4 ms·

There is a fairly interesting book written by the current finance minister of Greece Yanis Varoufakis on the subject called "The Global Minotaur", he argues tha

There is a fairly interesting book written by the current finance minister of Greece Yanis Varoufakis on the subject called "The Global Minotaur", he argues that after Bretton Woods the trade surplus of Germany especially vis a vis the United States was by design, as the profits of German corporations ultimately ended up in the hands of Wall Street. On the other hand Europe lacks such a surplus recycling mechanism, which according to him worsened the current economic crisis in Europe.

UweSchmidt 12y ago
Aparently the current finance minister of Greece has his own idea on how to "recycle" German surplus? At least he has build a congruent worldview that lets him sleep well at night. The fixed exchange rate 4,20 DM == 1$ in the 1950s is usually cited as helping German exports during the 1950s. During later decades the Deutsche Mark was exceptionally strong, in theory harming German exports. It's a fallacy to pick and choose events in the ultracomplex global economy and form a story from that. Consider all the fiscal and monetary policies that were enacted by all countries - ultimately success of an economy depends on the intrinsic strength, regardless if it's export oriented, or if it lives happily with a trade deficit like the US.
- orbifold 12y ago
  The point is that the US ultimately profits from the arrangement, yes it has a large and growing deficit, but that is actually fine, because the profits of the corporations that export goods to America largely end up at Wall Street, so there actually is a "cycle". Moreover since the US has control over the Dollar, which also is used for international trade, by devaluing the Dollar, that is increasing the national debt, they effectively levy a tax on the global trade.
- Luc 12y ago
  That can't be right. The value of the euro is depressed, to Germany's advantage, by the other euro members. How is that not going to affect the success of the German economy? I am reading Varoufakis' Minotaur book at the moment. I am about halfway in and I haven't yet gone 'hang on a sec, that can't be right!'. So he's got that going for him.
  - lispm 12y ago
    > How is that not going to affect the success of the German economy? The Germany economy is successful if the Euro is low and it is successful when the Euro is high. It makes no difference. The companies will adjust to what ever Euro exchange rate there is. It's just that Germany has invested a lot into building new markets (for example Eastern Europe, which is just next to Germany), less so into consumption or Trillion $ wars in Iraq.
- RobertoG 12y ago
  "It's a fallacy to pick and choose events in the ultracomplex global economy and form a story from that." You are probably right but, this has not prevented the Germans (or, at least, the German press) to create a narrative of how the current situation is due to how lazy the Greeks and the south Europeans are. I suppose that they have build a congruent worldview that lets them to sleep well at night.
  - UweSchmidt 12y ago
    Keep in mind that the German press has always strongly supported the ideal of a unified Europe. So, I believe as a tendency they would rather underreport problems (say, financial problems in other countries affecting Germany), instead of giving arguments to EU critics. I can't remember reading about "lazyness" - maybe you read too much into it? However the press had a look into the financial conduct of Greece - I hope that's allowed when you're out 50 Billion €?
- oskarth 12y ago
  > The fixed exchange rate 4,20 DM == 1$ in the 1950s is usually cited as helping German exports during the 1950s. During later decades the Deutsche Mark was exceptionally strong, in theory harming German exports. ...which Varoufakis talks about extensively in his book. You would know that if you actually read it. Essentially he splits the world economy post-WW2 into two phases: The Global Plan and The Global Minotaur. The second started (roughly) in the 70s, when US was starting to become a deficit country. This is when the US strategy vis-a-vis Germany and Japan changed. Of course it's more complicated than that, but that's the gist of it. > At least he has build a congruent worldview that lets him sleep well at night. If you are gonna be an armchair critic, please be an well-informed one and read what you are commenting on.
  - UweSchmidt 12y ago
    I'm primarily commenting not on the book (the existence of which I just learned in the previous book), but on the article. Point is that German exports have been strong when the currency was strong, and they are strong with other EU countries as well as outside the EU. The USA may have helped Germany with a favourable exchange rate out of political motivation (strong ally, look commies how well OUR Germany is doing - props to the US btw.). Economically it seems like a bad deal; Wallstreet might benefit indirectly, but it's not like the USA took ownership of German companies as reparations (that's what the Soviets did, again, thanks Americans for being cool like that). "You would know that if you actually read it." Key is, I knew it without reading it, as the topic is already ultra-well researched. The onus can't be on me to read his book, in particularly coming from that author: Wouldn't he likely be the most biased person on the planet in this matter? Objectively, giving him all the credit (heh...), wouldn't such a book be primarily a political statement of a man under immense pressure? A tool to put some narrative to support his politics? Big words like "The Global Minotaur" would make it seem like it is. Basically, the article discusses the global effects of "global imbalances". The author does not say Germany is to blame for Greece's problems.
    - deleted 12y ago
      [deleted]
    - 12y ago

