In Europe, they're blind to the potency of monetary policy, so the necessary economic adjustments for countries without their own central banks, are made with difficulty
German GDP shrank 0.1 percent in the three months through June, the
first contraction since 2012, according to the median estimate in the
Bloomberg survey. The economies of the euro area and France grew 0.1
percent, separate surveys show.
Yet, someone has to be numero uno;
posted an expansion of 0.6 percent in the same period, the National
Statistics Institute said last month. Italian GDP fell 0.2 percent,
after a 0.1 percent decline in the previous quarter, taking the country
into its third recession since 2008. [European Central Bank head Mario] Draghi took aim at Italy last week
for lack of progress in reforms.
“It’s pretty clear that the
countries that have undertaken a convincing program of structural
reforms are performing better, much better, than the countries that have
not done so,” he said on Aug. 7 in Frankfurt after the ECB left
interest rates unchanged at record lows.
Ignoring the dictum of Milton Friedman (and Scott Sumner
and Ben Bernanke) that interest rates are a poor indicator of monetary policy. We suppose it's an open question as to whether Europe will be better off
, in the long term, by being forced to 'restructure' their economic arrangements, but Mario--No Pain, No Gain--Draghi seems committed to denying monetary policy's role in Europe's troubles.
Post a Comment