Why Germany (Mistakenly) Thinks it Can Kill Its Export Markets Through Austerity and Still Prosper

I’ve mentioned repeatedly that Germany wants contradictory things: it wants to stop financing its trade partners (the periphery countries in Europe) and yet wants to continue to run large trade surpluses. I took this to be a sign of German wishful thinking, or just politicians figuring the incoherent strategy can still be maintained for the duration of their time in office.

A post by Yanis Varoufakis show that the Germans at least have better delusions that I realized. Their plan for how to square the circle is to shift from exporting to the periphery and sell more to the rest of the world.

That sounds lovely in concept but is rather disengaged from the state of play. The US is the importer of last resort. The deficit cutting plans underway are intended to reduce consumption, which should lower our trade deficit. On top of that, some manufacturers have been “reshoring” operations, in part because Chinese wage increases (due to a combination of increases in standards of living plus a moderately high level of inflation) have made operating in China less attractive than it used to be.

And that’s before you get to the Japanese brute-forcing the yen from over 80 to a more viable 100 yen to the dollar. While the sweet spot for the Japanese before was below 110 yen to the dollar, better yet below 115 to the dollar, the difference between the US and Japanese inflation rates makes up most of the difference between 115 yen to the dollar in 2007 and 100 to the dollar now. I had thought the Japanese would be pressured to stop their depreciation. Kuroda, the governor of the Bank of Japan, said earlier this week that the Japanese were not seeking to trash the currency. This ranks with the Japanese claim in the 1980s that they should not be asked to import US beef because Japanese colons were different and they couldn’t handle foreign beef. The BoJ chief also stated that the measures already taken were sufficient for the moment. The US officially scolded the Japanese late Friday. From the Wall Street Journal:

The Obama administration used new and pointed language to warn Japan not to hold down the value of its currency to gain a competitive advantage in world markets, as the new government in Tokyo pursues aggressive policies aimed at recharging growth.

In its semiannual report on global exchange rates, the U.S. Treasury on Friday also criticized China for resuming “large-scale” market interventions to hold down the value of its currency, calling it a troubling development. The U.S. stopped short of naming China a currency manipulator, avoiding a designation that could disrupt relations between the world powers.

I no longer have great contacts in Japan, but given that Japan is still a military protectorate of the US and that tensions are rising over the islands the Japanese call Senkaku, I’d find it hard to imagine that the BoJ did not give the Fed advance warning. In fact, it’s not implausible to imagine that Japan has been wanting to intervene for some time but has been urged not to by the US. The yen rising to the moon was the direct result of Chinese buying, effectively shifting their currency manipulation from dollar to yen (the Chinese buy yen, the Japanese are the ones who have to buy dollars to keep the yen from going even higher relative to the dollar. You can see the results in the rise in Japanese dollar FX reserves in recent years). And the US finger-waving, in advance of the G-20, may be perceived to be necessary to appease China, which has been regularly hectored in the past for its dirty peg.

As Yanis Varoufakis tells us, the German fantasy of finding new export markets to conquer wasn’t working so well before the Abe shock; it’s an even more uphill battle now.

By Yanis Varoufakis, Professor of Economics at the University of Athens. Cross posted from his blog

here is a growing consensus among commentators that Germany is de-coupling from France and from the rest of the Eurozone’s deficit regions. That German industry is turning instead to Asia and the rest of the world (even to Britain) for sources of demand for its net exports. However, the data suggests otherwise. Germany remains perfectly dependent on the Eurozone’s deficit member-states for the purposes of financing its net trade deficit with key non-Eurozone countries.

In 2012, mostly on account of energy imports, Germany had a net trade deficit of €27 billion with Russia, Libya, and Norway. In addition, it sported a €4.7 billion trade deficit vis-à-vis Japan and a sizeable €11.7 billion trade deficit with China. In total, Germany’s trade deficit with these net exporters summed to €43.4 billion. Meanwhile, Germany’s trade surplus with the Eurozone’s deficit nations (France, Italy, Spain, Greece, Portugal, Cyprus and Ireland) came to a still staggering €54.6 billion – despite the sharp diminution of this number following the sharp decline in imports in these crisis-hit nations.

