Germany: Split on the Economy

[olivegreen]

Thought this interesting for some insane reason

OG


http://www.spiegel.de/international/...604319,00.html

SPLIT ON THE ECONOMY
'Right Now, I Don't See a Crisis'

Economist Bert Rürup is convinced the German economy is in deep trouble. His colleague Stefan Homburg isn't so sure. With SPIEGEL as referee, the two discuss whether stimulus programs are merely a gigantic waste of money.

SPIEGEL: Mr. Homburg, Mr. Rürup, how long will the crisis last?

Homburg: Right now I don't see a crisis.

Rürup: Excuse me?

Homburg: Real growth was 3.3 percent and 1.3 percent in the second and third quarters of 2008 respectively, impressive numbers compared to the same quarters in the previous year. More recent numbers do not exist, just gloomier forecasts, but they could be wrong.


Norbert Michalke
Stefan Homburg and Bert Rürup don't agree on much when it comes to the economic downturn.

Rürup: Oh, come on! We can see how orders and production have plummeted in large segments of industry since last September, and how quickly the number of short-term workers is growing. If these are not signs of a crisis, what is?
Homburg: The word crisis is too alarmist, in my view. Unemployment is at roughly three million. That is a long way from the five million unemployed we had four years ago, when there was far less public hysteria than today.

Rürup: I disagree with your assessment completely. Despite the economic stimulus programs, the economy will shrink by more than 2 percent this year. This has never happened before in the history of postwar Germany. I would be pleased to see us reach the bottom in the second half of this year.


etc... etc...

[Guest]

Re: Germany: Split on the Economy

Olivegreen -

My employers are in Germany, and I agree precisely with the tone of this article. One can't make heads or tails of whether they are in a severe recession or not. One clue might be, that in the midst of this most dire of global circumstances, one of my CEO's has gone on a leisurely vacation (3 weeks) to Ecuador to "visit some friends". My sense is that Germany's economic situation is markedly stronger than the rest of Europe, which is having a mild heart attack. Go figure what the heck that all adds up to. Spiegel runs some great articles. Some of the best journalism in the world pops up out of there on occasion. Anyway the conclusion is - don't count the German economy down, until you see it flat on the canvas and KO.

[olivegreen]

Re: Germany: Split on the Economy

Ah yes Lukester....that makes sense... just found this by Evans-Pritchard...
It's all a game now of who is gonna pay... what a world...

Thanks,
OG


http://www.telegraph.co.uk/finance/g...-bail-out.html

Europe ambushes Germany on debt bail-out
The European Union has called an emergency summit of national leaders this month to halt the drift towards protectionism and stem the risks of a debt crisis as the slump deepens.

By Ambrose Evans-Pritchard
Last Updated: 6:24PM GMT 09 Feb 2009
EU finance ministers are to discuss proposals over breakfast in Brussels today for some form of "debt-agency" or mechanism for the EU to raise bonds, a move seen by diplomats as a ploy to ambush Germany into accepting shared responsibility for EU debts – anathema to Berlin.
Concern is mounting over the dramatic deterioration of public finances across the EU. Ireland's deficit is heading for 12pc of GDP, and there are doubts over whether Italy and Greece can roll over some €250bn (£218bn) in state debt between them this year.
EU company debt is a worry too, now 95pc of GDP compared to 50pc in the US. "The amount of debt to roll over in the eurozone is huge, at a time when banks are tightening credit standards," said Gilles Moec, from Bank of America. "Spanish businesses are in a dire situation."
Mirek Topolanek, Czech premier and holder of the EU presidency, said the crisis summit was aimed at thrashing out a joint "recovery plan" and curbing the nationalist reflexes that are tearing the EU apart.
The Czechs are livid over comments by French president Nicolas Sarkozy, who threatened to withold aide for French car companies unless they spend it at home. " If we give money to the auto industry to restructure, we don't want to hear about plant moving to the Czech Republic," he said.
Mr Topolanek said the comments were "unbelievable" and could cause the Czech Republic to reject the Lisbon Treaty. "If somebody wanted to seriously threaten ratification, they couldn't have picked a better means," he said.
The French plan fleshed out yesterday offers €6.5bn in soft loans to Renault and PSA Peugeot Citroen on condition that they promise not to close any sites in France. The Brussels competition police said they will examine the details to determine whether the terms breach EU law.

[Guest]

Re: Germany: Split on the Economy

I'm more convinced by the day there's going to be a crackup in the EURO zone. Euro is going to break up in some way in the next couple of years. or some pieces will come flying off of it. That's another thing that can be a real wild card out there for the USD. Imagine the global landscape changes, if the EURO really does crack wide open. Don't anyone claim it can't happen the way things are progressing.

Ah yes Lukester....that makes sense... just found this by Evans-Pritchard...
It's all a game now of who is gonna pay... what a world...

Thanks,
OG\
http://www.telegraph.co.uk/finance/g...-bail-out.html

Europe ambushes Germany on debt bail-out
The European Union has called an emergency summit of national leaders this month to halt the drift towards protectionism and stem the risks of a debt crisis as the slump deepens.

