With Germany refusing to budge from its budget surpluses and to stop syphoning out 160 billion euro of purchasing power from its EU trade partners, the ECB is left to pick up the pieces, writes Michael Ivanovitch.
Eleven years after the onset of the epochal financial crisis, followed by the Great Recession, the European Central Bank is still trying to hold the monetary union from drowning in another cycle of rising unemployment, poverty and civil unrest.
France has been under relentless German pressures to apply that oxymoronic growth model. Paris duly followed with some fiscal austerity and a lot of harsh labor market deregulations, combined, most recently, with ill-fated gasoline taxes. That's an intolerably absurd situation. The lunacy, however, could go further: One might soon see the Commission's orders cut deeper into the public spending of Italy's declining economy.
The ECB is doing all it can with abundant credit flows and a zero percent interest rate — to the horror of its German critics. But Germany has ruled that out. Anticipating calls for looser fiscal policies and a decreased reliance on its mercantilist policies, Germany served notice that it would continue to run budget surpluses, and that U.S. President Donald Trump should be told that German trade surpluses are just the way it is.
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