Attacking the lack of intellectual integrity in the Wall Street Journal 's opinions pages might strike many as a fish-in-a-barrel exercise, but someone has to do it. After decades of railing against excessive spending, taxation and bureaucracy in Europe, suddenly the Journal is in love with Europe. Writing in a book review yesterday, James K. Glassman—you'll remember him as the guy who predicted that the Dow Jones Industrial Average would hit 36,000 —wrote: "At the G-20 meeting in June, it was the Europeans who were pushing for austerity and the American administration that argued for keeping the public-spending spigot open. David Cameron, Britain's prime minister, wants to cut the budgets of government departments by 25%. Maybe we Americans can learn something from Europe after all."
This echoed an Allan Meltzer opinion piece from last week: "After Britain's new government announced a multiyear program to reduce government spending, the pound rose against the dollar and the economy continues to expand across the board. In the euro area, Germany has reduced the growth of government spending to bring down the budget deficit. Following the recent announcement of a credible, long-term German program to reduce future deficits, the euro appreciated strongly against the dollar. Forecasters expect a surge in second-quarter growth when it is reported later this month."
Meltzer was right about one thing: When results for Germany's second quarter were reported (the day after his piece ran), they were indeed positive: a 2.2 percent rise in GDP, the highest since reunification in 1990. But as anyone even modestly familiar with the German economy knows, Germany's boom is largely export-driven, and exports are up because of a relatively weak euro. Don't take my word for it; this is the Journal 's own reporter : "Germany's second-quarter sprint, which came at the height of the Greek debt crisis, highlights that in some ways Germany was an unintended beneficiary of the struggles in Europe's fringe. The weaker euro—which lost about 15% against the dollar as the crisis unfolded between December and June—boosted German exports."
Using Meltzer's logic, then, Germany's announcement about deficit reduction—if it in fact makes the euro appreciate—is
to the German economy, because it will dent the country's exports. But if that happens, you can predict that the
will run an opinion piece attacking Germany for not cutting the deficit enough! Rupert Murdoch's critics wring their hands about the prospect of opinions creeping into the news pages; someone should worry about getting some facts into the
's opinion pages.