Comments on: Much depends on, gulp, German consumer Tue, 24 Mar 2015 16:54:45 +0000 hourly 1 By: fakosek Tue, 18 Jan 2011 22:11:43 +0000 Here is another tiresome and biased opinion from an obviously neoliberal economist absolutely convinced that transnational currencies systems can’t work. Of course the author makes it sound like sovereign debtors orbit chiefly around Germany and the entirety of the European Model is at stake. Is this overreaching? I think so. The author overlooks a lot of things. But let’s start with America’s sovereign debt, which is 60% of its GDP. With a pitiful 10% manufacturing sector, its import/export ratio cannot possibly ever hope to diminish our sky high trade deficit (that feeds our debt). While on the other hand France and Germany’s collective sovereign debts are around 67% of their GDP, they have sound austerity measures in the works, whereas we do not. Yet what the author neglects to tell you about export driven countries within the Eurozone is that they are experiencing steadily increasing trade surpluses with Germany, be they still pedestrian. The author is correct that Germany’s massive trade surplus wont shrink adequately in relation to its domestic demand, but not because the Eurozone needs that to happen to survive, it’s because–as crazy as this sounds–Germany’s population, which has stabilized in recent years, shall begin to increase slowly. And a growing population fuels domestic demand better than an aging population. And Germany, as in France, has implemented social welfare programs that are beginning to bear fruit to that extent. This brings me to the ultimate goal of the Eurozone, which has just expanded to 17 countries, which is to politically unite. This is not farfetched or ungainly, as the author would surely disagree. Political unification is the ultimate extension of currency union, anyway, especially enleu of certain states’ straddling debts requiring non other solution. A political unification structure of some kind, perhaps with functionaries in Brussels, Frankfurt, and Strasbourg, probably would probably give the Eurozone the cohesion, if not the coherence, necessary to take hold of the debt problem and begin it’s dissolution within core constituent 400 million citizens. Why would I know that Germany will not abandon the Eurozone? It is too dependent on unsustainable rates of foreign demand for many of its core products, like machinery and airplanes. Once these demands subside, it shall be back to more inter European trade; hence, Germany needs the EU more than the EU needs Germany. But they both need each other too much to not, as the directive of the Lisbon Treaty implies, politically unite [someday].

By: MartinInFRA Fri, 14 Jan 2011 14:27:11 +0000 In short, your “solution” is that the Germans should become more Anglo-Saxon or the Euro experiment should be terminated.

I am not convinced by the present Anglo-Saxon examples that this would improve the welfare of ordinary Germans, neither in employment, nor in availability of health care, affordability of college education, or inflation control.

Before giving up on the Euro, let us remember the reasons for creating the Euro and in particular why the British government squandered billions to keep the pound sterling pegged to the Deutsche Mark in 1992:
Attenuate the domination of monetary policy by the Bundesbank as the guardian of the most stable currency in a convincing way.
The lesson was that throwing money at a lack of trust problem is not sustainable – in particular your own money.

Meanwhile, Sarkozy has understood that his voters have little nationalistic qualms to adopt the German economic model in some respects. The Irish are still clinging to their low corporate tax level and will still have to learn the hard way that trust and solidarity needs to be earned. No pain, no gain.

By comparison, quatitative easing is just numbing against the learning from the evidence.
When will the Anglo-Saxon poor including the poor Tea-party voters wake-up and follow the Tunesians?

By: paulos Thu, 13 Jan 2011 19:26:13 +0000 Germany will have to get used to supporting Greece, Ireland and Portugal for sure with maybe Belgium and Spain thrown in for good measure! The first three are showing no signs of growth and their ability to service their debt is going to be called into question in the long run. They will default unless the Germans dig deep once again and there is another bail out fudge. The problem is that a bail out and domestic cut backs do nothing to get the economies going hence the problem will re occur time and again. These countries need the ability to devalue their currencies and make themselves competitive once again. The German tax payer needs to be free of this albatross and to invest in their own future. The Eurocrats will fight this to the bitter end so expect this story to run and run.