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Europe needs a hegemonic Germany, by Yanis Varoufakis

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Helsworth
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Post: #1
Europe needs a hegemonic Germany, by Yanis Varoufakis

For six decades Germany was being pampered by a hegemonic America that oversaw the write-off of its wartime debts, the reversal of Allied designs to de-industrialise it and, above all else, the constant generation of the global demand which allowed German manufacturers to concentrate on efficiently producing quality, desirable wares.

Having taken all this for granted for too long, Germany’s elites are now finding it conceptually difficult to come to terms with the new ‘normal’:

A world in which sufficient aggregate demand is no longer maintainable by the United States, or any other single bloc, and in which Germany can no longer take for granted the demand for its goods.
A world in which there is no room for a Eurozone that operates like an augmented Germany.
Germany’s disciplinarian imposition of the greatest austerity upon the weakest of Europeans, lacking any plan for countering the resulting asymmetrical recession, is a sorry and dangerous leftover of a long-gone world order built by America. It is the result of a mental atrophy caused by a United States acting for too long as the over-protective parent. It will backfire with mathematical precision, causing higher debt-to-income ratios and lower economic dynamism throughout Europe. The time is, therefore, ripe for a Gestalt Shift from an authoritarian to a hegemonic Germany. Europe needs a Germany ready and willing to make this shift and, indeed, so does Germany.

But what would a hegemonic Germany do? It will be worried about something beyond fiscal rectitude and market reforms. It will know that a supply of high quality products does not automatically create its own demand. It will enthusiastically strive to engineer, as America did in the 1950s, a Pan-European Recovery Program that restores demand for the goods that Europe needs.

Should Germany then try to emulate America? Germany does not have the capacity to do what the United States accomplished from 1980 to 2008; that is, to operate as a gigantic vacuum cleaner sucking into its territory other nations’ net exports, at the cost of ever expanding deficits. Nor should German taxpayers be expected to reflate the bubbles that burst in 2008 (in their own banks, in and around the Greek state, in Irish and Spanish real estate markets etc.). Burst bubbles should be allowed to remain… burst. But meanwhile a hegemonic Germany would find ways to channel the huge pools of stagnant savings into productive investments in the Periphery where they shall produce the incomes that must pay down debts and maintain the level of intra-European demand German companies need to remain competitive both within and without Europe.

In a sense, a hegemonic Germany will be playing the role that Washington did in the 1950s, adopting an activist policy to re-balance Europe’s economy through efficient surplus recycling. But how can this be achieved, when Germany cannot afford to unleash a Marshall Plan? What institutions will this recycling require?

Two things are clear: Germany should not rely on the failed nexus between national governments and Brussels, which has been responsible for inefficient and corrupt uses of the EU’s structural funds. Also, it is futile to attempt moving in a federal direction, a move that Europe’s peoples are not ready for and whose glacial pace is certain to be outpaced by the galloping crisis. Is there a third way? Yes, there is.

Germany should take another leaf out of the New Dealers who put it on the road to recovery all those years ago: Europe needs its own New Deal, funded by a new class of public finance instruments. Germany can realise such a Recovery Program centred around the European Investment Bank. The EIB already has a proven track record of creating a liquid market for debt instruments that fund successful projects. In collaboration with, and supported by, the European Central Bank, an EIB-ECB partnership has the capacity to energise mountains of hitherto idle savings on pure banking principles, with minimal involvement of member-states and no need for Treaty changes.

All it will take is a German resolve to shift from panicky authoritarianism to a hegemonic, to an enlightened self-interestedness.

http://yanisvaroufakis.eu/2013/02/22/eur...c-germany/


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22.02.2013 19:42
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Titian
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Post: #2
RE: Europe needs a hegemonic Germany, by Yanis Varoufakis

reads like the author does not really know what 'hegemony' actually is and, if he does, it is a really bad idea to strive for hegemony at the moment anywhere.


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22.02.2013 20:24
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Crossover
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Post: #3
RE: Europe needs a hegemonic Germany, by Yanis Varoufakis

Or maybe you cant comprehend the word "hegemonic" the way he means it..


