Monday, January 16, 2012

Dumb and Dumber at the EU

The most important problem in the EU at the moment is the gap of competitiveness between Germany and Holland one side and many Southern countries on the other. Where many Southern states would need trade surpluses to get them out of their budgetary problems they have instead trade deficits. And the main countries they have a deficit with are in the North.

To mend that competitiveness gap the Southern countries are following very restrictive
fiscal policies. Unfortunately the EU is now forcing the North to implement similar restrictive policies. This means that the Southern countries are now running after a moving target that they may never reach before they stumble.

The logical alternative would be to have the North following an expansive fiscal policy. Unfortunately the EU leadership is so ideologically blinded that they refuse even to consider such options.

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