The entrepreneur is certain: “Without the warning Weidmann, the ECB would have advanced even faster and more vigorously into covert state financing and other political tasks that are actually incumbent on elected parliaments and governments instead of concentrating on monetary stability.”
Eben-Worlée called on the incoming federal government to think very carefully about what it needs to do for the stability of the euro in the face of rising inflation and who it will then appoint to head the Bundesbank. “Above all, the SPD should consider: inflation always hits workers hardest,” he said.
Eben-Worlée wanted “definitely someone from the“ Falke ”team instead of“ Taube ”to succeed Weidmann. Firstly, there are already too many pigeons in the ECB, and secondly, monetary stability will be one of the most important issues in the next few years. Weidmann was considered a hawk because he advocated a stricter monetary policy.
Top jobs of the day
Find the best jobs now and
be notified by email.
Family entrepreneurs have long criticized the fact that the ECB continues to interpret its mandate further. In Eben-Worlée’s view, the disastrous intermingling of fiscal and monetary policy has not brought Europe forward globally and deepened the rifts within the EU.
“While liquidity is micro- and macroeconomically available for almost everything thanks to the endless bazooka from Frankfurt, prices are rising. Ms. Lagarde and her board of directors are trapped in which they nevertheless receive applause from many, ”he said.
Read the full interview here:
Mr Eben-Worlée, following Jens Weidmann’s withdrawal, the Bundesbank needs a new president. How important is the personnel from the point of view of the family business?
Very important. These are all that is left of the promise that the euro will be as stable as the D-Mark. In contrast to the financial markets, family entrepreneurs focus primarily on the long-term risks because they – like the citizens – are held fully liable as soon as the bubbles burst or the states can no longer bear their debts. That is why a strong Bundesbank that pays attention to monetary stability is so important.
But monetary policy is done by the European Central Bank (ECB). The Bundesbank is only part of it …
A weighty part. Without the warning Jens Weidmann, the ECB would have advanced even faster and more vigorously into covert state financing and other political tasks that are actually incumbent on elected parliaments and governments instead of concentrating on monetary stability. Weidmann’s withdrawal is a beacon that the ECB is not taking monetary stability seriously.
Bundesbank President Weidmann was often lost there with his stability course …
The more important aspect is whether the Bundesbank president can slow down if the ECB takes the wrong course. Often enough, he lacked the backing of the federal government when the Union and the SPD accepted the weakening of the growth and stability pact at the European level and even pushed it forward. The coming federal government should think very carefully about what it has to do for the stability of the euro in view of the rising inflation and who it will then appoint to head the Bundesbank. The SPD in particular should consider that inflation always hits workers hardest.
“Falcon” instead of “Taube” as the Weidmann successor
You have probably also read the reports on Jens Weidmann’s possible successors. In your opinion, who would be most likely to be eligible for the post?
Definitely someone from the “falcon” team instead of “dove”. Firstly, there are already too many pigeons in the ECB, and secondly, monetary stability will be one of the most important issues in the next few years. The keyword of greenflation is already circulating.
Some economists argue that it has never been so cheap to go into debt in the face of cheap money and then invest in the future. Is that correct?
At first glance, the “easy money” argument is correct for companies and for states. On the part of the state, however, cheap money in no way leads to an efficient use of funds. Government spending has exploded everywhere. However, Europe’s competitiveness is being thrown back by completely unmodern administrations, outdated processes, high taxes and levies and the shortage of skilled workers. It is a myth that states lack the money for meaningful investments. In terms of society, the social upheavals are increasing everywhere due to cheap money: only those who already had enough equity could buy real estate or entire companies with the cheap debts. The small savers, on the other hand, pay the bill.
The EU rescue fund ESM recently proposed to allow a country to increase its indebtedness from 60 percent of gross domestic product to 100 percent. What do you make of it?
The proposal completely hides political liability. As long as the ECB allows the states not to have to pay interest on their national debts, the 100 percent mark will soon be passed. Europe is not lacking in public money. European competitiveness tends to decline due to inefficient administrations, bloated state apparatus and long decision-making processes. Giving the euro countries even more debt would only drive divergence within the euro zone and further undermine the stability of the euro zone.
A suitable finance minister
Two of the leading American economists, Adam Tooze and Joseph Stiglitz, warn against leaving FDP leader Christian Lindner the post of Federal Minister of Finance. In view of the European and global challenges, there should be no return to the austerity course that the FDP has in mind. What do you think of this line of argument?
Christian Lindner and the FDP stand for a high level of economic competence and for a commitment to regulatory issues. At the moment an attempt is being made to dismiss this attitude as outdated and unfashionable. Christian Lindner understood that Germany has not become a “lame duck” because of a lack of public funds.
Would Robert Habeck from the Greens be the better choice as Federal Finance Minister?
We judge the content, and there the Greens, especially at the European level, do not stand for the idea of getting along with the taxpayers’ money. Immediately after the “Next Generation EU” 800 billion euro package based on joint debts, the Greens demanded that the project should be overcome and that a new billion-dollar pot be created for green investments. Mr Habeck has not yet shown that he is critical of these thought patterns.
How do you rate the risk of inflation?
Of course we are dealing with many one-off effects, but structurally we will see another sharp rise in many prices. Sharply increased prices for energy and housing – the latter, incidentally, also as a result of the loose monetary policy for decades – affect everyone. For many companies, existential questions arise in view of the galloping energy prices. Since all of this is connected with many politically induced growth brakes, I consider stagflation to be a realistic scenario. The ECB does not want to admit it, but with its course of permanent quantitative easing plus low interest rates even in good economic times it has helped that the excess liquidity is now driving prices up.
The ECB director Lagarde and her board of directors are trapped, says Eben-Worlée.
(Photo: Reuters)
So far, the ECB has not seen this as dramatic.
We have long criticized the fact that the ECB continues to interpret its mandate. The ominous blending of fiscal and monetary policy has not brought Europe forward globally and deepened the rifts within the EU. While liquidity is micro- and macroeconomically available for almost everything thanks to the endless bazooka from Frankfurt, prices are rising. Ms. Lagarde and her board of directors are trapped in which they nevertheless receive applause from many.
Will prices go down again in the coming year?
Certainly based on the one-time effects. As far as global delivery bottlenecks are concerned, this is by no means clear. Other price jumps for which the ECB is responsible then come on top. A situation that can get out of hand very quickly. Difficult times lie ahead for the next Bundesbank president.
More: The stability of the euro is in jeopardy – one comment.