Obama To G-20: Print More Money, Don’t Make It

Ilana Mercer, June 25, 2010

German Chancellor Angela Merkel is not returning U.S. President Barack Obama’s calls. I’m being theatrical. Obama is demanding that Germany pull its weight in the global-recovery effort by aping the US: spending more and producing less.

Here are the providential orders verbatim, via the WSJ:

“U.S. President Barack Obama [has called] for Germans to aid the global recovery by spending more and relying less on exports.”It is not only Germany that Obama wishes to knee-cap economically, but Canada, Japan and China too. Given that big-spending Americans exist at the sufferance of the frugal, productive Chinese, I don’t quite know how this would work.

“Ms. Merkel countered that Germany’s growth and employment are rising—and therefore the world’s fourth-largest economy has no reason to rethink its dependence on its powerhouse industrial sector and large trade surplus.”

Know-it-all New York Times columnist Paul Krugman is a guide to those who’re perplexed about the US government’s monetary policy, Obama’s and Bush’s. Are you in doubt as to how “progressive” the US really is? Listen to Krugman berate “the monetary priggishness of the German heavyweights in the European Union, who are ‘foolishly’ seeking to prevent inflation [in the Greek debt crisis] and impose fiscal discipline.”

The Obamarxist-Merkel contretemps are a prelude to the upcoming “Group of 20” summit in Canada, where, by the looks of it, the US (once the economic engine of the world) will bicker with Germany, China, Canada, and Japan (nascent economic superpowers) to cut back on their robust exports and match its level of government and household debt.

Merkel is not quite as outspoken as Peer Steinbrück was about America’s errant ways. Germany’s former finance minister was something of an Austrian—an Austrian economist. When Bush launched the spend-into-prosperity program we’ve been on ever since, Steinbrück shocked Newsweek with his acid observations about the conversion of the US, UK, and EU from decades of supply-side politics to “crass Keynesianism.” Steinbrück suggested, lo, that a crisis that was created by cheap credit ought not to be corrected by more of the same.

Keynesianism ─ which has nothing to do with economics, and everything do with politics ─ is not merely “crass”; it’s criminal.

In Steinbrück, a member of the European center-left Social Democratic Party, we had a freer marketeer than American centrists such as Republicans pride themselves on being. Germany’s present Finance Minister Wolfgang Schaeuble is also bucking Obama and backing the Chancellor. According to Bloomberg Business Week, Schaeuble, standing alongside Merkel, told reporters that, “Nobody can seriously dispute that excessive public debts, not only in Europe, are one of the main causes of this crisis. That’s why they have to be reduced.” Germany’s Economy Minister Rainer Bruederle added that it was “urgently necessary for monetary stability that public budgets return to balance. This is something we should also tell our American friends.”

I mentioned Schaeuble’s predecessor, because, as Spiegel Online reported, the Nobel Prize winning Krugman had blasted Germany’s Steinbrück, at the time, for breaking step with the US, and resisting economic stimulus spending. A “bonehead” and a “know-nothing” is what Krugman called him.

Even more austere than Angela Merkel is Canadian Prime Minister Stephen Harper ─ in addition to slashing deficits and deficit spending, Harper wants his G-20 partners to reduce ratios of debt-to-GDP.

What has Canada got to show for her otherwise conservative economic practices─ among which are banks that are not nearly as leveraged as ours, and tough lending standards that do not make home owners of those who cannot afford homes, or give credit to those who are not creditworthy?

Let’s see: By the AP’s estimation, Canada can boast of “an economy that grew at a 6.1 percent annual rate in the first three months of this year,” and a hot housing market. The country has also recovered three-quarters of the 400,000 jobs lost during the recession.

What has Merkel got to show for her oddball austerity? Again: rising growth and employment, and a “powerhouse industrial sector and large trade surplus.” “German export successes,” said Merkel, “reflect the high competitiveness and innovation strength of our companies. Artificially reducing Germany’s competitiveness would be of no use to anyone.”

Obama comes to the debate armed with his May jobs report: He hired 411,000 government parasites to conduct the Census. The hogs left breathing room for only 41,000 new productive, private-sector workers.

Perhaps his European friends can explain to our community organizer that government jobs are not an addition to the country’s payroll; they are an increase in the nation’s payload. Mr. Obama is making productive Americans run faster to keep in place. Ms. Merkel is refusing to use her printing press to do the same to her compatriots.

June 25

CATEGORIES: Barack Obama, Canada, Economics, Economy, EU, Federal Reserve Bank, Foreign Policy, Political Economy