7 ms·

I'm annoyed by this quote: > "There is frustration with Germany," says André Sapir, a senior fellow > at Bruegel, a Brussels-based think tank. "Germany i

by biot 16y ago

I'm annoyed by this quote: > "There is frustration with Germany," says André Sapir, a senior fellow > at Bruegel, a Brussels-based think tank. "Germany is moving ahead, > but what are they doing for the rest of Europe?" I'm having a hard time reading this as anything but "Where's our handout?".

JanezStupar 16y ago
Indeed and that's exactly what it is. And (stupid?) sources of these commentaries keep forgetting that Germany and France (but AFAIK mostly Germany) are footing majority of "european" expenses. German workers are the ones willing to tolerate lower wages so that others will be able to develop and compete with them easier. I mean think of it - these guys dug themselves out of shit, while bailing out the rest of Europe. Using mostly common sense and hard work. They also had a retirement plan reforms, which changed retirement from 65 to 67 (!!!!!) for men and they took it with grace, no riots no thrashing of commonwealth (Greece? France??). Disclaimer: I am not German, but I wish that my national leaders would have the integrity and vision of German leaders.
- jan_g 16y ago
  Most of the time they do have the vision, but the problem is that every proposed reform is heavily objected to by the unions, pensioners, students and so on. For example, flat tax rate reform proposal under previous government, then the pension reform last year. It's always the same: large population groups (pensioners, students, state-payroll workers) do not want to give up those privileges ...
  - JanezStupar 16y ago
    Leaders != politicians unions, pensioners, students, etc... got their own leaders which are defrauding the people they should lead. Thats the difference between Germany and the rest of the Europe. Maybe in industry the fact that workers get to share the board with investors help, I don't know. But I know that Germans manage to not shit in their plate time and again. Edit: Why am I getting down voted on this?
    - jan_g 16y ago
      I don't know why you are down-voted. Here is my upvote and try not to care too much about votes :)
      - JanezStupar 16y ago
        Nah I don't care for downvotes - go look through my comment history if you think otherwise :D. What I care for is the counterview or an explanation that might help me perfect my worldview :).
- smsag 16y ago
  Be careful what you wish for. Not only lasts the current German boom on the shoulders of Spain, Greece and so on but also on millions of workers whose salery has to be filled with federal money each month. Which means none other that the current earnings of companies are subsidized by taxes or better: social welfare.
sgift 16y ago
The quote is quite harsh, but hides a real problem of our (I am from Germany) economic model: Export only works if other countries import. If all countries in the EU would follow the german model and maximized export, while ignoring their home markets Germany's economic growth would be a thing of past.
- danac 16y ago
  It is also out of self interest that Germany pumps money back to the European rescue funds from their trade surplus with these less-than-stellar European economies. It's not altogether unlike how China finances the US debts by selling more stuff to it. So in the end, it just leads to more co-dependence.
- stretchwithme 16y ago
  Germany isn't doing anything to maximize exports. Its just a net lender to the world. It has more savers and policies that don't incent its citizens to borrow too much. It isn't paper that the world is borrowing from Germany; its the labor of Germans. If the rest of the world stops subsidizing credit and balanced their budgets, the principle effect will be a decline in interest rates in Germany. And Germans will find it more reasonable to consume more or start new companies at home. Its not a problem. Germany wins either way. And those that keep consuming more than they produce will continue to lose, just as individuals do that behave unwisely.
  - sgift 16y ago
    The last page of the article highlights a problem with your line of thought: Wages didn't profit (much) from the economic growth of the last years. And without money germans cannot consume more. This is a problem for an ever increasing part of the work force as cost of living is on the rise. (There were people who benefited from the economic growth - I count myself among them - but that doesn't invalidate the argument regarding the whole work force)
    - stretchwithme 16y ago
      Wages rose quite a bit in countries that were net borrowers. All the extra cash bid wages up and the higher wages even caused many to move to those countries to get those higher wages. Importing goods is not the only way to import labor. The net lender countries didn't experience the same wage growth. But they didn't see their currencies inflate either. Except for those otherwise soundly managed countries that for some reason share a currency with a bunch of poorly managed countries. These countries got the stable wages and the privilege of subsidizing their partners.