By Ambrose Evans-Pritchard
Last Updated: 6:24PM GMT 09 Feb 2009
EU finance ministers are to discuss proposals over breakfast in Brussels today for some form of "debt-agency" or mechanism for the EU to raise bonds, a move seen by diplomats as a ploy to ambush Germany into accepting shared responsibility for EU debts – anathema to Berlin.
Concern is mounting over the dramatic deterioration of public finances across the EU. Ireland's deficit is heading for 12pc of GDP, and there are doubts over whether Italy and Greece can roll over some €250bn (£218bn) in state debt between them this year.
EU company debt is a worry too, now 95pc of GDP compared to 50pc in the US. "The amount of debt to roll over in the eurozone is huge, at a time when banks are tightening credit standards," said Gilles Moec, from Bank of America. "Spanish businesses are in a dire situation."
Mirek Topolanek, Czech premier and holder of the EU presidency, said the crisis summit was aimed at thrashing out a joint "recovery plan" and curbing the nationalist reflexes that are tearing the EU apart.
The Czechs are livid over comments by French president Nicolas Sarkozy, who threatened to withold aide for French car companies unless they spend it at home. " If we give money to the auto industry to restructure, we don't want to hear about plant moving to the Czech Republic," he said.
Mr Topolanek said the comments were "unbelievable" and could cause the Czech Republic to reject the Lisbon Treaty. "If somebody wanted to seriously threaten ratification, they couldn't have picked a better means," he said.
The French plan fleshed out yesterday offers €6.5bn in soft loans to Renault and PSA Peugeot Citroen on condition that they promise not to close any sites in France. The Brussels competition police said they will examine the details to determine whether the terms breach EU law.

[ciaoant1]

Re: Germany: Split on the Economy

I'm more convinced by the day there's going to be a crackup in the EURO zone. Euro is going to break up in some way in the next couple of years. or some pieces will come flying off of it.

Yes, i agree.

I am from Greece, and i have almost stopped saving money in euros (converted them to english gold pounds) since 2006-2007.

I remember a lot of people saying that i must be "out of my mind", when i would argue that a big crisis in the world capitalist system was going to happen, and that would lead to revealing the big difference between Germany and "the rest", especially Greece (here is my latest post, i used to write on a couple of forums, and i still do, but the readers wanted me to start a blog, so i did)

Germany's ascent into power, as "the boss of eurozone" is probably the most overlooked story of this crisis - probably because it involves politics, not just economics, and most of the people that are "taking an interest" and have some idea what is happening are economists, stoke brokers, investors, etc. So, they are mostly focused on the economic side of things, and not so much in the political side.

Germany is a country, probably the only one in the "west" that actually produces a lot of things. They also rely heavily on the quality of their products, not so much on their lowprice (not as much as -for example- the chinese at least) in order to export them.
They will also not be that heavily impacted as the other exporters if protectionism rises (which is the only way the west, especially countries like Greece, can expect to have some production of their own, otherwise "made-in-China" products will dominate the markets).
China will have a lot more problems if protectionism rises, since protectionism will be aimed primarilly at them, and they will lose a lot of jobs, so the workers will revolt (which is not a bad thing, they must finally stand up and claim something better against the state).
Germany will never accept protectionism inside the eurozone, so they will still get to keep a free market for their exports (the eurozone countries).
So, they will do OK compared to the other major exporter (China).

So they can "take it" if the euro is the hardest currency on earth - the other countries, especially countries like Greece cannot.

So, Greece has no future inside the eurozone.

Capital wants cheaper and cheaper labour - the wages of the workers need to go even further down for the "investors" to come to a country (the simplest and "stelthiest" way to do this is throught the devaluation of the currency), otherwise they will simply go elsewhere. This is how capitalism works.

But Germany won't devalue - they stopped ECB' s printing of money immediately, so countries like Greece cannot attract capital.

There are only two solutions for countries like Greece - devalue the currency, rob the peaople even more (in order for capital to get attracted to the lower wages), or protectionism.

And of course, there is always the option for an armed revolution/revolt (by the way, i think that if you are looking to "invest" somewhere politically, a good bet for the future would be to invest in the emergence of a political organization that will opose the exploitation of the people, since a lot of people see that they are indeed victoms, and they are "not going to take it". All systems that are based on exploitation devide -by nature- the people to the ones who do the exploitation, and the ones who get exploited. So, they all have to deal with the emergence of political parties/organization of the people who are oppresed. The left did poorly in the case on the Soviet Union, but i think that if the left an find something better, they could, and should, take another shot at it).

All other choises apart from the ones mentioned above lead to even worse poverty for the people - when this fact becomes obvious, and people start understanding a little more what is happening, they will move towards these choises, it is "a matter of survival", it "needs" to be done.

This neeed - not desire, need- is i think the decisive factor.

[ThePythonicCow]

Re: Germany: Split on the Economy

Yes, i agree.

I am from Greece, and i have almost stopped saving money in euros (converted them to english gold pounds) since 2006-2007.

Thank-you for your comments. They provide a valuable perspective.

[ciaoant1]

Re: Germany: Split on the Economy

Thank-you for your comments. They provide a valuable perspective.

Thanks, although it is i think obvious that most people in Greece (and indeed everywhere, worldwide) has little or no idea about what is happening.

So, my views, correct or not, do not reflect what most people in Greece think right now, i am "the minority vote"

[ThePythonicCow]

Re: Germany: Split on the Economy

So, my views, correct or not, do not reflect what most people in Greece think right now, i am "the minority vote"

That's ok. I trust minority views more than the majority.