Festive Germans still prudent
Germany's Christmas market sparkles with seasonal cheer. Small girls in matching pink scarves and hats sing with gusto from the stage, as well-muffled adults drink mulled wine and choose between thick lentil soup, sausages in a bun or pizza before doing a spot of shopping for wooden toys or jewellery. You would hardly know there was a recession on.
Some think the country's leader, Mrs Merkel, is behaving as though there wasn't. There will be a row at this week's summit because her government has been so dismissive of the European Commission's rescue plan. The commission wants all countries in the EU to cut taxes and increase targeted spending on key industries to boost the European economy. Mrs Merkel hits back with talk of not joining a senseless race to spend billions. Her finance minister, Peer Steinbrueck, talks of other nations behaving like lemmings, following each other on a path to suicide.
She is already being punished. Gordon Brown is hosting a "European global economic summit" with President Sarkozy and the Commission's President Barroso at Downing Street today. When we ask Mrs Merkel's office why she is not going, the indignant reply is "Ask Gordon Brown why she hasn't been invited".
But in a world where Gordon Brown has jilted Prudence, and George Bush has come out as a Keynesian New Dealer why is the German government not willing to spend its way out of a recession, when one would think it would take to it like a duck to water?
There are a number of possible answers, and they are probably all correct.
At the Christmas market I talk to Hubertus Pellenghar, the head of Germany's retail organisation. He says he would like the sort of tax cuts the commission are urging, but looks around him with approval at the shoppers spending and says that while consumer confidence has been low for a long while people are spending more this Christmas than last year. I am amazed, but he insists this year's figures are better.
Some think Mrs Merkel just doesn't realise how serious this is. They say that the recession has yet to bite in Germany, and that people are underestimating the seriousness of what will happen next year. There's a vague sense that as the whole thing was caused by failings that Germany does not share, the country will escape the worst of the knock-on effects, which does require an odd belief that economics is somehow fair and just.
There are those who point out that next year is election year. This makes governing in a grand coalition difficult. There is an intense debate within both the Social Democrats and Christian Democrats about the desirability of tax cuts.
Mrs Merkel would like to be in a different coalition after the election, with the Free Democrats. Their leader Guido Westerwelle tells me this is all about short-term politics. "It's really a problem that the rest of Europe is reacting and that the German government is still hesitating. The German government is concerned with the election campaign next year, but it would be better to act now by lowering taxes. Perhaps they are hesitating because they want to decide this very close to the election, but by then it could be too late."
Others think that tax cuts really wouldn't work in an economy where a large number of people pay no tax at all and those that do seem more inclined to save than spend. If they squirrelled away the money from a tax cut it wouldn't help at all.
This too is part of the social market. There is a distinct lack of a "get rich quick" mentality. Neither people not companies borrow a lot. Often firms deliberately aim at slow and steady growth. Thrift is a significant virtue. There has been no crash in house prices, because they never rose that much. The Germans are still in love with Prudence, even if Gordon has moved on. And they want to defend her virtue, angered that other countries are treating her shamelessly.
One of German's most prominent industrialists, the former head of the bosses' organisation Hans-Olaf Henkel, says: "One reason why our chancellor is a little bit more reluctant is the fact that we Germans believe we should never forget the stability of the euro. To spend a lot of money and accumulate a lot of debt will weaken the euro in the long term and leave additional debt for our children and grandchildren. Current governments should not forget the effect their decisions have on future generations. Just to spend and to leave it to our children to find out how to pay the money back I think is rather irresponsible. Therefore the German government response is not bad at all. Someone has to stay calm in Europe."
An American professor working at Berlin's Free University, Irwin Collier, thinks this is all rooted in the past and an extreme aversion to anything that might lead to the horror of the hyperinflation of the 1930s. He says it now expresses itself in Germany's self-perceived guardianship of the rules surrounding the euro, rules for a common currency without a common tax policy. "The one fear the Germans always have is that they will be stuck with the bill for irresponsible fiscal policies of their neighbours. This fear is in many ways well-founded.
"Germans feel like they've invested a lot in this set of rules on the size of national debt and they want to make sure that others are bound and they see that once people start violating those rules Germany will be paying. It's more looking to the future. It's not so much right now that Germany is afraid, they are really worried about establishing a precedent that other governments can run large deficits and Germany will be counted upon to bring stability back."
There might be a more immediate call for Germany to dig deeper into its pockets. The commission is calling for all EU countries to spend 1.2% of GDP on tax cuts and investment. Britain's initial programme falls just a tiny bit short of this, although subsequent announcements probably bring it up to the mark. France more than met the commission target and, without having done the sums, I suspect Spain is around this figure too. Germany isn't. Its programme amounts to 0.5%.
But it's clear that a whole range of countries, from Latvia to Ireland, Romania to Hungary, can't afford to spend the sort of money the commission wants. The commission's figure is just an average. So it needs somebody to spend more for the average to be reached. Now this is not about putting money into a common pot, it is about spending at home. But to reach the commission target of a Europe-wide figure of 1.2% someone has to spend more. The Germans don't want it to be them.
This could be a crucial moment in a trend that has been apparent since German reunification. A former economic adviser to the commission, Belgian economics professor Andre Sapir, says: "The message that Germany has to pay more because it has room for manoeuvre is not a very credible message".
But, I say, that is the way the EU has been run for the last 50 years. "Yes, but I don't think that is the way Europe is going to work for the next 50 years. It's true that Germany was the paymaster because of the past, the war, and the view that what is good for Europe would be good for Germany. I don't think that Germany should be made to pay forever for its sins. They were great, there's no doubt about that, I lost all four of my grandparents to the Germans, but Germany doesn't need to pay forever. Europe cannot be Europe if Germany is put in one corner and has to pay forever for the sins of the past."