credo 16y ago
I understand the sentiment, but you're overlooking one big factor. In a true free market scenario with freely floating currencies, currencies in countries like Spain, Italy, Ireland, Greece would have devalued. Germany's currency would have strengthened. This would have made German exports (to other EU countries) much less competitive than they currently are. However, the Euro tightly integrates these other countries with Germany and makes it very difficult for them to revive their economies. Using a single currency without a single federal government was a risk for all countries involved. Germany has a huge interest in keeping the Euro alive and the EU as a single unit. It shouldn't be surprising that many people in other European countries expect something in return (for having given up the options that they had before the Euro)
- fxj 16y ago
  people in germany are very pissed about the "rettungsschirm" which guarantees in principle the bail-out of all the other euro countries (PIIGS, portugal, italy, ireland, greece, spain) because it is german money that is given to the other countries. if there would be a referendum about the euro, german people would vote for leaving the euro zone. they want their deutschmarks back. the euro is a political instrument and was never welcome by the people in euroland.
  - danssig 16y ago
    This is absolutely true. I would personally like few things more than to see the Euro gotten rid of (though that's nearly impossible at this point thanks to speculators).
    - HSO 16y ago
      thanks to speculators?! try politicians, imposing their priorities on the population. soeculation has about zero relevance to this question. it's a matter of political will.
      - danssig 16y ago
        No, the issue is that which ever country steps out of the Euro first is going to be hammered by speculators. Personally, I would expect countries getting back to their own fiat currency to do better but the currency itself will certainly be worth less. And no matter how much money I had I wouldn't be willing to bet against everyone else' shorting.
barrkel 16y ago
The subsidy is in the form of a shared currency, and Germany is the primary beneficiary. With Germany running a large current account surplus, its currency should be appreciating drastically, and that of its trading partners depreciating. Because the currency is shared, and the exchange rate locked in, this can't happen, so in effect Germany is running a mercantilist beggar-thy-neighbour strategy.
- JanezStupar 16y ago
  But since Italy, Spain and Greece run the same currency - why don't they use the same strategy? Are you saying that they are more "ethical" and don't have the stomach for such an evil deed? Edit: I apologize to readers and commenters - I got out of context, I'm not referring only to the current monetary/fiscal position of Germany, but to the whole process that got everybody where they are.
  - danssig 16y ago
    Because they don't have a surplus? The issue is multiple drastically different economies trying to use the same currency. All the reasons you try to appreciate or depreciate your currency are not available to most EU countries.
    - JanezStupar 16y ago
      This is not only a fiscal issue. This ruin was in the making for decades. While germans were busy figuring out how to produce better stuff for cheaper PIIGS were busy figuring out how to sell shit for more. One strategy is hard short term, but bears long term dividends - the other is awesome short term but spells ruin in the long term and the ruin came. And now the Germany is at fault for all the years of support, encouragement, warnings and leading by example to these countries? I don't buy it :)
      - barrkel 16y ago
        You're right that it's not only a fiscal issue; it's a monetary issue. Ireland was ruined by low German-style interest rates making money far cheaper than it was before; that fueled a property bubble. The gains to Ireland from 1990-2000 or so were real; the Celtic Tiger wasn't hype. Much of the gains in the past decade, however, were from too low an interest rate.
fauigerzigerk 16y ago
The attitude expressed in that quote is indeed pretty ridiculous, but it's not as simple as asking for a handout. The ongoing debate is about German consumers not consuming enough and saving too much. And because Germans are saving so much they tend to be very aggressive inflation hawks, which led to the ECB _raising_ interst rates in 2008. Still, I think, it is deplorable how little respect the Germans get for simply making what others want. They're doing that very well and other European nations should ask themselves how they do it instead of complaining about a two speed economy. Get up to speed guys!
yequalsx 16y ago
Greece, Ireland, etc. are not being bailed out. Duetsche Bank is being bailed out. Greece and Ireland have been given guaranteed loans at high interest rates. It's money that they are paying back (provided they don't default). Germany is propping up its banks that made bad bets.
- Derbasti 16y ago
  You sure they are going to pay that money back? I would not bet on it.

