How many Germans do you need to change a light-bulb?

Not always you see a German policymaker cracking jokes. Well that is the general perception over Germans as well- serious and technocrats.

Here is an interesting speech by Bundesbank chief Jens Weidmann with couple  of jokes:

Just four weeks ago, France and Germany celebrated the 50th anniversary of the “ElyséeTreaty”, the treaty of friendship as it is called. And the friendship between France and Germany has come a long way since Charles de Gaulle and Konrad Adenauer met in Paris to sign the treaty.

However, we still cling to our favourite clichés regarding each other’s national cultural  behaviour. Let us look at a recent poll in which French people were asked to name some typical German traits. According to this poll, Germans are – first and foremost – very “serious” people. Put in the words of the French writer Stendhal: “It seems that in Paris more jokes are made in the course of one evening than in Germany during a whole month”.

Well, I am German so I would not dare to tell a joke. But as I am in Paris I might try at least to pass on a little quip I heard the other day. It goes like this: “How many Germans do you need to change a light-bulb? One, he holds the light-bulb and the rest of Europe revolves around him”.

I’m afraid this quip reflects the impression some might have of Germany at the moment. But let me add two things: first, the same joke was being told in the 1990s, and back then, the French where the ones holding the light-bulb. Second, the joke did not reflect actual circumstances in the 1990s, nor does it reflect them today.

:-)

He says both France and Germany want to resolve the crisis. Though approaches differ:

With respect to the future, we all are focused on the same objective: a prosperous European Union and a stable single currency. However, it is the question of “how to get there” where opinions differ. This should be no surprise because it is indeed a tricky question. To paraphrase the American politician Hubert Humphrey: The solution is hammered out on the anvil of discussion, dissent and debate. So, I would like to highlight three issues where I feel that my view and the view of many decision-makers in Germany might differ from that of others.

Some say it would hurt growth if countries consolidated their public finances at great speed. In my view, consolidation is crucial for growth in the long term and not that bad for growth in the short term. Some say Germany should do more to rebalance current accounts by reducing its  competitiveness. In my view, instead of making one country weaker we have to make all  countries stronger. Europe as a whole has to become stronger. 

Some say monetary policy should do more to solve the crisis. In my view central banks must  focus on price stability, must remain independent, and must not become too closely  intertwined with fiscal policy.

He sticks to his approach that peripheries should reduce fiscal deficit and improve competitiveness.

And central banks should avoid dancing close with fiscal policy on the dance floor:

Central banks should not find themselves dancing too closely with fiscal policy. To paraphrase one of my predecessors: If you dance too close with fiscal policy she will marry you. And the offspring are usually higher inflation and reduced fiscal discipline.6 BIS central bankers’ speeches And here, I am not even referring to the German experience of the 1920s. We just have to  look back to the 1970s. In these years, inflation rates in countries with independent central  banks were comparatively low. While average inflation in Germany stood at 5%, it reached  as much as 14% in Italy and 15% in Spain.

Or think of the French experience of the late 1980s. In 1993 the Banque de France became independent and Jean-Claude Trichet introduced his policy of the “Franc fort”. Only then did inflation rates decrease from an average of nearly 4% to less than 2%. So, if we care about stable prices and if we care about purchasing power then we should be  worried. We should be worried because on the European dance floor monetary and fiscal policy are moving toward each other. Think of Greece: while governments hesitated to disburse the next tranche of loans, monetary policy stepped into the breach. Nevertheless, we should not overburden monetary policy with the task of solving a crisis that it cannot solve  anyway. The price would be too high.

And the bulb joke has changed a bit:

Ladies and gentlemen, I began my speech with a joke about how to change light-bulbs in Europe. As you might know, traditional light-bulbs are increasingly being phased out in the European Union. This is a sign of the changing times we are living in.

But not everything has to change. Proven concepts such as central bank independence should be preserved. Nevertheless, the most important point of my speech is that we all share the same objective: a prosperous European Union and a stable single currency. This is what unites us and keeps us going.

And as I said in the beginning: Only together can France and Germany solve the current crisis. And as the largest economies in Europe they already contribute significantly through the rescue mechanisms. Stabilizing monetary union requires that both countries are economically and politically strong.

:-)

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