by Robert Waldmann
(lifted from Stochastic Thoughts)
I don’t want to make this a daily feature but Anthony Faiola and Michael Birnbaum made it hard for me to get past The Washington Post (my home page) without an angry blog post. In what is supposed to be a news article, they make a false claim of fact. They do not point to any supporting evidence (nor could they as their claim is plainly false) nor do they quote even a self appointed expert.
Their claim that “Europe’s crisis now is as much political as economic. It stems from a legacy of overspending and overborrowing, but …” is false. Spain and Ireland were running budget surpluses and had a debt to GDP ratio lower than Germany’s. Italy had a primary surplus and declining debt to GDP ratio. Germany happens to be the one and only country allowed to adopt the Euro in spite of not meeting the Maastricht conditions (which shows how stupid those rules were).
Now, I suppose that the claim is vague enough to be not proven false — they didn’t write public “overspending and over borrowing.” Indeed the root cause of most of the crisis, here in Europe as well as in the USA, ws a combination of banking deregulation and banker’s errors.
Here I think the problem is that they consider the sentence which I truncated to be a claim that the problem isn’t just over public spending and under taxing by Greece and Portugal. They go on to criticize Germany “but … it also reflects a lack of investor faith in the will of financially solid nations such as Germany to unite behind their troubled neighbors to shore up the currency union.” so they can’t say that the German position is total nonsense. That would be unBallancelicht.
But the German claims are false.