-In sharp contrast, economic phenomena are not just hard to predict. Their prediction is impossible. Why? Because human economies (quite unlike those populated by automata) are subject to something worse than the worst non-linearities: infinite regress.
22.02.2013 21:01
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Helsworth
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Post: #4
RE: Europe needs a hegemonic Germany, by Yanis Varoufakis

This reminds me of the french inspired fear of americanization of Europe during the Bretton Woods years. Some folk couldn't get it in their heads that what the americans were doing kept the whole thing together. I made my profits off of you, ergo I have to reinvest them in your country.
That same fear born out of ignorance and manipulation happened in the US, when everyone was freaking out, cause the arabs were "buying" America. The same phenomenon is in place today, though, the panic factor has been moved to China. "The chinese are buying up America. They own us. Bla bla bla."
Germany is the largest exporter, the first engine of the EU. Ergo it has economic hegemony. And it should behave as such and recycle its surpluses, instead of applying austerity and neoliberal policies which serve only to ruin everyone else, including the german citizens. That's the meaning Yanis is attributing to the word. Just like the US had hegemony over post WW2 Europe (Because they were the only ones with surplus), so does Germany have hegemony over the union today.


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This post was last modified: 22.02.2013 21:13 by Helsworth.

22.02.2013 21:12
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Barbaron
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Post: #5
RE: Europe needs a hegemonic Germany, by Yanis Varoufakis

Actually, the politics of germany at the moment are ruining the country right now. Saleries are pretty low here, which is part of the politcs, to keep germany as a export - nation. They hope with this low saleries they can keep the jobs here. What they forgot is, that with such kind of saleries large numbers of the german population is sinking into poverty. Only the rich benefit from such a way.

And now we should "lead" Europe. Where? In a world of low saleries and poverty? Yeah, that would be great.

23.02.2013 00:01
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Post: #6
RE: Europe needs a hegemonic Germany, by Yanis Varoufakis

Barbaron Wrote:
Actually, the politics of germany at the moment are ruining the country right now. Saleries are pretty low here, which is part of the politcs, to keep germany as a export - nation. They hope with this low saleries they can keep the jobs here. What they forgot is, that with such kind of saleries large numbers of the german population is sinking into poverty. Only the rich benefit from such a way.

And now we should "lead" Europe. Where? In a world of low saleries and poverty? Yeah, that would be great.

Well that's the thing. Austerity makes no sense. The german political elites have committed to supply sides economics in order to "germanize" the union financially. The german political elites need to stop promoting austerity within and without the country in order to revitalize aggregate demand. Once that happens, business will be able to produce, since it will be able to sell, since people will be able to save, borrow, and consume. Germany requires a prominent fiscal stimulus in order to cover its output gap. So does the UK, Greece, and all other countries which have unused labor and resources. Every net exporter is a net importer of aggregate demand. It's high time we got rid of these maniacal austerity eurocrats and domestic elites pushing feudalistic supply side economics (horse shit and sparrow theory), and start paving the way for physical integration of countries and peoples. Transnational railways, electricity, heating, running water, education, health care, dams, irrigation systems, etc.
Austerity not only goes against how modern money and economies work, but serves only to create poverty in the present and even more so in the future. It fuels xenophobia, racism, extremism, nationalism, and secessionist ideas/movements.
After all the shit this continent went through, aren't we tired of the same crap? Don't we ever learn from history? Sad


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23.02.2013 00:24
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Post: #7
RE: Europe needs a hegemonic Germany, by Yanis Varoufakis

Quote:
And now we should "lead" Europe. Where? In a world of low saleries and poverty? Yeah, that would be great.

Actually thats what Germany is doing now.Thats nowhere near what the article says....


-In sharp contrast, economic phenomena are not just hard to predict. Their prediction is impossible. Why? Because human economies (quite unlike those populated by automata) are subject to something worse than the worst non-linearities: infinite regress.
23.02.2013 15:48
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