Angela Merkel Continues Her Reisistance to “Crass Keynesianism”

by Mario Rizzo

Macro-policy economists are in a bad way. They cannot stand dissent. The New York Times reports that Angela Merkel’s government refuses to start spending as if it were going out of style. She sees the current crisis as the result of distortions caused by excessive and misdirected credit. Paul Krugman has also expressed frustration with the German lack of enthusiasm for a big stimulus. To give the reader the feel for this apoplexy: Continue reading

Interesting Idea from Angela Merkel in Swabia

by Mario Rizzo

The German Chancellor Angela Merkel is resisting pressures to follow the stimulative fiscal policy of engaging in deficit spending. The Wall Street Journal in its December 2nd edition says:

The root of the global financial and economic crisis in known to every Swabian housewife, Ms. Merkel said: “You can’t keep on living beyond your means.” A lack of thrift in advanced economies caused the crisis and can’t be its cure, she said.

How interesting indeed. Maybe one of those “Swabian housewives” can be appointed to an informal advisory position in the Obama Administration at least for some balance. Note: Swabia is the region around Stuttgart in Germany.