UweSchmidt 12y ago

Aparently the current finance minister of Greece has his own idea on how to "recycle" German surplus? At least he has build a congruent worldview that lets him sleep well at night. The fixed exchange rate 4,20 DM == 1$ in the 1950s is usually cited as helping German exports during the 1950s. During later decades the Deutsche Mark was exceptionally strong, in theory harming German exports. It's a fallacy to pick and choose events in the ultracomplex global economy and form a story from that. Consider all the fiscal and monetary policies that were enacted by all countries - ultimately success of an economy depends on the intrinsic strength, regardless if it's export oriented, or if it lives happily with a trade deficit like the US.

orbifold 12y ago
The point is that the US ultimately profits from the arrangement, yes it has a large and growing deficit, but that is actually fine, because the profits of the corporations that export goods to America largely end up at Wall Street, so there actually is a "cycle". Moreover since the US has control over the Dollar, which also is used for international trade, by devaluing the Dollar, that is increasing the national debt, they effectively levy a tax on the global trade.
Luc 12y ago
That can't be right. The value of the euro is depressed, to Germany's advantage, by the other euro members. How is that not going to affect the success of the German economy? I am reading Varoufakis' Minotaur book at the moment. I am about halfway in and I haven't yet gone 'hang on a sec, that can't be right!'. So he's got that going for him.
- lispm 12y ago
  > How is that not going to affect the success of the German economy? The Germany economy is successful if the Euro is low and it is successful when the Euro is high. It makes no difference. The companies will adjust to what ever Euro exchange rate there is. It's just that Germany has invested a lot into building new markets (for example Eastern Europe, which is just next to Germany), less so into consumption or Trillion $ wars in Iraq.
RobertoG 12y ago
"It's a fallacy to pick and choose events in the ultracomplex global economy and form a story from that." You are probably right but, this has not prevented the Germans (or, at least, the German press) to create a narrative of how the current situation is due to how lazy the Greeks and the south Europeans are. I suppose that they have build a congruent worldview that lets them to sleep well at night.
- UweSchmidt 12y ago
  Keep in mind that the German press has always strongly supported the ideal of a unified Europe. So, I believe as a tendency they would rather underreport problems (say, financial problems in other countries affecting Germany), instead of giving arguments to EU critics. I can't remember reading about "lazyness" - maybe you read too much into it? However the press had a look into the financial conduct of Greece - I hope that's allowed when you're out 50 Billion €?
oskarth 12y ago
> The fixed exchange rate 4,20 DM == 1$ in the 1950s is usually cited as helping German exports during the 1950s. During later decades the Deutsche Mark was exceptionally strong, in theory harming German exports. ...which Varoufakis talks about extensively in his book. You would know that if you actually read it. Essentially he splits the world economy post-WW2 into two phases: The Global Plan and The Global Minotaur. The second started (roughly) in the 70s, when US was starting to become a deficit country. This is when the US strategy vis-a-vis Germany and Japan changed. Of course it's more complicated than that, but that's the gist of it. > At least he has build a congruent worldview that lets him sleep well at night. If you are gonna be an armchair critic, please be an well-informed one and read what you are commenting on.
- UweSchmidt 12y ago
  I'm primarily commenting not on the book (the existence of which I just learned in the previous book), but on the article. Point is that German exports have been strong when the currency was strong, and they are strong with other EU countries as well as outside the EU. The USA may have helped Germany with a favourable exchange rate out of political motivation (strong ally, look commies how well OUR Germany is doing - props to the US btw.). Economically it seems like a bad deal; Wallstreet might benefit indirectly, but it's not like the USA took ownership of German companies as reparations (that's what the Soviets did, again, thanks Americans for being cool like that). "You would know that if you actually read it." Key is, I knew it without reading it, as the topic is already ultra-well researched. The onus can't be on me to read his book, in particularly coming from that author: Wouldn't he likely be the most biased person on the planet in this matter? Objectively, giving him all the credit (heh...), wouldn't such a book be primarily a political statement of a man under immense pressure? A tool to put some narrative to support his politics? Big words like "The Global Minotaur" would make it seem like it is. Basically, the article discusses the global effects of "global imbalances". The author does not say Germany is to blame for Greece's problems.
  - deleted 12y ago
    [deleted]
  - 12y ago