New York Times
April 14, 2011
The real Golden Rule, it has been said, goes like this: He who has the gold, rules.
They are trying that in Europe these days. Germany has the gold and it sees no reason other countries should not do as the Germans say.
The prescription for the so-called peripheral countries of the euro zone is simple: Enact the reforms Germany thinks are needed. Cut spending. Take wage and benefit cuts. Reform your tax system to produce more revenue, which may mean raising tax rates or just forcing people to comply with existing laws. Require people to work longer and retire later. Follow austerity as far as the eye can see.
Do all those things, and the rest of Europe will provide grudging assistance.
To some with the gold, this is simply a morality play. “They had their fun,” a former European central banker told me a few weeks ago, speaking of the peripheral countries. A different official used the same words last week.
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