Dec 132014

As I’ve mentioned before, I favor the geopolitical analysis of Stratfor.  A few days ago, in George Friedman’s stead, Economy Analyst Mark Flemings-Williams tackled the broad issue of what Germany is trying to do with its economic policy in the European Union.  Basically: Germany is Europe’s economic powerhouse.  They went through economic austerity after WW2 and are the better for it.  Now, the countries of the EU periphery have overspent themselves.  Germany has been willing to bail them out IF they reform their ways, i.e., go through austerity themselves and essentially become like Germany, net exporters, especially to America.  As austerity is hard on citizens, it turns out that the periphery countries are unwilling to continue; they want the German conditions gone, but the flow of bailout money to continue.  This means the European Central Bank would buy bonds big-time, in the European version of quantitative easing (QE) (which in my own view is simply erroneous Keynesian thinking).  Germany is naturally opposed.  The countries not being bailed out, like France and Italy, have their own troubles and are not much willing to take German advice.  So the EU lurches on, a currency union without financial unity, much less political.  Germany by itself will not be able, or willing for that matter, to pull the EU’s financial bacon out of the fire.