As I make my slow way through the packed Christmas market I notice that far more people are taking their time standing at the small round tables grazing on the variety of food on offer, sipping hot fragrant wine held tight in mittened hands, than looking around the stalls, and buying Christmas presents. It's striking that, while it is very easy to see the commission plan as them getting in on the act, as little more than a political desire to be at the centre of things, all the economists I speak to think that if anything it is too modest, too little to do the job. Will sensible German prudence turn out to be the right course, or too stuck in a familiar rut in unfamiliar times?
Welcome to my 
© MMIX~RS~q~RS~~RS~z~RS~12~RS~)
CommentsSign in
You need to sign in to contribute to this page. If you're new to BBC Blogs, creating your membership is quick and easy.
I have said all along that it may be Europe's Union, but it will be Germany and Britains bill, paid into Frances bank account.
Complain about this comment
You could argue that Germany is such a strong exporter that they will benefit most from the stimulus packages of other nations - inside and outside the EU.
That might turn out to be the right course for Germany (possibly no other EU nation) - perhaps with a little home stimulation for Prudence for political reasons.
I am sure you are going to blog on the implications of the pork problem in Ireland. Question for the EU is - will it make the Irish more or less likely to vote yes in a referendum ?
My guess would be that it will be likely to make them vote yes. Fear drives people to larger groups for comfort.
Complain about this comment
An EU target for tax cuts as a percentage of GDP shows how brain-dead the EU is.
If they have targets for each country based on something genuine then they should say so - if then don't then it is meaningless.
How much were they paid to come up with that nonsense?
Re: Irish Pork
Is irish pork poisonous? or is an irish pork sausage just the euqivalent of eating 80-200 normal ones?
No amount of BSE was 'safe' - but in this case are clunky standardised one-size fits all EU standards generating a 'scare' and waste that is actually as bogus as the panic brown is so keen to generate to save his political skin?
Complain about this comment
Sensible Germans.
Complain about this comment
The Germans have the right approach - its not about electorial advantage its what is right for the taxpayer.
Dear Gordon is thinking of himself.
Complain about this comment
I'd like to meet Prudence.
A pleasant, homely German lass who spends wisely, doesn't use credit cards, lives within her means and it is only her cooking that lets her down I believe!
Got to admit that this would be THE gal one could take home to Mum and Dad and get a seal of approval. ;=)
Complain about this comment
Good to see that at least one country is keeping their heads.
GB at the moment has the common sense and logic of a headless chicken.
Complain about this comment
I agree with the above it seems like the Germans are doing what is right for them.
I don't blame them, were doing the same, by trying to join the Euro were transfering our debt to E.U debt. So insted of just the British paying for it the whole of the E.U will have to via the ERM GB has had a storming idea.
Complain about this comment
Surely the German approach is the sensible approach; if people hadn't spent too much, built up a huge debt, and acted as though saving were a swear word we wouldnt be in this situtation now.
As for the stability of the Euro, the currency is barely 9 years old (or younger depending on how you view it). I could dig out clothes older than that; the Euro has never been tested, never challanged or pushed to the extremes. I hope it survives because it will drag a whole continent down if it doesnt; but lets not act as though it is a holygrail, it is merely a child taking its first steps.
Complain about this comment
Quite why Gordon Brown should not invite Angela Merkel to this meeting because she and the Germans are cautious and prudent is beyond me.
It is personal responsibility that seems to be lacking in the United Kingdom and the UK government with its socialist tendencies seems intent on supporting the ethos of lack of personal responsibility by its own efforts to borrow more in order to build up national debt and encourage the citizens of the UK to spend more especially through inviting the banks to lend more, invite the Credit Card companies to reduce Credit Card interest rates and trying to bolster the economy through further debt. Given that it is excessive debt borrowing that has got the Capitalist countries into this mess it seems very stupid to go and borrow yet more money and go on a spending spree!
Perhaps the Germans have got it right and the UK Government should follow their lead other than be the lead Lemmings.
The cliff edge is not that far away now and nobody quite knows how far the drop is!
Complain about this comment
Mark,
I find that people are a bit too fast to mention the trauma of hyperinflation to explain Germany's behaviour. First of all, hyperinflation didn't take place in the '30s, but in the early '20s. What happened in the wake of the stockmarket crash of '29 was, on the contrary, that excessively stringent monetary policies (very much a consequence of the then recent hyperinflation trauma) coupled with the burden of war reparations strangled Germany's economy, leading to mass unemployment and a creepy guy with a small moustache. This is something that German schoolchildren all learn in history lessons, and you can be quite certain that all German economists and policymakers are aware that an excessively tight fiscal policy in times of recession can be even more damaging than high inflation.
Merkel's behaviour is more easily explained by the fact that she prefers to keep her fiscal powder dry for the economic and political challenges of next year: As you point out, Germany hasn't crashed for the very same reason that its growth was rather sluggish in the last years, that is, prudent consumer spending. Germany's situation is thus very different from those of Britain, Ireland or Spain. What threatens Germany now are the aftershocks of the crashes all around it, but they'll become apparent only next year. Waiting to see the white of the eyes of the crisis before shooting fiscal stimuli against it seems reasonable. Let's just hope that Angela won't wait too long.
Complain about this comment
Just for the record, German cooking is very good. I'm an Englishman living in Baden-Wuerttemburg and the food, wine and beer here is very good.
