TROUBLE
At times like this, virtue, alas, may not be its own reward. Both Japan and Germany, nations whose economies are widely admired, are in at least as much trouble, if not more, than those profligate Anglo-Saxons the US and the UK. As German ambassador Eckhard Lubkemeier said last week, Germany’s exporters are in trouble because “apart from France, the US and Britain are our main clients.”
He was speaking at the launch of David Marsh’s new book The Euro: The Politics of the New Global Currency, and what an occasion it was. Marsh has achieved the seemingly impossible feat of making what the Brits tend to regard as a boring topic, best avoided, into a great story. What is more, it manages to be balanced, examining all the topical, as well as historical, issues, such as, will the eurozone survive? And will certain economies within it be forced out?
A distinguished guest was Karl Otto Pohl, who, as president of the Bundesbank, was against European monetary union but ensured that, if it was to go ahead, the ECB should be modeled on Germany’s central bank. In the book, Pohl is quoted as saying that, at a lunch at the Bundesbank, former British prime minister Margaret Thatcher “asked in her high voice: ‘What do you mean by monetary union?’ Then she started to give the answers herself and dominated the conversation for the rest of the meal.”
But back to reality. The US is introducing a huge fiscal package. So is the UK. So are many other countries. These should have a good Keynesian effect. What worries me is at what level of low world demand they are being applied. Such issues, as well as the banking crisis and the need to revive those institutions set up after World War II, will be tackled, we hope, at the London meeting of the G20 on April 2.
As I have said before, we can do without the kind of failure of leadership experienced at the London Economic Conference of 1933.
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