France and Germany discuss eurozone recovery
In an attempt to bring the European area to recovery, both the French and Germans are getting together to talk about how to do so. The European countries have been experiencing similar problems with their economy as the United States has since the crash in 2008. It is understood that the monetary prominence of both countries and their neighbors could benefit from change that could bring the European economy back up to speed.
In the last quarter of 2015, Portugal and Germany saw decreases in their economies. Greece, who has been in economic trouble for quite some time, also saw yet another blow to their economy as their debt continued. All of the European countries saw a dip in their GDP the last two years, only gaining 0.3% in 2015 and 1.6% in 2014. The only thing keeping the European economy alive in that quarter, was the spending of consumers, most likely on household items. The economy in these European markets is inching in the right direction, but is at a slower pace than expected. This is most likely the reason for the French and German leaders to meet on the recovery of their economies. Here is what the discussion looks like:
- Weidmann warns against over reaction:
Jens Weidmann, the Bundesbank President, does not expect a Chinese economy that would falter sharply. He believes that the returns in the Asian markets were spread by Europeans, and other nations throughout the world. He also stated that he opposed the idea of printing money to help with the recovery. This would create an inflation rate that would only assist in the downfall of the economy.
- Finance Minister Wolfgang Schaeuble on reforms:
Schaeuble said in a statement that he believes the structure of the monetary union needed to be reformed. However, treaties would have to be changed and he plans to try and make any changes without rewriting the treaties because it is not realistic to take on not only the issues with the current monetary union, but with the issues facing them by changing the treaties.
- Central Bank heads weigh in:
The bank heads from Germany and France stated that they don’t believe the Central Bank would recover from change in policy alone. That more would need to be done in order to help the recovery.
While I understand why Finance Minister Wolfgang Schaeuble believes that making changes to the current treaties isn’t realist, and that the Bundesbank President, Jens Weidmann wants to shy away from overreacting, I believe change is needed fast. The Central Bank heads have it right when they say that policy wouldn’t be all that was needed to help recover but it is important. Without the change in policy, the European economy might continue to progress slowly. While gas prices are low and there is low wage rises, policy change could be the way to change this. Politicians in the United States in most cases, work tirelessly to change policy to benefit the economy, I’m interested to find why this can’t be done in Eurpoe.