s making the rest of Europe do the same.
It’s an austerity suicide pact, and Germany doesn’t even want the ECB to cushion the blow. It turns out, though, that forcing your customers into a worse depression than the 1930s isn’t good for you, either. It’s left Germany, which despite its image as an economic powerhouse has only grown 1.1 percent a year the past decade, teetering on the edge of its own slump — with Russian sanctions maybe enough to push it over.
It really is stunning to watch this play out. Germany is playing the same role that Republicans played in the US in the aftermath of the Great Recession, except that Europe’s economy is in worse shape than ours was and Germany’s enforced austerity is worse than anything even the tea party was able to achieve. The evidence is overwhelming that this conduct is hurting Germany itself as well as the rest of Europe, but there’s simply no budging them. What are they thinking?