Adam Tooze: evaluation

Transcript context

…But isn’t it better to bail Italy out nontransparently through ECB purchases rather than through a common fiscal union where the German voters would resent it more? Italy probably would behave irresponsibly, right? There’s been a fracturing of cooperation with all nations. So isn’t it better we haven’t had a fiscal union? I take the force of that point, and it’s a classically Keynesian argument for burying a problem you can’t fix politically in some technocratic solution. It would be truly compelling if the German political class had managed to close ranks as, say, the French have, and basically silence and kill the issue. But they have failed to do that. And far too often, the Bundesbank and quite mainstream conservatives in Germany engage in a monetary populism, essentially, which blames the ECB for low interest rates, which problematizes this de facto round-the-back sharing of risk by way of the ECB balance sheet. Hans-Werner Sinn, the notable Munich economist, can command the pages of serious German newspapers with his polemics against the so-called TARGET2 balances, which are really just a reflection in the balance sheet of the ECB of movements within the European financial system. And all of that makes for a very unstable brew. What I worry about is a spiral of de-legitimization, fundamentally, in which an unspoken, as you say, convenient technocratic fix to the problem doesn’t in fact remain unspoken. Then, you have an insurgent economic nationalism against that, which is where the AFD, the right-wing party — which has haunted German politics in recent years — comes from. It’s not an anti-immigrant party in the first instance. It’s an anti-Draghi party in the first instance, a party directed against Mario Draghi. And the Alternative für Deutschland, the Alternative for Germany — they want an alternative to the sorts of monetary fix that we’re talking about, the activism on the part of the ECB. They then bring suits in front of the German constitutional court, which is an avenue favored by political activists. And the German constitutional court is put in the embarrassing position of having, basically, to sign off on what everyone understands are legal fig leaves to avoid the embarrassment of blowing up Angela Merkel’s Europe policy, or rather Angela Merkel’s nonpolicy towards Europe. And if that channel was not there, I would say, I’d be totally with you: bury this stuff. Bury it deep, and let’s never talk about it again. But unfortunately, that is not how the German political system works. Very striking contrast to France, which is, in a sense, essentially in exactly the same boat, also a risk sharer with Italy. And it’s not even a subject of serious conversation. I mean, it’s never been a serious subject for conversation there. And that’s the reason why I’m not sure that this status quo will hold, though de facto, I think that’s where we’re headed. Will Hungary simply persist as a truly autocratic regime within the European Union?…

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