Robin Wells, economist and Paul Krugman co-author, writes:
“[…] the heart of the problem lies in the political culture of Germany and the mindset of its political and economic elites, which have never been willing to admit to their own voters the sacrifices that must be undertaken in order to be the leader of Europe. Instead, they have led Germans to believe that they can have it both ways: enjoying the fruits of the Euro Zone while times were good, and lobbing the burden of adjustment onto others when times got bad.”
“Instead, in the German mindset, Greece became a convenient but bogus template for assigning blame to other periphery countries – particularly, Ireland and Spain. Rather than acknowledging that these countries suffered from the bursting of a property bubble, greatly inflated by German and French lending, German elites pilloried them alike for having out-of-control budgets and inefficient workers. In the end, it was easier to blame and to moralize than to admit the truth.”
The news out of Germany, after the defeat of Merkel’s party in a regional election, is that she is going to stand firm.
But Europeans hoping that mounting international opposition will make her drop her austerity plan to save the euro — a policy that is causing so much pain in ailing economies like Greece and Spain — are likely to be disappointed, say analysts in Germany.
On the other side – the volcanic Greek side – there is no deal too. The talks of a unity government have come undone and the country is going for its second election this year.
Polls show the leftist SYRIZA party, which rejects the bailout and placed second in last week’s vote, is now on course to win, a result that would give it an automatic bonus of 50 seats in the 300-seat parliament.
So, the Euro is going for a wild roller-coaster ride and the US markets will tag along. Sell in May was a still good call this year. If only I had listedned to my own inner voice.