Perhaps the differences in approach between the UK and Germany are because they have two different economies. Germany has a manufacturing economy, whereas the UK has a consumer economy. The UK needs to get more people spending. The Germans realise they have only to weather the storm. After all, the recession is predicted to last only a year.
Of the two approaches, Germany's is by far the most sensible. In a recession, government revenue falls because there are less taxes being paid. Cutting taxes and increasing spending seems downright reckless.
As an Englishman, I am glad I live here in Germany where the old English values of moderation and saving for rainy days are still practised.
I never liked Thatcher, her policies were based on greed, selfishness and recklessness. Her politics are now bearing their bitter fruits. Brown would be better funding British businesses and research.
Complain about this comment
I wish people in the UK shared the German values of discipline, caution, and respect for skills, education and the hard work which creates wealth. Then we wouldn't be in the situation where uneducated and hedonistic people willingly allow themselves be manipulated by a self-interested political party into confiscating the hard-earned savings of the disciplined, cautious and skilled minority who generate what little wealth is created in the UK in order to pay for the spending splurge instigated by that political party over the last 10 years. Good on you, Mrs. Merkel !
Complain about this comment
The Germans are doing exactly the right thing. Browns attempting to create another bubble to save his skin at the next election.
Complain about this comment
Nice article Mark - but to be fair there is talk in Germany by senior politicians of a follow-up package of stimulus measures for the spring or even earlier - so don't underestimate the Germans (to quote Gary Lineker). Also don't forget many German workers had large pay rises in 2008 which British workers could only dream of.
Complain about this comment
Ok as an Englishman living in Germany and apparently married to the German "Prudence" I can honestly say that the feeling here in general is "What Crisis"? Firms here are not going bust on a daily basis and the banks were not as badly hit as in the US or UK, but as I work in the shipping industry reading about all the other firms going to the wall makes me wonder about next year. I am however confused one moment I read about the possibility of "Deflation" now it will be Hyper inflation. Please economists make up your bloody minds, you are only adding to the confusion.
Complain about this comment
"Guido Westerwelle tells me this is all about short-term politics. "It's really a problem that the rest of Europe is reacting and that the German government is still hesitating."
Ummm maybe it is in fact `the rest of Europe' that is short-terming it. If anyone knows about recession and depression and long-term views of climbing out of disaster (as well as getting into it) it has to be the Germans (Marshall Plan or no Marshall Plan).
Complain about this comment
No housing bubble in Germany. So it seems reasonable to assume that they might come out of this with less of a crash than the UK, Ireland and Spain.
I wonder if *their* Chancellor actually promised "An end to boom and bust"?
Complain about this comment
I agree that the Germans should absolutely stick to their guns on this. Why on earth should they, the prudent ones who squeezed inflation out of the system under the d-mark, have to cough up for the idiocies of others ??
This will just import the failed policies of the US, Italy, Greece and the other feckless failed economies into the once-great-powerhouse German economy.
I bet many are thinking that they should rebuild the Berlin Wall and scrap the euro, and I have a bit of sympathy for them. The Second World War wasn't that long ago, and it would be ridiculous to repeat those mistakes again.
Complain about this comment
Great article on the Germans . Put succinctly what I've been trying to explain to friends back in England .
The Germans never bought into the US style materialism so enthusiastically embraced in the UK since Thatcher .
They are often more interested in the quality of their lives than the number of possessions .They like to take lots of holidays and treat themselves well too . Frantic workaholics seem thinner on the ground over here.
Nice to to live here away from that slightly unenglish focus on materialism I left behind (haven't heard a house price convo in 5 years ...so refreshing !)
A friend working on the Christmas market here says things are going very well too !
Complain about this comment
But the Germans do work hard, they just do it efficiently and few see the point in just sitting in the office late into the evening just to make a point about how hard they're working.
I remember years ago working on a project and the Project Manager was in at 10:00am and left at around 3:30pm with all his work done and dusted. Someone once mentioned to him that he'd been in the office until 8:00pm the previous night and got the following terse response: "So, get a job you can do."
Complain about this comment
Being prudent, is a good thing ...especially for the rainy day!
Complain about this comment
#12 PatrickJSmith
You can't STILL be blaming Thatcher for this, surely?
Why don't you smell the coffee; UK PLC has been sold down the river in the name of political expediancy by Blair and Brown. This crash was inevitable, and entirely obvious for years now.
If an average punter such as myself could spot it coming, you have to ask yourself why the Genius' in charge could not.
Or for those even more cynical than "complete incompetance", one could argue that they did see it coming, and held on so that they could blame someone else (America, Banks, FSA), regardless of the damage done to the country. And lets face it, they've got form for fixing the facts to suit the circumstances...
Complain about this comment
Germany is the workshop of the world for quality engineering (and quite a few chemical) products. It does not have a consumption problem at present: industrial layoffs have not yet really hit.
However, other countries - perhaps with higher personal and/or governmental borrowing levels - have been hit more immediately. They have needed to act now, and for the short to medium term, in order to stimulate growth. The UK, through its VAT cut has decided to stimulate consumer growth - which should be good news for German car-makers (and for all foreign producers exporting to the UK). I can't see many UK jobs being created out of that. However, that's my view.
France has chosen to stimulate producer growth, especially in critical areas such as housing and infrastructure spending. The view is that this should provide short-term job relief and a longer-term climb out of the crisis. Only time will tell whether it works or not.