Put differently, Germany’s net exports to the countries that the German press likes to lambast as ‘laggards’ that constitute a drain on German ‘progress’, sufficed to pay for Germany’s net trade deficit vis-à-vis China, Japan, Norway, Russia and Libya, with €11.2 billion to spare: enough to cover for the €3.4 billion transferred to German factories in the Czech Republic and in Slovakia and a large chunk of German companies’ transfer payments to their Dutch partners or subsidiaries (which are in a surplus of more than €15 billion with their German partners).

In short, despite all rumours to the contrary, German global trade surpluses are still being financed by the deficits of the imploding Eurozone ‘stragglers’. It is in this sense that Germany’s denial of the systemic nature of the Eurozone crisis, and its leaders’ commitment to the principle of ‘the greatest austerity for the weakest Eurozone member-states’, is perhaps our epoch’s most spectacular own-goal.


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  1. The Dork of Cork.

    Germany does not want to export to the PIigs

    It wants the PIigs energy ration.

    It can then use this energy ration to export to the US ,UK and pegged China.

    Everything orbiting euro trade has become concentrated in the North Sea area.
    Stuff will come out of the Rhine and flow to England.
    Its the point of least resistance under current monetary conditions.

    This is what happens when banking systems push resources onwards and upwards.
    You get a catastrophic collapse in redundancy so as to increase efficiency / profits.

    Wage share falls , credit replaces wages.
    Logical demand signals are no longer available.
    You get huge malinvestment.
    Then you get collapse.

      1. The Dork of Cork.

        I was taken off the Irish economy site 3 times which is probably a record and I don’t think I am coming back.

        As it is a rentiers mouthpiece.

        My only talent it seems is pissing off people from both the left and right ends of the spectrum.

        Again the problems in the eurozone can be most clearly seen in Ireland as the data is both quite good and extensive.

        The most important piece of data is this.

        See – table 4.5 for all that needs to be known about the Irish & wider euro economy

        We left the Sterling peg in 1979.

        There is a immediate Euro Soviet push to increase productivity & keep wages static

        Wages as a % of GDP

        Y1980 : 70.1%

        Y2002 : 46.3%

        Y2011 : 51.7%

        “The wage share is determined by capital intensity, technology and institutional factors.

        Globally there has been a general decline in the wage share, but Ireland’s sharp decline

        followed by partial recovery is unique”


        When there is no rational wage demand credit fills the surplus hole created.

        But how do you know what is rational demand when you have no rational signal ?

        This causes malinvestment on a huge scale.

        Since joining the EEC and especially since leaving the Sterling peg in 1980 Irish primary industry has been in deep crisis.
        This has been disguised by transfer payments which is now drying up.

        We have essentially a massive intermediate consumption problem but cannot find the labour to solve it as the currency we use is too hard.

        Look I will be frank about Irish culture – especially male manual culture.
        They work hard but for Pints and only pints.
        The English know this – we rebuilt their cities after the last German / English capital destruction episode.
        If Irish lads can’t buy stout in a pub they will travel the world to find it.

        The crisis in Irish primary industry was best seen recently in a tragic fishing accident in West Cork.
        The crew were all Egyptian but for a young guy on his first trip out and the skipper.
        I won’t go into the details here but it was clear the crew did not have a clue.
        The ship went down after it hit a rock in the center of the hom ports bay – something a local would never do.

        These skippers of trawlers cannot find or pay local men for the job and the guys cannot buy enough beer with it.
        Its as simple as that I am afraid.
        The local rednecks go abroad and are replaced with people who don’t have the right stuff.
        The population of Ireland is not declining Yves.
        The wealth is diving however.

