Greece, Germany, Brussels …Bickering Over Budgets …

• March 18th, 2010
• Posted by 7thmin

COMMENTARY: European financial markets moved tentatively upward early in the week after EU Finance Ministers agreed on making money available to Greece on friendlier terms, subject to it following agreed policy settings.

German authorities continued to insist there’d be no money for nothing; others began to suggest though the problem might be something to do with large scale exporters, (like guess-where), continuing to sell to customers with little money;  while the European Commission declared several more governments needed to trim their deficits severely.

MONEY MEN MEET ON GREECE

The Ministers from the 16 countries using the Euro currency met at Brussels to assess budget cutting measures being put forward by the Greek government, to improve its financial standing, and so evade high interest changes on renewed public debts.

“No guarantees” said the European Council after the gathering (16.3.10) , stressing it had just “clarified which mechanisms could be applied to help Greece if necessary.”

Said the Euro Group President, Jean-Claude Juncker, of Luxembourg: “If it is necessary (to help Greece), and we do not believe it to be necessary, we have made a decision on the instruments.”

All this cold-shouldering reflected the point of view that countries strictly need to keep to the budgetary contraints they signed on for, in order to keep the Euro system together. (See EUAustralia, “EU moves on Greek crisis” 12.2.10; “Tight times …”. 10.2.10). 

“EVERYBODY TIGHTEN YOUR BELTS!” , SAYS EC

Across the road at the executive European Commission , a new report was being presented, giving a caning not just to crisis-prone Greeks, but to other member states, like the United Kingdom, Portugal or Spain, running large deficits.

The Commission  said governments that moved to spend their way out fo the Global Financial Crisis, now needed to move more quickly to readjust the balance, towards much smaller deficits – in  terms of percentage of GDP.

“SHOP TILL WE DROP YOU”, SAYS DEUTSCHLAND

Chief objector to poor performances by Greece, in living within, or above the national means, has been Germany; understandavbly enough, Germany being also the leading prospective new creditor.

The political and economic establishment there are determined not to see good money thrown after bad; though another angle on that matter has been produced by Germany’s international broadcaster, Deutsche Welle (17.3.10), suggesting the problem might be to do with German industry, over-selling to customers who cannot really afford to buy.

It says:

“Germany carries its title as one of the world’s biggest exporters with great pride. Its reputation for excellent quality and reliability has allowed companies like Volkswagen and Siemens to thrive in foreign markets…

“However, the financial crisis in Greece and fears of similar crises in Italy, Spain and Portugal illustrate the downside of German trade prowess, and how it has the potential to negatively affect the Euro zone.

“Germany has a deep trade imbalance with its European neighbors. Simply put, this means that Germany exports a far larger amount of goods to so-called peripheral European countries, while those peripheral countries have not produced enough goods to make their export market profitable.

“This is good for Germany, as exports fuel the economy here, (and) bad for its neighbours, who have run up large amounts of debt purchasing German products without increasing the money they are making to pay for these goods.

“The German trade balance for 2009 was a surplus of €134-billion Euros [A$198-billion; dcerates.com, 20.3.10], compared to negative trade.”

Reference

David Francis and Sam Edmonds, “Großansicht des Bildes mit der Bildunterschrift: Not all EU members are equal when it comes to trade”, Deutsche Welle, Bonn, 17.3.10.
http://www.dw-world.de/dw/article/0,,5349490,00.htmlsenses, (17.3.10).

European Commission, “Commission assesses stability and convergence programmes of fourteen EU Member States”. Brussels, 17.3.10. IP/10/288

European Council (Presidencia Espanol; Spanish Presidency), “Euro Group Meeting in Brussel:s Euro Group clarifies the technical methods for helping Greece if necessary”, Brussels, Media Release, 16.3.10. http://www.eu2010.es/en/documentosynoticias/noticias/mar15mecanismo.html, (17.3.10).

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