When the Germans are laughing at you, things are in a pretty serious mess. That’s the case with the British version of the bailout, which the German finance minister has just ridiculed:
Criticising the UK government’s decision to cut VAT from 17.5% to 15%, Mr Steinbruck questioned how effective this will be.
“Are you really going to buy a DVD player because it now costs £39.10 instead of £39.90?” he said.
“All this will do is raise Britain’s debt to a level that will take a whole generation to work off.”
Saying the UK government was now “tossing around billions”, Mr Steinbruck questioned why Britain was now closely following the high public spending model put forward by 20th Century economist John Maynard Keynes.
“The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking,” he said.
“When I ask about the origins of the [financial] crisis, economists I respect tell me it is the credit-financed growth of recent years and decades.
“Isn’t this the same mistake everyone is suddenly making again, under all the public pressure?”
Given that so far Henry Paulson and his Treasury team have seemed to take their cues from the Brown government approach, one hopes that Herr Steinbruck will turn his attention to the Bush-Obama policy approach soon. We could do with a Teutonic laugh.