by Andreas Hoffmann
Ever since the beginning of the EMU crisis, politicians, journalists and economists have blamed Germany’s “fiscal austerity” for the prolonged troubles in Europe’s periphery. If only the Germans spent more on goods and services, so the idea, the people in the periphery countries of Europe could sell more stuff. Exports would help their economies recover.
The German government, however, is found to engage in fiscal austerity. The recent budget surpluses even seem to annoy people. B. Setzer wrote (mischievously): “Germany has fiscal space even by German standards!”, and she should use it for the good of Europe. But she won’t. P. Krugman adds that Germany’s restrictive fiscal policy was a “drag” on growth in Europe. The Germans seem to have learned nothing from the crisis!