Es gibt demnach kein Strukturdefizit, das abgebaut werden müsste. Es geht vielmehr darum, einen strukturellen Überschuss abzubauen! Deutschland hat einen erheblichen Spielraum für eine expansivere, am besten auf die Steigerung des öffentlichen Kapitalstocks und Wachstum ausgerichtete Finanzpolitik. Da dadurch die deutschen Einfuhren aus den Nachbarländern stark zunehmen würden, ließe sich die Eurokrise entscheidend abmildern. Die anderen könnten mehr exportieren – ihr Schuldendienst fiele ihnen entsprechend leichter. Die deutschen Steuerzahler wiederum brauchten nicht so viel Angst um ihre “schwebenden” Forderungen gegenüber Griechenland, Portugal, Irland, Spanien und Italien zu haben. Staatsschuldenkrisen lassen sich durch nichts so gut überwinden wie durch Wachstum.

It also tells us something else: by seeking insurance against a collapse of the euro, the Bundesbank tells us it no longer regards the demise of the euro as a zero-probability event. If the Bundesbank seeks insurance, so should everybody else.

The Target 2 debate is important because it goes to the root of the problem. But Germany’s economic establishment is disingenuous. What people are really saying is that they no longer want a monetary union. They want a looser single currency regime.

Schließlich müssen unsere lieben konservativen Ökonomen ja irgendwie den Spagat hinbekommen, sowohl gegen höhere Löhne zur Stimulierung der Binnennachfrage als auch gegen Rettungsprogramme für die faulen Südeuropäer zu sein. Da verzichtet man dann schon einmal darauf, die eigene Agenda auf Stimmigkeit zu überprüfen.

Sehr wahrscheinlich hat das auch etwas mit dem Euro zu tun, denn die Auslandforderungen der Deutschen stiegen seit Einführung der gemeinsamen Währung besonders stark. Es ist diskurstheoretisch interessant, dass diejenigen, für die die Stärkung der Binnennachfrage und die Abkehr von der Exportabhängigkeit linkskeynesianisches Teufelszeug ist – wie die Wirtschaftsredaktion der FAZ – nun plötzlich die Konsequenzen eben jener Exportabhängigkeit nicht akzeptieren wollen. Der Schlamassel wäre wesentlich kleiner, wenn wir zwischendrin statt auf Hans-Werner Sinn (der vor nicht langer Zeit noch vor der “nachlassenden Wettbewerbsfähigkeit der deutschen Wirtschaft” warnte und über den Untergang des Produktionsstandortes D sinnierte) auch einmal auf Oskar Lafontaine gehört hätten.

The truth is that we’ve just had a powerful test of the Keynesian proposition that when monetary policy isn’t available, changes in government spending move the economy in the same direction – and the results of that test say that what has lately passed for policy wisdom is instead almost criminal folly.

But given these current ‘tactics’ the ECB will eventually have to step in because investors will be spooked so badly by all the talk of more haircuts that the only ones left to keep a lid on the bond yields with be the central bank.

Does the ECB realise this? Do the Germans? I don’t know. But my guess is: no. My guess is that they haven’t even thought this stuff through. My guess is that they’ve become so caught up in their own little morality play that they fully believe this nonsense.

In fact, the 5 crisis countries (Greece, Ireland, Italy, Portugal, and Spain) all rank near the bottom in terms of the generosity of their welfare states. The European countries with the most generous welfare states, Denmark, Norway, Sweden, the Netherlands, France and Germany, are mostly weathering the economic crisis relatively well.

For young people, the vision of a good life that their society has imparted on them has gone up in smoke. A bitter irony: it’s the best educated generation ever—and the most pessimistic.

Die Probleme unserer Partnerländer haben uns über den Umweg “schwacher Euro” ein Beschäftigungswunder beschert. Wir sollten uns nicht ernsthaft beklagen und uns nicht allzu knauserig zeigen, wenn wir jetzt um Hilfe für die Anderen gebeten werden. Der Euro nützt uns sehr.

