Why Germany’s current-account surplus is bad for the world economy

[Deleted]

I'm aware of that one, and to nitpick, it was partial debt forgiveness, not getting all of it written off.

If we partially wipe Greeces debt, are they capable of paying the rest back? They owe quite abit.

I know it was partial, I suggested a partial write off for Greece aswell. Would it fix things? Who knows, however it was the only possible humane way of dealing with the situation.

[Mittens]

So what exactly did that fix?
The system has remained as flawed as it was before... they would just accumulate the same debt over again.

Lel, they can't. Their government has other expenses and debt to cover, but without Germany being a burden in their economy ,hopefully, they start to recover because the current set up is unsustainable for greece.

[Deleted]

What Germany has done with their economy over the last 30 years is remarkable and should be applauded. They've had a plan and stuck to it, the concerted effort between the government, unions and workers has got them into this position.

However, what irks many is the insistence that every economy should be like this when it is an impossibility to do so. Unfortunately the Eurozone has created winners and losers, and it looks as though these positions are now locked in. If any member states do leave the single currency this will be the biggest reason for it.

Yup. If you aren't like Germany you aren't ''competitive'' enough, thus austerity measures and a plethora of never ending criticisms and ''suggestions'' (usually you need to privatize more and sell your things off) from Brussels. It's impossible for any country to become the next Germany though.

[Azadina]

I know it was partial, I suggested a partial write off for Greece aswell. Would it fix things? Who knows, however it was the only possible humane way of dealing with the situation.

If they can't pay back half the debt, then partial forgiveness does nothing. And as such it's not even worth doing it, because next they want all the rest of it forgiven too, so they can party some more debt up, and we're back to square one despite forgiving all of it once.

[Mittens]

Owing money to someone sounds like debt to me. It's not all that relevant whether it's owed because it's reparations or loans, it's still money to be paid back.



I'm aware of that one, and to nitpick, it was partial debt forgiveness, not getting all of it written off.

If we partially wipe Greeces debt, are they capable of paying the rest back? They owe quite abit.

The idea of reducing greek debt is to reduce how much interest they pay to a level that can be managed by their government and do away with the fears of defaulting each couple of years.

[Deleted]

Lel, they can't. Their government has other expenses and debt to cover, but without Germany being a burden in their economy ,hopefully, they start to recover because the current set up is unsustainable for greece.

What exactly makes you think they have anyone among their leadership that can even remotely pull it off? Or one that is interested in doing so?

[Azadina]

The idea of reducing greek debt is to reduce how much interest they pay to a level that can be managed by their government and do away with the fears of defaulting each couple of years.

Tie the interest to inflation, and double the rate at which they are to pay back. Now they can get to it, instead of complaining about interest payments.

[Deleted]

Tie the interest to inflation, and double the rate at which they are to pay back. Now they can get to it, instead of complaining about interest payments.

If they can't pay back half the debt, then partial forgiveness does nothing. And as such it's not even worth doing it, because next they want all the rest of it forgiven too, so they can party some more debt up, and we're back to square one despite forgiving all of it once.

Lmao. You just figured out everything huh? Greeks are lazy and they just need to pay up those god damn debts! So smart.

[Dismembered]

Stupid thread is stupid, please close.

[Deleted]

Actually, germany is the biggest exploiter of workforce in the EU.

can you explain that more than in one hate sentence ?

please use this map https://en.wikipedia.org/wiki/List_o...y_average_wage in your arguments.

[Azadina]

Lmao. You just figured out everything huh? Greeks are lazy and they just need to pay up those god damn debts! So smart.

I've been able to figure just fine, that after all those money packages sent their way, nothing has improved. Maybe their corrupt politicians should think of fixing things with said money, to then be able to pay back loans. But no, they want to extend the unsustainable lifestyle they've grown accustomed to instead. Every chance they get.

And you think they won't continue down the very same line if you magically wipe all their debt away? I guess it's the evil EU who made them that corrupt or something? Nevermind that they in all their noncorrupt honesty totally didn't doctor the books to be able to join EU in the first place.

Or how about they just get on with paying the debts, without the neverending excuses.

[Deleted]

Oh, it's that thread. Unlike often assumed, Germans don't run around with big knives and small guns forcing foreigners to buy German shit. Both the decision to buy and the decision to sell is voluntary, often made by people who are not completely braindead. The premise, that some invisible, benevolent hand forcing either side to do otherwise will increase the common good, is at least questionable.


