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"Superman is wearing black, red and gold this year"

When was the last time the New York Times front page featured a headline with the words "German Surge"? I bet never since WWII.

Well, today's headline might only be at the top of the online edition and only for a few hours.

The good economic news come as quiet a surprise on this side of the Atlantic as well. I got the impression that most folks here don't expect it too last. Thus, consumer spending is not likely to increase, and in consequence our neighbors and the US are likely to continue to complain about our "selfish" economic policy.

Though the NYT points out: "German consumer spending, which tends to be tepid even in good times, contributed to the growth spurt, as the number of people working grew 0.2 percent from a year earlier to 40.3 million, the Federal Statistical Office said."

Bloomberg writes about record German growth (HT: David)

The increase in German GDP was the strongest quarterly gain since records for the reunified country began in 1991. First- quarter growth was also revised to 0.5 percent from 0.2 percent. Euro-area GDP rose 0.2 percent in the first three months of the year.

In annualized terms, the German economy expanded about 9 percent in the second quarter, said Andreas Scheuerle, an economist at Dekabank in Frankfurt. That puts it on a footing with emerging markets like China and India.

"Superman is wearing black, red and gold this year, Germany's national colors," said Carsten Brzeski, an economist at ING Group in Brussels. "But at some stage he'll become Clark Kent again. The economy can't keep growing at this rate."

The data nevertheless suggest Germany's economy, which contracted 4.7 percent last year, will grow "far more than 2 percent in 2010," Economy Minister Rainer Bruederle said in an e-mailed statement. In June, the Bundesbank predicted growth of 1.9 percent this year and 1.4 percent in 2011.

Wow, what's going on? Why is Germany doing so well right now? For once the US media does not mention the many existing and long-term problems that still haunt Germany. I am impressed.

Oh, and remember Nobel Economist Krugman's statements less than two months ago?

In an interview with the German business daily Handelsblatt on Monday, Nobel prize-winning economist Paul Krugman joined Berlin's legions of detractors, and took aim at the government's recently agreed to EUR 80 billion austerity package.

"I don't have a problem with trying to balance the budget in five or 10 years," Krugman told the paper. "The question is whether one should start when the economy is at 7 or 8 percent below its normal capacity and interest rates are at zero.... Now is not the time to be worried about deficits." Later in the interview, Krugman said, "the German austerity package is really a bad idea."

His concern is that German austerity could ultimately have a negative impact on an already fragile US economy and that Berlin is hoping to resuscitate its economy solely through exports. He said that other countries in Europe would suffer as a result of Germany's savings package. "Germany's consolidation policies don't just negatively effect the domestic economy, it also slows growth in other countries," he said.

Yep, Germany is the new bad boy. So is Germany to blame for the slow US recovery? Or is it the fault of US consumers, who are not shopping with their second and third credit card any longer?

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Joerg Wolf on :

P.S.: Two former US government officials turned think tankers write today at the Atlantic Council's page: [url=http://www.acus.org/new_atlanticist/europe-gets-it-right]Europe Gets it Right[/url] I can't handle all this love and appreciation from the US. Too much. ;-) I am missing [url=http://atlanticreview.org/archives/1383-Europeans-Are-a-Pack-of-Pagan-Losers.html]this[/url].

Pat Patterson on :

I must have missed the poll on Americans zeroing in on Germany's "...selfish" economic policy." Most Americans when the situation is explained are envious of Germany and wish our politicians were so understanding of export policy.

Pamela on :

I am missing this. Oh, sweetie, there's no need! Pascal Bruckner just spanked the entire EU (h/t Glenn Reynolds) -------- But Europe’s worst enemy is Europe itself, with its penitential view of its past, its corrosive guilt, and a scrupulousness taken to the point of paralysis. How can we expect to be respected if we do not respect ourselves, if our media and our literature always depict us by our blackest traits? The truth is that Europeans do not like themselves, or at least do not like themselves enough to overcome their distaste and to show the kind of quasi-religious fervor for their culture that is so striking in Americans. We too often forget that modern Europe was born not during a time of enthusiastic historical rebeginning, as was the United States, but from a weariness of slaughter. It took the total disaster of the twentieth century, embodied in Verdun and Auschwitz, for the Old World to happen upon virtue, like an aging trollop who moves directly from debauchery to fervent religious belief. Without the two global conflicts and their parade of horrors, we would never have known this aspiration for peace—which is often hard to distinguish from an aspiration for rest. We became wise, perhaps, but with the force-fed wisdom of a people brutalized by carnage and resigned to modest projects. --------- There. Feel better?

Joerg Wolf on :

Thanks! Very true and thoughtful analysis.

