Tag Archive for 'Germany'


In which I defend ‘Girls Around Me’ and Public-By-Default in general

For those people that don’t know:  A few days ago John Browlee discovered and wrote about an iPhone/iPad app called ‘Girls Around Me‘.  The app does a mash-up of publicly accessible data from Facebook and foursquare, together with Google Maps, to show you girls that had checked in to locations near where you are and some information about them.  John was not amused:

[T]he girls (and men!) shown in Girls Around Me all had the power to opt out of this information being visible to strangers, but whether out of ignorance, apathy or laziness, they had all neglected to do so. This was all public information.  […]

“It’s not, really, that we’re all horrified by what this app does, is it?” I asked, finishing my drink. “It’s that we’re all horrified by how exposed these girls are, and how exposed services like Facebook and Foursquare let them be without their knowledge.” […]

This is an app you should download to teach the people you care about that privacy issues are real, that social networks like Facebook and Foursquare expose you and the ones you love, and that if you do not know exactly how much you are sharing, you are as easily preyed upon as if you were naked.

Picking up on John’s piece, Charlie Stross took the ball and ran with it, extrapolating out into the truly horrific:

It’s easy to imagine how we could make something worse than “Girls Around Me”—something much worse. Facebook encourages us to disclose a wide range of information about ourselves, including our religion and a photograph. Religion is obvious: “Yids Among Us” would obviously be one of the go-to tools of choice for Neo-Nazis. As for skin colour, ethnicity identification from face images is out there already. Want to go queer bashing? There’s an algorithm out there for guessing sexual orientation based on the network graph of the target’s facebook friends. It’s probably possible to apply this sort of data mining exercise to determine whether a woman has had an abortion or is pro-choice.

In the worst case, it’s possible to envisage geolocation and data aggregation apps being designed to facilitate the identification and elimination of some ethnic or class enemy, not only by making it easy for users to track them down, but by making it easy for users to identify each other and form ad-hoc lynch mobs. (Hence my reference to the Rwandan Genocide earlier. Think it couldn’t happen? Look at Iran and imagine an app written for the Basij to make it easy to identify dissidents and form ad-hoc goon squads to proactively hunt them down. Or any other organization in the post-networked world that has a social role corresponding to the Red Guards.)

Not surprisingly, people freaked out.  Foursquare pulled the app’s access rights to their data, Apple pulled the app from the iTunes store altogether and — no doubt to the great relief of people like John and Charlie — a lot of people started talking about internet privacy in an era of social networking (e.g. a BBC News article).

Both John and Charlie emphasise that their concern is not with the app itself, per se, but with the approach to privacy (public by default) built-in to social networking websites’ very business plans that allowed the app to exist in the first place.

I want to defend that approach to privacy.

Let me repeat the first bit of that John Brownlee quote:

[T]he girls (and men!) shown in Girls Around Me all had the power to opt out of this information being visible to strangers, but whether out of ignorance, apathy or laziness, they had all neglected to do so.

Here is Marie Connelly, one of the girls that John apparently had around him, in response to the whole kerfuffle:

I have a problem [with this], because I’m not ignorant, apathetic, or lazy.

I’ve made a choice to participate publicly in the internet. I try to be careful about what I make accessible and what I share with everyone, and for the most part, I think I’ve found a balance that works pretty well for me. […]

The whole tenor of this, however, has been that if you are in this app, if you have been posting information publicly, especially if you’re a woman, you’re doing something wrong. […]

Checking in at your office, or a coffee shop, or The Independent (which is a great bar, by the way), whether publicly or not, doesn’t mean you’re “asking” to get stalked, or mugged, or anything else. People generally don’t ask for bad things to happen to them, and by and large, I don’t really believe anyone deserves to have something bad happen to them.

Kashmire Hill captured the same point in her excellently titled post, “The Reaction To ‘Girls Around Me’ Was Far More Disturbing Than The ‘Creepy’ App Itself“:

  • All men are creepy stalkers looking for new digital aids to help them catch and rape women.
  • All women are damsels-in-distress who have no idea how much danger they are exposing themselves to with every Foursquare check-in.
  • “You’re too public with your digital data, ladies,” may be the new “your skirt was too short and you had it coming.”