        It is all part of the plan I guess.

        1. Boomer

          I know the harbour and surrounding ports; all the boat crews are now North African or Eastern European, good men, but with little experience of what the Northeastern Atlantic can do. They had come to these climes to earn a living for their families back home.
          Most businesses are lowering wages to survive, and many young locals are emigrating rather than bending the knee. So much for the ideals of European solidarity!

          1. Boomer

            Hi Dork,
            Lough Ine, Baltimore, North Harbour, Sourth Harbour, Sherkin, Crookhaven, Schull: still magical places in the West despite the ongoing calamities. Might be useful addresses when this all goes down – many centuries of history there!

          2. lambert strether

            That’s astonishing. Word is that the North Atlantic is not like the Mediterranean. British power was built, in the centuries of wooden ships, on mastering those very very tricky and lethal seas — over generations. And now they’ve outsourced that. That won’t end well for the sailors at all, as you point out.

        2. Massinissa

          If you piss off BOTH sides, that means youre doing something right, as it usually means youre a free thinker.

          And I dont know about in Ireland, but the ‘Left’ in america is pretty much the same economically as the right.

          1. NotTimothyGeithner

            The “Left” in the U.S. is far more irritating than the more traditional right wing because of their insistence on being applauded for being tools.

          2. Nathanael

            Not really. If you piss off BOTH sides, it may mean that you’re just unbelievably, spectacularly stupid. Or simply reallly obnoxious. Sure, you may be a free thinker, but you could be an IDIOT free thinker.

          3. Nathanael

            However, that doesn’t apply to the current case. The Dork of Cork definitely has interesting things to say — probably useful.

            In Ireland it’s clear that the top THREE parties (Fine Gael, Fianna Fail, Irish Labour) all have identical pro-austerity, pro-bankster policies.

            As far as I can tell Sinn Fein (the fourth party) seems just as bad.

            So who’s the “left” in Ireland? People Before Profit, WUAG, the Socialist Party? Perhaps some of the Independents. What a mess.

        3. Glenn Condell

          ‘The local rednecks go abroad’

          A good many of them seem to have moved to my seaside Sydney suburb. Some of the pubs would have to close if they left.

      1. The Dork of Cork.

        Big brother is watching
        The Halls pictorial weekly episode from 1981ish that goes deep into the labour theory of value crisis that was afflicting Ireland in the early 80s has been wiped.

        “_halls_pictorial_weekly…” The YouTube account associated with this video has been terminated due to multiple third-party notifications of copyright infringement.


  2. tom

    The analysis of Varoufakis is more or less right but I wonder about his polemical tone. I live in Germany and can´t for the life of me find instances like the following. “Germany’s net exports to the countries that the German press likes to lambast as ‘laggards’ that constitute a drain on German ‘progress’”. The author evidently doesn´t know German. Otherwise he would know there is no such meme as “our progress” being touted in the German press. Nor other countries being blasted as laggards. The people who own Germany´s mass media are all committed to preserving the Euro and they will not allow anything that heightens tensions.
    In fact the recent report that Germans are the poorest members of the Euro zone was pretty much buried in German mass media. (Not that I agree with the findings)

    1. from Mexico

      Good greif, tom! When are you going to tire of being a propagandist for the German oligarchs?

      One of the primary tactics of emotional abusers is to deny that the abuse is taking place.

      1. from Mexico

        And let’s be very clear about what the German oligarchs are up to.

        Nationalism is the last refuge of the tyrant. The true target audience for the propaganda of the German oligarchs are the German proles. And there’s a word for what the German oligarchs are doing: it’s called scapegoating. It is the demonization and projection of the consequences of their own actions onto “the other.”

        1. Up the Ante

          Michael Parenti in his “To Kill A Nation: the attack on Yugoslavia” states that the Germans were initially outpacing the U.S. in efforts to dismember Yugoslavia in the early ’90s.

