Sunday, March 17

Germany killed the eurozone?

By Jim Jubak

A new budget makes it clear that only the weaker euro zone economies offer Germany lectures on frugality. This will deadlock.

German Chancellor Angela Merkel speaks with President of the European Parliament Martin Schultz at a EU Summit in Brussels on Thursday.

Today, left March 14, Germany the euro zone.

Oh yeah, nothing official. And I hold my breath not wait for confirmation of objective, such as the reintroduction of the German mark. But the new German budget marks the beginning of the effective end of the eurozone and the euro.

What exactly happened is the so important? How can a single national budget will make such a difference?

Because any upturn in Europe on Germany is on the way.

The German budget 2014 announced by the German Finance Minister Wolfgang Schaeuble on Wednesday, containing an extra EUR 5 billion (US$ 6.4 billion) in spending cuts eve of a European Summit. Total net new borrowing for 2014 to 6.4 billion euros (U.S.$ 8.3 billion), will be a 40-year low.

And it is balancing the German budget on a path in the year 2015. This is a year ahead of the German Constitution.

If fiscal prudence is your goal, this budget deserves the praise heaped by Ministers for the economy of Philipp Rosler, who said: "with all modesty, this is a result of historic proportions. The lesson from the crisis is that sound finances are essential. Thanks to this approach, Germany is a pioneer in Europe. Our success with a policy of growth-oriented consolidation is the envy of the world."

The problem-apart from the complacency of this Kommentaren--this is fiscal prudence which isn't the most pressing goal in Europe's largest economies.

Jim Jubak

Everyone knows the Greek economy is a city and the home of the latest unemployment figures was pressed. Unemployment hitting 26% in the fourth quarter from 24.8% in the third quarter. Workers between 15 and 24 years old is the unemployment rate at 57.8%. The percentage of the unemployed hit 65.3% searched for more than a year for a job.

But the real problem is not Greece. The real problem is that the rest of Europe-except Germany-, such as Greece, facing rising unemployment with no medium-term relief in sight. Employment in the euro area as a whole decreased by 0.3% in the fourth quarter from the third quarter. Only Germany showed growth in jobs between the zone's major economies. The decline in employment is particularly threatening in the fourth quarter because the Christmas-shopping season generated usually jobs.

And the Outlook for an improvement? Grim. Ernst & young, for example projects that unemployment continue until 2014 will rise this year, and the recovery will be anemic. Until end of 2017 Ernst & young estimates, the unemployment rate in Europe of 11% is stuck.

At the EU Summit now underway to promote the growth of the European economies to propose measures. But it is not clear where growth maybe could come.

Germany's neighbors have with the land, to stimulate its own economy pleaded because additional demand could produce more spending by German consumers for goods from Spain, Italy and France. The new German budget seems to have taken off the table.

The European Central Bank seems also unwilling to intervene. The International Monetary Fund has to stimulate the ECB on growth in Europe, by man named its benchmark interest rate, but the Bank continued to insist insist that combined with austerity budgets of European governments lead the current monetary policy, to a higher growth in the second half of 2013 sufficient will. The Bank is obliged at the moment, waiting for structural economic reforms to work. This growth to take alternative from the table.

Other members of the euro zone, most particularly France, called for easing of euro-zone 3% budget deficit-GDP ratio rules to Governments higher cyclical deficits in difficult economic times, to allow. The French argue clearly in the Eigeninteresse--it looks as if France were a deficit to GDP ratio of 3.7% or more in this year instead of hitting the 3% target is executed. Germany, however, this has also continued to insist that the countries the budget rules-follow and was particularly insistent on the need for the major economies like France, tax examples of smaller euro-zone economies. To remove this last alternative.

And somehow that heads of State and Government, gathered at the Summit to produce a growth plan for the eurozone. The later post instructions for these sessions are always in advance drawn up, changed through discussion. The design for this event, according to the financial times, called "short-term targeted measures to promote growth and employment."

Before the session, this language took fire from Germany, Finland and the Netherlands. The announcement of the German budget 2014--an announcement that a week pressure at the Summit to hold the line on discipline so that the budget ahead of the Summit would released - seems moved. Germany and austerity measures advocates such as European Commission Minister Olli Rehn have heaped scorn on French calls for the relaxation of the budget rules.

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