Sunday, May 06, 2012

Reality of German Economy longterm is not pretty



What is Capitalism?  It would seem, in Europe, that Capitalism is a organised global system of extreme short sightedness.

Take the current love fest for the 'German Model.'  In the UK conservative leaders can't say enough that we need a German like economy.  Well when you look long term, from 1990 to 2010 you see that the German economy, frankly, sucked.

Compared to the UK economy the Germany economy of the 1990s and between 2000 and 2005 was a joke.  Only just after 2005 did Germany return to some growth, but it was hit just as hard by the 2008 crisis.

So if you look over the last 5 years Germany looks good, but over the past 20 years Germany looks awful.  Popular wisdom in Europe today is the period between 1990 to 2010 was some kind of unsustainable false boom that inevitably would come crashing down, so the 20 years of UK growth was suddenly not real and the 5 years of German growth is.  But maybe the what if the current situation is unusual?  This actually is a more rational assumption.  What if Germany really is a weak economy benefiting from a temporary phase in the global economy, doomed to return to the long funk it has been in since the end of the 1980s?

 

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