          Somehow suspecting that Yugo debts to the West should have been preceded by due diligence, the game plan is probably similar.

        2. jake chase

          Yes, this is not a war between countries; it is a war between classes within countries. The war is continuously camouflaged by rhetoric about currency manipulation, but this is simply propaganda. That is why reading about these currency wars always leaves one wondering whether the writer has any idea what he is talking about. For those wondering, the answer is no.

    2. Brick

      Sorry a bunch of German links because i do not agree with tom. A few examples of reporting in the last few years:

      Outright destructive Bild: http://www.bildblog.de/tag/pleite-griechen/
      Here is Merkel making stuff up and Spiegel doing its job: http://www.spiegel.de/wirtschaft/soziales/euro-krise-mythos-vom-faulen-suedeuropaeer-a-763366.html
      Nonsensical to the point that i wasn’t sure if it is satire: http://blogs.faz.net/fazit/2013/03/28/hey-die-zypern-rettung-zeigt-wie-stark-der-euro-ist-1310/

      There is ONE guy swimming against the stream and that is Münchau (and Jens Berger). Spiegel is also half decent. FTD which was excellent does not exist anymore.

      The ECB study was all over the media. Don’t forget, that it was leaked by the Bundesbank a few weeks early.

      German media is pro austerity. Therefore it is against the euro. A few examples of what the mass media had to say about the “final” Cyprus decision: http://www.sueddeutsche.de/wirtschaft/vereinbarung-mit-eu-ministern-bruesssel-verschreibt-zypern-schocktherapie-1.1647097
      Again it is Spiegel with the best reporting: http://www.spiegel.de/wirtschaft/soziales/rettungsplan-fuer-zypern-wo-die-neuen-milliarden-herkommen-sollen-a-894082.html
      So we have one halfdecent online paper, and the rest is basically just copy-pasting Merkels position. ARD (German BBC basically) has Deppendorf who is the worst commenter ever in Germany. And all the private TV stations are on Merkels side.
      Again we basically have NO real media opposition to austerity. Germans sometimes see comments by Soros or Krugman, but the media in general has a massive bias towards “fiscal consolidation”. It the same time they always try to pretend, that Germany is still doing fine.

      So you even though you are correct, that neither progress nor laggards (though there is a German bias, that the Südländer are lazy), the overall picture you are painting is far too bright. German news media is handling the crisis just as “well” as the US media handeled the run up to the Iraq war, in my opinion.

  3. Ignacio

    The world is plenty in contradictions. While Spain is forced to “internal devaluation” a two class nation is created. One class that still has savings, although declining, want to preserve the euro status of their savings. The other class are unemployed and/or indebted. The former class constituents say that they have worked long years to give something to their offspring, but their offspring will grow up in an impoverished country with diminished opportunities to create their own savings, and fully dependent on the savings of precedent generations. They don’t realise how fast those savings will fade during the devaluation process as taxes raise and public services dissapear.

  4. Charis

    Hi from a greek in germany.

    I came to germany two years ago because all our mass media said that young people should leave greece and should try to find a job in germany which does so well in this crisis.

    After two years here I will leave again,better said I will flee from germany.Dont get me wrong.The german are very cool people.Friendly,serious and very kind.
    But the brainwashing they recieve on a daily basis from their oligarch-led media is freightening better said shocking.Former serious news magazins like the Spiegel or Die Zeit are now in the hands of the same people who led the propaganda war against the jews 70 years ago.If you think I am be joking just google for bertelsmann and holtzbrink.Same with the german state TV.There is no journalist there which is not in the bertelsmann-stiftung-think tank.It is not much different to the situation in the USA,UK with murdoch or italy mith Berlousconi.The nly real difference is that the germans are not aware of it.

    Alltough the german media is really leading a propaganda war against the south europeans (and specially us greeks) the german people generally dont care and many of them are a little bit angry about the way their media does all this but after 3 years of brain washing many germans are now convinced that this is not a word wide financial crisis caused by the banking system but a “gouvernment debt crisis” caused by the greeks or the PIGS in general.But this is not the reason I will leave this country.

