OH, Crap!

Paul Krugman’s Deflation As Betrayal:

Ambrose Evans-Pritchard writes that Europe’s slide toward deflation amounts to a “betrayal” of Southern Europe. This sounds over the top, but it is the simple truth. So let me elaborate …


… up to the crisis, capital was flooding into southern Europe. In retrospect, this was a bad thing, but few in positions of authority were complaining at the time — oh, and in Spain it was private borrowing, not public. The result was a boom in the south,

… rising prices in southern Europe helped Germany become super-competitive and emerge from the economic doldrums it was in at the end of the 90s, without needing actual deflation.

And then you have the Germans saying that they dealt with their problems, so why can’t southern Europe do the same? Why, because southern Europe played by the rules, but in its time of need the rules were changed, hugely to its disadvantage.

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