These two examples show the range of possible needs and approaches across the EU. My understanding is that the Brown Sarkozy meeting has proposed that a "tool kit" of measures should be created - by a group of leading figures from the financial, industrial, etc sectors in the UK and France (so far). Thus, the EU would not be "laying down the rules" so much as offering the base of a "pick'n'mix" choice. (And I understand the British like "choice"?).
Germany has to rely on other countries being able to stimulate sufficient growth - of whatever sort each feels best suits them. Germany's growth comes from them, the buyers. However, there comes a time when suppliers need to support their existing /potential buyers, eg by extending credit-lines. So, whilst Germany itself may not need any tax or other stimulus right now, the rest of the EU desperately needs Germany' involvement in their crisis battles. That is where Chancellor Merkel has failed.
Complain about this comment
All this talk of Germany's economy being so much better than the UKs because it's a manufacturing economy who exports more than imports is missing the point imho.
Germany has nearly 10% unemployment while Britain has just over 5% (2007 figures; CIA World Factbook). Also if most of the developed world go into deep recession who are the Germans going to export to? Moreover, will they benefit most from a weaker euro than most?
Complain about this comment
i wish other countries in europe would listen to Germany, and not fall for brown's waffle!
it is a measure of how far the UK plc has fallen that germany now have a much stronger manufacturing base than us, which is exactly the background required to get out of a recession, make things and sell your way out, protects jobs, protects future finances which in turn, protects a country's people from hardship.
throwing money around like confetti at the service sector is ludicrous, its deeply insulting that Mrs Merkel hasnt been invited along to the downing street discussions, voices from both sides of the argument should be there.
this "snub" reinforces the fact, for me, that gordon brown has bluffed other EU countries into the "lets borrow and spend more" way of thinking, not to sort out the mess, but to avoid going cap in hand on his own to the IMF, with begging bowl, and being sent packing with his tail between his legs.
he is telling every one who will listen that hes doing the right thing, as other countries are "following" his lead.... utter twaddle!
he is going to damage the UK economy, so badly, that for generations to come, we will all be burdened with his negligence.
gordon brown needs stopping, and if it means supporting the german position on this, then they have my full support!
Complain about this comment
It is amazing how the Paris-Berrlin EU axis of intrigue comes unstuck so often and yet that overmighty, unrepresentaive, wholly unwanted organisation keeps spouting the same federalist tripe:
'One-size European Parliament fits-all': Well no, especially "no" at a time of global economic depression and MEPs electorally represent barely 32% of the entire 360,000,000 Citizens.
'One-size Europe Currency fits-all': Well no, not when it doesn't suit Germany's master economic outlook.
'One-size Europe Agriculture fits-all': Well no, not when it doesn't suit France's retarded Agrarian policies.
'One-size Europe Justice fits-all': Well no, not when it doesn't suit various East European legislatures ideas of "free speech".
'One-size Europe Defence fits-all': Well no, not when Paris-Berlin-Madrid-Brussels pay lip service to NATO, but have not significantly contributed at the "sharp end" to any combat since 1956.
Plus, of course, 'one-size European Commission & Parliament fits-all, except that the most recent polls reflect a 65+% disatisfaction rating with the EU amongst its unrepresented majority electorate and in the UK that rises to well over 80%.
Is there anyone who can genuinely argue that EU membership means anything except a costly bounce in financial restrictions at a time when individuality and personal enterprise should be at a premium?
Complain about this comment
@13 "I wish people in the UK shared the German values of discipline, caution, and respect for skills, education and the hard work which creates wealth. Then we wouldn't be in the situation where uneducated and hedonistic people willingly allow themselves be manipulated by a self-interested political party into confiscating the hard-earned savings of the disciplined, cautious and skilled minority who generate what little wealth is created in the UK in order to pay for the spending splurge instigated by that political party over the last 10 years".
Wow, being a German myself, I wonder if the painted picture has anything to do with Germany. I'm affraid, it hasn't. To correct just a few misunderstandings: (i) Germany is a model-state for equality, everybody gets the same, whether he has worked hard or not at all. (ii) Taxation in Germany is sky-high and it has to be, because a decreasing workforce has to pay for an increasing number of people depending on state-transfer payments (iii) Anyone out there who wants to study motivation crowding-out - make a trip to Germany and analyse the relationship between pay and performance and the role, unions play. ...
Concerning the German reluctance to cut taxs or spend for consumption, I really cannot explain where this reluctance comes from. Those 35 years I happened to live in Germany the cure for all problems, whatever there cause, was money. So the only reason for me, why the German government does not want to spend money to get the economy going is: they simply have no money to spend, they cannot afford it.
Complain about this comment
Replying to #28. The irony is that Germany is, in fact, the only major country, with China, that can afford a stimulus package.
Let us all agree that no country is perfect. Each has the "advantages of its disadvantages and the disadvantages of its advantages".
In Germany's case, the problem is undue emphasis on export-led growth. It shares this tendency with Japan. (Does this jolt old memories?). And the newcomer on the block, China. (Countries with ephemeral surpluses due to access to energy raw materials e.g. Saudia Arabia and Russia can be ignored).
For a really worthwhile analysis, that of Martin Wolf recently in the FT is outstanding.
http://www.ft.com/cms/s/027b1efc-c0a4-11dd-b0a8-000077b07658,dwp_uuid=236ce648-33fa-11da-adae-00000e2511c8,print=yes.html
In the old days, the problem was resolved by a revaluation of the Deutschmark i.e a camouflaged devaluation of the franc and the lira. This is no longer possible within the Eurozone. Germany is not only the largest exporter in percentage terms, it is also the largest exporter in absolute terms in the world. It is also the absolute champion of state aid to its enterprises. In other words, it has a rigid corporatist economy.