    In all mass media around europe you will hear how well germany does economy wise and that the jobless rate is just 6-7%.But the reality is that the jobless rate is double as much.Like the gouvernment in the USA the german gouvernment does also everything to keep the “positive psychology” up.
    Millions of germans work full time but dont have enough money to make months end.Millions of germans work in so called “mini-jobs” (part time jobs).German leftist blogs speak about that from the 41 million work force in germany 15-18 million are either jobless,mini-jobbers,part time jobbers,or take part in some kind of state endorsed “re-education programms”.

    While in greece the gouvernment does everything to inflate the jobless-rate (taking every school children older than 15 and student into account) in germany this is the opposite.They also never talked about the 2 million germans who live from the soup kitchens of an organisation called “tafeln”.These poor people dont have enough money to buy enough to eat.You dont hear or read a word about them.For comparison:In greece we have some 200.000 people (most of them refugees and asylants) who need the soup kitchens of the church and some other NGOs and they show the pictures of these people every day in the state TV.Same with the homeless.In greece we have now (we never had before even a single) after years of this crisis some 30.000 homeless people.Most of them in athens in the quarter where refugees and asylum seekers live.You will see every evening a report about them on some state or private channel.In germany are over 600.000 people homeless.I see many of them every night around the main station in the city I live in,feeding themselves from the dustbins.But again,no word about them anywhere.Same about any kind of negative economy news.The german automobil-sellings drop -17% last month,the automobil production more than -13%.You can read about it in some leftist bolgs but this is all.The german mass media reports only about the positive news.And this is no “coincidence” or something like that.This has a well thought system.Same like the “every one hates us”-journalism you have now in germany.Sick.

    Also astonishing (for a south european) is the fact that almsot no german is a home owner.While in greece,italy or spain 80-90% of all people live in their own house (alltough haveing very low private debt) all germans I met have to pay 30-50% of their wage for rent.

    3 weeks ago I was told that I cant work anymore for 800 euro.Now I work for 400 euro and I have a new collegue who also works for the same money.This way it is much better for the company.And this is the way the germans manage their low jobless rate.Since I dont know how to make it with 400 euro I will leave germany and move back to greece.But not back to athens.More likely back to my village to start some small enterprise ie tourism or farming or something else.

    So long guys..

    1. banger

      Really interesting post, thanks. Are there blogs or publications that offer a realistic view of German society you can refer us to?

      Propaganda is now the default for all major media almost anywhere in the world–maybe less in Greece, I don’t know. But here in the U.S. the mainstream media is full of misdirection and propaganda but people are beginning to be very suspicious and looking elsewhere.

        1. tom

          Sorry, but I don´t believe your story. I know the blogs you cite and read them myself. They are quite high brow and German is quite a difficult language. Unless you read them in Google translation I find it hard to imagine that you learned the language in two years.
          As to all this stuff about the homeless and the terrible social situation in Germany you sound like a German. That is somebody who has never lived in any other country nor knows the bottom of his own one. Fact of the matter is anybody will be provided with money for rent and food (349€ for a single male) plus other goodies. For a family of five it works out at 1265€ per month plus whatever the rent within a certain limit. One has to take any job on offer though. In reality there are myriad ways around this requirement. It is absolute paradise in comparison with all but a few other countries.
          If there is Socialism on this planet it is in Germany. That is not my opinion but that of any numbers of Russians and other foreigners I know in Germany. By the way I spent altogether more than ten years of my life abroad. I lived in Ireland, Russia, China, Mongolia, the US and Canada. I know as an absolute fact that social conditions in Germany are better than in any one of these places. Which doesn´t mean that Germany has no real dire problems. Nor that it is a better place to live than these other countries. But the problems are more on a mental plane than anything else.

