Saturday, February 27, 2010

BEMOANING SENSIBLE BEHAVIOR--THE NEW ARGUMENT OF THE FECKLESS

Germany's frugality bemoaned for inhibiting euro zone growth By Anthony Faiola Sunday, February 28, 2010; BERLIN -- Greek extravagance touched off the biggest crisis in the 11-year history of the euro. But the world's most ambitious monetary union faces a less obvious problem that might be even harder to lick -- German frugality.  

Well, that certainly is a problem that must be quickly stamped out, lest it lead us back to the good old days of a world in which being sensible and practical was a virtue. That damned Germany. World's largest exporter, a nation of 80 million whose heels are being nipped by a nation (China) sixteen times its size. . . .
 

Yet in the years since, a significant part of economic growth in Germany, analysts say, was fueled by a surge of spending in Greece, Spain, Portugal and other European nations after they adopted the euro. In fact, a jump in sales of everything from BMW sedans to Miele washing machines in other parts of Europe helped make up for the lack of spending here in Germany -- where stagnant wages and a culture of conservative consumers has led to years of anemic domestic demand.

  Hmm. Yeah, analysts will certainly put things in perspective for us. If you have a wayward uncle, in hock up to his eyeballs, an analyst will caution you that it's not his problem, but yours, for not spending enough yourself. In a buy-now, pay-later (or never) world, it's the provider who is now at fault. And we swallow that crap, as if it were gospel. Nod our heads, agree and sink back in front of the 72" plasma screen.

 . . . A growing number of economists now say that must change to ensure the euro's survival.  

Maybe someone can explain to me why 'that must change.' The euro and the dollar have been abused, diffused and made irrelevant by the very forces economists want to reinstate. The euro and the dollar are exactly where they belong and are headed exactly where they deserve to head. Do these same economists belie the economic wisdom of currency trading? Have they suddenly abandoned their mantra of free markets, when markets prove free to wreck the value of their best loved currencies? What a joke. The British pound, American dollar and euro are in the dumper. Instead of building the environment that supports sound currencies, we profligate Westerners beg the strong to make themselves weak--to come down to our level. The strong just happen to be the Japanese, Chinese and Germans (even though the latter are suffering for trading their Deutschmark in for euros).

 . . . As a result of lopsided trade, Germany now enjoys a relationship with its partners in the euro not unlike that of China and the United States, with one acting as supplier and financier and the other as an overextended buyer.

 Case closed and stop all the whimpering. Interesting to me that Wal-Mart's heralded venture into Germany was a flop and they went scurrying back to Bentonville, Arkansas, wondering why they got their asses handed to them. Also interesting that Germany, unlike America, still actually makes something of value to export. We did that once and, presumably, tired of it as we discovered that the quick buck, the easy buck, was to brand a product and let Taiwan and China actually manufacture it. Much less factory dirt and grit under the cocktail-party fingernails that way.  

Rather than a lesson to be learned, our analysts and economists would rather bring the productive world down to our level than do the hard work of catching up. I wonder how that will work out for us?