The G -20 this weekend promises to be quite tense and decisive. Train crash. In a confrontation between two economic visions quite contrary. To go on spending to sustain the recovery or cut the public tap? So far, several partners have been heating up the atmosphere with a battle of letters and articles in which they read sentences like knives. Toronto will take place in war melee. Who wins the contest will determine the death sentence or pardon recovery.
“W?” Double -dip? This week we had any more information than worrying. The American real estate sector has given us two terrors: one on Tuesday and another Wednesday. Without public support, home sales are not sustained. The New properties have marked a historic low. The U.S. Federal Reserve, in its communiqué issued after its regular meeting on monetary policy, proved to be more pessimistic than it had been customary in recent months. Because the financial terms have become an enemy of economic growth. References added a string of worrying in terms of employment, growth and bank credit.
On this side of the Atlantic, while the debt crisis continues to lash some another, especially in the form of closure of the interbank market, the new panel forecasts for Spain Funcas predict a relapse into recession in the second half of the year.
And while the economy falters, European states are struggling in the design of draconian budget cut plans. The most controversy was raised was the German and the impositions of Angela Merkel community partners. So much so that has caused an intense debate between George Soros and nothing less than the German economy minister, Wolfgang Schäuble. The famous investor, yesterday in Germany, in interviews, at a conference and later in an article published in the Financial Times, said: “Policies that are being imposed in the euro area directly contradict the lessons of the Great Depression of the thirties and carry the risk of condemning Europe for a prolonged period of stagnation, or worse.”
Soros agreed, so, with the open letter sent by President Barack Obama to their partners in the G-20. It is true that Obama has expressed much more diplomatic and did not call names to those who, veiled, were subject to criticism. The U.S. president stressed the great efforts made by governments to leave the Great Recession, and that would be unacceptable to squander all that capital. “Our priority in Toronto must be the safeguarding of the strength of the recovery. We work in an exceptional way to restore growth; we can not let it wane. This means we must reaffirm our unity to continue the policies that support economic growth enough,” Obama wrote in his letter.
And another very important thing, in clear reference to both China and Germany: “A strong and sustained recovery must be built on a balanced global demand. In Pittsburgh (an earlier meeting of the G-20), we agreed that countries with current account balances surpluses should do their utmost to strengthen domestic demand. “It is critical that the pace of fiscal consolidation in each economy is adequate for the needs of the global economy,” added the president. He does not say, but I think it is taking the bronze Hu Jintao and Angela Merkel. The latest case has made him a more flexible yuan. But the first is to his guns.
Not that Obama is an unconscious and is not concerned about his country’s massive debt. Sure it is. But his obsession is not a German. “My administration will cut the budget deficit by half by 2013, which in 2015 will be reduced to 3 %, “says the president. Attention! In 2015! In Europe, it was decided that this objective is met in 2013. Why the European masochism? ” , I would say Paul Krugman , also of pro -spending club , of which just left the UK , which has again been a lover of “blood , sweat and tears.” Germany has a constitutional mandate anti – deficit. Why now is not skip it as early in this decade? Krugman sees a further danger on the horizon, finally, Germany’s Axel Weber will become the next president of the European Central Bank is more orthodox than the current one, Jean -Claude Trichet. We know that the monetary authority’s mandate is to monitor inflation. And I do not want to move there. Well, if they ask for more flexible labor market, what I ask is flexibility in the role of the European Central Bank and the Stabilization and Growth Pact. Because their rigidities condemn us to the abyss.
But come on, Schäuble does not decay in his advocacy of fiscal austerity. And, unlike the delicacy with which Obama expressed, the German minister with all the ammunition fired, “While American politicians prefer to look at the short term, we expand the focus and therefore we are more concerned about the implications excessive deficits and the dangers of high inflation.” “Our aversion to deficit and the fear of inflation, which have their roots in German history, may seem strange to our American friends, whose economic culture is, in part, truffled deflationary episodes.”
The meeting of G-20 promises to debate. Also in relation to the financing system. Obama calls for transparency in the European financial system to reduce tensions in the credit market. To see whether Merkel grants and bare their banks.
It is a game of table tennis. I prefer to win the Obama , Soros and Krugman. For once, I oppose the efforts being made by Old Europe because I think the numbers will take away the reason and also with them, give up its essence. Not only growth is in danger. The flag of Old Europe, the welfare state, is also in question.
By: Cristina Vallejo
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