Any uncoordinated stimulus package across Europe will simply feed the German export habit as consumers cannot be instructed what to buy within the internal market. "Vorsprung durch technik". Sarkozy has a point.
This cannot continue. Merkel will see the light as collapsing world trade will demolish - temporarily - the German export surplus as far as countries outside the EU are concerned. And the major German manufacturing strength - machine tools - should complement nicley the return of countries such as France and Spain to the virtues of a manufacturing economy rather than one based on the idea that people can grwo rich selling a consumer item - property - to each other.
As to Brown an the UK, as neither is actually on the pitch, their views cut no ice nor do they deserve to as Sterling hits 86 pence.
Complain about this comment
Reply to 23
Quote: "You can't STILL be blaming Thatcher for this, surely?"
Reagan and Thatcher told the bankers do what you like. Blair got New Labour elected because he adopted many of Thatcher's policies. I lived in Northern England, and saw what Thatcherism did. Yes, I do blame her and I blame the rest of the fools for going along with it for so long. It's about time people realised what was trickling down on them in a Trickle Down economy.
English politics seems to oscillate between the Tories and Labour, which are just two sides of the same coin.
Still as someone once said, "Well, if you don't like it, leave!" I have.
A good case in point was my first job, which was in the Netherlands. Although, I was taking home less money, I had more money after paying all my bills.
Quote: "Why don't you smell the coffee" I'm a tea drinker, East Frisian.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
Compare Prudence to Creditcardspender.
Creditcardspender does wonders for the economy: he spends a lot (thereby stimulating the economy), gets into debt and has to volunteer for extra overtime or get a second job to pay the interest on his loans. This extra work also stimulates the economy. Unfortunately he worries constantly and can't sleep properly at night.
Prudence on the other hand lives within her means, works a stress-free 35 hours a week whilst saving up to buy a house when she is 45.
As I see it, this is one principal reason why the British economy has grown faster than the German economy over the last 2-3 decades, but it certainly hasn't done anything for people's happiness!
Complain about this comment
It may be that the Sarkozy and Baroso are attending the meeting due to their position in the EU. If you invite Mrs Merkel you may offend other leaders and besides it is obvious that Mrs Merkel supports a different course of action at least for the time being.
But what bothers me is that ?spend our way out of the recession? is creating another bubble and we know what happened to previous bubbles. It also reminds me of the (in)famous way some of the greedy creditors used to entice those who were desperately in debt to ?consolidate all their debt? and probably at a higher interest rate
If the system is sick, as some say, then giving it the old medicine will not help. I dare not even try to imagine what would happen if Obama/Brown/Sarkozy policy gets it wrong and the chances are fifty-fifty at best. Economics is a social science and you don?t get many things right are the words someone is uttering this very moment on Hardtalk.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
Summed up well by this comedian:
http://www.youtube.com/watch?v=_wJaCedLfdg
As a German living in England he's surprised by the buy-today-pay-tomorrow culture. Any rational person has to conclude that spending on credit is a bad strategy; hardly surprising that the house of cards has to fall down.
Complain about this comment
Having said that, I think it would be a good idea for the German government to increase spending and/or cut taxes provided they did the opposite during the good times, that is textbook economics. However, a cut in income tax or VAT just before xmas will only encourage people to buy toys imported from China; it would be more useful to spend money on e.g. public infrastructure projects, schools and universities.. tax cuts should be a longer term goal.
Complain about this comment
No! We should not be sending British troops to Greece!
Complain about this comment
On this website I read:
"EU wants end to old-style bulbs"
I heat with electricity. Old style bulbs also heat so in winter there is no saving.
New style bulbs have a down side in that some of then contain mercury which is released when they break.
The people who drive hundreds of miles to work and back are more of a problem.
As for the saving to the economy as a whole: Leaving the "EU" would save more, much,much more.
Complain about this comment
In the International Edition of the Irish Times of Saturday, December 6th on page 10 is a picture of "Troops from the EU's Eurocorps ... on trhe Champs Elisees ..."
It says "The framework of the European Security and Defence Policy was agreed in 1998 in response to the EU's powerlessness to stop Serbian paramilitaries massacring 8,000 Bosnians ... in 1995."
I don't believe it. I believe that the Balkans was just the excuse. I went to teach in a German school in 1972. Very soon after my arrival, maybe even on the first day, there were leaflets all over the table in the staffroom saying "Do we need a European Army?"
We didn't then and we don't now. What was lacking in the Balkans was backbone.
The "EU" will use any excuse no matter how obviously dishonest it is to justify its attempts to create a Greater European Reich.
Complain about this comment
On the front page of the same newspaper one diplomat from an "EU" country is quoted as saying to an Irish representative on Irish requests for opt outs from the Lisbon Treaty:
"This is quite something you are asking for an we are asking in return for a perspective on when you will hold another referendum"
If it is too much then they shouldn't offer any concessions to the Irish and the Irish should refuse to sign. The Irish will still be in the right side of the existing treaties. They don't have to sign anything. The bullies are in the wrong.
If the Irish can get concessions, why can't we? We could but our government are worse than useless.
Apparently they believe that the rerun referendum could prove unwinnable.
Complain about this comment
Austrian Foreign Minister Michael Spindelegger (ÖVP) says that there can be no changes to the Lisbon Treaty .
In that case I refuse to recognise it.
Complain about this comment
Good old Hans, eh? "To spend a lot of money and accumulate a lot of debt will weaken the euro in the long term and leave additional debt for our children and grandchildren."
