The Astounding Hypocrisy of Jens Weidmann
The Eurozone crisis has been replete with politicians and ECB board members declaring victory after miscalculations of tragic proportions. We have seen plenty of congratulatory back-slapping on the Cyprus bailout, which is only predicted to destroy a quarter of their economy. We have seen pious talk of the need for “reallocation” in periphery economies, and that only “confidence boosting austerity” will allow their economies to recover, despite virtually every reputable study showing the exact opposite. We have had Olli Rehn, EU commissioner for finance, berating the economics profession for publishing studies showing the failure of austerity, because they are destroying confidence and making the problem worse. But this weeks pronouncement really takes the biscuit. Jens Weidmann, inflation hawk extraordinaire, has topped all that.
This week he was quoted as saying:
that eurozone interest rates could be cut, if warranted by further weakness in the region’s economic data.
Now what weakness was he referring to that day? Was it the fact that Eurozone unemployment has risen for the sixteenth consecutive month? Was it that fifteen months in a row wasn’t enough for a rate cut? But sixteen, that really shows weakness. But no, instead he was referring to a sharp fall in orders for German cars. Twelve percent unemployment is nothing to get worked up about, but if they stop buying German cars, that’s a disaster.
Surely Weidmann just believes that Germans are in need of some belt tightening to improve confidence. Austerity is for the periphery, if the German economy is slowing, obviously monetary stimulus is the answer.
Its an outrage.