14 ms·
The single market is looking wobbly
- yrgulation 4y ago“In case anyone felt their nose insufficiently rubbed in German success” All good things come to an end. Also it feels like if the weather will suck tomorrow it will be blamed on germany. Where are the other countries in all this? Taking a nap?
- inglor_cz 4y agoGermany was a huge winner from introduction of the Euro. Some other countries, especially the Latin bloc, cannot cope with the common currency. (Ironically, it was the German economists who used to be very skeptical against the common currency and were loud about it.) At the end of the day, the single market will only be popular if growth and prosperity are shared across the continent. If the economic periphery plagued by anemic growth and high debt burden expands, so will populist sentiments. And the economic periphery of the EU is already rather sizeable - even the former GDR could be counted in it, at least when looking at the structural unemployment and migration patterns of young qualified people. In the US, Trump won his mandate riding on a wave of such populist sentiments from the Rust Belt. In Europe, ethno-national differences run much deeper than interstate differences in America, so the end result may be a fatal split in the Union.
- mmarq 4y agoThe Latin block (Southern Europe??) countries joined the euro to cut their interest rates, and that happened. The periphery is poor because it has been ruled by embarrassing governments for decades.
- harperlee 4y agoAnd in turn saw their industry unable to compete with the German one as deutsche marks stopped relatively appreciating with every german export. By the way they didn’t just join for that, so obviously saying “don’t complain! You got what you asked for” doesn’t really make sense as an argument.
- mmarq 4y agoAfter 20 years, everybody should really stop believing the conspiracy theory of the Germans that invent the Euro to rule them all, à la Sauron.
- harperlee 4y agoPerhaps read a comment twice before publicly dismissing it as childish, in case you were not able to fully grasp what you read. The only thing I said regarding intentions is that the “Latin block” intentions portrayed above were overly simplistic. The mechanism by which german exports sharing a currency with weaker economies makes german currency appreciate less than otherwise is not a conspiracy theory but simple, generally accepted and well understood economics.
- nalaz 4y agoThe periphery is and will always be poor because of cultural problems. People make the politicians, not the other way around.
- yrgulation 4y agoIs porn banned in germany or why do people enjoy poverty porn so much? The periphery is anything but poor. There are gaps between eu countries but east south and west are consistently ranking high in term of economic development. Anaemic growth doesnt equal poverty.
- inglor_cz 4y agoMy wife speaks Spanish fluently and we often travel to Spain. Spain as such may not be exactly poor, but quite a lot of people are living in very subpar conditions. Andalusia in particular has a lot of visibly poor natives. Even African migrants do not want to stay there and if they manage to cross the Strait of Gibraltar, they immediately travel north to France/Britain/Germany.
- yrgulation 4y agoOh please. Thats like saying california is poor because san francisco has homeless people. Just because people dont drive fancy cars or homes arent refurbished in a region where it rarely rains it doesnt mean they are poor. Even east eu is rich compared to most of the world. I agree with you on slow growth but eu countries are anything but poor. Mismanaged yes. Poor not so much.
- inglor_cz 4y agoI am not sure if it has anything to do with rain. Israel does not have much rain either and homes look much better there. And when we speak to the locals in Spain, their typical complaint is that they struggle to make the ends meet. "I wasn't on a vacation for seven years." - "I think twice before taking a RENFE train even though it is twice as fast as a bus." - "Kids won't probably be getting new laptops ever." etc. Comparisons to the rest of the world are misleading. Being better off than Algeria or Brazil isn't that much of a result. Spanish people naturally compare themselves to other Europeans and the gap between the relative riches of Spain and, say, (West) Germany or Switzerland, is pretty visible. So is the fact that the gap does not seem to be closing, rather the other way round. I agree that mismanagement is a huge part of the problem, and that it is mostly domestic. For one, the political parties seem to be enormously corrupt, on par with the Balkans.
- deleted 4y ago[deleted]
- inglor_cz 4y agoItaly used to be quite an industrial powerhouse when I was young. I still remember visiting the country in 2000, and even though the lira was weak, the overall atmosphere was much more lively, optimistic and vibrant. Contemporary Italy feels worn down and without hope. Too many young people with diplomas have simply fled. I get the same vibe in Spain, by the way, and in many cities of the former GDR, which is actually part of Germany. Dresden is fine, but Hoyerswerda, Chemnitz or Zittau are semi-deserted and feel distinctly "over": no future for them, only slow decay. The local political scene reflects that: the anti-system AfD gets plurality of votes, just to stick it to the "elites".
- mmarq 4y agoItaly was already significantly behind Germany and far from the technological frontier in the 1980s, it wasn’t the euro that slowed its growth. Then it took 40 years of obscene governments to bring it where it is now.
- yrgulation 4y agoAgreed. If change doesnt happen in everyone’s interest it will result in a fatal split. The biggest loser will be germany tho. Without access to the markets that prop up its economy it will suffer an economic contraction it’s never seen in modern times.
- ricardobayes 4y agoThat's an outdated view, Spain is the fourth biggest economy in Europe, and are net contributors into the EU budget.