Isn't that nice?
Isn't that a nice sentiment? You know, let us not destroy the welfare of our children because we want to get richer, quicker, even if we don't know how that might happen.
What a nice, decent sentiment. Now Mr Mardell, you describe this as a "familiar rut". (good report, by the way.)
And you claim we live in "unfamiliar times".
Why are these "unfamiliar times"? Please explain that claim. I suspect you mean that it is unfamiliar that banks and the largest private businesses in Europe are demanding government money?
But surely not? Is it not a hallmark of communist eastern europe that the most powerful people in society would demand vast sums, unending sums, of money from the taxpayer, in order to prop up their failed economic ideas?
To borrow from tomorrow in order to pay for yesterdays' ideas?
Europe today is increasingly familiar to the eastern have of that entity. The CCCP and EEEU have so much in common, why only a very clever person could tell them apart.
Complain about this comment
"Please economists make up your bloody minds, you are only adding to the confusion."
An economist is a soothsayer who works for the state. How you expect the poor things to operate in a climate where there is no confusion is beyond me.
I mean, what is "the" economy? Is that a sane postulation, let alone a reality?
My economy, or yours? His, or hers? Theirs, or ours? A stockbrokers', or a illegal immigrants'?
Or do economists mean "all of our economy"? The one we all share. Because we are all in this together, right?
Trickle down theory, right? Concentrate the wealth and it will trickle down. Trickle all the way down into offshore accounts, into investments in gold, into security forces required?
Communism was trickle down theory. Give everything to the state, and watch it trickle down. Because we all in this together.
I say let the stockmarket burn. Stop the parasitic frenzy, let it die.
Complain about this comment
Response to 12.
Patrick I think you have hit on something. I supported Reagan in re-building America's armed forces (what is the point of making money if the world becomes communist), but the economics failed to address a real problem. It treated all businesses the same! Clearly they are not! A company making Automobiles or electronics for export is a real boon to the nation. A company that uses illegal aliens to mow grass is a drain. But service industry jobs were treated like we were really doing something! It is amazing that the free world would rather give it's work to Communist China than it's on working class. These same bail-out loans could have bought worker's factories in our country, but instead they propped up pieces of paper. German youth are encouraged to make things, the English speaking peoples of the world to buy and consume them. Not just America or Britain, but Australia and New Zealand. If you wanted to go to a school to find out how to take a factory from set up to sold product, where would you go in the English speaking world. My niece seems to be taught nothing but cultural diversity, Gay studies, the evils of Western style democracy and really wacky enviromentalism in school. I would not trust her teaher to wlk my dog. It is hard to believe that the savages we are raising ar going to be able o defend Western culture, let alone teach it to the rest of the world. Hopefully, there is a Winston Churchill type character on the horizon to save us from ourselves. Germany, may be the last sane country in the west. Hopefully, they will convert the rest of us tatooed, shower thong wearing idiots to sanity, before we destroy ourselves.
Complain about this comment
As an expat in Berlin, I personally find Frau Merkels attitude somewhat self-serving. She is not ruling out tax cuts she is saying she doesn't want tax cuts until after the election i.e. vote for me and I'll cut taxes. Somehow the rival SPD is completely failing to come up with a suitable reposte.
It is certainly true that the Germans did not go for the credit & spend binge in the same way as the UK. When I built a house the requirement for a low rate mortgage was 30% deposit and no more than 3 times salary. No 100%, self certificated stuff and as a result house prices have remained stable.
Complain about this comment
@SuffolkBoy
Once again you're 'Off Subject' and I do sometimes wonder if you bore your family as much as you do the readers here with your warped views..
I have to say, I prefer living in a Germany where Governments over the years have invested in the national infrastructure, rather than in a Suffolk, which never got much from a London Parliament..
and which through German eyes looks rather poor!
Complain about this comment
Germany will have a problem with exports at this time, especailly to countries such as the U.K. The current exchange rate does make eurozone and dollar currency products expensive in the U.K. (no accident this is part of the U.K. Government's hopes) It is likely in these diffcult times consumners will more than ever be wanting to spend their reduced income as prudently as possible, so are more likely to spend it on home produced products or on products from those countries that still have a favourable exchange rate.
Germany, along with the rest of the world, will suffer during this recessuion, this is something I take no satisfaction in, but to pretend otherwise is delusional.
Complain about this comment
#47, jordanbasset,
Quite so, Germany has long had a dual advantage, firstly it is the worlds largest exporter, and secondly the population have a belief that for anything to be any good it has to be German made. Government protectionism and this mentality made it very hard for an external company to break into the German market without having a manufacturing facility in Germany. Now that people are choosing very carefully what they spend their money on we can expect Germany to suffer, albeit a bit further down the road as the exports suffer.
One thing I suspect will happen now is that the sham that the EU is united and working will be exposed for the fraud it is, as national self interest and protectionism becomes overt rather than being covert as it has been.
As for the German housing market, I worked near Dusseldorf some 12 years back and I recall the house prices were astronomical at that time even compared to the UK. I might be wrong but I seem to recall the mortgages were often multi generation so houses tended to be family purchases in order to afford them. I also recall being told that many people had to rent since buying a houses was out of their reach.
Complain about this comment
#30. PatrickJSmith
"I lived in Northern England, and saw what Thatcherism did"
Thatcherism was a necessary response to a heavily unionised and inefficient workforce squandering the wealth generated by the private sector. Say what you like, but if your business model relies on people paying you more than they would have to pay others for the same service/goods, then you have no business model. You have no wealth creation and noone gets those little tokens that people can swap for goods or services.
