Count me a skeptic about letters signed by large numbers of economists, but this Open Europe report caught my eye. In it, the think tank notes that 160 German economists have written an open letter to their countrymen. Amongst their targets, the now fashionable notion of a “banking union”:
Politicians may hope to be able to limit the amounts of liability and prevent abuses through common bank supervision. They will however not be able to pull this off for as long as the debtor countries command a structural majority in the eurozone. If the ‘solid’ countries agree to the pooling of liability for bank debt in principle, they will be constantly exposed to pressure to increase the amounts of liability or to soften the requirements for liability provision. Strife and discord with our neighbours will be inevitable.
Unfortunately, the EU’s top officials may never see this letter. As Open Europe points out in another post, there may be a language problem in the Commission. It translates (danke!) this comment from Handelsblatt’s Ruth Berschens:
“How can EU officials and European politicians understand German sensibilities, if they do not speak any German and do not consult the German media? Short summaries of German newspaper article translated into English are not enough to suddenly make eurocrats experts on Germany. The flip-side of this low sensitivity to the domestic political constraints of the federal government are the completely exaggerated expectations of Germany.”