“Last year, according to the IMF, the U.S. pumped an extra 1.1% of GDP into the economy. Germany did next to nothing.” WSJ
“The latest figures showed German exports had grown at their fastest pace for nearly three years at 7%, with particularly strong growth in demand from rapidly-growing economies such as China.” BBC
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Do you really believe all these GDP stats? I am not referring to the sincerity of the actuaries, instead, I am referring to the validity of measuring the economy this way.
Why would you NOT believe them? Is it because it doesn’t fit into your world view?
This has been tried before. Unfortunately the more the government gets involved and tries to tinker with the economy the worse it will get. Look at the great depression. FDR only PROLONGED the misery.
no, just drawing attention to a funny irony.
Germany has a more socialized economy than the US and has recovered quicker with robust growth. What does that say about the free market?
@ Michael O’Hare
That you’re either woefully ignorant of the US economy, or have a very confused idea of what constitutes a free market.
Michael O’Hare,
The point is that the US government and other governments were calling for Germany to spend more stimulus money in order to allow the economy to recover.
Germany disagreed to do any such thing.
The German economy is now facing a quick recovery.
Let’s recap:
Germany: Little economic intervention, quick to start recovery
Many other nations: Plenty of economic intervention, slow to start recovery.
Germany has a more socialized economy than the US and has recovered quicker with robust growth. What does that say about the free market?
Well, since the U.S. has a mixed economy, and the gov. and the Fed have done massive intervention during this economic downturn (not to mention what they did to cause the downturn) it says nothing about the free market. Zip. Zilch. Nada. Zero.
Those Jerks, Don’t they know Paul Krugeman won’t tolerate such results. In fact I recall him asking for much more stimulus from the Germans! (and the US, and the Brits, and everyone else for that matter).
It was kinda of a trick question because yes, the US economy is “mixed” economy, (I hate this term. Maybe a “nuanced economy”, overly regulated economy, too much government intervention economy.
To say that Germany did nothing is disingenuous. The German Government is engaged in their economy all the time. I would not be surprised to find out that the German Government has been providing targeted liquidity to the banks and large industries during this recession, while Obama has been earmarking funds for potholes and other shovel ready projects.
Well the germn goverment saved some banks and we had a cash for clunkers program, with a great success our car dealer is very worried about 2010.
Jeffery was pointing to a funny irony. Don’t read too much into it.
Both France and German are coming out of recession without having to resort to mega trillion Stimulus packages or bailouts. The main reasons are continuity of leadership and predictable business climate. Both aspects lacking in the US right now. The US had a radical change in leadership, which is bent on Keynesian principles if not Marxist principles to fix the economy.
Investment has sat on the sideline until
the bailouts recede and new legislation shakes out. Cap N Trade and healthcare reform.
The markets have responded to the failure of the house to pass the Healthcare bill. And there is good money on the failure of cap n trade in the senate. But passage of either of these by Congress could send the economy back into a tailspin.
This post is meaty. We will be looked back at as the most ignorant generation in the history of our country.
The BBC and other news programs are saying that it is Germany and France’s cash for junk cars policies that are the cause of this.
It’s too early to tell but Krugman will have to eat more crow than he did when his advocacy for a housing bubble was exposed. That alone should have ended his career in my opinion.
Here’s Krugman preaching doom, disaster and chaos due to Germany’s [in]action: http://krugman.blogs.nytimes.com/2008/12/11/the-economic-consequences-of-herr-steinbrueck/
I would agrre to the critics here. It is not quite correct to say that germany did almost “nothing” when the U.S. urged her to come up with more stimulus. I can tell as a german citizen that our government implemented two stimulus-programs. currently I cannot drive through the city of Münster, where I study, because of all the construction sites at public roads. trafic jam in every spot because of exhaustive stimulus. the same occurs if you leave town in order to get on the “autobahn”…
Germany did a lot bad things, including giving guarantees to Opel and all the financial bailouts.
If one considers the current amount of public construciton sites and adds the programms for renewable energies I believe that germany will take the path of Japan: in a few years we will have a bunch of abandoned “wind-mills” and roads. scarce ressources will be waisted in infrastructure and in the programms of environmentalist ideology. Society as a whole we be suffering under that misallocation of german savings.
Make no mistake, Germany is socialistic from an economic point of view. You guys in america are still very lucky compared to us.
Greetings from Germany
That remark from Mr Tucker sounds almost like sarcasm.
Of course it’s scary to hear how the stimulus disciple are still preaching in the US.
But it’s quite normal that the GDP starts growing here and there, now and then, if central banks print so much extra money it seems. The question is if it’s good.
It could be another bubble, the German government did have its own bigger version of CARS.
@ Joe
Germany: Little economic intervention, quick to start recovery
Many other nations: Plenty of economic intervention, slow to start recovery.
Yes, but to be fair, our financial institutions were probably more heavily invested in ‘troubled assets’ etc etc. We’re ground 0 for the bubble– They’re not.
