AFP, Switzerland :
It was supposed to be a serious debate about the merits of monetary stimulus, but instead a panel in Davos Thursday featuring IMF chief Christine Lagarde, quickly degenerated into a skirmish over the European economy.
“There is a general expectation to compare the US economy and the euro area and I don’t think that’s a reality,” Lagarde said after an onslaught from her largely American co-panelists, including the CEO of megabank Goldman Sachs.
Hand-wringing over the fate of a wobbly Europe has become a Davos tradition, ever since debt-wracked Greece threatened to destroy the eurozone in 2010.
This year was no different, especially with Greek elections set for Sunday and the European Central Bank’s decision to unleash a massive bond-buying scheme worth 60 billion euros ($69 billion) despite resistence from the bloc’s most powerful member, Germany.
Rather than Greece, or other usual targets France and Italy, it was Germany that stirred debate, blamed for a blind push for austerity and imposing its singular economic vision on others.
“It is the failure to recognise that a one-off model that worked to produce export-led growth for Germany in the early part of the decade will lead to an outcome that is worse for everyone now,” said former US treasury secretary Lawrence Summers.
“It is the error of assuming that the strategy that worked for one once, when applied universally will work,” he said.
Lagarde however doubted that there was that much space for Germany to do anything to help out its neighbours and that little room existed for more public spending.
It was supposed to be a serious debate about the merits of monetary stimulus, but instead a panel in Davos Thursday featuring IMF chief Christine Lagarde, quickly degenerated into a skirmish over the European economy.
“There is a general expectation to compare the US economy and the euro area and I don’t think that’s a reality,” Lagarde said after an onslaught from her largely American co-panelists, including the CEO of megabank Goldman Sachs.
Hand-wringing over the fate of a wobbly Europe has become a Davos tradition, ever since debt-wracked Greece threatened to destroy the eurozone in 2010.
This year was no different, especially with Greek elections set for Sunday and the European Central Bank’s decision to unleash a massive bond-buying scheme worth 60 billion euros ($69 billion) despite resistence from the bloc’s most powerful member, Germany.
Rather than Greece, or other usual targets France and Italy, it was Germany that stirred debate, blamed for a blind push for austerity and imposing its singular economic vision on others.
“It is the failure to recognise that a one-off model that worked to produce export-led growth for Germany in the early part of the decade will lead to an outcome that is worse for everyone now,” said former US treasury secretary Lawrence Summers.
“It is the error of assuming that the strategy that worked for one once, when applied universally will work,” he said.
Lagarde however doubted that there was that much space for Germany to do anything to help out its neighbours and that little room existed for more public spending.
