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On Germany: profiting from pain & a 2012 recession? January 11, 2012

Posted by proeconomia in Fiscal policy, Main, News on Greece, On the crisis, Opinion.

Two articles from the English edition of Spiegel, that appear as a slight oxymoron. In the first article “Profiting from Pain: Europe’s Crisis is Germany’s Blessing” we read how Germany is now borrowing with negative interest rates! Falling unemployment is also enjoyed by the Germans, as the euro declines and German exports boom without bounds, while it also attracts many skilled professionals from other countries. ” The number of Greek immigrants rose by 84 percent in the first half of 2011 to reach some 4,100 people, according to the Federal Statistical Office. The total number of immigrants rose by 19 percent year-on-year for that time period, reaching 435,000″ says the article, which is stunning. Here is the ending of the article: ” Indeed, German exports grew by 2.5 percent month-on-month in November, reaching €94.9 billion. Compared to a year earlier, exports were up by an impressive 8.3 percent. The crisis notwithstanding, exports for 2011 as a whole surpassed the historic trillion-euro level, a benchmark not even reached during the boom year of 2008.”


The scone article “Germany could face a recession in 2012” comes as an antithesis to the first one (in fact they contradict each other on the 2012 growth forecast for Germany) but it still has some interesting lines such as this one: ” Consumers happy to part with their cash were the main driver of the growth last year, with private consumer spending up by 1.6 percent — an increase higher than any seen in the last five years.” Aha: this is important, as many have claimed that low consumer spending from the Germans was an important part of rising spending in other countries within the EU, Greece included; someone had to import their goods after all. And, no surprise here, the article says that economists at the Deutsche Bank predict that the main reasons behind the contraction in German growth would be the debt crisis and the austerity measures in the EU countries (i.e. these countries will not be importing as much of German products and they will not be able to borrow to do so since Germany borrows with negative interest rates and has no appetite to share the debt burden via eurobonds).


This is really nice, to see it in print, and is a keepsake for the future. We are all part in this EU/euro business after all, right partners?!




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