[jahewson]

Your statement about Germnay refusing to allow imports is manifestly false. The EU is a free trade area and its member states are not permitted to engage in such activities. The EU has its own courts to enforce such rules.

It's certainly true that Germany is a net exporter: this is because of their ability and competitiveness in engineering and technology, combined with the fact that Germans are not big consumers and prefer to save their money. It would be good for Europe as a whole if Germans spent more money on imports - but the idea that they are deliberately blocking imports is bogus.

Europe doesn't really have neoliberals, so I'm not sure what your point is there. If anything, Europe leans to the left.

If you want to find a country with a long history of ignoring debt, then look no further than Greece, which has defaulted over 20 times. It is a country in deep need of structural reforms in order to have a viable economy. Yet the reforms haven't happened, due to corruption, cronyism and general foot-dragging. This is the real problem and debt-reduction isn't going to solve it.

[yxhuvud]

No, Germans are not more frugal than other people. The main issue behind lacklustre German consumption is that neither their wages nor their investment in infrastructure has kept pace with their productivity growth.

[rwissmann]

15-20 years ago Germany was the sick man of Europe. Labour market reforms in line with an industrialization boom in Asia restored the competitiveness of her industrial economy.

The real problem with this argument is that they are too short-sighted. Germany cannot artificially reduce its competitiveness to appease other EU countries, because competition happens on a global stage and so the EU would simply lose out further to North America and Asia.

Your are correct that Germany should spend more on infrastructure.

[seizethecheese]

What's your source, your intuition? Germany is one of the highest savers in the Euro area; much higher than Greece.

http://data.worldbank.org/indicator/NY.GNS.ICTR.ZS

[antman]

This table does not mention personal savings. It is cannot provide insight, is as useless as GPD per capita.

[yxhuvud]

That Germany, the state, is living beneath its means does not say anything at all about the German people or if they save their wages or not.

[bildung]

If I understood GP right you both say the same: Being frugal means consuming less (= saving instead).

[jahewson]

Wages and infrastructure are key factors, but they're not the complete story. Other countries have lower wages, yet import more per-capita.

[galfarragem]

Completely agree. Just compare Athens or Lisbon subway with Berlin subway. It seems that Germany is the most poor of these countries.

[tspareme]

The issue here is that we know Greece is not as competitive in exports as Germany. So what can Greece do to run a trade surplus while in a common currency union with Germany? They are not able to depreciate their currency. They are not allowed to put up tariffs either. Also, where does the German do with their export surplus. They don't just hide it under the mattress. German banks is also looking for a outlet, however, Greece is not allowed to implement capital control to block the inflow. So the only alternative is to out compete Germany or some other Euro-zone countries (but this just substitute Greece for some other PIGS).

The key here is that for everyone in the world, the trade surplus and deficit must sum to zero. So someone has to run a trade deficit if German/Japan/China wants to run a trade surplus. German now wants the entire eurozone to run a trade surplus which means someone else must run a even bigger trade deficit.

BTW, it is in theory possible for Greece to run a government budget surplus but a trade deficit. This would mean that the private sector is loading up on the debt. Even in this case, the private sector is really the banks which has to be backstopped by the government anyway. So bank debt is just another form of government debt.

[jahewson]

Yes, that is the core issue: can the Euro sustain both Germany and Greece given how diverse their economies are? I have my doubts, but perhaps what we're seeing is an emerging solution wherein Germany subsidises the weaker members of the Euro indefinitely. That still doesn't absolve Greece of financial responsibility but it would support their position of having a sizeable portion of their debts written off. It's a sort of sovereign welfare state...

[x0x0]

Europe doesn't have neoliberals? How else do you explain post 1990 economic policy?

TheOtherHobbes isn't discussing rules or laws, but merely the current and recent economic structure. Germany net exports. Therefore, without floating currencies, only one thing may occur: someone must borrow money. You write about this -- "a country with a long history of ignoring debt" -- as if it were a moral claim, rather than an accounting identity.

Where Greece not in a currency union, they could have gradually restructured, as drachmas depreciated against foreign currency, or they were forced to borrow in a foreign currency. Their problem is that the EU is set up, by design, to actively fuck less productive southern states. States, whether states in a union or independent states, either need their own currency in order to accommodate differing productivity levels, or high productivity net exporters must accept permanent subsidization (as northern / coastal states do for the American south) of less productive states.

The simple fact of the matter is that the ECB has long acted in a way that favors Germany while the German government has carefully avoided explaining to Germany the consequences of running an export economy inside a currency union. Now that they have had 20+ years of economic success as the outcome of the union, they wish to duck the consequences.