Every bubble has two components: something – some real trend, and a misconception about that trend.
The more comprehensive and convincing a debt reduction program is, the less likely it is to fail. And remember, just as Germany is grateful to America for the Marshall Plan, Italy would be grateful to Germany for helping it lower its refinancing costs.
I think that my foundation uses the money better than the government does. In any event, I do pay taxes.
Giving government aid to a bank basically transforms it into a utility. The huge salaries in this sector are only a symptom of a more profound misalignment. The profitability of the finance industry has been excessive. That is absurd.
If every rich person gave 50 percent of their wealth to charity, I would not say they should pay more taxes.
The US needs a cap and trade system with auctioning of licenses for emissions rights. The revenues from these auctions can be used to launch a new, environmentally friendly energy policy. That would be yet another federal program that could help us to overcome the stagnation.
I am against market fundamentalism. I think this propaganda that government involvement is always bad has been very successful – but also very harmful to our society.
However, even a strong government can’t perform miracles. It needs money from the taxpayers.
What works for Germany can’t work for the rest of Europe: No country can run a chronic surplus without others running deficits.
China could easily emerge as the great winner if the Chinese leaders handle the situation well. On the other hand, they could also turn out to be the biggest losers if they handle it poorly. If the management turns out be wrong, this could lead to a political crisis in China.
Any central bank should only be in charge of liquidity. Solvency is a matter for the treasury.
There is a well-established conviction that the central banks always do what is necessary to keep the system going and then afterwards you then take care of the legal aspects. In a crisis, you simply do not have time to think about such concerns for too long.
No individual anonymous participant can influence the prices and therefore you really can speculate in the market without paying attention to morality. That’s one of the positive features of markets. That’s why they function.
Of course, speculation will always make a crisis worse. If there is a weak point, it will expose it.
My original intention was to spend the money in my lifetime.
Germans tend to forget now that the euro was largely a Franco-German creation. No country has benefited more from the euro than Germany, both politically and economically. Therefore what has happened as a result of the introduction of the euro is largely Germany’s its responsibility.
The integration of Europe was very much led by a Germany that was always willing to pay a little bit extra to reach a compromise that everybody accepted, because Germany was so eager to get European support for reunification. That was called the “farsighted vision,” which created the European Union.
We in the United States are very often – since we are a democracy and we have national interests, we’ve often made the mistake that a democracy has to adopt America’s interests, and that is a contradiction because a democracy basically is people deciding what their interests are.
Merkel has realized that the euro is not working, but she cannot change the narrative she has created because that narrative has caught the imagination of the German public, and the German public has accepted it.
The key problem is the debt restructuring in the euro zone. As long as the debt burden is not reduced, there is no chance of the weaker EU countries regaining competitiveness.
I admire Chancellor Merkel for her leadership qualities, but she is leading Europe in the wrong direction.