          1. Jemand-aus-dem-Norden

            Hi tom,
            me too i am greek and i live in Hamburg. I agree with Charis, the germans are generally nice and very kind people.
            Unfortunately you have an over-simplified view about the poor people germany,the reality is quite different. The main stream media leading a propaganda war against the poor and the weak in germany. The state from the other side conspires with certain employers to supply what is effectively cheap labour via forcing people back to work (they must take any work offer) at rock bottom wages or cutting benefits, the scamming of the system by employers by employing two or three people on a 400 € Basis. How about a reality check? Of course from the tabloids you would never hear a word about all these poor people in germany who dont have enough to eat, because the tabloids are supporting the oligarchs and the plutocrats. This is really sad because the german media lead a propaganda war even against their own country men.In some articles they call them more or less parasites (Schmarotzer), this is smple unbelievable whats going an in Germany.
            I wish all the poor and weak people in Germany, in south Europe and everywhere a better future. Poor people are not criminals.

          2. Yves Smith Post author

            American economists I respect consider Hans Flassbeck to be THE best economist in Germany. He presented at INET last year and he was a standout.

            And why do you assume Charis had no German before he moved to Germany? Most reasonably educated Europeans are multi-lingual.

          3. tom

            Hi Yves
            Why I don´t believe Charis? If he has indeed come to germany two years agon and mastered the language to such an extent it is hardly credible that he works for 800€. First of all nobody works for that kind of money if he has such good German and second of all such command of the language will enable him to get into Germanys social welfare system. As to two million people living of “Tafel” that is the kind of crap completely overfed Germans come up with. Anyboedy with residence status in Germany is entiteled to Hartz IV. That is the state will provide rent, health insurance and a living allowance of around 350€ per month. But you have to prove that you are looking for work and also take whatever work they might present you with.
            Germans find that absolutely terrible and complain no end.
            People from regions of the world which are not as rich manage to live on that money and even save!!! Why? They still know how to cook and to make simple but tasty dishes. Germans though eat (comparably) expensive TV dinners and have their heads unscrewed by corporate PR which tells to want that and that and that. Also they compare themselves to other Germans and in relationship to them they are indeed poor. But absolutely and not relaitively speaking even HartzIV receivers live better than 90% of the worlds population. And certainly better than an Italian truck driver from the South who makes 1500€, has to feed two kids and sees his family once a month. In Italy, Spain, Portugal and Greece you can only dream of that kind of public assistance.
            As to poor Germans being renters and not owning their living space permit me to cry. First any sane person in Germany knows he can claim rent allowance if his rent is above a certain percentage of his income. And then there is a certain kind of freedom in living in a country where the landlord can´t simply raise the rent as he likes. Germans are pampered no end in that regard. Take any average Italian or spanish student and he or she will have to live at home until he or she has taken a credit to buy an apartment. Most German students can afford to move out as soon as they enter University.

            Finally I might retract something I wrote above. Namely that German mass media downplayed the recent report about the supposedly poor Germans. That has just changed. Der Spiegel (incrredibly influaential) has just announced a change in chief editors and the latest title is about how the South hides their wealth. Absolutely disgusting and irresponsible!!!!

            I have helped asylum seekers from around the world and they are absolutely amazed about that. (But as non EU citizens they have a very hard time getting it)

          4. Charis


            Sorry but I have some difficulties to get what you are accusing me..

            Do you say that I am no greek in germany but some evil german leftist who throws dirt on his own country for ideological reasons?

            Or do you claim that there are no hungry people or homeless in germany?
            Or that it is not as worse as in greece or spain?

            Have you looked for your self?Did you take two minutes to google for “the tafeln”?No?Here you go(it took me less than 1 minute to find it):


            They speak about 1,5 million germans who need help to feed themselves,one third of these desperate people are children.