- yrgulation 4y agoThere was a DW article that presented spain as one of europe’s poor countries. Cant find the link unfortunately. I swear these people get a boner when throwing around the word poor.
- inglor_cz 4y agoGo to Sevilla or Malaga and look around. Houses have old facades, people drive old cars, pavements have been last repaved 20 years ago and meeting a highly educated beggar is a common occurrence. That is not how a wealthy community looks like. Spanish economy may be nominally big, but random folk in the streets do not seem well off. The contrast to, say, Austria or Denmark, where most of the population seems to live just fine, is big. My friend, a nurse in Madrid, makes less than 1000 euro net. She and her son live in a small Franco era apartment where one of the tiny rooms does not even have a window.
- yrgulation 4y agoNurses are underpaid everywhere in europe. Its a common issue with public healthcare systems.
- inglor_cz 4y agoTrue, but at this point the only thing that prevents her from moving to Czechia to make better money is the fact that her son likes Madrid and she does not want to uproot him. That would be unthinkable some 20-25 years ago. Spain back then was, relatively taken, much richer than any post-Communist country and your living standard would have gone measurably down if you moved from Spain to Czechia.
- yrgulation 4y ago
- lazyeye 4y agoGermany loves the common market due to the way their economy is structured. Normally what happens for a major exporting country is that their currency (Deutschmark) would go up in value because of high demand to pay for German goods. This drives up the cost of their goods making them less attractive. But in the common market with a shared currency they are able to keep the cost of their goods artificially low due to other countries absorbing the demand for the currency. So where Germany wins, you can guess that other countries lose.
- enlyth 4y agohttps://archive.ph/7ORCZ https://archive.ph/7ORCZ
- chrisseaton 4y ago> The single market is looking wobbly Note that the Economist is British.
- secondcoming 4y agoAnd?
- chrisseaton 4y agoI wonder what motivation the British could have for saying that the EU's single market is looking wobbly?
- secondcoming 4y agoThe Economist isn't a mouthpiece for the UK government.
- donedealomg 4y agoOr the majority of the voters
- deleted 4y ago[deleted]
- luckydata 4y agoI don't know about the economist but there's certain stipulations that went into the foundation of the single currency that favored Germany heavily, and Germany behaved the whole time like it didn't happen. Most of the european resentment comes from that fact. Most southern european countries were taken for a ride during those negotiations, and have paid (and continue to) a steep price. I was a strong believer in the common currency but after reading about it for a while I'm not convinced it was a good idea anymore - if you're anyone except Germany or France. Paul Krugman wrote at length about why that was a mistake, and he was 100% right about it.
- durnygbur 4y ago"capital has no nationality", then of course any capital excesses will trickle down just any time...
- guerrilla 4y ago> Imagine queuing up at a food bank only for a millionaire to rock up in a BMW and announce he is snapping up the entire supply of grub Except it's not a like foodbank; it's literally a market and this is the cost of markets and the reason many socialists oppose them.
- systemvoltage 4y ago> State-aid rules were suspended during covid-19, as national governments bailed out everything from airlines to pizzerias. This is anything but a free market, and the consequences thereof. Actually a very good analogy for NGEU program.
- zublet 4y agoAnother round of blaming Germany! I guess after the Nord Stream sabotage they need another issue. The whole of Europe took gas from Russia, but Nord Stream was the incarnation of evil. The press was full of Nord Stream articles and never mentioned the other pipelines. Poland took gas well into May 2022, and only stopped after Russia demanded payment in rubles. The Yamal pipeline is still standing. Europe still gets Russian gas via the Ukraine transit pipelines. So apparently the issue is that there must not be a direct connection between Germany and Russia, so the transit states have leverage. What does Poland do itself? It routes the new pipeline from Norway via Denmark and the sea, avoiding transit via Germany. Perhaps Germany should leave the EU like Britain if it is so horrible.
- 14u2c 4y ago> Poland took gas well into May 2022, and only stopped after Russia demanded payment in rubles. True, but Germany did the opposite and started buying the gas with rubles. It's no surprise that this caused some animosity.
- zapperdulchen 4y agoI think that's misinformation. Do you have a credible source for this? Here is mine: Gas only for rubles: is Germany also threatened with a delivery stop? [https://www-br-de.translate.goog/nachrichten/deutschland-welt/gas-nur-gegen-rubel-droht-auch-deutschland-ein-lieferstopp,T4DH71Y?_x_tr_sl=de&_x_tr_tl=en&_x_tr_hl=de&_x_tr_pto=wapp https://www-br-de.translate.goog/nachrichten/deutschland-wel...]
- donedealomg 4y ago
- midislack 4y agoJust have the pipelines blown up. It's easy, everybody's doing it.
- juusto 4y agoIf I had one euro for every time The Economist has said that the Euro/EU were wobbly/breaking/etc I could balance Liz Truss'es budget and have money left for some fish'n'chips.
- systemvoltage 4y agoThis kind of ad-hominem happens on every Economist thread here. First order of business is to take a jab at the Economist. That just means factual things are being reported and people don't want to confront reality.
