tag:blogger.com,1999:blog-36227136.post5047495183416990254..comments2024-01-16T08:40:53.682+00:00Comments on <a href="http://www.openeurope.org.uk">Open Europe</a>: Is the Bundesbank going soft?OEhttp://www.blogger.com/profile/00556463374230498875noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-36227136.post-29620967978374483782012-05-11T09:38:00.723+01:002012-05-11T09:38:00.723+01:00Sueddeutsche's article: http://www.sueddeutsch...Sueddeutsche's article: http://www.sueddeutsche.de/wirtschaft/debatte-ueber-steigende-inflation-bundesbank-behaelt-die-ruestung-an-1.1354306Stevenoreply@blogger.comtag:blogger.com,1999:blog-36227136.post-7131657612450805972012-05-11T09:27:15.334+01:002012-05-11T09:27:15.334+01:00Thanks Steve - that didn't take long!Thanks Steve - that didn't take long!Open Europe blog teamhttps://www.blogger.com/profile/13298566546867244328noreply@blogger.comtag:blogger.com,1999:blog-36227136.post-73463852862479331482012-05-11T09:14:47.873+01:002012-05-11T09:14:47.873+01:00"Bundesbank’s Weidmann Hits Back at FT Report..."Bundesbank’s Weidmann Hits Back at FT Report, Sueddeutsche Says" at http://www.bloomberg.com/news/2012-05-10/bundesbank-s-weidmann-hits-back-at-ft-report-sueddeutsche-says.htmlStevenoreply@blogger.comtag:blogger.com,1999:blog-36227136.post-56781577083943655032012-05-11T07:49:46.232+01:002012-05-11T07:49:46.232+01:00The ECBs mandate is for the whole EZ not for a cer...The ECBs mandate is for the whole EZ not for a certain country. As Germany goes much better than the rest it is likely that when the EZ inflation overall is slightly below 2% it will be higher in Germany. The 2.5-2.6% is probably a good indication.<br /><br />This doesnot mean that there won't be discussions on that in Germany. They already have started one, reading the news papers. Meaning that most likely a political process will be started with an uncertain outcome. But also one that might have consequences for future rescue attempts/bail outs etc. This is not only a Central Bank call, in Germany the population is pretty anti-inflation so it is simply a political issue as well. (And it is mainly about perceived inflation not about the figures economists come up with).<br /><br />As you say this is about 2.5 or 2.6% nowhere near enough to correct the differences. Percentages needed for a substantial correction are much higher and will get the BuBa and ECB people very likely lynched in Germany. Basically you donot close 30-40% and more gaps with 1% more inflation per year.<br /><br />Anyway presenting that as the cure that will solve all is imho plain stupid. You need new investments in the Southern PIIGS mainly export oriented. Meaning you will have to compete with the rest of the world for that.<br />I donot see that happening:<br />- they have hardly products that are interesting for the worldmarkets;<br />- no sales/marketing apparatus in place to sell them;<br />- much more expensive than the direct competition in Eastern Europe (and worse educated)not even to mention China and India;<br />- loony unions;<br />- high taxes;<br />- mass corruption;<br />- totally over the top labor protection;<br />- inefficient government and a lot of other red tape.<br />Simply is a horrible picture. They missed the opportunity to stay ahead of China/India and Co and now these are moving forward and rapidly and they are stagnating.<br /><br />The problem is that the Southern PIIGS are simply totally uncompetive on a worldscale and not just within the EZ. So you won't solve their problem by only correcting that (you might even make the whole EZ weaker when you do that the wrong way (like the way earlier proposed by Lagarde).Riknoreply@blogger.com