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That's a good thing. They've been violating the Euro treaties by running a surplus against other countries in a common currency area, but no one dared to say a

That's a good thing. They've been violating the Euro treaties by running a surplus against other countries in a common currency area, but no one dared to say a word.

skrause 4y ago
My guess is that Germany still has a surplus against other euro countries, instead the money is flowing to oil and gas exporting countries. So that wouldn't help.
- DisjointedHunt 4y ago
  Yes, and thus at some level, is unsustainable. ie, There is a point at which they could be running all the surplus they could wish for against the rest of the EU, but the cost of those surpluses offsets any gains to economic growth.
  - imtringued 4y ago
    > but the cost of those surpluses offsets any gains to economic growth. In the export destinations like Greece. For Germans it means supressed wages because they have to compete against Greek wages which means Germany has to sacrifice its productivity gains to provide low priced goods, effectively giving those productivity gains away for free the moment the export destination country predictably must go bankrupt.
remarkEon 4y ago
Can you explain this in more depth? I'm not that familiar with EU laws and treaties. Is it illegal to run a trade surplus? How does that work, functionally?
- lkrubner 4y ago
  I don’t think it is illegal but it was hurtful to the EU overall: https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/07/12/one-size-fits-one/ https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/0... Of course, you could make the argument that it violated the spirit of the treaties.
  - deleted 4y ago
    [deleted]
  - remarkEon 4y ago
    What specific harm is being done here though? Krugman has a tendency to take a lot of underlying assumptions for granted without actually enumerating them. I’m looking to understand why Germany should have to manage its economy based on the aims of the rest of the EU and not their own, which seems to be what’s implied here.
    - morelisp 4y ago
      Put simply, Germany wants (or wanted - we don't talk about the euro crisis much anymore even though it was never really resolved) everyone in the EU to a) trade mostly with other EU members, b) run a trade surplus. This is obviously impossible, but Germans don't want to hear that in a modern economy, for Germany to have no debts means someone else must. They sent moralists to do an economist's job. That being said I have no idea what the OP was on about, it's not illegal, it's just stupid.
    - lkrubner 4y ago
      “* I’m looking to understand why Germany should have to manage its economy based on the aims of the rest of the EU and not their own*” Because Germany has renounced part of its independence and sovereignty by joining the EU, so now it has to do the patriotic thing and think of that larger collective. As a point of comparison, should New York do what is best for New York, or what is best for the country? At least sometimes, we expect New York to sacrifice its own interests and do the patriotic thing for the whole country. As was pointed out many times during the crisis years of 2008-2013, many of the problems in the EU exist because of its partial and unfinished integration. It is very difficult to have a unified currency without also having a unified fiscal policy. As others have pointed out, the EU cannot survive in its current state, either it breaks up or it deepens its integration and becomes a United States of Europe.
      - remarkEon 4y ago
        >Because Germany has renounced part of its independence and sovereignty by joining the EU, so now it has to do the patriotic thing and think of that larger collective. Is this enumerated in a treaty? Which law says this? >As a point of comparison, should New York do what is best for New York, or what is best for the country? At least sometimes, we expect New York to sacrifice its own interests and do the patriotic thing for the whole country. I live in the United States and I have never, ever, heard of this question being asked. Which thing is New York sacrificing for the rest of the United States?
- quarantaseih 4y ago