Or should the tax payer continuously support inefficient industry? Clearly there is a line to be drawn; but for coal and steel one could have smelled the Danish from a mile away.
To continue to Blame Thatcher, 20 years later, especially after the wasted mandate that Blair had, is disingenuous at best....
Complain about this comment
Krugman has spoken: http://krugman.blogs.nytimes.com/2008/12/10/the-german-problem/ so the matter is settled.
Complain about this comment
To be brief, the Euro may have many ailings, but it has two excellent features that make it reliable: (1) the German weigh substantially over Euro-decisions, (2) the UK has zero say about it.
Complain about this comment
Re 49: To continue to Blame Thatcher, 20 years later, especially after the wasted mandate that Blair had, is disingenuous at best....
Now that the UK economy is going down the drain (like it did in the early nineties) you talk. In retrospect though, New Labour may have had some socially progressive policies, but as far as the economy goes it just propagated unchecked Reaganomical Thatcherism.
Complain about this comment
Germany may fool people about its exports, but not ordinary Germans. I lived in Germany for three years, and most Germans told me that "The made in Germany" label, was just a national Trademark.
Goods were shipped from factories throughout Eastern Europe, and packaged in Germany, under the "Made in Germany" label, then re-exported.
Even sports shoes made in China, were suddenly packaged and labeled with the "Made in Germany" label, and exported to Russia.
I knew one truck driver who made a good living, driving chinese made shoes into Germany, waiting for them to be re-labellled and then driven to Russia!.
These false "export" figures make germany look rich but most of the Country is poor by European standards. There were more soup kitchens in Germany, then in poorer Poland, before the crisis.
And German banks are impossible to borrow from, even if you fully own property.
Don't be fooled by the mighty German economy, its mainly a tinker state for other nations, and in reality a country that is forced to mislead over the sad state of its
packaging industry.
Complain about this comment
The thing that surprises me the most is, that I always percieved the germans as having a gloomy outlook, talking things bad. The euphoria of having one nation divided was over so quickly.
But at the moment the germans are the optimists. Really. I talk to a lot of business people in spain and britain, and they are much much more worried than the germans.
So maybe germany does not need the tax cuts to stimulate their inner economy. And then they shouldn't. No way.
Complain about this comment
#52. lacerniagigante
actually I talked for the past 5 years about putting conservative (in the dictionary, rather than politically sense) rules in place and hence I personally am well placed.
If you were bipartisan you would call it Gordonomics, but instead you wheel out the ghost of a leader past and falsly claim the whole thing her fault, instead of the people in charge who blindely applied her policies in a different era, to solve none of the same problems.
The point is that Crash Gordon has acted exactly like a teenager in a really fast car who just can't believe how fast he is going, and how much space there is behind him on the road. Without bothering to think that roads only run straight for so long and constant acceleration leads to a short, sticky end.
Complain about this comment
Give me German rationalism over NuLab delusionalism any day.
And as for Patrick Smith blaming Margaret Thatcher for this:
Go get a clue and get some therapy. Then answer this:
Brown replaced the the Tories' SIB with his own FSA in 1997. What remit did he give them?
1."Do nothing" (quote, unquote)? Or,
2. Trash the economy?
Either way the buck stops with him and he is as culpable as hell because his strategy of telling the construction industry to build as much as they liked so he could rob the future through junk mortgages is precisely what the Americans did to cause the credit crunch in the first place. And he's still carrying on with it!!!!!!
Anyone who disagrees with Brown is called isolated but if you are going to do that to the finance minister of Germany (probably the most fundamentally sound economy in the world) you had better be prepared to crank up that Nulab/BBC lie machine to full power.
Complain about this comment
If Markus2008 doesn't think the germans export much perhaps he should go and stand by any street in the world and count the german cars or any factory-floor and count the german-made machines. To imply that their economy is not much healthier than ours is pure drivel.
Complain about this comment
Re 42: But surely not? Is it not a hallmark of communist eastern europe that the most powerful people in society would demand vast sums, unending sums, of money from the taxpayer, in order to prop up their failed economic ideas?
Indeed, Fanny Mae, Freddie Mac, Lehman Bros, Meryll Lynch, are all known to be part of the Soviet Apparatus.
Complain about this comment
hey, thanks very much for the many positive remarks about my home country.
However, I regret that seemingly politicians start failing to talk reasonably with each other. I think it would help more if we'd accept and respect that our national economies all differ somehow. Hence, each might need its own special treatment. On a european level it would be sensible to coordinate actions in order to amplify their effects. Or could we really hope to find a better approach by trying to find methods to be applied in all countries the same way ?
I've doubts, because we still don't have a clear picture of how deep this crisis could still become. If I remeber well, Germany has experienced the effects of former economic slowdowns allways with some delay, possibly due to its dependency on exports. Maybe this could justify being reluctant now in order to save up some potential to act for the future.
Yet consumption was already low for years due to many measures that reduced private income especially of the middle class. As a result this segment of society is decreasing whereas the gap of income and wealth grows more and more in recent years. As good as Mr.Steinbruecks intentions may be at saving future generations from excessive debts, its hard to understand why many employees had to pay more for the fiscal consolidation while businesses were receiving tax cuts here and there. This could hit back seriously if the economic situation should become significantly more critical. I hope that the currently maintained attitude of calm prudence pays off. Yet I think noone can predict at the moment that it will. With the bubble economics of the last years an economic experiment of such a huge extent had been started that possibly we can only hope to keep control over it.
