Germans in Fantasy Land
Paul Krugman quoting Wolfgang Munchau:
German economists roughly fall into two groups: those that have not read Keynes, and those that have not understood Keynes.
Munchau tells us something I didn’t know, that Ludwig Erhard “once tried to explain the Great Depression in terms of cartels.” In the German economics mindset, there is only microeconomic distortion; macro problems, even in the middle of Europe’s second Great Depression, don’t exist.
How does this end? We have to keep pounding on the issues, and I’m reasonably sure that Draghi and co get it. But with the largest player on the European scene living in a fantasy world, the best guess has to be that nothing much is done until there is complete political crisis, with anti-European nationalists taking over one or more major nations.