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German economy weakening, not immune to Europe's problems
HAMISH_MCTAVISH
Posts: 28,592 Forumite
Germany is learning they are not immune.....
The economic crisis threatening the rest of Europe is now starting to take down Germany's economy as well.
Turns out you can't thrive when your economy is based on exports, and all your biggest customers are suffering.
Who knew?
The economic crisis threatening the rest of Europe is now starting to take down Germany's economy as well.
Turns out you can't thrive when your economy is based on exports, and all your biggest customers are suffering.
Who knew?
http://www.thenational.ae/thenationalconversation/industry-insights/economics/merkel-must-act-as-alarms-ring-in-berlin#fullThe euro crisis is starting to catch up with Germany, a lone bastion of growth in Europe for the past three years.
The indicators pointing down for the continent's powerhouse economy could finally prompt it to make the sacrifices needed to save the common currency.
Industrial output and orders, car exports, the Ifo business climate index and purchasing managers' indexes have all fallen in recent weeks as a result of slumping demand in neighbouring European countries and a slowdown in major economies in places such as China and the United States.
Until now, Germany's booming foreign trade outside the euro zone had shielded the country from the debt turmoil. Apart from newspaper headlines, the only real sign of the storm ravaging the rest of Europe has been a surge in job applications from skilled Greeks, Spaniards and Portuguese desperate to escape the economic misery in their home countries.
But with car exports down 13 per cent year-on-year last month, industrial output down a surprisingly strong 2.2 per cent in April, company executives increasingly pessimistic and share prices tumbling, the alarm bells have started to ring in Berlin.
Politically isolated in Europe, confronted with a dangerous new eruption in the crisis in Greece and Spain and facing the prospect of a slowing domestic economy ahead of a general election next year, Mrs Merkel has to act fast.
She is responding too tentatively, as usual. .
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
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Comments
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It's been clear to many of us for some time that Germany has made this crisis far worse than it needed to be.
Good to see the media picking up on this fact.Mrs Merkel's crisis management has been consistently poor right from the start.
By initially refusing to bail out Greece in early 2010, she encouraged speculators to drive that country and other high-debt nations closer to the brink.
Her insistence in late 2010 that private creditors must shoulder part of the burden of bailouts prompted investors to dump Irish bonds and worsened Ireland's position. Weeks later, the country had to seek a bailout.
And her demand that nations slash their budget deficits regardless of the economic impact has locked nations such as Greece, Spain and Portugal into long-term recession, with no prospect that they will be able to repay their debts at affordable interest rates.
The growth stimulus she is now talking about, after heavy prompting from Mr Hollande, should have been a central part of the bailout packages right from the start.
It would have spared millions of Europeans the pain that she would never have dared to impose on her own people.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
And it looks increasingly like a major policy U-Turn for Germany is inevitable, now that Merkel can no longer pretend that Germany's success was anything other than an illusion....
The labour market and welfare reforms that turned Germany into a European paragon and allowed it to lecture its neighbours were not Mrs Merkel's achievement. They were pushed through by her predecessor, Gerhard Schröder, who was voted out of office in 2005 as a result of the deeply unpopular measures.
In fact, Mrs Merkel has carried out no significant domestic reforms since she came to power in 2005, even though there is plenty she could be doing - Germany has a staggeringly inefficient health service, an education system that is failing to cater properly for millions of immigrant children and a public administration that remains choked by red tape.
Besides, it is easy to preach fiscal discipline when your tax coffers are brimming thanks to three years of strong economic growth driven by a Chinese appetite for German cars.
But Mrs Merkel, bent on winning a third term in next year's vote, is nothing if not astute.
She knows this is the make-or-break year for the euro and that a dissolution of the euro zone would have disastrous political and economic consequences, including a huge currency appreciation that could bring Germany's mighty industry to its knees.
She won't let herself go down in history as the woman who destroyed Europe. Germany's sudden economic vulnerability could give her the justification she needs to change her mind and sign up to what Mr Hollande and much of the rest of Europe are clamouring for - jointly-issued euro bonds and direct loans to countries from the European Central Bank.
Such moves would break German taboos and boost German borrowing costs, but they would douse the flames of the crisis and send an urgently needed, powerful signal to Europeans and the rest of the world: that the nations of this continent have not forgotten the lessons of their history and are committed irrevocably to their common currency and to closer integration“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
No ones interested in your "I told you so's" Hamish.
Espoecially so when you are having to travel to the United Arab Emirates and quote "The National" as your source.0 -
Graham_Devon wrote: »Espoecially so when you are having to travel to the United Arab Emirates and quote "The National" as your source.
Seriously?
That's the best you can do?
Not one single comment on any of the content about the fact that Germany's economy is in trouble....
-The plummeting exports
-The fall in output and manufacturing
-The fall in business sentiment
-The political problems facing Merkel
-The mistakes Germany has made in handling the Euro crisis
None of it....
Just a particularly lame attack on the source.
Wow...
That's kind of pathetic even by your admittedly low standards Graham.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Graham_Devon wrote: »No ones interested in your "I told you so's" Hamish.
Espoecially so when you are having to travel to the United Arab Emirates and quote "The National" as your source.
His posts are more balanced than the 1 sided cr8p you post.0 -
Think Germany are doing better than Greece though.0
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Think Germany are doing better than Greece though.
So far....
But Germany can't continue to prosper when it's customers are unable to buy German exports.
As has been said many times, Germany's success is an illusion, and if the rest of Europe is in trouble then so is Germany.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »So far....
But Germany can't continue to prosper when it's customers are unable to buy German exports.
As has been said many times, Germany's success is an illusion, and if the rest of Europe is in trouble then so is Germany.
They will obviously suffer along with everyone else.
BMWs and Mercedes are now becoming very sought after in the emerging economies though. Cannot see the average high flying Indian or Brazilian aspiring to Greek consumer goods though.0 -
HAMISH_MCTAVISH wrote: »So far....
But Germany can't continue to prosper when it's customers are unable to buy German exports.
As has been said many times, Germany's success is an illusion, and if the rest of Europe is in trouble then so is Germany.
The point Germany is missing is that trade has to balance once you take assets into account: that's why economists use the phrase 'balance of payments'.
If Germany wants to sell more goods than She buys then she will need to accumulate foreign assets. That's just maths.
If Germany doesn't want more foreign assets She will either have to sell less abroad or buy more from abroad.0 -
If Germany wants to sell more goods than She buys then she will need to accumulate foreign assets. That's just maths.
Germany has accumulated well over a trillion euros of foreign assets...
Specifically, foreign debt.
Germany now seems to be a bit indignant that the value of those assets can and does change with the financial health of the issuer.
When it should have been obvious from the day they had to start lending their customers the money to buy their products. :cool:“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0
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