Complain about this comment
Re 52: actually I talked for the past 5 years about putting conservative (in the dictionary, rather than politically sense) rules in place and hence I personally am well placed.
But that has been done 10 years ago by New Labour. The genial idea that Blair, Brown and Mandelson had in the nineties was that if you can't beat the Tories, then just start acting like them, just take the mouldy crust off the dark velvet, change colours and cover all that with glitz and wide smiles to the media. Making sure you have news channels (Murdoch, BBC, etc.) on your side, that is.
The fact is that British economy did not change a whole lot under New Labour, from what it was under the Tories.
In fact, it became even harder to contrast the policies of Blair government, because all this economic deregulation purportedly was aimed at making the working class become a dreamland middle class. But keep in mind that it wasn't Blair (nor sorry Brown) who invented the credit card for all, the mortgages for all, and all that. These are all imports from the USA which Thatcher's government started aping with its deregulation policies.
The fact is that the UK is a country in decline since the end of WW2. There have been bouts of recovery, but they're all short-lived quick fixes. I don't think the Tories have any idea on how to fix this, because these ideas lie at the opposite end of the economic-political spectrum. New Labour's goofy attempts to reinstate the great English economist Keynes, after decades of neglect are just a sign of how *all* UK politicians have got it wrong so far.
Complain about this comment
Re 56:
I agree with most of what you say. What is "SIB" and "FAS".
I'm becoming fascinated with the UK's economic history, but I'm not very good with acronyms and been in the UK only for 4 years now... long enough to get a glimpse on how fallacious is New Labour, but not long enough to understand why many tell me that they would rather have a hundred stinking Blairites than one single Thatcherite among their councilors.
It must have been really bad over here in the eighties. We heard about it over there (on the continent) and felt the depressive mood (Depeche Mode, Smiths, etc.) but you have to have been in the UK to understand fully its extent. Looking around me now, I think I start to "feel" what went wrong then. History doesn't repeat itself, but it rhymes; said some American writer some hundred and so years ago. Maybe I'll understand one day, but I think the main problem between the UK and the rest of Europe, is that the Brits are prone to embrace "quick-fixes" and "if it works don't touch it, don't question it" type of engineering (mechanical, building, social, economical).
There is a total disregard, almost a dislike, for things like "robustness", "quality", "durability"... in fact you even get funny smiles when you dare mention such things during work meetings. Another aspect of things that is in very low regard is the "common good". Just look at trains in Britain and elsewhere on the continent. Such an subconscious act as putting ones shoes on the seats, may be a small detail, but it is very telling.
Sorry though, I think I just digressed too far here :-) So let me say that on the other hand there are many interesting aspects to the UK society as a whole which would be useful, if adopted more wholeheartedly by the continentals. Let's see where this will lead to.
Complain about this comment
Re 55: The point is that Crash Gordon has acted exactly like a teenager in a really fast car who just can't believe how fast he is going, and how much space there is behind him on the road. Without bothering to think that roads only run straight for so long and constant acceleration leads to a short, sticky end.
I see rather like Tony was riding the fast car, and Gordon next to him. And as long as the car was going, Tony kept on pressing on the pedal (knowing deep inside that something had to give eventually) but as soon as he smelled trouble he jumped out of the car, leaving Gordon (and the embarrassment of the Crash) alone in it. Good old Tony, while sitting in his Jerusalem villa, enjoying the middle eastern sun and the millions flowing into his account for talking sweet b**ls**t, he can watch his old "friend" sinking into deeper and deeper trouble. No wonder people have stopped trusting politicians a while ago.
Complain about this comment
I have to say, the perception in Germany of what the British Government is doing, is that of 'the arsonists' suddenly becoming 'the firemen'.
The British Government's position sounds like pure spin.. that's the problem, after eleven years of spin.. no-one believes them anymore..
Complain about this comment
#60 lacerniagigante
I think you are probably largely correct- my biggest beef with Blair and Brown is that they totally squandered a huge mandate to bring idealism back to british politics. They could have done ANYTHING, but instead the made a pension problem even worse, taxed and spent more than any previous government and have little to show for it except for the worse tendancies of power-hungry micromangers: politicised police, civil service, draconian and intrusive new powers and laws, hugely expanded public employment while the infrastructure still crumbles and real wealth creation staggers, choked with red tape, to more friendly climes.
#62
This is also pretty close to the mark. If we can get Blair into the Hague to stand trial for misleading the house and public into a war which has killed tens of thousands [for what?], can we then metaphorically ascribe this to the injuries Tony would have got from leaping out of the car?
Complain about this comment
about #60
I agree completely, and would like to add that the german socialdemocrats, especially since chancellor Schroeder, try exactly the same game: trying to be better business propagandists than the christian democrats. Mr.Steinbruecks financial politics isn't undisputed in Germany, and there are even conservative politicians who suggest more spending already now.
Apart from that, I don't think that the current situation can be solved by tracing back when and by whom it all began. Whenever this development had started, at least about seven years ago probably far more, it changed so much in the structures of our economies and societies that I can hardly imagine that the initial assumptions and premises could be of much help for us now. I even doubt that the two governments of Great Brittain and Germany differ about the economic model to apply now: probably both favour a keynesian model. Its tricky point, especially now, is finding the right time to support the economy with tax money and debts (and of course taking it back when the mood gets better, which most governments have more often failed to do than succeeded; the german one, too).
Complain about this comment
An interesting article,but the German hyperinflation was in 1923 and not the 1930s as Mark Mardell asserts.
Complain about this comment
View these comments in RSS