  I read somewhere that europeans agreed to an open market and common currency that included Germany only if German's export surplus were contained. I dont know if they are part of the treaties of not. The idea being, why would Italy, France and Greece agree to open their market and give up their currencies (ie ability to devalue) in the face of the German juggernaut? A joint market would destroy French and Italian industry and in-debt Greece - as happened. <rant> The Euro zone was a mistake. Its premise was solid - the europeans no longer had the ability to have colonies to steal resources from, so they sought to create a large enough market to be relevant and muscle themselves into decent prices. It failed because the US quickly made sure the euro never seriously challenged the USD. Also, a continent that makes < 1.5 children/woman is not a going concern so no one has ever taken them seriously. Finally, the rise of China and India sealed the EU's fate. </rant>
  - mmarq 4y ago
    > The idea being, why would Italy, France and Greece agree to open their market and give up their currencies (ie ability to devalue) in the face of the German juggernaut? Because they couldn’t manage their currencies and always dreamt of low inflation, in a few words: they wanted the Mark. Calling it Mark would have upset the nationalists, so they made the Euro. > The Euro zone was a mistake. Outside of the eurozone, Italy would have gone bankrupt in the mid 2000s, Greece a few years later.
    - imtringued 4y ago
      Poland is doing far better precisely because it isn't in the Eurozone.
      - mmarq 4y ago
        One would have to admit that Poland is still catching up, otherwise they would have to explain why the UK is doing so bad outside of the eurozone.
    - thriftwy 4y ago
      Or maybe they would devalue their currencies and reindustrialize?
- Aeolos 4y ago
  Yes, there is a maximum allowed limit in the Maastricht treaty. Germany has been systematically breaking the rules. https://www.intereconomics.eu/contents/year/2018/number/3/article/on-current-account-imbalances.html https://www.intereconomics.eu/contents/year/2018/number/3/ar... "The rules established under the EU’s macroeconomic imbalance procedure (MIP)define a ceiling for current account surpluses of six per cent of GDP and stipulate that the three-year average for a country’s current account surplus should not exceed this ceiling.2 However, Germany has been running surpluses in excess of this figure for many years. Its most recent three-year average is eight per cent of GDP, while the 2016 figure was even higher, at 8.5%."
Terry_Roll 4y ago
Not just a common currency area, most of the world, but is there anything wrong with that? Somebody has to have savings to stand up to the corporates. Its what Obama's Diesel-gate was all about! Obama (remember him?) was telling Merkel to run a trade deficit, but stepping back, what you have are different countries dictating policy to other countries, in this case the US dictating to Deutschland how to spend their money. The meme being pushed in financial circles is "debt is money", when what they really want to say is the biggest borrowers get to dilute their currency the most and dilute, which can be read as weaken, the purchasing power of other people. So you see countries like the UK ramping up house prices, mortgages creating new money in the absence of the UK actually making anything of any worth, shelter is also on the lower tiers of Maslow's Hierarchies of Needs , the British Media pumping out thousands of hours of property porn to reinforce Asch conformity, is all in all a highly intelligent way to control people using stealth means! init(clever);
- mardifoufs 4y ago
- bobthepanda 4y ago
  I mean, the US saves very little money and yet was able to stand up to VW Group, so I'm not sure what "has to have savings" has to do with your example. Obama's observation was that you can't run a trade surplus with Southern Europe for decades and then get all surprised when they run out of money to pay you with. In a similar vein, you can't have EU cross-border banks without a EU cross-border insurance deposit scheme, because then one bank can potentially drown a small country, which is what happened during the Eurozone crisis.