But they certainly make one good point. German infrastructure is - indeed - crap. Investing in roads, schools, prisons (with all the rabid leftists and recent non-european immigrants doing their thing the most urgent) is overdue. It will have a small impact on the trade surplus, but the assumption that all those schools will be painted by uzbek painters using mexican brushes and angolan paint is a tad farfetched.

In the end, it all comes down to the Euro. There have been significant trade surplusses in the past, but a D-Mark strengthening vs other EU currencies always tended to balance it out. As mentioned before in this thread with Reunification, France blackmailed Germany into giving up the Mark. With that vent gone, some labour reforms in Germany under Schröder and the Euro vs Dollar performing much worse than Mark vs Dollar used to, it all escalated quickly.

The idea of reducing greek debt is to reduce how much interest they pay to a level that can be managed by their government and do away with the fears of defaulting each couple of years.

But after endless rounds of negotiation and blackmail, Greece already pays one of the lowest average interest quotas in Europe: 2.5%. Lower than Italy, Spain, Ireland, Portugal.

[PL-Cibo]

Central and Eastern Europe needs to diversify away from Germany as soon as possible. German and French decline shouldn't drag us down with them.

Ah well, then theres no problem, they do that since 1990. It served them quite well, last time i was there.
And yes, poor central europe. Dänemark, Niederlande, Österreich, Schweiz they are poor as fuck, and living there must be hell.

[Independent voter]

Oh, it's that thread. Unlike often assumed, Germans don't run around with big knives and small guns forcing foreigners to buy German shit. Both the decision to buy and the decision to sell is voluntary, often made by people who are not completely braindead. The premise, that some invisible, benevolent hand forcing either side to do otherwise will increase the common good, is at least questionable.

Germans tend to buy German so do the Japanese. It's nationalism in the market place. American's are less patriotic and will buy whatever.

And the few companies we have that are competitive in the EU, Microsoft, Apple, Amazon, Google, the EU makes up some spiteful law based solely on getting votes to punish these companies. I don't get it.

[Xarkan]

I've been looking for an article like this for quite a while. This basically sums up most of my thoughts when it comes to the Euro and Northern Europe/Germany problem. I don't think our German friends will like it though.

Why Germany’s current-account surplus is bad for the world economy


https://www.economist.com/news/leade...nt-surplus-bad

Underlying Germany’s surplus is a decades-old accord between business and unions in favour of wage restraint to keep export industries competitive (see article).

At least they have a federal minimum wage now..

It is a funny complaint though. In other places the right to fire people on a whim is guaranteed by law so if a random industrial worker thinks of joining a union or asking for more in wage you can just fire them (i think it is jokingly called right to work) I bet the economist would be fine with that.

[Miyagie]

can you explain that more than in one hate sentence ?

please use this map https://en.wikipedia.org/wiki/List_o...y_average_wage in your arguments.

WTF is a hate sentence ? Its a fact that germany has the biggest low-pay sector and the average wage in the EU shows that.

[Sunseeker]

It's a distortion generated by the Euro, Germany's ageing population being frugal and artificial suppression of wages. The issue would probably balance itself if the Euro was gone, but alas its The Economist and ideas like that are pretty rare there.

For pretty obvious reasons too. While I support currency sovereignty, I only support it if its actually beneficial to a nation. Clearly the Euro is a better deal for Germany than otherwise.

Yes and that's neoclassical thinking. Neoliberalism is somewhat similar but not the same.

I'm not really sure I understand the difference, but then I'm learned in political theory, not economic theory so my economics knowledge is sort of fuzzy on specific names and styles.

And here I thought you were a person who'd support neoliberalism. (Why can't people be universally critical instead of cherry pickingly showing their rationality and then blindly dogmatize and have monolithic core beliefs and dont want their world view questioned)

Really? I'm surprised I'd give anyone that idea. I support globalization to the point that interconnectedness does work at keeping people from going to war with each other. I don't support that via "win-win neoliberalism" and "free trade", both of which I find only effective between nations of similar economic development, ethics and social structure. Everyone else gets "fair trade".

But Germany's economy does have an effect on all countries which use the euro. I've said this many times on this forum but in the current system Germany profits off other countries using euro. Saying they ought to think of others is common sense. But they wouldn't even let Greece implement their own currency back. That's not to say Germany doesn't work hard, or isn't an amazing country. But you can't expect everyone to be Germany. It's literally impossible, because of the size, location, the people, the industrial base etc. The euro needs to go, simple as that. Otherwise you risk permanent stagnation in the mediterraenan countries.

