Atlantic Review - International Economics

"Germany has the economic strengths America once boasted"

nospam@example.com (Joerg Wolf) — Wed, 25 Jan 2012 22:19:01 +0100

Dear Don Lee and Los Angeles Times,

Thank you very much for writing and publishing a positive article about the German economy that goes beyond the usual focus on our exports and also looks into the general economic model and the frugal lifestyle with plenty of recreation:

Every summer, Volkmar and Vera Kruger spend three weeks vacationing in the south of France or at a cool getaway in Denmark. For the other three weeks of their annual vacation, they garden or travel a few hours away to root for their favorite team in Germany's biggest soccer stadium.

The couple, in their early 50s, aren't retired or well off. They live in a small Tudor-style house in this middle-class town about 30 miles northwest of Frankfurt. He's a foreman at a glass factory; she works part time for a company that tracks inventories for retailers. Their combined income is a modest $40,000.

Yet the Krugers have a higher standard of living than many Americans who have twice that income.

Their secret: little debt, frugal habits and a government that is intensely focused on high production, low inflation and extensive social services.

That has given them job security and good medical care as well as well-maintained roads, trains and bike paths. Both of their adult children are out on their own, thanks in part to Germany's job-training system and heavy subsidies for university education.

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The Only Thing We Have to Fear Is Fear Itself

nospam@example.com (Joerg Wolf) — Thu, 24 Nov 2011 00:42:12 +0100

The Eurocrisis is severe, but no reason to wet your pants -- or to mention the war, is it? As did The Times editor-at-large Anatole Kaletsky, in an op-ed for his paper by the headline: "Germany has declared war on the eurozone"

If Clausewitz is right that "war is the continuation of policy by other means", then Germany is again at war with Europe -- in the sense that German policy is trying to achieve the characteristic objectives of war: the redrawing of international boundaries and the subjugation of foreign peoples.

Holy guacamole! The Australian has republished his op-ed with free access to everyone visiting via Google. So search for the headline "Europe is at economic war, and Germany is winning". (HT Christian)

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Drezner: GOP Abandons Italy

nospam@example.com (Joerg Wolf) — Thu, 10 Nov 2011 11:54:24 +0100

Dan Drezner:

While Rick Perry's major league gaffe will command all the headlines, I thought the most reealing answers were given to the first question of the night -- what to do about Italy? Here are the responses of the co-frontrunners:

HERMAN CAIN: "There's not a lot that the United States can directly do for Italy right now, because they have -- they're really way beyond the point of return that we -- we as the United States can save them."

MITT ROMNEY: "Well, Europe is able to take care of their own problems. We don't want to step in and try and bail out their banks and bail out their governments. They have the capacity to deal with that themselves."

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Giving advice is easier than taking advice

nospam@example.com (Joerg Wolf) — Sun, 30 Oct 2011 10:47:30 +0100

"It's hard to detect which matters more: German behavior over Libya or its course in the management of the euro crisis, but, in short, most US analysts believe that Germany got both wrong," writes Ulrike Guérot in the European Council on Foreign Relations' blog .

I think it is the Eurocrisis, as many US analysts were not in favor of the Libya mission either, at least until the rebels succeeded.

Naturally, US pundits and politicians have plenty of advice for Germany on how to get it right. Dr. Guérot concludes: "Whatever the solution, Germany needs more ears to listen to what is said about our country beyond our borders and be capable to integrate this into the domestic policy discourse."

I agree, but the German government disagrees.

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Today is World Teachers' Day

nospam@example.com (Joerg Wolf) — Wed, 05 Oct 2011 20:37:01 +0200

Why do public school teachers have such a bad reputation in the US and get little pay?

That's one of the things I don't get. It's quite different over here. The job is well paid and respected by most folks. As a country with little natural resources, Germany depends on innovation and a smart work force. Education is good for democracy, happiness etc. The children are our future, yade, yade.

The US has more natural resources and is better than Germany (Europe) in attracting the smartest brains from all over the world, but still it needs a well educated general population to compete in the 21st century.

To improve the level of education in the US requires many reforms (as it does in Germany), but it seems quite elementary that more pay and more appreciation is necessary to encourage smart, talented, creative and committed young people to choose the profession of a teacher and then to stay motivated in this tough job to provide excellent education.

Since today is World Teacher Day, here is a shout out to teachers world wide!

