In these terms I understand economics

ImageOne thing we have learned from the economic crisis is that we need better ways of measuring economies. The economics profession missed an $8 trillion housing bubble in the US, as well as housing bubbles in Spain, Ireland and UK; it failed to recognize the severe over-leveraging of banks and households, or the macroeconomic imbalances within the eurozone; it failed to recognize that the global financial system had been turned into a gambling casino where taxpayer money would be needed to bail out bankster excess; it has become over-reliant on measurements like growth rates as the primary indicator of economic health; and economists around the world, even Nobel Prize winners, were caught flat-footed by the global economic collapse. The performance of the economics profession has been like a master chef who not only burned the meal but burned down the entire restaurant. Yet the chef never lost his job; instead he is still in the kitchen, cooking up mostly the same meal, no wiser for the wear.

Sometimes it seems as if Germany and its supporters are like a poker player with a very weak hand, who has managed to convince all the other players that their hand is much stronger than it is. But there is a danger that you may get so good at playing this bluff, that you may stop looking at your cards and actually believe you have a strong hand. Or worse still, that although your hand is weak, you deserve to have the better cards, and therefore you do have the better cards.

That’s why it takes the average German three minutes to earn enough to buy a beer, exactly the same as 20 years ago, showing the euro has not eroded Germany’s purchasing power.

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