Inflation: The winner is always the state

by admin

While the inflation rate for the euro area could be kept stable at about 2 percent, the inflation rate was in Greece with about 4 percent, almost twice as high.Greece keeps Europe in suspense. The fiscal position of Helena is not only a violation against the fiscal criteria of the European Monetary Union; it is an oath of disclosure. In such a fundamental crisis of the experiment is not surprising to externalise the applied loads.

Surprisingly, however, are suggestions and contributions from international institutions as well as from economists who directly or indirectly support the Greek tendency to displace the problem.None other than the IMF has promoted the idea, “solve” the current problems by means of inflation.

Inflation is an attempt to postpone distribution of acute conflict, and thus impose future generations. The European Monetary Union came through fiscal and monetary policy is under pressure. The result would be a fundamental loss of confidence because the losers are the savers.

The presentation of market economy and entrepreneurship

Those, who do not trust the market, will not start a business. Jobs will be created but only there, the majority of small and emerging SMEs. If you want more jobs, should the entrepreneur and the image of the social market economy in the school not to be represent dark and daunting. For a critical analysis, there is no objection. Nevertheless, the judge is the market economy, given the record of accomplishment of the social market economy in the past 60 years were benevolent.The German schoolbooks often give a different impression.

There are anti-market attitudes. A recent study, in which the representation of economic subjects was analysed in German schoolbooks, has confirmed this. Often remains unmentioned the positive relationship between globalization and new opportunities. It triggers new growth momentum in the markets but often it is unmentioned.

Accordingly, let global differences in prosperity be solved by more redistribution.The anti-market attitudes need not be surprised about the lack of bold, risk-taking and committed entrepreneurs. This is not good for the market economy and endangers our prosperity!

Greek tragedy with more grotesque features

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Almost all euro countries have broken the Maastricht criteria. The Greek tragedy is taking on ever more grotesque features, is now Portugal also been the target of speculation. How could this happen, and what to do? A basic problem is that the Greek debt and low productivity in the overall economy of the European Commission was not sufficiently recognized. Because the instrument, however, the Stability and Growth Pact has become a toothless tiger. Sanction options no longer exist.

It has been watered down since the pact at the initiative of the Federal Government in 2003. The sense of sound fiscal policies and good governance can be lost. In Greece, this has been done, but also in other countries of the EMU. Despite the lack of sanctions, it would still have been possible, the Greek government and the people to realize that the other European countries cannot help financially. State support of other EMU members, the so-called bailout is banned by EU Treaty, and rightly so.

Such a bailout adds distorted incentives in the debtor countries. The absence of clear rules on penalties in conjunction with the planned support is, so to speak, the fraction of the bailout. Thus, it makes sense for some market participants to bet against Greece and now against Portugal. What could be the reason of this bet? The deterioration of the rating and refusing new loans could the governments of the EMU feel increased pressure to give state aid. These bets are obviously only safe if the Greeks will actually helped with federal funds from the EU, but it seems no doubt exist.

Nevertheless, it is worth it even now to think about the right kind of support. The alternatives are clean. First, the EMU helps, as now is announced. It could be an incentive for the Greek government, but also for the governments in Portugal, Spain, Italy, and Ireland. In the Portuguese case, it is feared that the aid will be due at the same time. The fiscal stability in the euro zone would not help.

Whether in such circumstances the EMU would inventory is open, because the differences between the countries would be very large. At the same time, all the member countries would be weakened if they had already given money.