I wrote in this space almost a week ago about economic policy chaos in the German government, and a new piece in Berlin’s Der Tagesspiegel confirms that that bunch has become little more familiar with actual economic reality in the interval. Steinmeier warns EU-partners about turning away from the Stability Pact is the headline; the lede: “Germany’s Foreign Minister is worried about finances. Not in connection with the current crisis, but the stable euro. He takes the other EU-lands to task – they need to follow the euro-rules again soon.”

Don’t recall the Stability Pact (more properly, the EU Stability and Growth Pact)? That’s too bad, since it was a favorite topic of this weblog back in the day, especially in 2003. It’s the agreement that underpins the euro, and in fact preceded the formal establishment of the euro, by which all EU states (but especially those using the euro as their currency) pledge to keep their budget deficits to 3% of their GDP or less, and to either keep their national debt below 60% of GDP or – if it already is above that level – to make steady progress in getting it so that it’s below. The idea is to prevent euro-using states from taking advantage of the euro’s benefits (e.g. lower interest rates for their government debt) while at the same time undermining its stability through profligate government spending. All that commentary back in 2003 mostly had to do with the revelation of the ugly political reality that Germany and France – the Union’s heavyweight countries – could violate the Pact whenever they wanted, without facing adverse consequences, all while lesser states (Portugal, the Netherlands) were still forced to take it seriously. Ironically enough, this was a German initiative in the first place, required in exchange for their willingness to give up the deutsche mark, to keep those profligate Latin countries (like the Italians) from ruining the common euro-project. (more…)

Presidential or Parliamentary? The question of which system makes for a more effective and truly representative government has engaged political scientists for many years, but make no mistake: it also has some serious real-world consequences. Right now, with the Bush administration headed towards the history books stained by torture, illegal wiretapping, Katrina, Iraq, financial collapse, a corrupt Dept. of Justice, etc., etc., the presidential model is most assuredly under some disfavor. (Oh, and the presidential system also results in excruciatingly-long lame-duck periods waiting for the new chief executive to take power that are really inconsistent with the speed of events in the modern day. See this recent New York Times article for a solution to that that was contemplated in the past, but which Bush has nowhere near the intelligence nor love-of-country to implement now.) But a recent article in the authoritative German daily Die Welt by Jan Dams (Financial crisis: Glos provokes Merkel and Steinbrück) reminds us of many of the defects of the parliamentary system, especially during economically perilous times. (more…)

German Finance Minister Peer Steinbrück is currently in Washington, attending that “G20″ summit that is supposed to restructure the international financial system – i.e. to bring about a “Bretton Woods II” – to deal with the current world-wide economic troubles. But after this weekend he’ll not be back at his Berlin office long before he’ll face yet another economic summit, reports the German business newspaper Handelsblatt: Steinbrück calls Opel-Summit.

That’s “Opel” as in “Adam Opel GmbH,” the German-based daughter auto-making concern of General Motors. As you can imagine, it’s currently in financial trouble; this past week it directed its own appeal for help to the German government (actually governments, see below). And so, in more-or-less mirror-image to the issue the US government is now having to confront, Germany is also now taking up the same dilemma: should its auto-makers be bailed out to save the many thousands of jobs dependent on them? Or would that be throwing only the first installment of massive monies to an industry that is anyway doomed with no future? (more…)