  - Terry_Roll 4y ago
    Debt dilutes the currency because money is created every time someone takes on debt, it means your overseas creditors ie other countries get their money back, but its worthless today than in the past, because this is monetary inflation, not to be confused with the man on the streets inflation which is price rises. At the end of the day its just an intellectuals way of keeping the plates spinning and the uneducated in their place. Now it also happens this is a way for banks to wrestle power away from the politicians, just like stock market listed companies can put a ban on recruitment when a new political party comes to power, increasing unemployment. Its hard for Govt's to prove this, because legislation isnt the brightest, in fact, legislation can create fake science. Its a massively complex subject and education is the first step in divide and conquer.
kken 4y ago
That's an extremely naive thing to say. Do you think the root cause of this does not apply to other European countries? Namely, faltering supply chains in Asia, skyrocketing energy prices?
jeroenhd 4y ago
This is the first time I've heard about this, could you tell me what treaties they're violating? Barring an economy from running a surplus seems like a terrible trade deal to me, so I wonder why the Germans would ever agree to such a rule.
- shimonabi 4y ago
  Because you are not allowed to beggar-thy-neigbour in a common currency area. If Germans are allowed to have a permament surplus, than someone MUST always have a deficit.
  - jeroenhd 4y ago
    Why? Materials get imported from outside the EU all the time and exports can also go across EU borders. It's not like Americans pay their BMWs with euros. No country has a trade surplus/deficit of exactly 0, or even near 0. There's always at least half a billion going either way. If you know of any treaties that put limits on these numbers, I'd like to know what they are because I'm very curious about the intentions behind the people who would draft something like that. Going by https://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_151969.pdf https://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_... (link says 2013, but document says Q1 2022), Germany had an intra-EU trade surplus of about 0.2 billion euros. Germany is the closest to a perfect balance within the eurozone in the entire EU except for Bulgaria. Their surplus is almost entirely extra-EU, which isn't a problem for EU members.
    - imtringued 4y ago
      >It's not like Americans pay their BMWs with euros. The Greeks do hence they are massively in debt. No, they can't export their way out of debt because that would mean Germany has to export less and import more. Germany is supposed to be the workplace country and Greece must remain soulless suburbia with no job opportunities.
      - jeroenhd 4y ago
ChemSpider 4y ago
What § would that violate? This must be one of the (many) anti-EU fake news.
jacquesm 4y ago
No, this is completely in line with everything that the EU is all about. I'm not sure where you got the belief that Euro countries are not allowed to have internal trade deficits, it's inevitable in fact.
- shimonabi 4y ago
  Merkel said after 2008 that ALL countries in the EU must have surpluses. It was like saying all teams in the NBA must win.
  - jacquesm 4y ago
    The world is a lot larger than the EU so there is no reason why that could not be the case.
    - v4dok 4y ago
      I rememember in an econ book that we think that exports have the "world" to serve. But in reality most countries trade the most with those closest to them. I wouldn't be surprised if that was the case for the majority of EU countries
      - jacquesm 4y ago
        Yes, but don't underestimate the exports that Germany is generating, between all of the high tech there and the car companies you are looking at a substantial exporter. China is #1, the USA (all of it) is #2 and Germany (just Germany, not the EU) is #3. Have a look at their relative populations and appreciate that fully.
    - imtringued 4y ago
      Asia is exporting too (Japan, China, Korea). Australia is exporting. The only ones not exporting, i.e. importing is Africa and South America and eastern Europe including Russia if you ignore their oil exports.

