Wednesday, November 27, 2013

A bad deal all around


From today's Open Europe news summary:
 Merkel’s CDU/CSU and SPD seal Grand Coalition agreement Following two months of negotiations, the CDU/CSU and SPD signed off on a coalition agreement early this morning. The Europe chapter of the agreement has not changed from the draft agreement of which Open Europe was the first to provide an English translation on its blog and in yesterday’s press summary.

European Parliament President Martin Schulz, part of the SPD’s negotiating team, confirmed that the parties had agreed that the ESM bailout fund could be used to directly recapitalise struggling eurozone banks if other measures such as bail-ins and state guarantees are not sufficient. The deal also includes introducing a national statutory minimum wage of €8.50 per hour from 2015 – a major victory for the SPD. The coalition has also committed to implementing the controversial EU Data Retention Directive, which had been blocked by the FDP.

Open Europe’s Nina Schick appeared on CNBC this morning discussing the coalition agreement. Open Europe’s blog translating the draft German coalition agreement has been cited by Gazeta Wyborcza, Forex Live and Central Banking.
Open Europe blog Handelsblatt EUobserver El País El Mundo Le Monde FAZ FAZ 2 Süddeutsche Süddeutsche 2 Süddeutsche 3 Süddeutsche: Denkler FT WSJ Euractiv Telegraph Central Banking Gazeta Wyborcza Forex Live
The deal to seal the Grand Coalition between Germany's Christian Democrats and Social Democrats is a bad deal for Germany, a bad deal for Europe, and a bad deal for the world. Germany gets a minimum wage of over $11, ensuring higher unemployment among its young and less skilled citizens. The German taxpayer gets to pay higher social welfare costs to support the increase in unemployed workers and to fund the European Stability Mechanism (ESM), which WILL be tapped by the banks in deficit countries. Nothing could be more certain, for the political class in these countries will oppose bail-ins and will have no budgetary room for bailouts. All Europe will suffer from more socialization of banking, which will postpone even further the necessary restructuring of the European economies. Even the citizens of the countries receiving ESM funds will suffer, as they need real jobs not more welfare. Only their own politicians can solve their problems by being forced to face the reality that no one will lend them more money. And the world will suffer as German capital is wasted on more international welfare. The only beneficiaries will be the predatory German political class, led by the Christian Democrats' Angela Merckel and the Social Democrats' Martin Schulz, who will bask in the false glow of being good European neighbors for sacrificing the wealth and future of the common German citizen.
Germany deserves better. Europe deserves better. And the world deserves better.

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