To present even in the sovereign debt crisis. Based on historically low interest rates lowering the European Central Bank interest rates one more time Nobel laureate economist Paul Krugman recommends in Handelsblatt, the unlimited turning on the tap European money to buy government bonds. He does not see inflation risks. Presumably, he assumes the liquidity flow relieves the states of the difficult credit search, the lower the interest rates and possibly create a growth spurt that catapulted Europe out of the crisis. Can you flush away the crisis that simple? I think: no. Below is argued therefore, that interest is a price that many other prizes as well as social functions and exercises its arbitrary manipulation might have unwanted side effects.

Second prizes as carriers of information

Prices are not only an expression of the distribution of gains from trade between buyers and sellers, they are not the result of a constant-sum bargaining game. Rather, they are essential information carriers that govern the behavior of people in socially desirable cars.

The market price for a product bundles a variety of detailed information. First, it shows how much the consumer had to pay for the most recently acquired from the market Good to the last train had come to demand not just to beat. He brings so well to express the appreciation that would willingly offering consumers a production expansion. Market prices continue to collect the costs incurred by providers. These include, among other things, the procurement, storage and marketing costs, which in turn expressed upstream market prices, in turn, consider the cost of all the upstream stages of production. In this way, the benefit and cost estimates on any number of stages in the value chain are concentrated in the market price. As a result, events that must be done away from consumers and from that neither knew nor understood, find their way into his behavior.

If for example the promotion of a particular commodity at a specified delivery area, the raw material in question is relatively scarce. Its price will rise and with it the prices in all the different strands using downstream production steps. The effect extends to the consumer, who now have to decide for its various end products that contain the raw material concerned, must decide whether the use of the benefits now increase in price still exceeds.

In addition, the signal

Price increases demonstrating the increased scarcity of the product. Do the entrepreneurs then on ways to close the supply gap thus created at a cost below the new market price, then it follows immediately a profit opportunity. Even if the entrepreneur does not know, why has this set to win and even if they carry out their acts of pure self-interest, so they contribute to the welfare of other members of society.

The third Rate as the price of loans

The interest rate is a price to contribute through incentives and information content for directing scarce resources. During normal goods prices adjust the structure of consumption of different commodities at a time when the interest rate the same consumption rate of five percent creates controls, he can consume in one year for products with a value of 105 €. The credit market now governs how the temporal allocation of consumption – the intertemporal allocation of goods – will be.

.

But

Spirits, if they resist the politically correct policy direction are often the paradigmatic political pike in the carp pond. Because political correctness is the incarnation of liberty, freedom of thought and circumcision of political action. Down political correctness is the cause of the powerful and paternalists the contrary, the counterpoint, the idea of ​​competition as fear of the plague. Voluntarily accepted political correctness is the home of the timid, the idea of ​​lots and ideologues, the career-minded conformists and copiers, but not of free citizens and statesmen, but the subservient subjects and then either greedy politicians. Political correctness is therefore the enemy of liberals. Thus does a perfectly identifiable amount of voting citizens, although certainly not the majority.

And where there is

The FDP? At a time when courting in the major political parties in Germany to “the middle” of the median voter as the majority fundraiser for the supposedly politically correct want to have in view, it obviously lacks the courage to depart from that visible. Their political product portfolio appears to be hardly distinguishable appendages to their larger coalition partner. And even if some political products of the FDP in content actually deduct from those of the CDU, it notices the little public – not particularly well because the Liberals take the coalition counterpoint is not enough, probably for fear of his own courage, the putative median voter of to lose so-called political center, and thus the present toleration as a coalition partner or even the re-election as coalition partners. Or because it is the political party for the marketing craft public policy offering to their potential voters are not sufficiently effective control.

Liberals in Germany has traditionally had a limited soundboard. Wahlarithmetisch he moves in the long corridor, probably between six to nine percent. Everything else about it has something to do with temporary electoral overshooting. The median voter than majority buyer is a liberal party in Germany, therefore, not strategically relevant. For this reason the smaller coalition partner, the FDP, to survive, voters do not follow the media-oriented policy direction of the great party CDU unconditionally and not copy other parties in the green and social terrain want.

