krebscycle

The @nytimes is well known for its “liberal” bias despite its role pushing the Iraq War, suppression of stories on Trump/Russia while engaging in hysterical attacks on Hillary Clinton, its sad role in hyping the Whitewater non-scandal, its suppression of a story on Bush’s domestic spying before the 2004 election and its relentless mockery of Al Gore, and addiction to stories about “real Americans” who generally are racist nuts sitting around in cafes – just to mention some highlights. But the Times economics stories are where its real ideological bent is revealed. As a case in point the Times published an alarmed “news” story about how the new German government’s strong role for the moderate Social Democrats may damage the economic miracle.

“The coalition is undoing all the reforms that turned Germany from the
sick man of Europe into the locomotive,” said Holger Schmieding, chief
economist of Berenberg, a German bank

  Here is a chart of German GDP growth – the Socialists were in power until around 2005 and Angela Merkel’s right-center party took power after then.  Does that look like a miracle? Not to me.

The German austerity regime came into full flower in 2009 when Wolfgang Schäuble became finance minister. You can see from the chart that the 2007/2008 world bank crisis was a disaster, there was a sharp recovery followed by a sharp decline and a choppy period that has lasted until today. The Times characterizes this as follows:

The
German economy could hardly be in better shape as Angela Merkel
formally began her fourth term as chancellor Wednesday. Unemployment is
almost nonexistent, stock prices are at record highs, and there is
almost no inflation.

But the political compromise
that allowed Ms. Merkel to remain in power could bring that boom to an
end. She had to bend to demands from her party’s junior coalition
partner, and agree to roll back deregulation that, since 2005, has
unleashed the country’s economy.

 That doesn’t have any basis in the GDP graph.  As the Times reluctantly admits later in the story, “unemployment is almost nonexistant”, but many German workers are temps, with low wages, low benefits, and no job security. In fact 9% of all workers and 19% of all workers under 35 are on temporary contracts.

 labor representatives accuse employers of abusing the system,
creating a cohort of second-class workers living from one six-month
contract to the next. Temporary workers are more at risk of slipping
into poverty and are less likely to be married or have children,
according to a study by the Hans Böckler Foundation, which is financed
by German labor unions.

And still, they are not grateful. And that’s in Germany.

Mr. Schäuble, the finance minister from 2009 until he resigned last year,
was a dominant figure not only in Germany but throughout Europe, where
he enforced the austerity imposed on crisis countries like Greece and
Portugal in return for eurozone aid. Austerity measures in the wake of
the financial crisis largely involved shrinking government spending, by
trimming pensions and cutting social programs, as a way to rein in
budget deficits.

The effects of Schaubel’s austerity in Greece have been utterly devastating (22% of the nation is in severe poverty) and  fascism in Greece, Hungary and Poland has been really been “unleashed” by falling wages, instability, and social unrest caused by this insane policy that is, according to this “news” article such a wonderful blessing.  In fact, the Times itself published an article in its deeply buried data driven section a few years ago that explained how this “unleashed” economy worked.

To
understand a crucial reason for the European financial crisis that
nearly caused a global financial collapse and threatened to undo a
six-decade push toward a united Europe, you could look at a bunch of
charts of bond markets and current account deficits and fiscal
imbalances.

Or, you could take a look at new data compiled by LIS, a group that maintains the Luxembourg Income Study Database, that shows how income is distributed in countries around the world. It offers a surprising insight about why Europe came to the financial brink.

In
most advanced economies, the middle class made significant advances in
earning power over the last few decades, even if the rich have done
quite a lot better. But one major country stands out as the exception,
with middle-income workers seeing no meaningful increase since the
1990s.

It
is Germany, the largest economy in Europe. And the numbers are
remarkable. From 2000 to 2010, after-tax income for people in the middle
of the income distribution in Germany increased 1.4 percent. Not per
year. Total.