Comments on: Germany’s beef with QE A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: afuzilla Mon, 15 Nov 2010 03:38:17 +0000 “And just to add, I’m not sure why you think that the level of external debt would be a good measure of fiscal responsibility.”

I don’t personally think that, but the German finance minister seems to think that generic “debt” is a huge problem in the states, but not in Germany. Which makes no sense when you look at the data.

By: saucymugwump Wed, 10 Nov 2010 15:17:33 +0000 Salmon wrote: “the U.S. is simply too big to carve out a niche as a provider of high-priced, high-quality, manufactured products”

The USA used to be known for manufacturing machine tools for the world; companies like Cincinnati Milacron come to mind. We somehow came to the bizarre conclusion that putting all of our money in an industry that creates absolutely nothing, except for enormous profits for its owners, was a better use of resources; obviously I am talking about Wall Street. A side effect of this is that there is no money left for investment in infrastructure and industry.

Germany is the world’s second largest exporter, having been recently passed by China. Germany’s unemployment rate is currently the lowest it has been since 1992. This is largely due to Germany being a country which makes all sorts of high-quality products, and not just niche ones. Our top exports are dominated by Boeing airplanes and parts, the Intel crowd’s chips, and agricultural products. The first category will evaporate in 2016 when China releases its 190-seat airliner, the C919. And the third category is not responsible for many good-paying jobs.

We should be trying to emulate Germany, not drag it down into the mud with us. The only jobs we are generating are in restaurants and liquor stores.

By: y2kurtus Wed, 10 Nov 2010 14:45:35 +0000 Felix could you clarify what you meant by “the U.S. is simply too big to carve out a niche as a provider of high-priced, high-quality, manufactured products: its greatest successes have been in the mass market.”

I’m thinking about the large us export catagories and other than agg commodities… it seems to me the ONLY things we export are high priced high qualtiy manufactured products. (DE, CAT, BA, LMT)

By: Dafydd Wed, 10 Nov 2010 11:41:21 +0000 Really, the fact that the two biggest surplus countries see things from the surplus country’s perspective should come as no surprise.

Mr Lawson (like his father, the Conservative UK finance minister in Mrs Thatcher’s government) is an ideological cutter of public spending.

We may not be sure of the outcome of QE, but the outcome of the policy advocated by Mr Lawson is clear. Look at Japan’s lost decade.

Should the deficit countries go down that path, there will be no surplus available to Germany and China. That will not be so pretty for them, either.

By: zeeble Wed, 10 Nov 2010 09:43:00 +0000 And just to add, I’m not sure why you think that the level of external debt would be a good measure of fiscal responsibility.

By: zeeble Wed, 10 Nov 2010 09:41:15 +0000 Right, but let’s look at the fact that Germany has faced a recession followed by stagnation for the last decade and is only just coming out of it.
The US faced a decade of rapid growth, yet failed to pay any debt down. Now, in the face of a recession, the US is attempting to spend its way out by adding almost $10 trillion in debt over the next 10 years:  /mar/26/cbos-2020-vision-debt-will-rise -to-90-of-gdp/

By: afuzilla Wed, 10 Nov 2010 06:17:11 +0000 I don’t understand where the idea that the German government has somehow been more fiscally prudent than the U.S. comes from.

German public debt as % of GDP = 72.10
US public debt as % of GPD = 52.90 ntries_by_public_debt

German external debt as % of GDP = 155
US external debt as % of GDP = 94 ntries_by_external_debt

By: DiegoForever Wed, 10 Nov 2010 05:13:10 +0000 The nations with chronic current account deficits are like the lenders who subsidized the real estate bubble.

Germany and China buy the bonds of fiscally irresponsible governments like Greece and the US in order to recycle dollars so that the bankrupt US and Greece can continue to import Chinese and German goods. The behaviour is similar to the banks that loaned more and more money to individuals who could never repay their debts.

The US has to inflate it’s way out of debt and the Greeks, and Irish have to default on theirs. China and Germany will realize that expanding demand by loaning money to bad credits is a bad idea. The US and Greeks will figure out that borrowing money to consume isn’t exactly sound economic policy, nor definitely feasible.

What will happen is inflation in the US, and more internal consumption in China and Germany. The US will ultimately have to reestablish its manufacturing base and make what it consumes as China and Germany will no longer be willing to ship us “stuff” for dollar bills printed by the Fed.

By: maynardGkeynes Tue, 09 Nov 2010 22:40:51 +0000 How dare you question the word of a Fiance Minister of the Reichsbank?

By: Abulili Tue, 09 Nov 2010 18:37:49 +0000 I am amazed at the Germany-bashing I encounter in this comments section. I wonder if they would be the same for other successful economies.
Germans on average simply worked hard, accepted real wage erosion over the last 10 years, did not overspend/consume unlike many of their Anglo-Saxon counterparts, and saved for possibly uncertain times ahead. House prices broadly stayed flat over that period. All very prudent. To speak of f/x manipulation by Germany is laughable – the ECB, currently “run” by a Frenchman, is more independent that any other central bank in the world, and the Euro is now 20% higher vs. the dollar than when it was introduced, and European conversion rates fixed. Is it too demeaning for Americans to accept that perhaps they could learn a thing or two from Germany?