There's no need to charicature Otmar Issing, the ECB's Chief Economist is fully capabable of doing that all by himself. Obvioulsy he doesn't have the first idea what the deflation proble is all about, I sometimes wonder if he has any sort of idea of what an economy is! It's kinda scary to think that someone who is so out of touch (eg his argument that what is happening to German prices doesn't matter, since we have the European average to console us. At best this is crass, at worst.......) has got his hand any nearer the Frankfurt tiller, but the looking at Duisenberg he may feel quite at home.
European Central Bank Chief Economist Otmar Issing said on Wednesday concerns about deflation are excessive, even in Germany. While Germany could see a period of declining prices, that would not translate into deflation. "From those events we are miles away," Issing said at a university symposium. Asked if there is a hysteria over deflation, Issing said: "Currently, this is like a Pavlovian reflect.""Nobody can rule out that we will see negative inflation rates in Germany in the coming two years, but that has nothing to do with deflation," he said.The International Monetary Fund has warned that Germany faces a risk of declining prices that threatens economic activity. ECB officials have disagreed that it is a problem for the euro zone if its largest member, Germany, faces a short period when prices are declining. Issing said the reason why declining prices in Germany is not a deflationary threat for the ECB is because the central bank looks at the whole euro zone, and inflation differences will equal out. Some nations, such as Ireland and Spain, have high inflation rates way above 3 percent.