Myth of German economic discipline

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http://www.presseurop.eu/en/content/article/1194641-myth-german-economic-discipline

Financial market investors and German politicians don’t really have a lot in common. Normally, the former don’t understand why the latter need so much time to implement the decisions they reach at a crisis summit. Conversely, the investors serve the politicians as the scapegoat of choice when it comes to who caused the crisis of the day.

There is one point, however, where both are unusually united: in their view of Germany’s fiscal policy, regarded as solid and a role model for all the southern countries in debt. Even when the facts look very different, it’s a boat no one really wants to rock.

And so the Christian Democratic Union’s chief whip, Volker Kauder, recently got away with declaring at the CDU convention that “Europe is speaking German now“. With this bit of chauvinist swagger, Kauder neatly summed up the politics of his Chancellor. Since the euro crisis broke out early in 2010, Angela Merkel’s mantra has been that if everyone could just save like the Germans, there wouldn’t be any problems.

You have to grant it to Merkel: apparently, she’s been rather convincing. In any case, the investors in the financial markets seem to believe the Federal Chancellor. While they’re demanding higher interest rates to buy government bonds from almost all the other eurozone countries, they’re giving their money to the German finance minister virtually at zero cost.