Watch the trailer of the new documentary American Teacher below:

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Craziest Commentary on Germany and Greece

nospam@example.com (Joerg Wolf) — Tue, 27 Sep 2011 08:43:44 +0200

The NY Times published the craziest op-ed on Germany's policy on Greece that I have seen in a broadsheet. Ever.

After tons of articles about Germany being too slow, too hesitant, too selfish to sufficiently help Greece, the NYT now opened its op-ed pages for the American economist Todd Buchholz to write about "Germany's Love for Greece":

Germany's real motivation to help Greece is not cash; it's culture. Germans struggle with a national envy. For over 200 years, they have been searching for a missing part of their soul: passion. They find it in the south and covet the loosey-goosey, sun-filled days of their free-wheeling Mediterranean neighbors.

In the early 1800s, Goethe reported that his travels to Italy charged him up with new creative energy. Later, Heinrich Heine made the pilgrimage, writing to his uncle: "Here, nature is beautiful and man lovable. In the high mountain air that you breathe in here, you forget instantly your troubles and the soul expands."

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German Dummkoepfe

nospam@example.com (Joerg Wolf) — Thu, 18 Aug 2011 19:46:35 +0200

Is this going to be a new running theme? Vanity Fair runs a long essay under the headline "It's the Economy, Dummkopf!"

With Greece and Ireland in economic shreds, while Portugal, Spain, and perhaps even Italy head south, only one nation can save Europe from financial Armageddon: a highly reluctant Germany. The ironies-like the fact that bankers from Düsseldorf were the ultimate patsies in Wall Street's con game-pile up quickly as Michael Lewis investigates German attitudes toward money, excrement, and the country's Nazi past, all of which help explain its peculiar new status.

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"Germany's War on Facebook"

nospam@example.com (Joerg Wolf) — Fri, 05 Aug 2011 19:12:58 +0200

Oh boy, what a poor choice of words for the headline in The Atlantic Wire piece published by Yahoo News:

Germany's War on Facebook
German authorities are now the first to declare the feature illegal. Hamburg's data protection official Johannes Caspar claims that the software violates both German and European Union data protection laws and that Facebook users don't know how to delete the data that Facebook is gathering. "If the data were to get into the wrong hands, then someone with a picture taken on a mobile phone could use biometrics to compare the pictures and make an identification," Caspar told the Hamburger Abendblatt. "The right to anonymity is in danger."

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Outspoken Helmut Schmidt

nospam@example.com (Joerg Wolf) — Mon, 18 Jul 2011 21:31:24 +0200

Former Chancellor Helmut Schmidt is the only elder statesmen who constantly smokes cigarettes on TV and sometimes uses the term "shit" as a description. He gets away with it because of his huge popularity. His outspoken manner and lack of concern for political correctness also reinforces his popularity, especially at a time, when Germany is governed by uncharismatic politicians, who lack vision and do not even make much of an effort explaining their policies (link in German).

Schmidt has used the term "shit" repeatedly when talking about the World War II. Last week, however, he used the term (for the first time?) to describe the financial crisis.

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Germany to Benefit from Lower US Credit Rating

nospam@example.com (Joerg Wolf) — Mon, 25 Apr 2011 13:18:41 +0200

"Standard & Poor's warning the United States could lose its AAA rating may ultimately bring investment to Germany, reduce interest rates on its bonds and help the country lower its own debt," writes Deutsche Welle:

"Standard & Poor's reassessed US sovereign debt and decided to put it on negative watch for the first time, meaning there is one-in-three chance the ratings agency will downgrade the country's hitherto cast-iron AAA credit rating in the next two years. "Germany wins in this equation because it gets a dividend through stability," said Clemens Fuest, a member of the German finance ministry's technical advisory committee. "Interest rates will be pressed down as a result." Germany maintains a secure AAA rating, pays less for a 10-year bond than the United States, and has a constitutionally-mandated 'debt brake.' In Europe, German bonds, known as bunds, have long been the benchmark for investors. (...)

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NYT Criticizes German Leadership

nospam@example.com (Joerg Wolf) — Thu, 10 Feb 2011 21:03:49 +0100

The New York Times (via ACUS) describes a joint proposal from German Chancellor Merkel and French President Sarkozy to the EU leaders as a "German diktat." That's the first weird assessment in this Germany bashing editorial. Here are three more:

Mrs. Merkel wants all 17 countries that use the euro to fall in line with German ideas of fiscal austerity in return for limited additional financial support for countries in trouble. She expects them to run deficits no higher than Germany's (3.5 percent of G.D.P.), allow retirement no earlier than Germany (age 67), and raise or lower their tax rates as required to match Germany's.

a) Has the NYT forgotten what the EU agreed on two decades ago? According to the Maastricht Treaty of 1992 deficits should be below 3 percent and debt below 60 percent of GDP. Most countries broke the rules. For some this caused more serious economic problems than for others. Now Germany is asked to help them.