That's a good thing. They've been violating the Euro treaties by running a surplus against other countries in a common currency area, but no one dared to say a word.

skrause 4y ago

My guess is that Germany still has a surplus against other euro countries, instead the money is flowing to oil and gas exporting countries. So that wouldn't help.

DisjointedHunt 4y ago
Yes, and thus at some level, is unsustainable. ie, There is a point at which they could be running all the surplus they could wish for against the rest of the EU, but the cost of those surpluses offsets any gains to economic growth.
- imtringued 4y ago
  > but the cost of those surpluses offsets any gains to economic growth. In the export destinations like Greece. For Germans it means supressed wages because they have to compete against Greek wages which means Germany has to sacrifice its productivity gains to provide low priced goods, effectively giving those productivity gains away for free the moment the export destination country predictably must go bankrupt.

remarkEon 4y ago

Can you explain this in more depth? I'm not that familiar with EU laws and treaties. Is it illegal to run a trade surplus? How does that work, functionally?

lkrubner 4y ago
I don’t think it is illegal but it was hurtful to the EU overall: https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/07/12/one-size-fits-one/ https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/0... Of course, you could make the argument that it violated the spirit of the treaties.
- deleted 4y ago
  [deleted]
- remarkEon 4y ago
  What specific harm is being done here though? Krugman has a tendency to take a lot of underlying assumptions for granted without actually enumerating them. I’m looking to understand why Germany should have to manage its economy based on the aims of the rest of the EU and not their own, which seems to be what’s implied here.
  - morelisp 4y ago
    Put simply, Germany wants (or wanted - we don't talk about the euro crisis much anymore even though it was never really resolved) everyone in the EU to a) trade mostly with other EU members, b) run a trade surplus. This is obviously impossible, but Germans don't want to hear that in a modern economy, for Germany to have no debts means someone else must. They sent moralists to do an economist's job. That being said I have no idea what the OP was on about, it's not illegal, it's just stupid.
  - lkrubner 4y ago
    “* I’m looking to understand why Germany should have to manage its economy based on the aims of the rest of the EU and not their own*” Because Germany has renounced part of its independence and sovereignty by joining the EU, so now it has to do the patriotic thing and think of that larger collective. As a point of comparison, should New York do what is best for New York, or what is best for the country? At least sometimes, we expect New York to sacrifice its own interests and do the patriotic thing for the whole country. As was pointed out many times during the crisis years of 2008-2013, many of the problems in the EU exist because of its partial and unfinished integration. It is very difficult to have a unified currency without also having a unified fiscal policy. As others have pointed out, the EU cannot survive in its current state, either it breaks up or it deepens its integration and becomes a United States of Europe.
    - remarkEon 4y ago
      >Because Germany has renounced part of its independence and sovereignty by joining the EU, so now it has to do the patriotic thing and think of that larger collective. Is this enumerated in a treaty? Which law says this? >As a point of comparison, should New York do what is best for New York, or what is best for the country? At least sometimes, we expect New York to sacrifice its own interests and do the patriotic thing for the whole country. I live in the United States and I have never, ever, heard of this question being asked. Which thing is New York sacrificing for the rest of the United States?
quarantaseih 4y ago
I read somewhere that europeans agreed to an open market and common currency that included Germany only if German's export surplus were contained. I dont know if they are part of the treaties of not. The idea being, why would Italy, France and Greece agree to open their market and give up their currencies (ie ability to devalue) in the face of the German juggernaut? A joint market would destroy French and Italian industry and in-debt Greece - as happened. <rant> The Euro zone was a mistake. Its premise was solid - the europeans no longer had the ability to have colonies to steal resources from, so they sought to create a large enough market to be relevant and muscle themselves into decent prices. It failed because the US quickly made sure the euro never seriously challenged the USD. Also, a continent that makes < 1.5 children/woman is not a going concern so no one has ever taken them seriously. Finally, the rise of China and India sealed the EU's fate. </rant>
- mmarq 4y ago
  > The idea being, why would Italy, France and Greece agree to open their market and give up their currencies (ie ability to devalue) in the face of the German juggernaut? Because they couldn’t manage their currencies and always dreamt of low inflation, in a few words: they wanted the Mark. Calling it Mark would have upset the nationalists, so they made the Euro. > The Euro zone was a mistake. Outside of the eurozone, Italy would have gone bankrupt in the mid 2000s, Greece a few years later.
  - imtringued 4y ago
    Poland is doing far better precisely because it isn't in the Eurozone.
    - mmarq 4y ago
      One would have to admit that Poland is still catching up, otherwise they would have to explain why the UK is doing so bad outside of the eurozone.
  - thriftwy 4y ago
    Or maybe they would devalue their currencies and reindustrialize?
Aeolos 4y ago
Yes, there is a maximum allowed limit in the Maastricht treaty. Germany has been systematically breaking the rules. https://www.intereconomics.eu/contents/year/2018/number/3/article/on-current-account-imbalances.html https://www.intereconomics.eu/contents/year/2018/number/3/ar... "The rules established under the EU’s macroeconomic imbalance procedure (MIP)define a ceiling for current account surpluses of six per cent of GDP and stipulate that the three-year average for a country’s current account surplus should not exceed this ceiling.2 However, Germany has been running surpluses in excess of this figure for many years. Its most recent three-year average is eight per cent of GDP, while the 2016 figure was even higher, at 8.5%."

Terry_Roll 4y ago

Not just a common currency area, most of the world, but is there anything wrong with that? Somebody has to have savings to stand up to the corporates. Its what Obama's Diesel-gate was all about! Obama (remember him?) was telling Merkel to run a trade deficit, but stepping back, what you have are different countries dictating policy to other countries, in this case the US dictating to Deutschland how to spend their money. The meme being pushed in financial circles is "debt is money", when what they really want to say is the biggest borrowers get to dilute their currency the most and dilute, which can be read as weaken, the purchasing power of other people. So you see countries like the UK ramping up house prices, mortgages creating new money in the absence of the UK actually making anything of any worth, shelter is also on the lower tiers of Maslow's Hierarchies of Needs , the British Media pumping out thousands of hours of property porn to reinforce Asch conformity, is all in all a highly intelligent way to control people using stealth means! init(clever);