In effect, the Germans (behind the auspices of the troika) are saying, “It’s fiscal austerity on our terms. You try to renegotiate like the Greeks and we take you over. The other alternative is that you leave.”

Above all, we have to recognise that saving the euro is no substitute for the larger political project, of which it was once meant to be both core and catalyst. The politics of fear may have saved the euro. We need a politics of hope to find a European answer to the Arab spring.

The European Union, [Soros] said, was "undemocratic to the point where the electorate is disaffected, and ungovernable to the point where it cannot deal with the crisis that it has created".

Storbeck weist die Erklärung, der Euro sei der Quell allen Übels in der europäischen Wirtschaft zurück und betont die Risiken, den Euro wieder aufzugeben. Meiner Meinung nach betont er jedoch zu sehr die Bedeutung von Staatsschulden als Ursache.

In short, it would be difficult to find a generally accepted measure of competitiveness where Europe does poorly compared to the United States. The European Central Bank may be able to inflict enough damage so that in a few years this is no longer the case, but for now Europe's fundamentals still seem solid.

Clearly, the “German success recipe” will be tested in 2012. If there are more declines in export orders, GDP will take a significant hit, even if the Eurozone makes it through the year intact. Which is by no means certain.

"The UK can have a debt ratio above Japan’s 200% and still face no chance of involuntary default. That is the beauty and utility of issuing your own currency"

"A sovereign government faces no financial constraints."

I have read in a number of places that people believe that Greece’s issue was that the country has a culture of tax evasion, which is true but not for the reasons most people think. The fact that Greeks weren’t paying tax to the government meant that the private sector debt was smaller than it would otherwise be under the same circumstances. This meant that the Greek government was taking on the debt of the private sector but this is simply a matter of debt composition. The real issue with tax evasion was that the capital flowing into the country was not being recaptured and was therefore making the current account deficit worse. What Greece really needed was controls over both foreign capital and interest rates and a government with prudent fiscal controls that targeted wage constraint and productivity. It obviously had none of these.

Interesting proposal to let the ECB take over shares of banks as a means to rescuse them. However, the author notes that the proposal is neither politically nor legally feasible, concluding with this insight:
"Given that the current legal framework does not support any feasible solution, and given that we do not have the time to adjust the legal framework, we will break the law anyway. Actually, we broke it already."

Also this:
"So this may be the major lesson of the political project to impose a common currency on a non-optimal currency area: any attempt to implement a political vision in contradiction to economic regularities (some may say in contradiction to „economics laws“) is not only doomed to fail, but also undermines the fundamental ingredient to a free and prosperous society: the Rule of Law."

the case for defaults and against both austerity and ECB intervention

An annoying article. He claims to be reasonable where others cry wolf without explanation, but does not discuss the downsides of austerity.

"If they were truly interested in warnings from history, Germans would understand that the proximate cause of Hitler's victory – which was in 1933, not 1923 – was not inflation but the mass unemployment bought by Heinrich Brüning, "the hunger chancellor". He responded to the Great Crash of 1929 in much the same way that eurozone governments and the Cameron coalition have responded to the Great Crash of 2008 – by imposing an austerity that slashed salaries, cut services and left 30% of the workforce unemployed. Germany then resembled Greece, Spain and Italy now."

"Greece and Italy are in the process of acquiring technocratic governments the stated purpose of which is to ensure that the Brussels Agreement is implemented. If my analysis above is right, their task is hopeless. Technocrats may serve a purpose when working from a rational engineering plan. But when the plan is of the sort discussed here, they are bound to oversee the collapse of the very euro edifice that they were summoned to save. They will then be remembered as Europe’s reverse alchemists (who started with a nugget of gold which they then, almost mysteriously, turned into a piece of lead.)."

Probably the best and most comprehensive accounting of the euro crisis I've read so far.