Germany’s export model

The FT has a nice piece on Germany’s economic problems today. As Martin Wolf keeps pointing out, the reliance of countries like Germany and China on heavily-indebted consumers elsewhere is one of the root causes of the crisis that will have to be solved sooner or later.

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It was said several times at Davos that surplus countries need to spend and debtor nations need to save/deleverage if anybody wants to view the vid its on the youtube davos channel at the ’roundup’ of the conference

Germany’s GDP fall seems very similar to ours, their in a depression too, this presumably means we can’t rely on Berlin for any bailout? This is a very interesting topic, even if we get a V-shaped recovery how do we rebalance between high consumption and high exporting countries, if little or no rebalancing happens between USA/UK vs China/Germany/Japan we’ll just be heading for another crisis.

The portents are not good so far, re Merkel: “Her strategy seems clear – sit out the crisis, preserving industrial strength as much as possible, and await the eventual upturn. The reliance on exports “is not something you can change in two years”, Ms Merkel said. “It is not something we even want to change.”

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