Successful course of the FDP times to reach more than 14 percent, but that was only a short-term overshooting, which at that time due to federal elections is well known, especially the drift of the CDU-programmatic from the acceptance of parts of their very liberal-oriented core constituency was that the then opposition party FDP with traceable catch-regarded as a liberal entitlement. Since the liberal opposition party programmatically obviously done everything right. The present coalition party FDP, this function is as a refuge for liberal partisans usually competing, but also as a reliable home for traditionally liberal choosers because now own programmatic Kompaßlosigkeit got thoroughly lost. Although it is clear that his opposition to government action program and no compromise in coalition wholly-owned intersections, should the programmatic position of the FDP are not defaced to such an extent that its liberal label has to be searched with a magnifying glass. That this is the case now, the current polls show unambiguously.

.

A recent study published in the Economic Journal. For this purpose one must know that – the NHS is dominated by the state – contrary to stereotypes about the continent supposedly very liberal market Britain. Every inhabitant of Great Britain has automatically entitled to free health care in the tax-funded NHS. The system was also organized over a long period of quasi-planned economy. For example, patients were admitted to a hospital, the inpatient care provided in each region as a monopolist. There was therefore no long competition of hospitals to patients.

Only in 2006, patients were given the right to freely choose the hospital where she wanted to be treated. The hospitals themselves were given DRG for each patient treated. These packages are slightly higher than cost recovery, so immediate an incentive for hospitals to enter into a competition for patients. An attempt was also part of the NHS to increase the transparency of the market were provided by the Internet information on quality indicators for all hospitals. Patients may thus provide a marginal cost close to zero with information.

Cooper and co-authors on the one hand can now compare the period before the policy change and the time after the policy change to determine whether competition has an effect on mortality after heart attacks. This, however, not yet. Finally, there might have been during this time medical advances that have had an influence on the survival rate. Therefore, they are constructing a number of different indices for the degree of competition in some regional markets. Will react differently – this allows them to figure out whether a nationally consistent regional institutional variation – depending on the intensity of competition. The main results of the study are robust to all these different dimensions of competition.

What are the results from now? It is clear that a higher intensity of competition between hospitals in a region with a lower mortality rate for heart attacks is linked. Specifically, the country about 300 patients per year are less died as a result of a heart attack, as it would have been without the introduction of competition in the case of inpatient care. That sounds like a true positive, but rather small number, however, one must remember that there really is only to cases of heart attacks, their survival rates are used as a quality indicator. It is expected therefore, that patients have benefited with very different clinical pictures also of better quality care.

.

The problem

€ is a veritable crisis of sovereign debt crisis. First came the countries of the periphery into the fiscal twilight. Now, however, the center is no longer safe from infection. The sinners are the debtors to the States. However, in some countries, private financial actors, the states have set credit rotten eggs in the nest. Everywhere government spending were the proceeds thereof. The holes were filled with financial loans. This went on for decades, so life on credit became chronic. The loans increased the state's debt mountain. The capital markets has not long disturbed, certainly not in the euro area. With the financial crisis exploded the national debt. But only the Greek fiscal Fukushima capital markets into a panic.

The output side of the euro countries shows at first glance little momentum. The government expenditure ratio moves since the introduction of the euro – little changed – to a high level. This goes for euro and non-euro countries. However, the expenditure ratios in the euro area were slightly higher. Only the outbreak of the financial crisis led to more movement. Now the government expenditure ratio increased significantly to values ​​above 50% throughout the EU. This abdominal mastered the government expenditure on social protection. They run up to the financial crisis unspectacular, in the euro area but at a higher level. The ratio of other government spending in the euro area hardly moves, which rises in the other EU countries but steadily since 2000.

Because government spending grew faster than revenues, increased public debt. Drivers were in the euro area countries, expenditure on social protection in the non-euro countries other expenses. The members of the EMU into debt every year since the introduction of the euro on New. Also in the dazzling world of economic development phase 2004-2007 it funded a portion of their spending on credit. The non-members were up to the outbreak of the financial crisis a little more economical. No wonder that high in both groups of countries the debt in good times continued. With the financial crisis exploded the deficit and debt ratio for members and non-members.

.

Health care in Germany is excellent. More than 95 percent of the world envy us. The scope of eligible services in Germany is Europe's largest. How long will this still be the case, is questionable, because with the aging and declining population, the blessing of the medical-technical progress, the increase in chronic diseases and the growing demand for quality services, not least in the nursing field, increase spending for health care.