mardifoufs 4y ago
bobthepanda 4y ago
I mean, the US saves very little money and yet was able to stand up to VW Group, so I'm not sure what "has to have savings" has to do with your example. Obama's observation was that you can't run a trade surplus with Southern Europe for decades and then get all surprised when they run out of money to pay you with. In a similar vein, you can't have EU cross-border banks without a EU cross-border insurance deposit scheme, because then one bank can potentially drown a small country, which is what happened during the Eurozone crisis.
- Terry_Roll 4y ago
  Debt dilutes the currency because money is created every time someone takes on debt, it means your overseas creditors ie other countries get their money back, but its worthless today than in the past, because this is monetary inflation, not to be confused with the man on the streets inflation which is price rises. At the end of the day its just an intellectuals way of keeping the plates spinning and the uneducated in their place. Now it also happens this is a way for banks to wrestle power away from the politicians, just like stock market listed companies can put a ban on recruitment when a new political party comes to power, increasing unemployment. Its hard for Govt's to prove this, because legislation isnt the brightest, in fact, legislation can create fake science. Its a massively complex subject and education is the first step in divide and conquer.

kken 4y ago

That's an extremely naive thing to say. Do you think the root cause of this does not apply to other European countries? Namely, faltering supply chains in Asia, skyrocketing energy prices?

jeroenhd 4y ago

This is the first time I've heard about this, could you tell me what treaties they're violating? Barring an economy from running a surplus seems like a terrible trade deal to me, so I wonder why the Germans would ever agree to such a rule.

shimonabi 4y ago
Because you are not allowed to beggar-thy-neigbour in a common currency area. If Germans are allowed to have a permament surplus, than someone MUST always have a deficit.
- jeroenhd 4y ago
  Why? Materials get imported from outside the EU all the time and exports can also go across EU borders. It's not like Americans pay their BMWs with euros. No country has a trade surplus/deficit of exactly 0, or even near 0. There's always at least half a billion going either way. If you know of any treaties that put limits on these numbers, I'd like to know what they are because I'm very curious about the intentions behind the people who would draft something like that. Going by https://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_151969.pdf https://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_... (link says 2013, but document says Q1 2022), Germany had an intra-EU trade surplus of about 0.2 billion euros. Germany is the closest to a perfect balance within the eurozone in the entire EU except for Bulgaria. Their surplus is almost entirely extra-EU, which isn't a problem for EU members.
  - imtringued 4y ago
    >It's not like Americans pay their BMWs with euros. The Greeks do hence they are massively in debt. No, they can't export their way out of debt because that would mean Germany has to export less and import more. Germany is supposed to be the workplace country and Greece must remain soulless suburbia with no job opportunities.
    - jeroenhd 4y ago

ChemSpider 4y ago

What § would that violate? This must be one of the (many) anti-EU fake news.

jacquesm 4y ago

No, this is completely in line with everything that the EU is all about. I'm not sure where you got the belief that Euro countries are not allowed to have internal trade deficits, it's inevitable in fact.

shimonabi 4y ago
Merkel said after 2008 that ALL countries in the EU must have surpluses. It was like saying all teams in the NBA must win.
- jacquesm 4y ago
  The world is a lot larger than the EU so there is no reason why that could not be the case.
  - v4dok 4y ago
    I rememember in an econ book that we think that exports have the "world" to serve. But in reality most countries trade the most with those closest to them. I wouldn't be surprised if that was the case for the majority of EU countries
    - jacquesm 4y ago
      Yes, but don't underestimate the exports that Germany is generating, between all of the high tech there and the car companies you are looking at a substantial exporter. China is #1, the USA (all of it) is #2 and Germany (just Germany, not the EU) is #3. Have a look at their relative populations and appreciate that fully.
  - imtringued 4y ago
    Asia is exporting too (Japan, China, Korea). Australia is exporting. The only ones not exporting, i.e. importing is Africa and South America and eastern Europe including Russia if you ignore their oil exports.