But you guys are right– it is rather funny that
Germany has come out of recession first.
European banks(included German ones, I believe) are also in what Celente calls the “Bailout Bubble.” France and Germany did lead a trillion euro bailout of the banks.
“The latest figures showed German exports had grown at their fastest pace for nearly three years at 7%, with particularly strong growth in demand from rapidly-growing economies such as China.”
So the reason for the demand growth in China is due to Germany’s lack of economic intervention? Of course! China’s huge stimulus bill has nothing to do with it!
And what about Italy? They had a far lower stimulus than either Germany or France, and yet their recovery is still in the negative.
Sorry, I better pick a user name. Comment above this one isn’t mine, but another Joe.
I’m going to be Giant Joe from now on, as I am pretty large in stature. :p
what are you talking about? germany doing nothing?
BS. germany’s stimulus was among the biggest in the world, cash for clunkers was a german “idea”, germany “rescued” several banks and one auto maker.
you need to stop getting your information from one quote from one politician(merkel about the fed) and start looking at the facts.
she talks about one thing while her governmetn is doing the opposite on a regular basis.
All it really shows is that the IMF is horrendously ignorant (perhaps close to Krugman) with regards to the discipline of economics.
You don’t “pump 1.1% of GDP into the economy”. Last time I checked, GDP meant Gross Domestic “Production”. Could someone please tell what exactly the government actually produced?
You can spend $1 trillion, or $100 trillion for that matter. It doesn’t created $1 more of GDP. Period.
Once more, the IMF proves why it must be abolished. ASAP!!
Actually “Cash for Clunkers” was an Italian idea.
It is all going as I predicted last year: the crisis will be rapidly over, perhaps by early 2010 it will just be “something the US caused”. Who wants to take a bet with me, 5 €?
Problem is there won’t be a healthy recovery, just the usual anemic GDP growth after the initial rebound, and the spectre of other looming crisis will become more menacing as Europe is fast burning its savings to plug holes as they come open.
What we need right now is a radical reformation of our entire welfare, labour and fiscal apparatus because that’s our true problem, not US foreign debt or bad mortgages.
Politicians and economists know this very, very well, believe me, but all they can do is provide short term “fixes” like higher retirement age or changes in working hours. Popular opinion doesn’t favor reformation, just more of the same. Cutting taxation to help growth is out of the question as expenses continue to soar.
What the EU right now rightly fears is a member State going “broke” over welfare expenses. Main candidates right now are Italy, Spain and Ireland.
Mark my word: unless something drastic is done this will happen in ten years time, maybe less. And when it will happen the EU will have to make a choice: either kick that country out and let it sort its own problems by itself or step in with billions of euros to plug the holes. Both choices would be incredibly unpopular and could seriously undermine the EU credibility.
Germany intervened in economy a lot. Angela Merkel was against it until January when she went down under the pressure of SPD and trade unions.
The only one who was against bailout and stimulus mania was and is Bundesminister für Wirtschaft und Technologie Karl-Theodor zu Guttenberg (from Bavarian conservative CSU).
http://de.wikipedia.org/wiki/Karl-Theodor_zu_Guttenberg
@Michael O’Hare
Haha, good one. Seems like most people took your gibe too seriously though.
But it’s not the first time that people here have used dubious evidence/statistics to support their POV, whenever it suits their purposes – kinda hypocritical, in a way.
Germany had and continues to have a Cash for Clunkers program. I like the post, but I think the Germans are nudging things along.
And remember, GDP during parts of the Depression due to all the fake money too. It’s sort of silly to use government spending in GDP.
@ Borislav : “zu Güttenberg, the only one who was against bailout and stimulus mania ”
zu Güttenberg still has lots to prove. The simple fact that he is part of that stupid spineless election machine called Christian Social-Democratic Union is actually not a good sign for his credibility.
Here’s what Westerelle (FDP 3rd party in Germany) said to the WSJ in april on the other hand, quite in line with his own policies since years now:
WSJ: German fiscal policy is under fire: Critics around the world say Germany isn’t taking enough responsibility and is doing too little to stimulate growth. But you criticized Germany’s fiscal stimulus package in January as a “policy of rising indebtedness.” Is the German government doing too much or too little?
Mr. Westerwelle: It’s doing the wrong things. It’s spending billions on a car-scrapping bonus, although it knows car industry’s problems are only just starting. The U.S. government devoted a much bigger part of its stimulus package to reducing the tax burden for middle and lower income households, which Germany is hardly doing at all.
@Artisan
Zu Guttenberg is so far OK, and I talked about big coalition.
And I agree about FDP
. Guido has right.
But remember, CDU/CSU is one part of puzzle, another are SPD and trade unions.
I guess after Bundestag election next month CDU/CSU and FDP will form traditional coalition and stimulus mania will be scrapped.
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