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02mydafsoup-01
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The reason I point this out is because many in Germany and at the ECB are saying the crisis is because the stability and growth pact wasn’t strict enough. (See here for the ECB’s version of this). The ruling CDU-led coalition in Germany is actively marketing an anti-SPD storyline on these lines in the run up to the general election that goes something like this:

"We in the CDU/CSU/FDP union were fiscally responsible. But once the SPD and the Greens took over, Germany lost its way, resulting in the watering down of the stability and growth pact. These unfortunate events are what led to the crisis we now have because without the SPD-Green government’s actions, deficit hurdle breaches would be non-starters."

This is pure propaganda. To my ears it sounds much like the Partido Popular propaganda in 2011 that conned Spaniards into giving them the largest ruling majority since 1982. Rajoy told Spaniards it was the socialists’ profligacy which created the mess. Once PP was in place, things would be different, all without the need to raise taxes or anything painful like that. We now see this was complete rubbish.

Moreover, in the German context, We know already that it was the Union-FDP government of Kohl – in which both present Chancellor Merkel and Finance Minister Schaeuble were prominent members – that allowed the debt hurdle weakening allowing Italy, Greece, Ireland, Portugal and Ireland into the euro zone to begin with. If the debt hurdle had been set at 60% without the "diminish sufficiently and approach the reference value" clause in the Maastricht Treaty in 1992, none of these countries would be in the eurozone: Not Italy, not Ireland, not Portugal, not Spain, not Greece and not Belgium. If none of these countries were members of the euro zone, their currencies would have devalued long ago as an adjustment for their lack of competitiveness after the financial crisis. They could have their central banks backstop debt, run deficits or whatever they wanted to do, much as Britain and the US have done. (See Spain is the perfect example of a country that never should have joined the euro zone")

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link

— Chart of the Day: Germany in breach of Maastricht Treaty in 8 of 10 years since 2002 | creditwritedowns.com 2012-07-15
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