Those are my takeaways from the past week’s furor over “Girls Around Me.” […]

Many of us have become comfortable putting ourselves out there publicly in the hopes of making connections with friends and with strangers, whether through Facebook, Twitter, or OKCupid. It’s only natural that this digital openness will transfer over to the ‘real world,’ and that we will start proactively projecting our digital selves to facilitate in-person interactions. (For example, KLM is now allowing passengers to link their digital identities to their seats on the plane so that people can choose seatmates accordingly.) […]

In rejecting and banishing the app, we’re  choosing to ignore the publicity choices these women have made … in the name of keeping them safe … If you extend this kind of thinking ‘offline,’ we would be calling on all women to wear burkas so potential rapists and stalkers don’t spot them on the streets and follow them home.

I’m sorry, my friends, but I think apps like ‘Girls Around Me’ are the future … We don’t fear making connections with strangers; we crave it. […]

Yes, think about your privacy settings. They’re important. But critics, also remember that some of us have thought about our privacy settings, chosen accordingly, and don’t mind showing up on geo-mapping apps. We’re not all damsels-in-distress going pale at the thought of being seen in public places and digital spaces.

I couldn’t possibly agree more.

I’m happy to require by law that all websites that gather personal information give plain-English explanations of how your information might be used under each setting.  I’m also happy to be very, very angry at Facebook for changing their policy in such a way as to change your settings from “keep this private” to “make this public” after you made an explicit choice (although, to be fair, social networks are still a new industry and should consequently be granted at least some leeway for their frequent adjustments).

But there’s a much bigger topic here.  Whether or not public exposure has negative consequences is a social norm, based on co-ordination effects.  It’s socially acceptable in America for girls to wear bikinis at the beach, for girls in France to go topless at the beach and for people to use mixed-sex saunas and public showers throughout Germany and the Scandinavian countries.  It’s not as though they have massive rates of rape or sexual abuse.

The reason I see no problem with apps like ‘Girls Around Me’ is because I believe they represent the emergence of a new social norm that supports and encourages the public sharing of information about yourself, perhaps even a step towards David Brin’s Transparent Society.  Disagree with me?  Well, I would argue that of those people that (a) are doing it; (b) don’t realise they’re doing it; and (c) would actually care if they were to discover they’re doing it, the vast majority are over the age of 30.  In other words, this is a generational development.

Here’s an excellent example of that generational change.  Earlier this year the NY Times wrote about teenagers’ new habit of sharing their passwords with their (boy|girl)friends:

Young couples have long signaled their devotion to each other by various means — the gift of a letterman jacket, or an exchange of class rings or ID bracelets. Best friends share locker combinations.

The digital era has given rise to a more intimate custom. It has become fashionable for young people to express their affection for each other by sharing their passwords to e-mail, Facebook and other accounts. Boyfriends and girlfriends sometimes even create identical passwords, and let each other read their private e-mails and texts. […]

In a 2011 telephone survey, the Pew Internet and American Life Project found that 30 percent of teenagers who were regularly online had shared a password with a friend, boyfriend or girlfriend. The survey, of 770 teenagers aged 12 to 17, found that girls were almost twice as likely as boys to share. And in more than two dozen interviews, parents, students and counselors said that the practice had become widespread.

Knowing their audience, though, they couldn’t help being a little worried about it (and, of course, nothing sells newspapers like sex):

Rosalind Wiseman, who studies how teenagers use technology and is author of “Queen Bees and Wannabes,” a book for parents about helping girls survive adolescence, said the sharing of passwords, and the pressure to do so, was somewhat similar to sex.

Sharing passwords, she noted, feels forbidden because it is generally discouraged by adults and involves vulnerability. And there is pressure in many teenage relationships to share passwords, just as there is to have sex. […]

Ms. Cole’s mother, Patti, 48, a child psychologist, said she believed her daughter would be more judicious now about sharing a password. But, more broadly, she thinks young people are sometimes drawn to such behavior as they might be toward sex, in part because parents and others warn them against doing so.

“What worries me is we haven’t done a very good job at stopping kids from having sex,” she said. “So I’m not real confident about how much we can change this behavior.”

Speaking of sex and intergenerational concerns, this whole affair reminds me enormously of a post I wrote back in 2008 about the increasing public acceptability of sex for it’s own sake:

These developments are not without their concerns. Sara Montague – a presenter on BBC Radio 4′s Today programme – is clearly concerned, noting that much of the movement seems grounded in the hope of empowerment and self-confidence, but worrying that this serves indirectly to promote eating disorders among girls and the acceptance of rape among boys.