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Social Mobility

nospam@example.com (Joerg Wolf) — Tue, 01 Feb 2011 18:32:00 +0100

Social Mobility is an issue that comes up time and again in the comments section of Atlantic Review and other blogs. Why? Because fairness and equal opportunities are so important to the US and European self-image. Or in the words of the researcher of the London School of Economics: "The level of intergenerational mobility in society is seen by many as a measure of the extent of equality of economic and social opportunity."

In 2005 they published these "disturbing findings" (HT: Influx):

A careful comparison reveals that the USA and Britain are at the bottom with the lowest social mobility. Norway has the greatest social mobility, followed by Denmark, Sweden and Finland. Germany is around the middle of the two extremes, and Canada was found to be much more mobile than the UK. Comparing surveys of children born in the 1950s and the 1970s, the researchers went on to examine the reason for Britain's low, and declining, mobility. They found that it is in part due to the strong and increasing relationship between family income and educational attainment.

My guess is social mobility declined in many countries in the five years since the publication of the survey. Fortunately, the situation is still better than in North Africa. The lack of social mobility was the key factor in the protests/revolution.

Europe and China: Weapons for Investment?

nospam@example.com (Joerg Wolf) — Thu, 13 Jan 2011 18:06:45 +0100

Atlantic Community:

EU countries mired in debt are getting help from an unlikely source: China. The ascendant superpower is buying up large amounts of European bonds and investing heavily in euro zone countries. Moreover, there is talk of a reversal of the long standing EU arms embargo on China. Is this all a coincidence?

Kurt Volker, a former U.S. ambassador to NATO and now managing director at Center for Transatlantic Relations at Johns Hopkins University commented: "If all this were to play out - that is, lifting the embargo, subsequent sanctions, etc. - it would be a new low point in U.S.-E.U. relations." (HT: NATO Source)

I agree. I hope the EU does not lift the arms embargo. In my opinion NATO countries should not sell any arms to non-NATO members.

Plutocracy: US Media Concerned about the Political Influence of the Super Rich

nospam@example.com (Joerg Wolf) — Tue, 11 Jan 2011 23:34:19 +0100

Conventional wisdom used to be that Europeans envy the rich, while Americans hope to emulate them. Now, Americans are increasingly concerned about rising inequality and the influence of the tiny elite of the super rich.

Plutocracy is a very popular topic of discussion in the US media at the moment. I am quite surprised.

It can't be a coincidence that even mainstream and center-right publications like Foreign Affairs, The American Interest and The Atlantic write about it extensively right now:

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"The Temptation to Save the EU from Itself"

nospam@example.com (Joerg Wolf) — Wed, 22 Dec 2010 18:51:31 +0100

What? John Bolton, a former US ambassador to the UN, says that Europeans have to save the Euro crisis? No way! Uncle Sam has to solve all our problems. We Euro weenies are just kids.

Okay, I get it. It's just a New York Post headline. But still. The premise behind the headline is.puzzling.

So what is John Bolton saying exactly:

As the euro encounters even graver difficulties, America should resist the temptation to save the EU from itself. We must avoid propping it up directly through loans or financial assistance or indirectly through the International Monetary Fund.

"Temptation"? Seriously? Given all the short- and long-term US financial problems, are Americans really tempted to "save the EU from itself"?

I am not an IMF expert, but is not the fund's purpose to help member states, who are in trouble, but have a plan to bring their finances in order? The EU is not a member, but Greece, Ireland, Spain are members. As sovereign countries they can ask for support. The IMF should grant the support, especially if it is in the interest of the world economy. The IMF's purpose is neither to promote the Euro nor to defend the US-dollar as the world's leading reserve currency. A few years ago, pundits debated whether the IMF is obsolete.

Since the US is the biggest contributor to the IMF, it also gets to influence a country's recovery policies, which is one of the reasons, why some Europeans (France?) used to be against IMF involvement in the Euro crisis.

I agree with Bolton's conclusion, which is just common sense and therefore boring and waste of ink: "We should worry about President Obama's staggering deficit spending and let Europe worry about its own."