Those Depressing Germans

Is Germany playing a double-game in Europe? Krugman makes the case:

In that paragraph Treasury argues that Germany’s huge surplus on current account — a broad measure of the trade balance — is harmful, creating “a deflationary bias for the euro area, as well as for the world economy.”

The Germans angrily pronounced this argument “incomprehensible.” “There are no imbalances in Germany which require a correction of our growth-friendly economic and fiscal policy,” declared a spokesman for the nation’s finance ministry.

But Treasury was right, and the German reaction was disturbing. For one thing, it was an indicator of the continuing refusal of policy makers in Germany, in Europe more broadly and for that matter around the world to face up …
http://nyti.ms/1hG7D7F

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3 thoughts on “Those Depressing Germans

  1. I think that there is certainly some right to give blame to Germany about the economic depression in Europe. However, I cannot help to ignore the fact that Germany as an individual nation will seek to improve their own economy. It bothers me when the author of this article says that it does not matter if Germany has been spending less for good or bad purposes. Of course they are doing it for a good purpose, that would be the well-being of its citizens. It might seem as if Germany was not spending enough in the European market but guess what? Germany has goals within its own borders, they are most likely spending on welfare programs and such. After all, Germany’s history has helped define what an economic depression is so I would not consider it wise to think that they are being selfish.

  2. eebashaw says:

    I suppose there is some merit to the argument that Germany is having a negative impact on the economies around it as it is continuing to grow at a rapid pace while the economies around it continue to suffer. There is some logic to the fact that Germany should be considerate of the countries it is closely tied to economically as it will only come back to bite them if the countries around Germany suffer. However, Germany should be allowed to prosper and work to grow economically as its own entity. Germany has almost single-handedly saved the EU from an absolute economic crisis the past few years. Without Germany’s determination to succeed, Europe could very well have fallen into a depression, pulling much of the world down with it because of the deep trade ties countries have with the EU. Were it not for Germany’s spending and constant growth, Greece and Spain would be in more trouble than they already are because Germany was one of the very few countries that had money to give to their support.
    There is a need for balance for a country in thinking of themselves and thinking of the countries around it, but I think Germany has done no wrong in this instance.

  3. Taylor Shippen says:

    It’s nice to hear a breath of fresh air after seeing so many people buying the German Kool aid; I brought this issue up during current events on the second day of class and got slammed for implying that Germany’s success was the result of predatory fiscal policy. Germany’s success is BUILT UPON the failure of the other Euro state economies. Germany’s investments are part of what created the bubble that collapsed the Euro in the first place, further strengthening German exporters by further weakening the Euro. Germany isn’t any more “determined to succeed” than its neighbors, it just created an artificially high savings rate that forced Germans to look internationally to preserve their wealth. This policy heated up neighboring real estate markets rather than increasing consumption within Germany, and when the Euro housing bubble burst, Germans only lost on their investments, compared with other nations whose citizens lost their livelihood. Holding up Germany as an example of fiscal responsibility is like commending the guys at the top of a pyramid scheme for being at the top.
    We need to stop thinking about Germany in terms of how “self-less” they need to be, and as Mr. Krugman points out, we should think more about how extended trade surpluses affect the world economy. It’s bad enough that Germans are taking advantage of their trade partners and destabilizing the Euro zone. It’s quite another to commend them for doing so.

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