The main problem that Montague faces is that for most people, embracing public sexuality is non-harmful – not every girl gets an eating disorder and not every boy contemplates forcing himself on a girl – and is undertaken by choice. Montague is, in essence, faced with Douglas Adams’ cow that wants to be eaten. […]

By all means work to increase support for those burdened excessively by concerns of body image. By all means increase support to rape victims and ease the ability of the state to bring those guilty to justice. But that doesn’t mean we should fight to stop it altogether if people choose it freely and feel that it helps them, or even if they just enjoy it.

Anyway, that brings me back to ‘Girls Around Me’.  It — and other apps like it — really are designed to be fun, to let Kashmir and people like her make connections with strangers.  Yes, of course Facebook and Foursquare can be used by creepy stalkers and Rwanda 2.0 ethnic cleansers.  So what?  I have a 20cm Global Cook knife beside me right now.  I could use it to cut chunks out of hipsters, but that doesn’t make it flawed by design.  My credit card can be used to fund the KKK, but it’s also useful for other stuff, too.  There’s nothing wrong (and there should be nothing illegal) with having information.  It’s only when somebody acts on information in a manner harmful to others that we should care.  ‘Girls Around Me’ was about sharing information; how people act on that information is up to them.

Let me finish with this incredibly relevant and, as ever, excellent comic from xkcd:


Policy options for the Euro area [Updated]

I here list a few policy options for the Euro area that I support, broadly in descending order of my perception of their importance.  Everything here is predicated on an assumption that the Euro itself is to survive and that no member nation of the Euro area is to exit the union.  I don’t claim that this would solve the crisis — who would make such a claim? — but they would all be positive steps that increase the probability of an ultimate solution being found.

  • Immediately establish a single, Euro area-wide bank deposit guarantee scheme.  A single currency must absolutely ensure that a Euro held as money in Greece be the same as a Euro held as money in Germany.  That means that retail and commercial deposits in each should be backed by the same guarantee.  I have no firm opinion on how it should be funded.  The classic manner is through a fee on banks proportional to their deposits, but if Euro area countries ultimately prefer to use a Tobin-style tax on transactions, that’s up to them.  Just get the thing up and running.  Of course, a unified deposit guarantee also requires a unified resolution authority in the event of an insolvent bank collapsing.  There are many and varied forms that fiscal union can take; this is the most urgent of them all.  I am shocked that this does not already exist.
  • The ECB should switch from targetting current inflation to expected future inflation.  The Bank of England already does this.  Accepting that any effect of monetary policy on inflation will come through with a lag (or at least acknowledging that current inflation is backward looking), they “look through” current inflation to what they expect it to be over the coming few years.  This is important.  Current inflation in the Euro area — i.e. the rate of change over the last 12 months — is at 3%.  On the face of it, that might make an ECB policymaker nervous, but looking ahead, market forecasts for average inflation over the coming five years are as low as 0.85% per year in Germany.  They will be much lower for the rest of the Euro area.  Monetary policy in the Euro area is much, much too tight at the moment.  At the very least, (a) interest rates should be lowered; and (b) the ECB should announce their shift in focus toward forward inflation.
  • The ECB should start to speak more, publicly, about forms of current inflation that most affect future inflation.  This follows on from my previous point, but is still logically distinct.  The Fed likes to focus on “core” inflation, stripped of items with particularly volatile price movements.  I don’t much care whether it is non-volatile prices or nominal wages, or even nominal GDP.  I just want the ECB to be speaking more about something other than headline CPI, because it is those other things that feed into future headlines.
  • The ECB’s provision of liquidity to the banking system, while currently large, is not nearly large enough.  The fact that “German Bunds trade below the deposit facility rate at the ECB and well below the Overnight Rate” is clear evidence of this.  I currently have no opinion on whether this ought to be in the form of increasing the duration of loans to Euro area banks, relaxing the collateral requirements for loans or working with member countries’ treasuries to increase the provision of collateral.  I certainly believe (see my second point above) that interest rates should be lowered.  The point, as far as is possible, is to make replacing lost market funding with ECB funding more attractive to banks than deleveraging.
  • A great deal of Euro area sovereign debt is unsustainable; hair-cuts are inevitable and they should be imposed as soon as possible (but, really, this requires that a unified bank resolution authority be established first).  The argument for delaying relies on banks’ ability to first build up a cushion of capital through ongoing profitability.  When banks are instead deleveraging, the problem is made worse by waiting.
  • Credit Default Swaps must be permitted to trigger.  The crisis may have its origins in the the profligacy of wayward sovereigns (frankly, I think the origins lie in the Euro framers not appreciating the power of incentives), but the fundamental aspect of the crisis itself is that various financial assets, previously regarded as safe, are coming to be thought of as risky.  By denying market participants the opportunity to obtain insurance, Euro area policymakers are making the problem worse, not better.  Market willingness to lend to Greece in 2025 will in no way depend on how we label the decisions made in 2011 and 2012.
  • Every member of the Euro periphery should be in an IMF programme.  Yes, I’m looking at you, Italy.  If the IMF does not have sufficient funds to work with, the ECB should lend to it.  All politicians in Euro periphery countries should be speaking to their electorates about multi-decade efforts to improve productivity.  These things cannot be fixed in two or three years.  They can, at best, be put on the right path.
  • For every country in an IMF programme, all sovereign debt held by the ECB should be written down to the price at which they purchase it.   If the ECB buys a Greek government bond at, say, a 20% discount to face value, then that bond should be written down by 20%.  The ECB should not be in a position to make a profit from their trading if Europe finds its way through the overall crisis.  Similarly, the ECB should not be in a position to take a loss, either — they should not be required to take a hair-cut below the price they pay for Euro area sovereign debt.

