Saturday, April 13, 2013

Party like it's 1924

European Union Commission President Jose Manuel Barroso at a speech in New York, celebrating the results of European austerity --

Europe has a manufacturing trade surplus of almost 300 billion euro, five times as large as it was in 2000. Sometimes people tend to forget this, that even in the crisis, Europe is in fact increasing its surplus. Our services surplus has expanded to over 100 billion euro. And our agricultural trade has shifted from a deficit to a surplus.

John Maynard Keynes, "The German Transfer Problem," Economic Journal Vol 39 (March 1929) --

If, however, we suppose that, by agreement with the Reichsbank, deflation is enforced, how will this help? Only if, by curtailing the activity of business, it throws men out of work, so that, when a sufficient number of millions are out of work, they will then accept the requisite reduction of their money-wages. Whether this is politically and humanly feasible is another matter. Moreover, an attempt by foreign financiers to withdraw some part of their vast short-term loans to the German Money Market, estimated at $300,000,000, might be a by-product of a violent political and economic struggle aimed at the reduction of wages in the interests of foreign creditors.