Is German Economist Exacerbating Euro Crisis?
18/07/2012 Deja un comentario
Germany’s Hans-Werner Sinn is fighting desperately against euro rescue. His controversial theories fill the pages of newspapers for days at a time, but his answers are often simplistic. A growing number of his colleagues are distancing themselves from influential Munich economist. Shortly after 5 p.m. last Tuesday, fatigue began to take hold in the courtroom at Federal Constitutional Court in the southwestern German city of Karlsruhe. Judges sank back into their cream-colored armchairs, and the audience began to thin out. The lawyers and judges had already spent about seven hours addressing the question of whether European Stability Mechanism (ESM), permanent euro bailout fund, is compatible with Germany’s constitution. Constitutional law expert Karl Schachtschneider, one of plaintiffs, made an impassioned plea for a a national referendum on the issue, while German Finance Minister Wolfgang Schäuble warned against the “immeasurable consequences” of a Karlsruhe veto. It seemed as if everything had already been said by the time Munich economist Hans-Werner Sinn stepped up to the microphone. The professor gave a technical lecture on the economy, but what made his listeners perk up were his bold assessments. Sinn was sharply critical of what he called a “bottomless pit,” and spoke of “false therapy” and a “machinery of asset destruction” and accused European community of nations of employing instruments that are doing precisely the opposite of what they are intended to achieve. “They are getting in the way of a cure”. When he was finished, judges no longer had any questions. It was a performance entirely to Sinn’s liking. Before the gates of Germany’s highest court, 64-year-old professor with a Captain Ahab beard was given an opportunity to present himself, once again, in what is currently his favorite role: as a vehement opponent of the prevailing euro policy. With his tirades against what he characterizes as Europe’s bailout monstrosities, from the European Financial Stability Facility (EFSF) to the ESM, Sinn isn’t just trying to show that it is possible, contrary to prevailing view, to express the complicated issues facing European monetary union in simple terms. He is also demonstrating to the nation that he has added a new type of individual to German academic community, the economist campaigner. Like no other professor, Sinn has long shaped the economic debate in Germany with his bold theories. Around turn of millennium, when the German economy was in the doldrums and the country was often referred to as “Sick Man of Europe,” alarmed Germans with his assessment that labor market reforms would have to be much more severe to bring the country’s job slump to an end. A few years later, he warned that Germany, the world’s top exporting economy at the time, had deteriorated into a “bazaar economy”, because it had so many foreign suppliers. Now he even promotes the theory that the rescue policies coming from Brussels are not solving problems but are in fact making them worse. “Our children will be forced to go to southern Europe and get our money back”, he warns (…..)