            Another link:

            They say that in 2011 there were 1,3 million people at the “tafeln”,2012 it was already 1,5 million.So since the crisis in 2008 every year it is 200.000 more germans which are not able to feed them selves.Does that look to you like germany is some kind of “role model” to anyone?

            Are you claiming that all these people do not exist?The old people I see every night eating from the dustbins because they are to shy to go to these “tafeln” are just a prodct of my fantasy?Are you telling me this?This would be like the gouvernment of the USA whoch claims that “the economy does fine” but the numbers of food stampers goes through the roof from year to year(reaching already 48 million US-citizins).

            More links for you:

            This from the gouvernment-springer-press “Die Welt”:

            Even these liars and propaganda-pricks speak about 250.000 homeless people.Should we trust them?

            Let us look what more independent sources say:

            These experts speak about 860.000 homeless people in germany.What reason do they have to lie?

            And yes,sure you are better of in germany right now (let us not forget this “right now”) than anywhere in southern europe.All gouvernment institutions work,the people get paid in time (inlike in greece or spain),the health care system is still o.k. (again,unlike in greece or spain)..

            But if this is enough to keep you germans away from protests and demonstrations against social cuts and austerity I would wonder.The funny thing is that this is exactly what all the banksters and mobsters fear most.Not the people on the streets in a small country like greece.We dont count.Not when it comes to numbers.Not even the millions of protestors in spain.Allthough a big nation spain is not as import as france,UK and most of all germany.The ruling class fears you my friend.The germans.If 3-5 million germans flood the streets in berlin and munich this would be more than just big news.Just imagine..

            “Ze e-vil tschörmans on the streets,protesting against austerity and poverty,side by side with greeks,spaniards and french”.

            These headlines would be heard around the world.This would be the starting sign for a global mass-protest against fraud,greed and banksters who dont know about nationality.This time you would be the cause for some thing positive,you would be the “good guys”,you would be (for once and finally) on the “good side of history”.And if I learned some thing about you guys here in the last two years than that this is what you want most.Not?

            Tom,you guys should really think about it.

          5. Charis


            I forget something.The sizuation in greece!So you should know why we greeks are so angry:



            11.000 homeless people in athens.20.000 all around greece.Compare this with the numbers(ofcourse desperate human beings are NOT numbers!) in germany and then you will understand why we greeks dont understand the german mentality to stay calm when everything is burning.

  5. washunate

    Very interesting. It’s fascinating putting this into context with pieces about ‘free trade’, because the German trade model is not something that can be emulated, yet that is often what liberal commentaries suggest – why don’t we be more like Germany and export our way back to health with magical advanced manufacturing?

    At this juncture, I wonder if the real German policy is just like the American policy – see how much loot you can get into your corrupt, failing banks before people say no to the looting.

    1. Nathanael

      I suspect you are right that the real policy is looting by banksters.

      However, the question is how on earth they manage to convince industrialists, workers, and everyone else to go along with this policy.

  6. Ignacio

    It is generally said, for instance, that Spain is not competitive within the eurozone. Regarding trade of goods, Spain is in surplus within the eurozone (7,7 billion euros surplus) and de EU-27 (13 billion). The balance of services is even more positive for Spain (tourism). The deficit in goods with Germany has shrunk from -23 billion in 2008 to -3,7 billion in 2012. Remarkable.

    The real commerce imbalances in Spain are held with China (-13 Billion) and the OPEP (-20 Billions) highlighting that energy efficiency (not wages) is the most important factor reducing competitiveness in Spain.

  7. allcoppedout

    The British press tend to sound as Yanis suggests the tone is in Germany. The message is somewhat muted, but the smear is clear.
    The idea that economics makes any sense is being laid waste. Even the term “crisis” now seems to mean ‘more than five years’.
    People I meet have no clue what is going on – they never do, even though they will say they vote on ‘the economy’. One wonders what kind of economics could ever be so difficult for ordinary people to follow.
    Greece, Ireland and Cyprus have been stiffed. I don’t know why because the real data is restricted, if collected at all. Slovenia, Slovakia, Spain and Italy look next and who knows if the chickens are coming home to the UK, the hub of looting through offshore.
    I have no time at all for a “subject” that treats human beings the way economics does. Biology is more considerate with its laboratory animals.

