Parallel Universes

So, on today’s FT the German finance minister Wolfgang Schauble forcefully argued that Europe is on the right track, that austerity is paying off, and that “Despite what the critics of the European crisis management would have us believe, we live in the real world, not in a parallel universe where well-established economic principles no longer apply.”

He then proceeds listing all the benefits that austerity and “well-established economic principles” brought to Germany, and to other countries that followed them. Today, he claims, Germany has strong growth, fueled by domestic demand, and grounded on robust investment and innovation.

Ok, let’s see who lives in a parallel world.

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Short-Term Pain for Long-Term… Pain

We really had a strange summer. The whole media circus, and to a certain extent markets, clung to a few sparse green shots to decree “the recession over”. Which, according to the latest OECD interim assessment, is technically true: GDP in the EMU is forecasted to increase in 2013 by 0.4 per cent. Can we party, then? Well, no.