As yet none of the numerous reforms, the structural deficits of the health system has received long-term in the handle, health reform for long-term task: Since the founding of the Federal Republic, there were more than 80 laws, which held the Federal Ministry of Health the lead. 1977-2000 alone there were more than 46 laws, with more than 6,800 individual rules and regulations. And the current federal government exercises in Panta Rhei of ongoing reform efforts: To date, three laws adopted with the objectives of the savings on medicines and the financing of health insurance. Another is for the performance-based remuneration of doctors and the blanket coverage was just approved by the Cabinet.

With these reforms, the federal government limits instead of a large litter once more mainly on short-term spending restraint and the avoidance of contribution rate increases. However, she's gone with the additional contributions as a step towards a more income-related financing for health insurance. However, whether this one as in the coalition agreement called for the medium and long term guaranteed funding of the health system can be achieved is questionable.

To make the health system in the long term efficient and financially viable, and no one excluded from health care, should have a basic insurance for all citizens to be introduced, with freedom of choice for additional benefits. In this “real” citizens' insurance, the system should be income-based contributions replaced by a system of contributions which are independent of age, gender, medical history and income. In addition, exposure limits are set. The social balance would then be where he can best succeed: through the tax and transfer system. Health insurance contributions were cut off from the wages paid and the employer contribution. There should be freedom of choice of all insured persons between the various providers – whether they are public or private – exist. For all providers of “real” citizens' insurance would be to contract, so that could not be rejected as chronically ill patients by insurance companies. A higher proportion of funding would improve the demographic strength. With such a long-term structural reform could secure health care and social equity succeed together.

.

A union is a group of providers in the labor market, which joins together to jointly exercise market power. This group, which thus forms a kind of cartel, changes the outcome of a particular market sector. In the American League system, and thus also in the NBA, is now the following situation: While the providers have the merger to a union of a better way to enforce the monopoly profit, is the demand side, that the league due to lack of competitive leagues and existing players in the form of a binding instrument monopsony.

.

Contrary to popular belief, is and was in Germany in recent years, no country of immigration. This fact illustrates the table below by the Federal Statistical Office. Even if one ignores the migration of German citizens, there is no significant net immigration. We need in the coming years and decades, immigration to the demographic pressure on social security systems to alleviate at least some.

.

Structural problems

The causes of the problems are known. Some members of the EMU long lived beyond their means. With the introduction of the euro private households in the PIGS have set high on the public debt is even better. The borrowing abroad, took leaps and bounds. Falling nominal interest rates in the periphery and above-average increase in goods prices lowered real interest rates and increased the incentives for a life on credit. The actors lived their private debt orgy, especially in real estate in Ireland, also from the financial sector. Not so in Italy. There was changing with the euro, the little debt. However, it is much too high for a long time.

Rising commodity prices have been reflected in rising nominal wages. Unit labor costs rose sharply, the international competitiveness of the PIGS declined. Mounting deficits in current accounts were the visible signs of this development. Until the sudden onset of the financial crisis, the international capital markets, the growing deficits financed without major problems. This aggravated the sectoral structural balances. The real estate sector in the PIGS was much too large, the internationally-traded goods sector continued to remain underdeveloped.

At the sectoral

Mistakes of the PIGS wearing the € a due partly to blame. The uniform interest rate policy in the euro area was for the periphery countries too expansionary for the core countries for a long time in the 90s rather contractionary. These economic and sectoral developments were not wrong for a long time noted. The joy of catching the periphery toward the center covered the misallocation. In fact, the convergence was not more than an economic mirage. The financial crisis put an end to this sham prosperity of the periphery, and revealed the true circumstances.

System problems

With the financial crisis came to light the structural aberrations. Now the high private and public debt avenged at home and abroad. Banks in the PIGS came under pressure financially. It was left to the states nothing else than to save them from destruction. This was most evident in Ireland, where the government nationalized the major banks and took over their part, horrendous debt. It was also for Portugal, Greece and Spain. Everywhere had to systemically important banks to be rescued. From the debt crisis of the banks was a veritable sovereign debt crisis.

The slump in economic development in the financial crisis intensified those problems. With some massive debt-financed government spending programs in the country tried to come out of the crisis. This gave a further boost to the national debt. Not so in Italy. Government spending behaved more discreetly by Italian standards. They remained at approximately 50% of GDP. Also, government debt has changed from 2008, not dramatic. The much too high debt ratio of 120% of GDP has been further updated. Italy is different than the PIGS.

