Daniel Alpert, after interviewing members of the German economics establishment, characterizes the German approach as a form of “Tinkerbell economics”:
All of this ends with a full-throated advocacy of the concept that has become known as “expansionary austerity,” which forms the bedrock of German and other core nations’ policies towards the massively over-indebted periphery: Countries that have been irresponsible borrowers need only to demonstrate their fiscal discipline and prudence, reduce their indebtedness and reform their inefficiencies and over-regulation and investment and growth will resume because markets will once again have confidence in the economies of those countries. Yes, there it is . . . the return of the same confidence fairy that supply-siders hold out as the magic pixie dust that allows economies to fly once more without regard to the adequacy of demand or the competitiveness of a given nation relative to others.
One of his colleagues suggests a different cultural symbol:
Act II of Richard Wagner’s ring series opera, Seigfried. As Fafner the dragon is awoken from his slumber and warned by the conniving Alberich that the hero Siegfried is on his way to kill Fafner, the fearless dragon dismisses Alberich’s warning and returns to sleep.
The world cannot afford the luxury of sleeping on this. What is at stake here is more than the issue of recovering monies lent to Greece. A very substantial amount of European capital is at stake and plans to recover it by placing the populations of the GIPSI’s under indentured servitude to their creditors are the stuff of fairies and pixie dust.
It is past time to tighten the belt at both ends, recognize the money that has been lost throughout the periphery, recapitalize core institutions, and bite the bullet on the secession of the defaulting nations. Sorry Tinkerbell!
And then, of course, there’s Julio Cortázar’s story, “Fafner the Dragon.”