Business Spectator

In an ideal world, an economic liberal like myself would happily enter a debate supporting the moot that it is financial fundamentals driving investment markets. But it is not an ideal world, neither for economic liberals nor for investment markets.

For the Germans, July 8 was a good day. Not just because it also happened to be your columnist’s birthday or because of Germany’s emphatic 7-1 win over Brazil in the World Cup, but because this year, it also marked Germany’s Tax Freedom Day.

Published in Business Spectator (Melbourne), 3 July 2014 Last week, I wrote about Angela Merkel’s declining influence in Europe. For a number of domestic and international reasons, the German Chancellor can no longer enforce austerity and economic reforms in the eurozone. She is already past the peak of her power, I concluded. What I did not […]

It is debatable whether Merkel actually managed to negotiate good deals for her country, but at least it always appeared as if she was able to dictate her will in Europe. Not anymore.

Given Germany’s position as the largest shareholder in the ECB, it is astonishing how weak their control of its governance is. But for the result of their past carelessness in designing the ECB’s rules, the Germans only have themselves to blame.

What we are seeing now is a continent barely held together by the monetary alchemy of its central bank. But you have to hand it to the ECB: it has developed extraordinary skills in concealing the real nature of its actions. No other central bank could so beautifully camouflage subsidies to banks and governments as help to the private sector.

What is democracy? Well, usually democracy is when the people vote in an election and the winner then happens to form a government. It is as simple as that. And what is European Union democracy? It is when the people vote in an election and, regardless of the outcome, German chancellor Angela Merkel decides on the next president of the European Commission

By all accounts, these European elections have shaken political landscapes in many countries. Over the coming years, we will find out what these developments will mean in practice. However, the fragile consensus that hitherto governed Europe — closer integration and bailouts against austerity promises — will be hard to maintain.