by biot 16y ago

JanezStupar 16y ago

Indeed and that's exactly what it is. And (stupid?) sources of these commentaries keep forgetting that Germany and France (but AFAIK mostly Germany) are footing majority of "european" expenses. German workers are the ones willing to tolerate lower wages so that others will be able to develop and compete with them easier. I mean think of it - these guys dug themselves out of shit, while bailing out the rest of Europe. Using mostly common sense and hard work. They also had a retirement plan reforms, which changed retirement from 65 to 67 (!!!!!) for men and they took it with grace, no riots no thrashing of commonwealth (Greece? France??). Disclaimer: I am not German, but I wish that my national leaders would have the integrity and vision of German leaders.

jan_g 16y ago
Most of the time they do have the vision, but the problem is that every proposed reform is heavily objected to by the unions, pensioners, students and so on. For example, flat tax rate reform proposal under previous government, then the pension reform last year. It's always the same: large population groups (pensioners, students, state-payroll workers) do not want to give up those privileges ...
- JanezStupar 16y ago
  Leaders != politicians unions, pensioners, students, etc... got their own leaders which are defrauding the people they should lead. Thats the difference between Germany and the rest of the Europe. Maybe in industry the fact that workers get to share the board with investors help, I don't know. But I know that Germans manage to not shit in their plate time and again. Edit: Why am I getting down voted on this?
  - jan_g 16y ago
    I don't know why you are down-voted. Here is my upvote and try not to care too much about votes :)
    - JanezStupar 16y ago
      Nah I don't care for downvotes - go look through my comment history if you think otherwise :D. What I care for is the counterview or an explanation that might help me perfect my worldview :).
smsag 16y ago
Be careful what you wish for. Not only lasts the current German boom on the shoulders of Spain, Greece and so on but also on millions of workers whose salery has to be filled with federal money each month. Which means none other that the current earnings of companies are subsidized by taxes or better: social welfare.

sgift 16y ago

The quote is quite harsh, but hides a real problem of our (I am from Germany) economic model: Export only works if other countries import. If all countries in the EU would follow the german model and maximized export, while ignoring their home markets Germany's economic growth would be a thing of past.

danac 16y ago
It is also out of self interest that Germany pumps money back to the European rescue funds from their trade surplus with these less-than-stellar European economies. It's not altogether unlike how China finances the US debts by selling more stuff to it. So in the end, it just leads to more co-dependence.
stretchwithme 16y ago
Germany isn't doing anything to maximize exports. Its just a net lender to the world. It has more savers and policies that don't incent its citizens to borrow too much. It isn't paper that the world is borrowing from Germany; its the labor of Germans. If the rest of the world stops subsidizing credit and balanced their budgets, the principle effect will be a decline in interest rates in Germany. And Germans will find it more reasonable to consume more or start new companies at home. Its not a problem. Germany wins either way. And those that keep consuming more than they produce will continue to lose, just as individuals do that behave unwisely.
- sgift 16y ago
  The last page of the article highlights a problem with your line of thought: Wages didn't profit (much) from the economic growth of the last years. And without money germans cannot consume more. This is a problem for an ever increasing part of the work force as cost of living is on the rise. (There were people who benefited from the economic growth - I count myself among them - but that doesn't invalidate the argument regarding the whole work force)
  - stretchwithme 16y ago
    Wages rose quite a bit in countries that were net borrowers. All the extra cash bid wages up and the higher wages even caused many to move to those countries to get those higher wages. Importing goods is not the only way to import labor. The net lender countries didn't experience the same wage growth. But they didn't see their currencies inflate either. Except for those otherwise soundly managed countries that for some reason share a currency with a bunch of poorly managed countries. These countries got the stable wages and the privilege of subsidizing their partners.