I'm well aware of that. But Greece didn't need Germany's permission to go back to using its own currency, all it needed to do was leave the EU. The EU needs to understand that like the USA, under a Federal currency system, some states will always be takers and some states will always be givers. The EU is in part struggling because it can't accept this and expects everyone to be givers. The EU must either accept that the international economic, political and social leverage brought about by being "one nation" is more valuable than every member being a giver, or they must reevaluate their unification goals.

Germany actually gets this (in part because it's totally benefitting from the current arrangement) which is why via the EU, they have been subsidizing other countries. The problem is they're still treating that like loans and debt to those nations, which you can't do if you want to be "one nation" because that debt and its repayment will just crush their economies because they'll never not be debtors.

[Deleted]

I've been able to figure just fine, that after all those money packages sent their way, nothing has improved. Maybe their corrupt politicians should think of fixing things with said money, to then be able to pay back loans. But no, they want to extend the unsustainable lifestyle they've grown accustomed to instead. Every chance they get.

And you think they won't continue down the very same line if you magically wipe all their debt away? I guess it's the evil EU who made them that corrupt or something? Nevermind that they in all their noncorrupt honesty totally didn't doctor the books to be able to join EU in the first place.

Or how about they just get on with paying the debts, without the neverending excuses.

I don't think you understand how money and loans work. The people who lent the money knew exactly what will happen. When I say Greece can't repay their debt I mean it. Everyone who lent them the money knows it. This isn't a simple case of them just ''having to pay back and stop being lazy/wasteful''.

https://www.yanisvaroufakis.eu/2017/...petual-crisis/

I'm not trying to excuse corrupt government officials, I am thinking about how not to throw the people of Greece completely under the bus. In the same way when I say ''Germany'' and ''EU'' I don't mean the people but the government officials and financiers.

- - - Updated - - -

I'm well aware of that. But Greece didn't need Germany's permission to go back to using its own currency, all it needed to do was leave the EU. The EU needs to understand that like the USA, under a Federal currency system, some states will always be takers and some states will always be givers. The EU is in part struggling because it can't accept this and expects everyone to be givers. The EU must either accept that the international economic, political and social leverage brought about by being "one nation" is more valuable than every member being a giver, or they must reevaluate their unification goals.

Germany actually gets this (in part because it's totally benefitting from the current arrangement) which is why via the EU, they have been subsidizing other countries. The problem is they're still treating that like loans and debt to those nations, which you can't do if you want to be "one nation" because that debt and its repayment will just crush their economies because they'll never not be debtors.

Good post, I agree. However I do think Greece had very little choice in the matter of leaving EU or dropping the Euro.

[Deleted]

Germans tend to buy German so do the Japanese. It's nationalism in the market place. American's are less patriotic...

That parallel universe of yours; is there kinky stuff as well? And no, in this reality Americans are not less patriotic than Germans; never thought I'd ever need to spell that out. In less than one year in the states, I've seen way more 'buy American' advertising than 'buy German' in decades living in Germany.

And the few companies we have that are competitive in the EU, Microsoft, Apple, Amazon, Google, the EU makes up some spiteful law based solely on getting votes to punish these companies. I don't get it.

Microsoft and Google both have monopolies and are not squeamish about securing them. Facebook blatently lied to EU trade and market commissioners during the 'whatsapp' takeover. It cost them a mere 110 million Euro, which is a joke. Apple virtually pays no taxes in Europe. I don't like the EU and many of their regulations, but they didn't hit any innocents here.

There is a clear imbalance concerning banking regulations. Deutsche Bank had to pay billions in the US - quite possibly deservedly. On the other hand Goldman Sachs was instrumental in helping Greece cook the books for Euro entry. What happened? Nothing. EU should have crushed them.

What I (probably unlike 95% of europeans) find problematic are the measures against genetically modified food and seeds. Those hit US companies as well and they are not necessarily on solid scientific ground. If unsure, just mark the products as genetically modified and let the consumer decide.

But in the end, those are EU decisions, not german ones and I doubt they contribute in a relevant way to the trade surplus.

[Sunseeker]

Good post, I agree. However I do think Greece had very little choice in the matter of leaving EU or dropping the Euro.

I agree, but this was in part due to the fact that economically and politically, Greece was a mess with or without the EU. Currency sovereignty may have helped stabilize their economy, but they were still a corrupt political mess.