German ridicule for UK policies

Generali

Conrad wrote: »

I dont know if we need lessons from the Germans. I bought some property there and was astounded how backwards Berlin was - I mean all over, not just in the Eastern portion.

As an example the small cafes for a quick snack were honestly like something from the 1960s - and I mean all of them, not just the odd example.
Old brown wall paper, homemade 1970s british rail chesee buns, real old and dire.

Perhaps a cafe would have been a better investment than a flat/house.

tradetime

Setting aside the economic debate about whose approach is right, I suspect the Germans have some desire to slow things down as the largest Euroland economy they are paying the largest slice of the bill for all the stimulus and bailouts.
It's a bit like going out for beers with all your mates and at the end of the night the bill is split in proportion to earnings, and you earn the most, not only that but week after week your mates invite someone new along who earns less and less.

Sir_Humphrey

Worrying about balancing the budget in the face of a potential depression was the mistake Weimar Germany made in 1930. He should know better. FWIW, cutting VAT was not the smartest way to try to boost the economy, but doing nothing would be disastrous. Perhaps the Germans prefer us not to buy their cars?!?

EdInvestor

Generali wrote: »

The biggest problem for the German economy (ditto the Australian economy) is that either their customers have no cash or their customers' customers have no cash. Both amount to the same thing.

Quite so. Who is going to buy the German Beemers if there is no domestic stimulus to put money in the hands of local buyers, and no foreign stimulus and the customers are all flat on their backs "suffering for their earlier misdeeds"?

The Germans flog their machine tools (we do this too) to the likes of China, who then use them to make car parts and washing machines etc which they export to companies who sell the finished products to consumers in America and other European developed countries like the UK.

It is not dissimilar to a UK property chain - if the guy at the bottom (the FTB/BTL investor) has no money and can't proceed all the other transactions will tend to stall, hence the paralysis we see now.

Methinks the German finance minister hasn't quite thought this through. One also wonders if the likes of David Cameron and others who think the right approach is to do nothing really want to see the entire global economy come to a juddering halt.Why do they think that would be in anyone's interest, including their own?

Of course much of it is just playing politics and can safely be ignored - as long as people are comfortable that someone serious is in charge.

WTF?_2

EdInvestor wrote: »

Quite so. Who is going to buy the German Beemers if there is no domestic stimulus to put money in the hands of local buyers, and no foreign stimulus and the customers are all flat on their backs "suffering for their earlier misdeeds"?

The Germans flog their machine tools (we do this too) to the likes of China, who then use them to make car parts and washing machines etc which they export to companies who sell the finished products to consumers in America and other European developed countries like the UK.

It is not dissimilar to a UK property chain - if the guy at the bottom (the FTB/BTL investor) has no money and can't proceed all the other transactions will tend to stall, hence the paralysis we see now.

Methinks the German finance minister hasn't quite thought this through. One also wonders if the likes of David Cameron and others who think the right approach is to do nothing really want to see the entire global economy come to a juddering halt.Why do they think that would be in anyone's interest, including their own?

Of course much of it is just playing politics and can safely be ignored - as long as people are comfortable that someone serious is in charge.

And where are we going to get all this money from to rejuvinate our economies?

Clue: Up until now we've more or less been borrowing it from the savings of the people who are making the goods to sell to us - or magicking it up with complex financial instruments (now a bust).

The credit crunch has meant that we can no longer borrow to fund our lifestyle. All can see that the Emperor has no clothes. We'll only become consumers again when we've made our economies more productive and people in general have savings and feel confidant enough to spend.

See chart 1.7:

http://www.bankofengland.co.uk/publications/fsr/2008/fsr24sec1.pdf

Pay particular note to the household saving ratio and its relationship to the customer funding gap.


Saving nothing and borrowing to consume is dead. Time Brown & Co. figured that out or we are going nowhere but further into the stinky stuff.

moneysavingallday

The Krauts need to shut the eff up. At least we're not fully-fledged Nazis over here in Britain (yet)!

lostinrates

Sir_Humphrey wrote: »

Worrying about balancing the budget in the face of a potential depression was the mistake Weimar Germany made in 1930. He should know better. FWIW, cutting VAT was not the smartest way to try to boost the economy, but doing nothing would be disastrous. Perhaps the Germans prefer us not to buy their cars?!?

Hello, havn't seen you for a bit

tomstickland

moneysavingallday wrote: »

The Krauts need to shut the eff up. At least we're not fully-fledged Nazis over here in Britain (yet)!

What a stupid comment.

kennyboy66_2

EdInvestor wrote: »

One also wonders if the likes of David Cameron and others who think the right approach is to do nothing really want to see the entire global economy come to a juddering halt.Why do they think that would be in anyone's interest, including their own?

Of course much of it is just playing politics and can safely be ignored - as long as people are comfortable that someone serious is in charge.

Cameron seems to have dusted off the Tory policy from 1980 & 1990.

This essentially means;

1) Keeping interest rates too high.
2) Keeping sterling too high.
3) Say that unemployment is a price worth paying.
4) Realise that you are wrong.
5) De-value currency.

Arguably we have just got to the same position the Tories would have but without wasting 9-15 months doing nothing.

The problem is that even after a devaluation, it takes about 12 months for the effects to really start working through.

Sir_Humphrey

lostinrates wrote: »

Hello, havn't seen you for a bit

Thanks! I have a new post which is more challenging (and interesting). The last couple of weeks or so I have been at the UN at Geneva, so I have not been around to post. TBH, the whole HPC thing is such a done deal now, I see less reason to post on that subject.