credo 16y ago

I understand the sentiment, but you're overlooking one big factor. In a true free market scenario with freely floating currencies, currencies in countries like Spain, Italy, Ireland, Greece would have devalued. Germany's currency would have strengthened. This would have made German exports (to other EU countries) much less competitive than they currently are. However, the Euro tightly integrates these other countries with Germany and makes it very difficult for them to revive their economies. Using a single currency without a single federal government was a risk for all countries involved. Germany has a huge interest in keeping the Euro alive and the EU as a single unit. It shouldn't be surprising that many people in other European countries expect something in return (for having given up the options that they had before the Euro)

fxj 16y ago
people in germany are very pissed about the "rettungsschirm" which guarantees in principle the bail-out of all the other euro countries (PIIGS, portugal, italy, ireland, greece, spain) because it is german money that is given to the other countries. if there would be a referendum about the euro, german people would vote for leaving the euro zone. they want their deutschmarks back. the euro is a political instrument and was never welcome by the people in euroland.
- danssig 16y ago
  This is absolutely true. I would personally like few things more than to see the Euro gotten rid of (though that's nearly impossible at this point thanks to speculators).
  - HSO 16y ago
    thanks to speculators?! try politicians, imposing their priorities on the population. soeculation has about zero relevance to this question. it's a matter of political will.
    - danssig 16y ago
      No, the issue is that which ever country steps out of the Euro first is going to be hammered by speculators. Personally, I would expect countries getting back to their own fiat currency to do better but the currency itself will certainly be worth less. And no matter how much money I had I wouldn't be willing to bet against everyone else' shorting.

barrkel 16y ago

The subsidy is in the form of a shared currency, and Germany is the primary beneficiary. With Germany running a large current account surplus, its currency should be appreciating drastically, and that of its trading partners depreciating. Because the currency is shared, and the exchange rate locked in, this can't happen, so in effect Germany is running a mercantilist beggar-thy-neighbour strategy.

JanezStupar 16y ago
But since Italy, Spain and Greece run the same currency - why don't they use the same strategy? Are you saying that they are more "ethical" and don't have the stomach for such an evil deed? Edit: I apologize to readers and commenters - I got out of context, I'm not referring only to the current monetary/fiscal position of Germany, but to the whole process that got everybody where they are.
- danssig 16y ago
  Because they don't have a surplus? The issue is multiple drastically different economies trying to use the same currency. All the reasons you try to appreciate or depreciate your currency are not available to most EU countries.
  - JanezStupar 16y ago
    This is not only a fiscal issue. This ruin was in the making for decades. While germans were busy figuring out how to produce better stuff for cheaper PIIGS were busy figuring out how to sell shit for more. One strategy is hard short term, but bears long term dividends - the other is awesome short term but spells ruin in the long term and the ruin came. And now the Germany is at fault for all the years of support, encouragement, warnings and leading by example to these countries? I don't buy it :)
    - barrkel 16y ago
      You're right that it's not only a fiscal issue; it's a monetary issue. Ireland was ruined by low German-style interest rates making money far cheaper than it was before; that fueled a property bubble. The gains to Ireland from 1990-2000 or so were real; the Celtic Tiger wasn't hype. Much of the gains in the past decade, however, were from too low an interest rate.

fauigerzigerk 16y ago

The attitude expressed in that quote is indeed pretty ridiculous, but it's not as simple as asking for a handout. The ongoing debate is about German consumers not consuming enough and saving too much. And because Germans are saving so much they tend to be very aggressive inflation hawks, which led to the ECB _raising_ interst rates in 2008. Still, I think, it is deplorable how little respect the Germans get for simply making what others want. They're doing that very well and other European nations should ask themselves how they do it instead of complaining about a two speed economy. Get up to speed guys!

yequalsx 16y ago

Greece, Ireland, etc. are not being bailed out. Duetsche Bank is being bailed out. Greece and Ireland have been given guaranteed loans at high interest rates. It's money that they are paying back (provided they don't default). Germany is propping up its banks that made bad bets.

Derbasti 16y ago
You sure they are going to pay that money back? I would not bet on it.