German politicians steer for the iceberg:
Germany’s plan to cure its self-confessed economic failure by doing exactly the opposite to what modern economics would suggest is certainly a bold and novel idea. Jim O’Neill, the chief international economist of Goldman Sachs, remarked on television last week that German politicians are acting as if they had never seen an economics textbook, much less understood one.
Accordingly, the new German Government has decided to impose one of the biggest tax increases in postwar history and to target the extra taxes on the weakest and most sensitive parts of the economy: consumption, which will suffer a three percentage point increase in VAT, and housing, which will lose tax incentives for first-time buyers. In addition, to fend off accusations that the new consumption taxes will bear unfairly on poorer consumers, the Government will hit the rich as well, increasing the top rate of income tax from 42 per cent to 45 per cent.
This is lunacy, it is so fundamentally insane that it goes beyond mere idiocy in much the same way that Pluto’s orbit goes beyond Mercury’s. It is a fantastic exposition of the great myth of socialism, namely, that the government can do anything – ANYTHING – based on reason, let alone more efficiently and effectively than a free market.
I’ve made a nice bit of change being long dollar this year, but I was wondering how the Elliot Wavers could possibly be correct in anticipating Euro-Dollar equivalency. Now, I understand. If the economically suicidal Teutons keep this up, we may well see the return of the .88 EUR/USD before too long.