College of Political Knowledge
International Studies Group
European Desk
Last Friday, Aug.13, 2010…the economic news brought us a good picture of Germany and Europe…all the economic pundits on the airwaves were jumping and jerking off at the news that the economy in Germany rose by 2.2 percent, which helped the EU rise by 1%….all in all good news right?
I got to think about the US and all the “good” news in the US….that about earnings and growth and……I just had to do some research on what was really happening in Germany…..
The German figures have been greeted with euphoria and self-congratulatory pronouncements by bankers, government officials and sections of the German media, but as Financial Times columnist Wolfgang Münchau pointed out recently, the German economic recovery is more “mirage” than “miracle.”
Germany was able to regain some economic ground in the early part of this year due to stimulus subsidies made available to employers by the government. But as is the case in France and many other European countries, these subsidies, such as short-time working, have largely come to an end.
Germany’s export industry also benefited in recent months from the fall in the value of the euro, which at one point declined to near 1.20 per dollar. In recent weeks, however, with concern growing over the prospects for the US economy, the euro has risen toward the 1.30 per dollar mark. The strengthened euro makes German exports less attractive on world markets.
The strength of the German economy is also its Achilles heel. Germany’s relatively expensive exports can find buyers only under conditions of expanding markets. But urged on by the German government, one European nation after another has introduced drastic austerity programs, which will inevitably depress economies and choke off consumer demand, with far-reaching longer term implications for German exports.
Recently, the US was lectured by the EU, at least some in the EU, to get our run away spending in check or we could suffer the same as Greece….there has even been some US pundits that has said similar stuff….the truth is….that most of Europe would just sh*t if the US stopped spending….the rest of the damn world dependsw on the spending habits of the US, both private and public.
In other words….Germany’s miracle on the economic front is NOT such a miracle. Makes good copy and makes good fodder for some politicos but in reality…… Germany needs the US to continue spending and spending…if the US becomes serious about its deficit then the rest of the world go into the crapper….what to do?….what to do?
Yes. Pretty accurate I’d say. The truth is that IF Germany had not joined the Euro, apart from the fact that it might well never have hit serious recession, the fact is that it would be simple for them to talk down the deficits in the rest of the EU, whilst quietly putting their own house in order.
In fact, the Euro is a VERY bad idea – particularly for countries like Germany – almost as bad as their other biggest daft idea in recent decades – reunification at ANY price with East Germany…
Germany forgets to mention that taxpayer money was used on some of their banks also……it is good to gamble where you are not responsible for your losses….
Oh so true… and so few of us are in that happy position…
Though I do take issue with you over one thing – I’m not sure just how important the US is these days as a customer for European goods – not very, I suspect.
However, it is true that, without the stimulus of American paranoia and trouble making, we might have to start building our own home grown conflicts on a more serious basis or we too would run out of customers for the highly expensive weaponry we also manufacture.
If the GOP is successful in the 2010/2012 elections then you could bet that the weaponry will be in vogue again….