Note that I have not yet used the phrase “Euro bond” anywhere.  Note, too, that a central bank is only meant to be a lender of last resort to banks.  The lender of last resort to governments is the IMF.

If Euro area policymakers really want to engage in a fiscal union (a.k.a. transfers) beyond the absolutely essential creation of a unified bank deposit guarantee scheme, it is perfectly possible to do so in a minimal fashion that does not lessen the sovereignty of any member nation:  Have a newly created European Fiscal Authority (with voluntary membership) provide the minimum universally agreed-on level of unemployment benefits across the entire area, funded with a flat VAT.  Any member country would retain the ability to provide benefits above and beyond the minimum.  This will have several benefits:

  • Since its membership would be voluntary and it would provide only the minimum universally agreed level, it cannot, by definition, constitute a practical infraction on sovereignty;
  • It will help provide pan-European automatic stabilisers in fiscal policy;
  • It will provide crucial intra-European stabilisation;
  • It will increase the supply of long-dated AAA-rated securities at a time when demand for them is incredibly high; and
  • It will decrease the ability of Euro member countries to argue that they should be able to violate the terms of the Maastricht Treaty at times of economic hardship as at least some of the heavy lifting in counter-cyclical policy will be done for them.

———————-

Update 30 Nov 2011, 13:05 (25 minutes after first publishing the post):

It would appear that the world’s major central banks have announced a coordinated improvement in the provision of liquidity to banks.  This is a good thing. Press releases:


Ayn Rand, small government and the charitable sector

The Economist’s blog, Democracy in America, has a post from a few days ago — “Tax Day”, for Americans, is the 15th of April — looking at Ayn Rand’s rather odd view of government.  Ms. Rand, apparently, did not oppose the existence of a (limited) government spending public money, but did oppose the raising of that money through coercive taxation.

Here’s the almost-anonymous W.W., writing at The Economist:

This left her in the odd and almost certainly untenable position of advocating a minimal state financed voluntarily. In her essay “Government Financing in a Free Society“, Rand wrote:

“In a fully free society, taxation—or, to be exact, payment for governmental services—would be voluntary. Since the proper services of a government—the police, the armed forces, the law courts—are demonstrably needed by individual citizens and affect their interests directly, the citizens would (and should) be willing to pay for such services, as they pay for insurance.”

This is faintly ridiculous. From one side, the libertarian anarchist will agree that people are willing to pay for these services, but that a government monopoly in their provision will lead only to inefficiency and abuse. From the other side, the liberal statist will defend the government provision of the public goods Rand mentions, but will quite rightly argue that Rand seems not to grasp perhaps the main reason government coercion is needed, especially if one believes, as Rand does, that individuals ought to act in their rational self-interest.

