The Great Debate UK
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
LONDON -- First Greece, then Ireland, next Portugal? It would be easy to think the whole world is sinking. It isn't. Small euro zone periphery economies are in deep trouble. Spain, if it sinks, which it might, is larger and would force a more expensive and problematic rescue by the euro zone. But for the global economy the periphery is a side show. For now world economic prospects don't look bad at all.
Even in Europe there is life at the core. The German economy will grow by close to 4 percent this year. Investment in machinery and equipment is booming as Germany re-equips itself for exports, whose earnings were up by 22.5 percent in September. German consumers are responding, too, though none too boldly. Consumer spending rose by 0.4 percent in the third quarter.
Germany's revival is linked to the resurrection of the great U.S. consumer. In the United States spending by consumers on durable goods has been rising at annualised rates of over 7 percent in the first three quarters of 2010. As the United States spends again, its trade deficit is widening. It was $44 billion in September, not far off double the $25 billion of May 2009 when the global downturn was at its worst. Germany, Japan and other exporters benefit.