.

As a big leap forward is now the project of a “European economic government” presents. Even in Germany there are increasing voices a common fiscal policy – a “fiscal union” – calling right away into the framework of a “political union” or the “United States of Europe”. What is often overlooked, is that the European economic government or fiscal union would weaken the independence of the ECB further. The more, the financial leaders organize at the European level, the more they can put together the Governing Council under pressure. That was clear from the beginning makes the French intention, and even past performance, how it works.

When the ECB

Started in May last year to buy Greek government bonds, a meeting of the Euro-Council was preceded to the ECB President Trichet was also invited. The present leaders revealed that they would welcome such bond purchases, and Trichet put their request then during a telephone conference in the Governing Council. With the European treaties had this request is not compatible, because there is written. “Governments of the Member States undertake not to try … to influence the decision-making bodies of the European Central Bank or national central banks in carrying out their tasks”

That come together until the Treasury and then the leaders of the euro countries as a policy counterweight to the ECB and are now starting to build a bureaucracy for the euro group, is a threat to the independence of the ECB and therefore for the stability the euro. A European economic government or fiscal union would exacerbate this problem considerably. The finance minister had a common interest in an expansionary monetary policy, because this their tax revenues – would increase

- at least temporarily.

Which now call for a common fiscal policy for the euro area, fear that the uncontrolled increase in public debt caused the politicians to urge the ECB to an inflationary monetary policy in order to reduce the real value of their debt. They too are therefore devoted to the independence of the ECB and the stability of the euro. But they do not seem to recognize that a common fiscal policy would just undermine that goal. The independence of the central bank requires a fragmentation and decentralization of political institutions.

How can this dilemma be resolved? Is it possible to reconcile the two goals, “limiting the national debt” and “central bank independence” under one roof?

The solution is and remains an effective stability pact. Public debt should not be limited by a common discretionary fiscal policy, but contractually agreed common rules. This should also include national debt brakes. The rules must be applied locally. What it has lacked, is their consistent enforcement and penalties. Automatic sanctions, France has always denied. When the German budget deficits under the Schröder government ran out of control, even in 2005 it took the chance, the Stability Pact with German consent to dilute beyond recognition.

.

Loss of trust and credibility

Behind the current problems is a crisis of confidence and credibility with many facets. It is made of an information crisis, emerged an institutional crisis and a crisis of crisis management. To their causes is recognized if the current problems will be solved permanently.

Information crisis

It has been shown that significant lack of information passed over the status of relevant actors such as states and banks and there. This lack is made possible by including a strong network of actors and the resulting complexity of market relations. Despite stability reports and bank stress tests, there are still great lack of information about the risk allocation in the euro currency union. There also exists a lack of information about the economic and political reform potential in the affected economies. A look to Greece should demonstrate this. Lack of information also exist on the reactions by creditors, investors and rating agencies agreed on political measures. However, the effects of alternative reform measures are uncertain, unclear responsibilities.

Uncertainty

As a result, a marked uncertainty in the monetary union emerged, which is fueled not only by the short life of the individual reforms. Thus, the lack of information can be signaled by a systematic underestimation of needs correction. Uncertainty also arises from the threat of “horror stories” as well as through the “Talk ban” a state of insolvency. The situation will not improve even if the emergency is used opportunistically for the launch of a transaction tax or euro bonds. Against this background suffers the credibility of most of the measures agreed.

Institutional crisis I

Negative on the credibility of the current summit decisions affect the existence of an institutional crisis. In this regard, two aspects are distinguished. First, the design and management failures of the monetary union, which form the background of the debt crisis, and secondly, the attempt at crisis management. The institutional deficits of the first category are well known: his term political decision for a heterogeneous monetary union with members of the divergences in economic development levels, economic policy preferences, the union-oriented behavior and generally fidelity exhibited, an inconsistent monetary policy, the monetary factors and their determinants in different levels are established, an inconsistent Union regulations with national political responsibility and decision-making structures and a supranational monetary order. In addition there were numerous violations tolerated and the unexplained finality of the European Union. Arise when the “United States of Europe” to the current steps towards greater pooling of fiscal policy to be assessed differently if this is not the case.

Institutions Crisis II

.