  8. The Dork of Cork.

    The only current construction activity in Cork city is Apple computers building another temple.
    NOTHING ELSE IS HAPPENING….other then building one last pointless flyover for cars.

    Apple computers moved into Cork during 1980 as the old rust belt like Industrial work dried up.
    Also the last of the agri industry died in the center of Cork city at that time.
    Computers are not infact part of a new Industrial Revolution as they do not increase energy density.

    Like cars and other consumer stuff their consumption is a form of extraction of labour value from abroad.

    Cork city is a old agri export town.
    The longest street is a old working class neighbour hood – this road gave direct access to animals on the hoof from the west…..
    In my memory they actually had a fleece sorting warehouse near the centre of town at the end of this street.


    The Apple stuff is not real.
    Its the shuffling of international claims in the global monetary ether.
    Its pointless stuff.
    A kind of Stepford wives nightmare world.

    Cork girls even now jog with their makeup on keeping up that 1990s & noughties visage.


    Its a credit hologram.

    1. Boomer

      I know the harbour and surrounding ports; all the boat crews are now North African or Eastern European, good men, but with little experience of what the Northeastern Atlantic can do. They had come to these climes to earn a living for their families back home.
      Most businesses are lowering wages to survive, and many young locals are emigrating rather than bending the knee. So much for the ideals of European solidarity!

    2. digi_owl

      “The only current construction activity in Cork city is Apple computers building another temple.”

      A lovely formulation.

  9. The Dork of Cork.

    The guys in the big clubhouse have created a perfect world.

    It so happens to be a nightmare world for most of us.

    1. Boomer

      Bail-out’s, bail-in’s, LTRO’s, No haircuts for bondholders !, Haircuts for depositors !!! Cyprus is unique , but Cyprus is the template for future resolutions, but Cyprus is unique again….. It’s now like Alice in Wonderland in the Frankfurt corridors of power.
      The elites think that they can change the rules with impunity to suit any particular situation, “You can’t do dat….” , as Miah used to say. This will turn out bad, and not in the way that our elites think or plan !

  10. Susan the other

    Why do we need global (now “regional”) trade at all if it causes this much confusion? The game plan looks like a rubics cube. Heavy industry shifted to the north face, agriculture to the south, and all the other stuff in the middle. Is there something else causing these seismic shifts? Is it just a takeover by monopoly capital? It’s not capital itself because we can produce as much money as we need. And for sure monopoly capital can’t get along without fiat. So what is it? Oil Price said that Cyprus was about the control of the price of energy to the EU (Germany apparently), but the US, according to some docs (Greg Palast) is taking over the control of oil in the middle east to keep the price high. So maybe Varoufakis is partially correct in that Germany is not planning to up its exports but to ax its imports. Clearly not just Germany, but the entire EU, is planning to up its exports to the US as soon as the treaty can be signed (probably before the TPP is signed the way it is going). Is our new oil export industry driving this? None of this makes any sense.

    1. Susan the other

      The plan to do a pipeline from Alberta to Maine never made sense, but now with this picture coming into focus, it would have made good sense. Export wise.

  11. Nathanael

    Honeslty, who do the Germans think they’ll export to?

    Africa? No money, no wealth.
    South America? Doesn’t want them, is trying to develop domestic export industry, and is happy to install capital contrals.
    Southeast Asia? Has domestic export industry and is trying to eliminate foreign imports by enlarging it.
    The Arab world? I suppose that’s a possibility.

    The US?

    1. Massinissa

      The US is still big, but its not like we dont already have an enormous trade deficit. And its not like Germany can depress their wages low enough to compete with China when it comes to selling to the US.

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