Eyes on Germany

The U.S. Treasury has issued a damning criticism of Germany's chronic trade surplus in its annual report on worldwide exchange rate abuse, although it stopped short of labeling the country a currency manipulator.

Treasury officials told Congress that internal balances within the eurozone are disrupting the global trade structure, with almost nothing being done by north European states to curb their huge surpluses.
The report said Germany's current account surplus is running at 6.3 % of GDP, and Holland is even worse at 9.5 %. Yet the countries still cleave to fiscal austerity policies that constrict internal demand. ...

The U.S. Treasury said eurozone surplus states have "available room" for fiscal stimulus but refuse to act, despite repeated pledges by EU leaders  that more must be done to foster growth. "They have not yet made any concrete proposals capable of yielding meaningful near-term results." ...

A chart published in the report shows that Germany has overtaken China to become the biggest single
source of global trade imbalance, alone accounting for a large chunk of the U.S. deficit.

The U.S. Treasury's shift in focus away from China-and towards Germany's disguised mercantilism-
reflects mounting irritation in Washington over North Europe's "free-rider" strategy, which relies on exploiting

Europe crisis

There's a lot more available on the web now, about Europe. I'm not deep in it, but it seems their problem is the single currency leaves individual countries without the usual way to take their medicine and get renewed monetary life.

Germany is not willing to suffer along with the country(s) in trouble, and not having monetary sovereignty the troubled country, Greece for example, or Spain, can't devalue (devaluing currency effects foreign exchange, imports & exports, but keeps the relationships within an economy the same, so imported goods cost more but exports compete better) . . so devaluation offers opportunity for a fresh start. but being on the Euro, with currency relationships NOT changeable leaves out that opportunity for correction & a fresh start.

Seems like all those financial monetary geniuses could have seen that coming?

Another key issue I think is that of austerity. Under that prescription, the old (& I hope DYING) paradigm would cut back on domestic spending and raise taxes, so the banks (who are the ones most concerned with foreign exchange rates) wouldn't have to take losses (to me this is feeding the parasite when the host is already dying) --maybe kind of like bloodletting . . . . -at best! A lot of respected economists, including popular ones such as Krugman, are pretty convincing that austerity is EXACTLY the WRONG approach. & they make sense.


People used to say:
1. The money has to come from somewhere, and
2. The money has to be worth something.

I think they got that wrong!!!!

Money has been coming from thin air for a very long time, and has NO actual worth, except the faith of those who need and use it. (& that's how it should be, according to many) If money has that faith, it works. Without that, it doesn't. Being legal tender usually is enough to legitimize and evoke faith, because we really DO need to have money to use (rather than barter, etc.) and all the populace really wants is money that is reliable and not being manipulated to enslave them. Well THERE's the rub, eh?