November 2014: Germany and Europe

Helmut Kohl, the former German chancellor, has chosen the 25th anniversary of the fall of the Berlin Wall to launch a broadside against his successor Gerhard Schröder for alleged failures leading to the present parlous state of economic and monetary union. In a book entitled Worrying about Europe, Kohl also sides with Schröder, a noted supporter of Russian President Vladimir Putin, over European policies on Ukraine, saying it is a mistake to isolate Moscow over the issue. Kohl inadvertently puts his finger on a substantial reason for Europe’s malaise: rightly or wrongly, Germany is often seen as marching out of line with the rest of the continent. John Nugée ranges over these issues in a survey of how Germany has responded to the widely held hope that, once again, it should become a ‘normal’ nation. Steve Hanke and Michael Holstein focus on the reasons for the European slowdown. Mojmír Hampl looks at regulation and supervision after the European review of banking balance sheets. Paul Betts and Celeste Cecilia Lo Turco investigate the uphill struggles in the other two biggest euro members, France and Italy. Stewart Fleming looks at Jean-Claude Juncker’s new team at the European Commission while Norman Lamont outlines how the formation of the euro has left the UK with no choice but to renegotiate its position with the EU. As William White observes in an analysis of the threat of world economic imbalances, disequilibria in the euro area (with Germany closely behind China in terms of its overall net creditor position) have provided a persistent source of worry. ‘The global economy is dangerously unanchored – a problem that cries out for a global solution.’ Yet, as we point out, the industrialised world’s leading monetary powers, the US, Japan and Europe, are all pointing in different directions in their latest policy actions. There are few signs of successful co-ordination in the emerging market economies. Otaviano Canuto writes on the tasks awaiting reelected Brazilian President Dilma Rousseff. Kingsley Chiedu Moghalu dwells on challenges facing the Central Bank of Nigeria under Godwin Emefiele, its new governor, while Peter Bruce spells out the agenda facing Lesetja Kganyago, the new incumbent at the South African Reserve Bank. John West looks at the perennial problems facing China as it adjusts to slower growth. All of those mentioned above should find the time to read the two books (by Clifford Longley, and Charles Calomiris and Stephen Haber) on fundamental aspects of capitalism and
economics presented by our reviewers, William Keegan and George Hoguet.

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