The idea of private goods vs. public goods, I think, is something that Rand would have recognised, if not in the formally defined sense we use today, but I do not think that Rand really knew much about externalities and the ability of carefully-targeted government taxation to improve the allocative efficiency of otherwise free markets.  I think it’s fair to say that she would probably have outright denied the possibility of anything like multiple equilibria and the subsequent possibility of poverty traps.  Furthermore, while she clearly knew about and despised free riders (the moochers  in “Atlas Shrugged“), the idea of their being a problem in her view of voluntarily-financed government apparently never occurred to her.

However, this does give me an excuse to plump for two small ideas of mine:

First, I consider the charitable (i.e. not-for-profit) sector as falling under the same umbrella as the government when I consider how the economy of a country is conceptually divided.  In their expenditure of money, they are essentially the same:  the provision of “public good” services to the country at large, typically under a rubric of helping the most disadvantaged people in society.  It is largely only in they way they raise revenue that they differ.  Rand would simply have preferred that a (far, far) greater fraction of public services be provided through charities.  I suspect, to a fair degree, that the Big Society [official site] push by the Tories in the UK is about a shift in this direction and that, as a corollary, that Mr. Cameron would agree with my characterisation.

Philanthropy UK gives the following figures for the size of the charitable sectors in the UK, USA, Germany and The Netherlands in 2006:

Country Giving (£bn) GDP (£bn) Giving/GDP
UK 14.9 1230 1.1%
USA 145.0 6500 2.2%
Germany 11.3 1533 0.7%
The Netherlands 2.9 340 0.9%

Source: CAF Charity Trends, Giving USA, Then & Spengler (2005 data), Geven in Nederland (2005 data)

Combining this with the total tax revenue as a share of GDP for that same year (2006), we get:

Country Tax Revenue/GDP Giving/GDP Total/GDP
UK 36.5% 1.1% 37.6%
USA 29.9% 2.2% 31.1%
Germany 35.4% 0.7% 36.1%
The Netherlands 39.4% 0.9% 40.3%

Source: OECD for the tax data, Philanthropy UK for the giving data

Which achieves nothing other than to go some small way towards showing that there’s not quite as much variation in “public” spending across countries as we might think.  I’d be interested to see a breakdown of what services are offered by charities across countries (and what share of expenditure they represent).

Second, I occasionally toy with the idea of people being able to allocate some (not all!) of their tax to specific government spending areas.  Think of it being an optional extra page of questions on your tax return.  Sure, money being the fungible thing that it is, the government would be able to shift the remaining funds around and keep spending in the proportions that they wanted to, but it would introduce a great deal more democratic transparency into the process.  I wonder what Ms. Rand (or other modern day libertarians) would make of the idea …

Anyway … let me finish by quoting Will Wilkinson again, in his quoting of Lincoln:

As Abraham Lincoln said so well,

“The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves—in their separate, and individual capacities.”

Citizens reasonably resent a government that milks them to feed programmes that fail Lincoln’s test. The inevitable problem in a democracy is that we disagree about which programmes those are. Some economists are fond of saying that “economics is not a morality play”, but like it or not, our attitudes toward taxation are inevitably laden with moral assumptions. It doesn’t help to ignore or casually dismiss them. It seems to me the quality and utility of our public discourse might improve were we to do a better job of making these assumptions explicit.

That last point — of making the moral assumptions of fiscal proposals explicit — would be great, but it is probably (and sadly) a pipe dream.


The ECB starts raising interest rates (updated)

[Updated to include labour cost inflation too]

Here are the stories at the FT, the WSJ, the Economist (in their blogs) and for a won’t-somebody-think-of-the-children perspective, the Guardian [1].

There are plenty of arguments against the increase.  You could argue that there’s a sizeable output gap, so any inflation now is unlikely to be persistent.  You could argue that core inflation is low and that it’s only the headline rate that’s high.  You could argue that with the periphery countries facing fiscal crises, they need desperately to grow in order to avoid a default or, worse, a breakup of the Euro area.  You could argue that a period of above-average inflation in Europe’s core economies and below-average inflation in the periphery would allow the latter to (slowly) achieve what a currency devaluation would normally do:  make them more competitive, attract business and allow them to grow in the long run (above and beyond the short-run stimulus of low interest rates).

