Nobel laureate: Angela Merkel ignoring seriousness of economic crisis

15th December 2008, Comments 0 comments

American economist Paul Krugman says that the German leadership still views the world – and the threats facing it - as it was a year ago.

Berlin -- German Chancellor Angela Merkel is unaware of the seriousness of the economic crisis, Nobel laureate for economics, Paul Krugman, told Der Spiegel.

In an interview published Monday, Krugman told the weekly that Merkel and her finance minister, Peer Steinbrueck, still viewed the world as it was one or two years ago, when inflation and deficits were the main economic threats.

As a result, they are ignorant of the seriousness of the current global crisis and are wasting precious time for Germany and Europe, he warned, adding that perhaps they lacked mental flexibility.

Steinbrueck, who has made strides in improving Germany's public finances, is loath to spend any more than is necessary to get the German economy moving again. At the same time, he is under pressure to contribute more than the 31 billion dollars already pledged.

But Merkel on Thursday backed a 200-billion-euro economic stimulus target for the European Union, which would ramp up public investment across Europe and allow for the reduction of some taxes.

"Germany is aware of its responsibility as a large economy and we are going to consider what we can still do especially in light of the American (stimulus) measures that will come in January with the new president," she said.

Another weekly, Wirtshaftswoche, said Berlin was preparing a new 30 billion euro economic support package with various measures to be unveiled in January after Barack Obama takes office in the United States.

Merkel's economic advisor, Jens Weidmann was in talks with party leaders and Economics Minister Michael Glos to draw up the program, the report said.


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