Englund

Many Germans sympathized with (even if they didn’t quite follow) Sinn’s argument that the way the ECB supported the peripheral economies through its TARGET2 settlement system amounted to a covert “transfer union.” What the Southern Europeans needed to do was what Germany had done after 2003: to reduce their price and wage levels, and thereby regain domestic competitiveness. This was a constant refrain in the German press. Like many others, I said at the time that such arguments made little sense. Even in the midst of the pandemic, it took the French president, Emmanuel Macron, to force through the long-overdue fiscal integration that had always been implicit in the project of a single European currency. Niall Ferguson Bloomberg 29 augusti 2021 https://www.bloomberg.com/opinion/articles/2021-08-29/how-angela-merkel-turned-back-the-clock-of-german-history Germany, it says, will never accept a “transfer union”. Target 2 https://englundmacro.blogspot.com/2019/09/germany-it-says-will-never-...

In essence, this is a competitiveness crisis brought about by the distortion of relative prices within the eurozone, which is a result of inflationary overpricing in Southern European countries.  This overpricing, in turn, stemmed from the flood of capital that entered these economies after they joined the euro. And now COVID-19 has triggered another phase of capital flight that eclipses all the others. Hans-Werner Sinn Project Syndicate 24 July 2020 Hans-Werner Sinn, Professor of Economics at the University of Munich, was President of the Ifo Institute for Economic Research and serves on the German economy ministry’s Advisory Council. He is the author, most recently, of The Euro Trap: On Bursting Bubbles, Budgets, and Beliefs .

Germany is the largest guarantor of the European Central Bank’s credit default insurance, known as the OMT,  and provides by far the largest stock of “target” overdraft credit to other European countries, currently €956bn. Hans-Werner Sinn FT 27 June 2018

The fiscal compact – formally the Treaty on Stability, Coordination, and Governance in the Economic and Monetary Union French Prime Minister Manuel Valls and his Italian counterpart, Matteo Renzi, have declared – or at least insinuated – that they will not comply with the fiscal compact to which all of the eurozone’s member countries agreed in 2012 Their stance highlights a fundamental flaw in the structure of the European Monetary Union  – one that Europe’s leaders must recognize and address before it is too late. Hans-Werner Sinn, Project Syndicate 22 October 2014 The fiscal compact – formally the Treaty on Stability, Coordination, and Governance in the Economic and Monetary Union – was the quid pro quo for Germany to approve the European Stability Mechanism (ESM), which was essentially a collective bailout package. ECB should abolish its OMT program  – which, according to  Germany’s Constitutional Court , does not comply with EU treaty law any...

Italien Italy EMU