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Victor Jimenez

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That PIIGS Label Will Stop Now, Mrs Merkel

Posted: 09/10/2012 16:44

Their kisses on the cheek make the euro go around. But leaders of the so handsomely known as 'core Europe' deserve less respect than the figure French and German safer public coffers cut out of the Merkollande tandem.

Let's go to Paris, to begin with. A 2013 Budget-and a medium term fiscal plan until 2017-bringing down public spending by merely 2.4 percent of GDP? Savings in the public sector of some mere €10 billion for next year, while throwing a special 75 percent tax rate on households with over €1 million of annual income? And what about pressuring companies to send in early corporate tax payments?

The French strategy, as marketed to voters in France and austerity-hurt Europeans in the southern stretch, was meant to revolve around the principle of alleviating taxpayers' backs. Hollande's government would place most of the burden, instead, on the wealthiest. Yet, the reverse holds true, too: the French socialists have proved stubborn protectors of the sort of euro zone bloated state whose size decades ago became inefficient, cumbersome for the sake of party-politics. And terribly expensive.

We at The Corner weren't the only ones to smell the rat in the plans of the once auspicious premier, and even within the proud hexagon voices from the business sector now begin to complain.

I personally have no qualms about calling Hollande Tartuff and imaginaire alternative. After all, half of France's partners in the common currency region must cope every day with being labelled as pork-barrel economies under the infamous moniker of PIIGS. A playground where central Europe's role is the paymaster's and the Mediterranean countries would embody sheer profligacy will sooner than later mess up the desperate discussions for further euro zone integration. European nations really are all in to face the credit crunch music, whether they sit at the 'core' table or not.

Which brings us to Berlin. Talking to our correspondent in Washington, indeed, former White House chief of staff and Harvard professor James Robinson, told us this week what, even though obvious, few say in Europe: that "all European countries bear some responsibility. If there is debt, someone had to lend the money, and someone had to borrow it," he graciously explained.

Leaving aside the many facts that point at a not-so-healthy Germany (mini-jobs, pension crisis), the ultimate question looming on Chancellor Angela Merkel's porch is: when will she be ready to admit German financial institutions behaved like barking-mad lenders?

Perhaps City analysts in Spain are growing more outspoken, but I'm convince experts elsewhere in other financial hubs would nod at the interesting assertions Self Bank's Victoria Torre made to our reporter in Madrid. Torre said that "Germany's problem is that its position isn't clear at all (...) The euro rescue fund is still being dissected and the chance that incompatibilities with the German constitution is found out is quite real."

My take? Next time you hear "Oink!", don't make assumptions.

 

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