The current news out of Europe is the victory of French Socialist Francois Hollande in the Presidential race. Mr. Hollande has just won a narrow but convincing victory over incumbent Nicolas Sarkozy and his party is favored in the French Assembly elections next month. But that is not the important electoral news out of
That important news is the rise of radical political parties on the right and left, personified in the elections in
Greece that saw
once fringe parties, particularly extreme right wing parties that evoke fascism
make substantial gains. Add to this the
strength that Marine Le Pen, a hard line nationalist, showed in the first round
in the French election, the strength of a radical right winger in the
Netherlands who just brought down the government and the strength of radicals
in other countries, and one can start to worry about Europe.
The continent is not facing an imminent rise to power of neo-Nazi like parties, but conditions are developing that makes it possible, if not downright plausible that such a thing could happen in the future. The reason is economic austerity. In the 20th century harsh economic conditions allowed radical dictatorial governments to come to power in Germany, Italy, Spain and Portugal, and while the horror of that era is still fresh in everyone’s mind, those memories are not perfect insurance against the same thing happening again.
|Mr. Weidmann - He Doesn't Look Like|
Someone Who is Imposing Misery on Millions
The trend is not good, and the reason is that
Germany, the continent’s economic power is
determined to impose economic austerity on the rest of Europe. That policy is personified
in German economist and central banker Jens Weidmann.
strongest defender of fiscal probity, Weidmann is fighting the Keynesian tide.
The 44-year-old blond with a diffident smile and a quiet demeanor is austerity
personified. Since last year he has been president of the Deutsche Bundesbank, Germany’s central bank, which is fiercely
devoted to preventing a recurrence of the hyperinflation that ruined ’s
middle class in the 1920s. Germany
Weidmann’s devotion to austerity is even purer than that of German Chancellor Angela Merkel, for whom he once worked at the Chancellery in
as an economic adviser and sherpa at G-8 and G-20 summit meetings. “Merkel has
embraced European integration as the make-or-break issue of her
chancellorship,” says Christian Schulz, a London-based senior economist at
Berenberg Berlin ’s oldest. “Weidmann has a
narrower responsibility. [It’s] not all of Europe or even all of Bank, Germany . His
responsibility is price stability.” Germany
the mission of the Federal
Reserve is price stability and full employment.
for the Bundesbank it is just price stability.
And achieving price stability is actually pretty simple and easy if that
is the only goal. All one needs to do to
have zero inflation is to adopt policies which will have a very low level of
economic activity, zero or negative growth.
When there is excess capacity and insufficient demand, business cannot
raise prices and labor cannot get wage increases. The result – no inflation.
is imposing austerity on the rest of Europe,
helped in part by other conservatives so that there will no inflation. And these narrow minded policy makers seem to
be ignorant that they are creating not only conditions that impose economic misery and
devastation on millions, but also conditions that also allow for the rise of the
radical right and the radical left. They
probably think given the history of Europe and
the horrors of World Wars I and II that it cannot happen again. They should think differently.