From Bill Mitchell:
"Over the last week or so I have been in Europe and talking to all sorts of people. In the streets the decay is clear and I am in a relatively rich part of Europe (Maastricht). Unsold properties are multiplying and the there are lots of shopping space vacant in the main centres. It is very apparent to me but when I ask people about this some express surprise – not having noticed it themselves. I concede that when you come here once a year you note the changes but the reality is fairly stark. If we put this anecdotal evidence together with the way in which the Euro bosses are behaving and the overall quality of the policy debate in Europe at present it is clear to me that there is a great sense of denial in Europe. Nowhere is this more apparent than in
Germany. Their growth model has failed and must change. But it will be very difficult to achieve the sort of national awareness that will render that change possible. The Eurozone was always going to fall apart as a result of its basic design flaws from its inception. But the German strategy – which they consider to be a source of national pride – actually ensured that once the basic design flaws were exposed by the collapse of aggregate demand, things would be much worse than otherwise."
"The only way forward for the world economy is to stimulate aggregate demand. The high savings of Germans (and the Dutch for example) which then rely on the dis-saving of other nations to maintain some semblance of growth is not consistent with the way in which the Euro bosses are handling this crisis."
"There is a great sense of denial here in Europe which I have picked up strongly over the last week. The dots are not being connected. Somehow analysts think that killing off Greece will help Germany maintain its export-led growth strategy."
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