Eastern Europe: The Forgotten and Misunderstood European Hinterland

Eastern Europe has become the talk of the political town. While it was hoped in Western Europe that the region would become a new power house in Europe after the Great Reunification in the early 1990s, from which the West would then also benefit, disappointment now prevails. The region is characterized by the emigration of many workers, the dominance of Western companies and enormous political instability, even open turning away from Europe. What has happened?

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Light and shadow – the new goal of European monetary policy

The realignment of the European Central Bank’s (ECB) monetary policy target resembles a revolution: After twenty years, the Central Bank Council has changed the target figure on which monetary policy is based and against which it wants to be measured. From now on, the inflation rate targeted for the euro zone will no longer be „below but close to two percent“, but two percent in the medium term. And it has done so in such a way that deviations from this target rate, both upward and downward, are equally undesirable, as the statement on the ECB’s monetary policy strategy puts it. This means that if the actual inflation rate in the euro area is below the target rate, this is considered just as negative as if the inflation rate is above the target rate.

Light and shadow – the new goal of European monetary policy weiterlesen

After the slump in consumption: Will reduced savings pull us out of the swamp?

The Corona crisis is shaking the economy very differently than all previous crises in the economic history of the western industrialized countries in the last 75 years: Its extent is extreme in terms of geographical scope, impact, duration and, above all, the structure-shifting effects. This also applies to Germany, as can be seen from the more detailed data on macroeconomic development in the first quarter of 2021, which the Federal Statistical Office has recently published.

After the slump in consumption: Will reduced savings pull us out of the swamp? weiterlesen

Europe in recession – foreign trade as a way out?

At the end of April, the European statistics agency Eurostat reported that the gross domestic product (GDP) in the European Monetary Union (EMU) had fallen by 0.6 percent in the first quarter of 2021 compared to the fourth quarter of 2020 and that GDP in the European Union (EU) had fallen by 0.4 percent. Both time series had already been in decline (-0.7 and -0.5 percent in the fourth quarter of 2020). Now, in mid-May, Eurostat has confirmed this first estimate: two quarters in a row with a negative growth rate, according to which Europe is in a recession (see Figure 1).

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Public Investment: why America’s „more“ is better than Europe’s „too little“

Last week Konjunkturanregung: Besser mehr als zu wenig by Heiner Flassbeck and Friederike Spiecker went online, and meanwhile there is an english version of this text available.

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European Monetary Union: The Great Presumption

With a scandalous ruling, the German Constitutional Court not only calls into question the legal system of the EU, but also proves that it is totally incapable of understanding a multilateral economic order.
Cross-posted from Makroskop and Brave New Europe.


Why did the Greeks live beyond their means? The trap of monetarism

This is the (updated) translation of an article that was published February 27, 2015 on flassbeck-economics. We intend to publish one article in English every week to allow more readers to follow closely our analysis of global and European events.

„No one forced the Greeks to live beyond their means for years.“

If this statement were true, the following reasoning would hold: „If the Greeks had lived beyond their means voluntarily, they would have brought the debt burden of their country on themselves. If foreign debts were Greece’s main problem, the Greeks themselves were to be blamed for their countrie’s plight. Then they would have to live below their means for a while, so that these imbalances could disappear. This process could be expected to be painful, but this is something that the Greeks would have to figure out for themselves. Therefore they cannot refuse to make the necessary changes. Debtors cannot be allowed to escape repaying their debts. And we cannot just give them new money, because then they would continue to live beyond their means and not below them.“