Ralph Peters points out the obvious but it is worth the repetition. The Germans understand the way to handle money a lot better then the welfare Southern Europeans (like Greece) and the Obama Administration does. A prescription for individual economic health – live below your means, pay your bills on time, use debit instead of credit cards if possible, and save even when it hurts. If you can afford a $400,000 house, buy a $350,000 house, if you can afford a $100 ticket for Broadway, buy a $75 ticket. That bailout of Greece might bring down the Merkel government which is unfortunate because Angela Merkel is more pro American then Barack Obama, and the Germans miss the always robust Deutsche Mark. Deficit spending in order to come out of a recession is insane.
by Ralph Peters
Germany’s governing coalition is on the verge of collapse, but the country isn’t. Berlin’s the one major capital likely to survive the global economic plague in strapping health.
In the past, I’ve written mercilessly about German strategic freeloading, but it’s time to give Herr Meier (the German Joe-Sixpack) his due: His attitudes toward spending and saving are admirable.
Germany isn’t without problems. Its eastern states still haven’t recovered from the triumphs of “real existing socialism.” Its banks are dangerously exposed to southern European debt. Some German multinationals, such as Siemens, may have over-extended themselves. Mid-sized companies — the backbone of the German economy — aren’t investing. And there’s still no entrepreneurial startup culture.
Yet Germany books far more credits than debits. As much of Europe stumbles into negative growth, the German economy’s expected to expand at 2.1 percent this year. That isn’t dramatic, but it’s solid. And the battered Euro makes German exports more attractive (although every export ultimately needs an importer).
With 82 million people and the world’s fourth-largest GDP, Germany remains the world’s No. 2 exporter in terms of value (behind only the US and ahead of China). Economically, it punches above its demographic weight.
President Obama insists that only added deficit spending can ease the consequences of our previous economic irresponsibility, but no serious German political leader’s buying into his call to throw more money away. Instead, Germany’s leaders are playing a strong defense, cutting social benefits and imposing targeted tax increases.
And, unlike the bankrupt Greeks or ailing Spaniards, Germans haven’t taken to the streets to demand an uninterrupted free lunch.
Those austerity measures play only a minor role in the crisis within Chancellor Angela Merkel’s government. The real trigger was the government’s decision to underwrite the Greek bailout (with loans that are never going to be paid back — it’s mathematically impossible).
Germany already was the biggest contributor to the European Union — to the tune of 21 percent of the EU’s budget. The money flowed south, and Germans got little more in return than the assurance that they’re good Europeans.
But when it came to subsidizing retirement at 50 for Greek civil servants — while the German retirement age was rising to 67 — Herr Meier had had enough. Two-thirds of Germans opposed the bailout. Vacations in Greece and Spain had exposed them sufficiently to the south European work ethic.
They also understood that their 30 billion Euro contribution would only be a downpayment, as Europe’s southern welfare states buckled under their debt loads, one after the other.
But German politicians are captives of a dated Europa-uber-alles outlook. They rammed the aid package through. In thanks, the Greeks cursed German greed and promptly launched another wave of strikes.
Read the rest – Where the Germans get it right
Tags: Financial Crisis
