Warts and all, however, the NYT's belated admissions about the folly of austerity and the need for fiscal stimulus have to be applauded as substantial progress from an embarrassing six years of shilling for austerity and largely ignoring the human misery caused by its recurrent failures.
The WSJ's Treatment of Deflation
The WSJ article begins with this clunker. "Inflation has been below 0.5% since July 2014, threatening the ECB's credibility in achieving its objective of price stability." As the NYT correctly explained, eurozone inflation has been below the ECB's target for two years and it has been falling. The ECB has had zero "credibility" for years with regard to its rules on inflation. The WSJ article indirectly admits this later in the piece when it concedes that central banks consider inflation near 2% as "optimal."
The WSJ Ignores Fiscal Policy
The WSJ article becomes embarrassing in this disingenuous passage.
"But the euro bloc is struggling to find the building blocks for a more vibrant, jobs-rich recovery that would boost prices. Europe faces high unemployment in much of the region, weak business investment and geopolitical uncertainties. In contrast, inflation rates in the U.S. and U.K. are closer to the 2% rate that central bankers consider optimal."
The euro block is not "struggling to find the building blocks for a more vibrant, jobs-rich recovery that would boost prices." We have known for at least 75 years how to produce that recovery through fiscal policy. The troika, however, due to German diktats is not permitted to employ the fiscal policies that would have long since ended the crisis. Unlike the NYT's recognition that eurozone unemployment remains at Great Recession and beyond Great Derpession levels in much of periphery, the WSJ's indifference to the catastrophe caused by austerity remains stony. The reader learns only that "Europe faces high unemployment."
The WSJ Misses Draghi's Logical Contradictions
The WSJ did, indirectly, admit that the reason why central banks considered 2% inflation "optimal" was that long before deflation sets in very low rates of inflation can further reduce already inadequate demand.
"'If inflation remains low for a long time, people might expect prices to fall even further and postpone their spending,' ECB President Mario Draghi warned in a newspaper interview published last week."
What the WSJ neglects to point out is that eurozone inflation has already remained too low under the ECB's own standards "for a long time" (two years and no one expects this to end soon). Draghi has not only refused to enforce the ECB's rules but even claimed that exceptionally low inflation rates are desirable. Under Draghi's own logic his actions are irresponsible.
The Germans Force European Workers to Act Like Financial Gladiators
The WSJ article ends on this telling, and distressing point.
"Weakness in German inflation, which was just 0.1% last month on an annual basis, also makes it harder for its eurozone neighbors to rebalance their economies. To gain competitiveness vis--vis Germany, Spain, France and others must run inflation rates well below Germany's. When inflation is near zero in the bloc's biggest economy, others in Europe face pressure for more dramatic price and wage cuts."
The WSJ's answer to economic recovery is for Eurozone nations to "rebalance their economies" by "winning" a race to the bottom via "dramatic price and wage cuts" in which the prize of increased exports goes to the single nation that makes the most "dramatic price and wage cuts." Think, unlike the WSJ, in both economic and moral terms about the implications of Germany and the troika forcing the people of Europe to engage in such a brutal race to the bottom. Note first, however why this dynamic is such an elegant solution from the German perspective -- Germany uses the troika to do the dirty work of compelling European workers to enter the Coliseum and slaughter each other's wages in a brutal financial competition while Prime Minister Angela Merkel's wealthy financial and manufacturing supporters thunderously applaud the results. Merkel takes particular delight when German diktats force leftist heads of state to betray the workers by forcing "dramatic " wage cuts." This, of course, discredits the parties that once represented the workers.
Economically, forcing "dramatic " wage cuts" on the workers of France and the periphery during the Troika Depression constitutes malpractice. Consumer demand is already inadequate, so cutting wages does not simply force prices down to levels that are increasingly harmful because they delay consumer purchases, it also directly reduces consumer demand because it forces "dramatic cuts" in workers' wages. It is also a strategy in which the workers in the single nation that "wins" the race to the bottom are the "biggest losers." The losers in the race to the bottom (we can't all be next exporters) are double losers. They suffer "dramatic" drops in wages and already inadequate demand and they don't end up with the "competitive advantage" of being the biggest (wage) loser. I stress that there are real winners in such a continental race to the bottom of workers' wages, and they are not the workers. The real winners are the CEOs of the largest companies and their crony politicians. As the Super Computer realizes in the film Wargames, the only way to win such a race to the bottom game is to refuse to play.
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