European Crass Warfare

[혜영]

European Crass Warfare

By PAUL KRUGMAN

Published: December 15, 2008

So here’s the situation: the economy is facing its worst slump in decades. The usual response to an economic downturn, cutting interest rates, isn’t working. Large-scale government aid looks like the only way to end the economic nosedive.

But there’s a problem: conservative politicians, clinging to an out-of-date ideology — and, perhaps, betting (wrongly) that their constituents are relatively well positioned to ride out the storm — are standing in the way of action.

No, I’m not talking about Bob Corker, the Senator from Nissan — I mean Tennessee — and his fellow Republicans, who torpedoed last week’s attempt to buy some time for the U.S. auto industry. (Why was the plan blocked? An e-mail message circulated among Senate Republicans declared that denying the auto industry a loan was an opportunity for Republicans to “take their first shot against organized labor.”)

I am, instead, talking about Angela Merkel, the German chancellor, and her economic officials, who have become the biggest obstacles to a much-needed European rescue plan.

The European economic mess isn’t getting very much attention here, because we’re understandably focused on our own problems. But the world’s other economic superpower — America and the European Union have roughly the same G.D.P. — is arguably in as much trouble as we are.

The most acute problems are on Europe’s periphery, where many smaller economies are experiencing crises strongly reminiscent of past crises in Latin America and Asia: Latvia is the new Argentina; Ukraine is the new Indonesia. But the pain has also reached the big economies of Western Europe: Britain, France, Italy and, the biggest of all, Germany.

As in the United States, monetary policy — cutting interest rates in an effort to perk up the economy — is rapidly reaching its limit. That leaves, as the only way to avert the worst slump since the Great Depression, the aggressive use of fiscal policy: increasing spending or cutting taxes to boost demand. Right now everyone sees the need for a large, pan-European fiscal stimulus.

Everyone, that is, except the Germans. Mrs. Merkel has become Frau Nein: if there is to be a rescue of the European economy, she wants no part of it, telling a party meeting that “we’re not going to participate in this senseless race for billions.”

Last week Peer Steinbrück, Mrs. Merkel’s finance minister, went even further. Not content with refusing to develop a serious stimulus plan for his own country, he denounced the plans of other European nations. He accused Britain, in particular, of engaging in “crass Keynesianism.”

Germany’s leaders seem to believe that their own economy is in good shape, and in no need of major help. They’re almost certainly wrong about that. The really bad thing, however, isn’t their misjudgment of their own situation; it’s the way Germany’s opposition is preventing a common European approach to the economic crisis.

To understand the problem, think of what would happen if, say, New Jersey were to attempt to boost its economy through tax cuts or public works, without this state-level stimulus being part of a nationwide program. Clearly, much of the stimulus would “leak” away to neighboring states, so that New Jersey would end up with all of the debt while other states got many if not most of the jobs.

Individual European countries are in much the same situation. Any one government acting unilaterally faces the strong possibility that it will run up a lot of debt without creating much domestic employment.

For the European economy as a whole, however, this kind of leakage is much less of a problem: two-thirds of the average European Union member’s imports come from other European nations, so that the continent as a whole is no more import-dependent than the United States. This means that a coordinated stimulus effort, in which each country counts on its neighbors to match its own efforts, would offer much more bang for the euro than individual, uncoordinated efforts.

But you can’t have a coordinated European effort if Europe’s biggest economy not only refuses to go along, but heaps scorn on its neighbors’ attempts to contain the crisis.

Germany’s big Nein won’t last forever. Last week Ifo, a highly respected research institute, warned that Germany will soon be facing its worst economic crisis since the 1940s. If and when this happens, Mrs. Merkel and her ministers will surely reconsider their position.

But in Europe, as in the United States, the issue is time. Across the world, economies are sinking fast, while we wait for someone, anyone, to offer an effective policy response. How much damage will be done before that response finally comes?

[검은 머리 앤]

nosedive? 사전을 찾지않고 곰곰히 생각해보니 재미있는 단어군요.

[검은 머리 앤]

in as much trouble as we are. as much as~ 라는 표현을 왜 이렇게 안쓰는지...

[검은 머리 앤]

in no need of major help

[검은 머리 앤]

아~ 좀 어렵다.

[jessica]

the current economy situation throught all over the world is faced with the worst moment ever. communism is used to considered as the most unstable aspect but nowadays there are lods of the problem of democracy are getting appeared like the rich-get-richer, family owned companies even those are much worse in developing country including korea(this is controvercial, korea is way to be developed, individual thought anyway). besides even developed countries such as the state and the uk are also getting involved international bankrupcy group.

[jessica]

as i'm not so informative person who knows economic situation expertly, the reason that this huge issue is happening cannot be found by myself, but still i completely know how the situation is. we need a very perspicacious phenomenon to escape from this collapsed ecnomic situation.

[혜영]

chancellor: 장관, 대법관 / reminiscent : reminding you of sb/sth

[혜영]

perk up: to become or to make sb become more cheerful or lively, especially after they have been ill/sick or sad

[혜영]

avert : to prevent sth bad or dangerous from happening

[혜영]

denounce: to strongly criticize sb/sth that you think is wrong, illegal, etc.

[혜영]

accuse : to say that sb has done sth wrong or is guilty of sth

[혜영]

crass : very stupid and showing no sympathy or understanding

[혜영]

engaging : interesting or pleasant in a way that attracts your attention

[혜영]

unilateral : 한편의, 일면인, 일방적인

[혜영]

heap scorn on sb/sth : to speak about sb/sth in a way that shows that you do not respect them or have a good opinion of them