On that last point, though, it’s worth looking at the data.  It’s a great idea, in principle, but unfortunately and despite all the austerity packages, the data show exactly the opposite picture at present.  Here’s the current year-over-year inflation rate broken down by country, from Eurostat (HICP and Labour Costs):

 

 

Economy HICP Labour Cost Index
Euro area as a whole 2.4% 2.0%
Germany 2.2% 0.1%
France 1.8% 1.5%
Greece 4.2% 11.7%
Ireland 0.9% n/a
Portugal 3.5% 1.0%
Spain 3.4% 4.1%

 

 

For some reason Ireland doesn’t seem to be included in the Labour Cost data.  Look at Greece and Spain.  They’re getting more expensive to do business in relative to Germany and France.  Portugal is in the right area, but with Germany’s growth rate in Labour Costs so low, they’re still coming out worse.  The same story is painted in consumer inflation.  It looks like Ireland is doing what it needs to, but Greece, Portugal and Spain are all getting even less competitive.

Here’s my theory:  The ECB hates the fact that they’re temporarily funding these governments, but can’t avoid that fact.  Furthermore, they reckon that Greece, Ireland and Portugal are eventually going to restructure their debt.  Given that they cannot shove the temporary funding off onto some other European institution, the ECB either doesn’t care whether it’s in 2013 or today (they’ve already got the emergency liquidity out there and it can just stay there until the mess is cleaned up) or quietly wants them to do it now and get it over with.  Either way, the ECB is going to conduct policy conditional on the assumption that it’s as good as done.

 

[1]  Just kidding, Guardian readers.  You know I love you.  Mind you, the writing in that article could have been better — it says that inflation has gone above the ECB’s target of 2% and never mentions what it actually is, but later mentions the current British inflation rate (4.4%) without explaining that it is for Britain and not the Euro area.


Basel III will help fix the Euro

The Basel III compromise is out.  Via Free Exchange, you can read the text here.  Or you can just look at the BIS’s handy-dandy little chart:

Let me quote Ryan at Free Exchange:

The minimum common equity requirement has been increased from 2% to 4.5%. Common equilty is what is called “core” Tier 1 capital. Regulators have agreed on an additional 2.5% “conservation buffer”. Most large banks will likely maintain such a buffer, as falling below it will lead to additional regulatory scrutiny. The likely impact, then, is a pretty substantial increase in the common equity reserves banks need to hold.

What he said. Anyway …

The asterisk on the countercyclical buffer has this note against it: “Common equity or other fully loss absorbing capital”.  Here’s some more detail, from the press release itself:

A countercyclical buffer within a range of 0% – 2.5% of common equity or other fully loss absorbing capital will be implemented according to national circumstances. The purpose of the countercyclical buffer is to achieve the broader macroprudential goal of protecting the banking sector from periods of excess aggregate credit growth. For any given country, this buffer will only be in effect when there is excess credit growth that is resulting in a system wide build up of risk. The countercyclical buffer, when in effect, would be introduced as an extension of the conservation buffer range.

In other words, the countercyclical buffer is expressly designed to allow for different rates of credit expansion across different countries.  This is excellent news for the Euro area, because (as I mentioned previously) it explicitly allows — heck, even encourages! — individual member countries to re-assert some control over monetary policy.  Remember that the level of credit in an economy is not just affected by demand for the stuff (which is itself influenced largely through interest rates), but also through the supply of the stuff, which falls under the umbrella of macro-prudential regulation (since, it is assumed, banks will generally supply all the credit they can subject to the restrictions of capital adequacy regulations).  The former may remain the remit of the ECB, but the latter can be economy-specific.

This is arguably desirable because, since the Euro-area economies are not perfectly synchronised, we have for many years seen monetary policy be overly tight for low-inflation countries like Germany and overly lax for high-inflation countries like Spain.

To some extent, one might view Germany’s reluctance to accept tighter capital requirements as evidence that they have been tacitly using this logic all along:  that is, they were already compensating for the (to them) overly-high interest rate with relatively lenient policies on the supply side.  To a German’s mind, it may therefore appear that with these higher minimum ratios, a neutral position for the German economy will require lower interest rates on average than previously prevailed.

The risk, from the Germans’ point of view, is that in a Eurozone world with higher capital ratios but lower interest rates, countries like Spain may be tempted to avoid making use of the countercyclical buffer and so may still end up with faster-than-ideal credit expansion.  How to convince the central banks and/or regulatory authorities in Mediterranean countries to be financially conservative, even when their governments aren’t, is clearly the next challenge.