German Economy a la M. Merkel

Discussion in 'Current Affairs, News and Analysis' started by tomahawk6, Nov 15, 2005.

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  1. RTFQ

    RTFQ RIP

    It may actually be a clever bit of passive-aggressive politics. A gamble, definitely, but they may be relying heavily on their european influence to make the rest of us drag them back from the brink.

    The European Central Bank will be very much aware that come 2007 it will hold Germany's and eatern europe's economies in their hands. That means the stability of the EU and its very future will rest on the decisions of the ECB. Everyone else will know this, and a lot of political pressure will be breathing down its neck.

    They'll be very tempted to lower interest rates and give germany a get out of jail free card.

    The success of this will be determined by how powerful the opposition (ie those likely to suffer from lowered interest rates and a devalued euro) are. If they are stamped on, it may just work...

    Btw, have there been any state visits from the US to germany recently? The US stand to gain from a EU economy arm-locked into helping germany out of the sticky stuff.
     
  2. The economic problems stem from re-unification when the right wing CDU Government 'bribed' the east with the offer of 1 East Mark for 1 DM. The Socialists were arguing that this would break the economy and wanted 4:1 exchange rate. Funny thing they were correct.

    I read the article last night, and there seemed to be some situations when this 'strange' policy has worked. It will not seriously harm the EU or Euro if the Germans and some E Eastern States experience a Black Monday. It will force some reforms and improve their competitiveness. In the longer term it is likely to be more detrimental to the US as it is likely that EU exports would increase and EU imports would decrease; further exacerbating the current account and trade deficit that the US has with the World.

    Sadly only the English Speaking First World, US/UK/AUS/CAN/NZ seem to be spending rather than saving. It is perhaps our Marco-economics, which are out of sync with the rest of the world. Also the rest of the world is less interested in consumer goods and more interested in Infrastructure when they do spend….

    It is possible that it will fcuk the Germans and/or it might work....but the US and UK can hardly say that everything is greener on their side of the fence
     
  3. Seems that most of the fiscal reforms she promised in pre-election situation. Suppose that is what you get when you put the putzfrau in charge>
     
  4. To quote good old Sir Winston:

    "To think that you can make a man richer by putting on a tax is like a man thinking that he can stand in a bucket and lift himself up by the handle."
     
  5. "The economic problems stem from re-unification when the right wing CDU Government 'bribed' the east with the offer of 1 East Mark for 1 DM. The Socialists were arguing that this would break the economy and wanted 4:1 exchange rate. Funny thing they were correct."

    Yes much of Europe's problems stem from that decision.
    john