Is Merkel in "Cloud-Cuckoo Land" or Simply a Hypocrite? How About a Chameleon?

Today my spotlight is not on the implosion in Spain, Portugal, France, Cyprus, or Italy.

Rather, my focus is on a statement made by Paul Krugman that "senior German officials are living in Wolkenkuckucksheim - cloud-cuckoo land."

Please consider Double Standards: Europeans Are Right to Be Angry with Merkel

Chancellor Angela Merkel has tenaciously insisted that austerity is the only way out of the crisis for ailing EU countries. She doesn't practice what she preaches in Germany, though, which makes growing anger toward her understandable.

The question is not about whether Krugman is right when he almost obsessively labels Merkel "dim-witted" and writes that "senior German officials are living in Wolkenkuckucksheim -- cloud-cuckoo land."

No, it is not the know-it-alls from abroad who spark doubts. It is Merkel's own policies here at home that prove the error of the measures she champions for the ailing economies of Southern Europe -- and feed the suspicion that the outrage directed at the German taskmaster is wholly justified.

Hypocritical Examples

1. Merkel insists German deposits are sacrosanct. Cypriot deposits are not.
2. Merkel insists stimulus measures are out of the question for club-med states, but they were not out of the question for Germany in 2009.
3. In regards to fiscal stimulus, when the financial crisis threatened Germany, "Merkel allotted €1.5 billion to a car-scrapping bonus plan. More than half a million used cars were crushed by the junk press, and 600,000 new cars were purchased, each of them subsidized by €2,500 in government funds."
4. Merkel was a huge supporter of nuclear energy until the German population wasn't in the aftermath of the nuclear disaster in Japan.

Merkel the Chameleon

Economically speaking, it's easy enough to make the case that it is Krugman who is in "Cloud-Cuckoo Land" and that Merkel is simply a hypocrite.

However, Merkel is so good at changing the color of her spots, I propose chameleon is an equally good description.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
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