- KerrAvon 4y agoThe Economist lost a lot of credibility with some of us around the turn of the century, when it fatally misunderstood US politics and wrote columns addressing people like Karl Rove and asking them to follow their better nature. (Karl Rove does not have a better nature.)
- moomin 4y agoNot helped by one of their senior editors taking a sabbatical to become a full time crank.
- systemvoltage 4y agoI've been reading Economist since a teenager it is by far the best source of general global news in bite sized format. Excellent in every way from writing to admitting to mistakes. It is actually amazing that it is still relatively in the same shape despite of all the polarization in the world. HN has a strict bias for attacking Economist because they tend to take positions on things HN doesn't want to confront (anti-EU in this article). My honest view of this place. So you see attacking Economist rather than actually debating the talking points, quite a pattern.
- jlmorton 4y agoMaybe, but then there was this [1]. [1] https://www.economist.com/leaders/2004/05/06/resign-rumsfeld https://www.economist.com/leaders/2004/05/06/resign-rumsfeld
- MrPowers 4y agoThere is an excellent Real Life Lore video on "How Russia is Crippling Germany with Gas" that has quite a different take: https://www.youtube.com/watch?v=Xi74gPrn24Y&ab_channel=RealLifeLore https://www.youtube.com/watch?v=Xi74gPrn24Y&ab_channel=RealL... Peter Zeihan also has quite a different perspective. > those in Europe’s biggest economy will be able to behave as if not much is going on It seems like the shut down of the Nord Stream will have a big impact on German manufacturing. I'm not sure how they'll be able to "behave as it not much is going on".
- ajsnigrutin 4y agoEven with the rest of the comments here, the single market has issues, especially in the energy sector. I live in slovenia, and with some minor modifications we have enough electricity for our country (two factories shift to half-production, and we're there). We also don't use a lot of russian gas, but mostly rely on hydro, some coal (we even have a coal mine) and nuclear... so, no problem for us, we're safe for the winter. But, we've joined a single market for electricity, and (to very very simplify it), all the power goes into a single "pool", and countries buy it "at an auction"). ... this means, that we will produce enough power for us, but that power will be on the market for foreign buyers, especially the ones who earn 2-3x as much as we do (monthly wages) and whose governments will add aditional taxpayer money to offset individuals prices... one of those countries is germany. So the result will be, that instead of keeping our own, and let 'the big ones play politics, they're the ones who started this whole mess', we'll be fucked with reductions in power too.
- wooque 4y agoYou have to make some sacrifices for the family
- SevenNation 4y agoThe article is really about something called the NGEU: > ... Thus, as the pandemic raged, a novel form of European solidarity was agreed in the form of a €750bn bail-out fund, Next Generation eu (ngeu). The money is a form of redistribution: it is borrowed by the eu, but will in effect be paid back by its richest members while being doled out to its poorest. This gave fiscal capacity for southern Europeans to stimulate their own economies in the recovery. I can't imagine something like this is on the table now. Germany's balance of trade, peaking at 2.5 trillion euro in 2015 is now almost zero. That's fine for a country that issues its own currency, but not one like Germany that doesn't. The days of German largesse are in the rear-view-mirror now. Europe will need to find a way to cope without its economic Willy Wonka. https://tradingeconomics.com/germany/balance-of-trade https://tradingeconomics.com/germany/balance-of-trade Also, the title in the article is: > A German aid package revives calls for solidarity with poorer EU countries which is not as sensational as the HN title.
- netsharc 4y agoI don't think it's the NGEU, that was for Covid, but recently Germany just said it will borrow 200 billion Euro to be distributed to German businesses as help, and the article is saying that's not very fair.
- gsatic 4y agoNot too different from what happens in China or India. The imbalances between the rich provinces and poor ones are much more than in the EU.
- AnonCoward42 4y ago> Because of healthy state finances, it can afford to borrow up to 5% of GDP to create a “protective shield” that will insulate Germans from the cost of higher energy. I find this kind of insulting to Germans actually, since the energy prices were already high to begin with in Germany and the personal wealth of the lower 90% is actually so low that it is not hard to imagine how quickly society can collapse after the government has set so much money on fire just because they can. The problem with this "protective shield" is not that the intent is unjustified, but it comes way too late and I don't think it is going to help for long. I am honestly not sure there is a solution at this point anymore. They print money to dampen the price hikes, therefore increasing prices/devalue currency, therefore they need to print money.
- unity1001 4y agoThis just helps Germany to avoid the repercussions of their gas supply going away. After improverishing other European countries by pushing to them the IMF-style neoliberal loans after forcing them to bail out PRIVATE German banks in those countries back in 2008 and then blaming the people of those countres for 'being lazy', they will be scarcely motivated to help Germany that way. Especially considering how German industry's competitiveness hangs on other countries' industries being weaker, bringing the Euro down to keep German exports competitive. This is a chance for all the other European countries in recovering their industries back - German industry shutting down means that domestic and foreign markets that those industries were dominating will now be open to other European countries. Couple this with the Euro going down and making European products more competitive, you can understand that why other countries are not so enthusiastic in bailing out Germany.
- Proven 4y ago