Joe Noory on :

Don't get wrapped around the axle, Axel. This isn't about German workers' souls, Keynsian government astroglide, or any other over-emotionalized inference. [i](Superman? What are we supposed to do, kiss your ring?)[/i] The data came with a few clues: to the same variant as with GDP growth, France and Italy also did well to a lesser degree, commensurate with their growth in exports. In other words, the champions of Q2 in order were Germany, Italy, and then France. It's backward looking, and correlates to the 2 months following the Euro bottoming out at $1,18 which discounted anything exporters are able to sell, and we know where the exporters are. [b]Mind the Gap[/b] The difference in rates between Greek and German bond rates, (and with today's news, between Ireland and Germany) don't bode well. It was a big, fat, ugly flashing sign that said dump the Euro, purge your Euro denominated debt at a loss right now if you can, before it's completely wrecked by another currency devaluation, or multi-year stagnation. This gap which has just widened again was an indicator in this spring's crisis. Watch for selling triggered by anticipation of the sale or disposal of corporate and sovereign bond maturities at the end of the month. If the net effect will be another soft spot for the Euro, the exporters will be busy again, and the entire eurozone population will have lost purchasing power again. The rather small amount of that growth being attributed to domestic consumption follows toward the end of Q2, with worker activity higher and a rising Euro. Otherwise the post looks like just another strange little attempt to make the argument for inherent German superiority in, like, y'know, [i]what[/i]ever - something objectively implausible and largely useless. If you really want to get a grip on these moves, I suggest watching or listening to Sylvia Wadhwa's interpretation of the larger tides and turns arising from this kind of economic data.

Marie Claude on :

hureusement cé pas moi qui le dit

Joe Noory on :

If "Europe gets it right", then why is the growth forcast for the Eurozone 1,5% vs. 1,9% for the US? It's incredibly myopic to impute the German data on the whole of the Eurozone or all of Europe when that growth will be monetized in Euros.

David on :

I just saw an interview with Peter Bofinger on the Web site of Die Zeit. He warns that the euphoria will be short-lived if Angela Merkel follows through with her austerity measures. Still, this economic report is the best news she's had all summer.

Marie Claude on :

Part of the reason for this is the fiscal crisis that plagued the peripheral countries, notably Greece and Spain, during the quarter. Indirectly, the ensuing depreciation of the euro linked to the crisis also helped make Germany’s large manufacturing sector competitive internationally – a key factor behind its rapid growth. http://www.ft.com/cms/s/0/59a8cc0e-a709-11df-90e5-00144feabdc0.html If the euro were ever to break up, this competitiveness gain for Germany would be instantly reversed. Furthermore, freed from the influence of the weakest economies in Europe, it is very likely that a newly constituted Deutschemark would rise like a rocket against the dollar and yen, hurting German exporters further. Funnily enough, the more the Germans gain from the present predicament of the euro, the less the German electorate seems to like it. http://blogs.ft.com/gavyndavies/2010/08/13/germany-continues-to-gain-from-the-predicament-of-the-euro/ hmmm why this apparent success doesn't benefit to Merkel, who probabably will be outed in the next elections ? morale de l'histoire: le malheur des humbles fait le bonheur des... (?)

Joerg Wolf on :

Yes, according to the opinion polls, the Social Democrats and Greens would form the next government, if there were elections tomorrow, but there won't be new elections any time soon, I think. Well, you never know, when a government collapses. The Globalist writes about Merkel's and Obama's popularity abroad and lack thereof at home. The author comes to the conclusions that Merkel could become EU president and Obama UN Secretary General. Not very serious. It would be an improvement at the UN and at the EU, though. [url]http://theglobalist.com/storyid.aspx?StoryId=8636[/url]

Zyme on :

Merkel is having quite some trouble ahead, as she lost many conservative voters in the recent years. They mostly didn't vote other parties, instead they refrained from taking part in the process anymore. According to recent polls, more than 20 % of the electorate would vote for a new right wing party to the right of the CDU/CSU, a party with a free market approach and no socialism included. Should the likes of Merz, Koch and Clement get their act together, it could rip the conservatives apart just like the SPD after the Linkspartei entered the stage. And wouldn't that be fun? :) You can read about the polls at last part of this article: http://www.wsws.org/articles/2010/aug2010/germ-a04.shtml I can only hope there is truth to this. Just imagine: No longer would Merkel's circus be able to be so lenient in national politics. Instead they would have to upgrade their rhetorics and positions considerable to counter the new challenge. Just think of Austria! To cut a long story short, politics here would become interesting again :)

Joe Noory on :

What's the moral of the story? That the [url=http://www.economist.com/comment/624250#comment-624250]logically incapacitated[/url] will rule the blogsphere. Don't you realize that the [i]sans-papiers[/i] tend to [i]deport themselves[/i] when there's no money to be made?

Marie Claude on :

"What's the moral of the story? That the logically incapacitated will rule the blogsphere." hmm, who's that, you ? "Don't you realize that the sans-papiers tend to deport themselves when there's no money to be made? so what ? you want to welcome them in your paradize ? I didn't see that the unskilled were welcome there

Pamela on :

Ok, this is too weird even for me. And that's saying something. ------------- German Millionaires Criticize Gastes Giving Pledge. Krämer: I find the US initiative highly problematic. You can write donations off in your taxes to a large degree in the USA. So the rich make a choice: Would I rather donate or pay taxes? The donors are taking the place of the state. That's unacceptable. http://www.spiegel.de/international/germany/0,1518,710972,00.html ------------------------- An individual taking the place of the state. Imagine that. Oh, Joerge? If Obama wanted to be any more unpopular that he already is, that mosque business just did it. I tried to tell people.......

Pat Patterson on :

Even odder is that further down in the article the same source says he has already give a ton of money to, get ready for this, an NGO.

Marie Claude on :

German miracle, or mirage ? "There is a saying about the Germans that they are either himmelhochjauchzend or zu Tode betrübt – either totally euphoric or depressed. Right now, the Germans are euphoric – at least about their economy. German business confidence indices are approaching their all-time peaks reached in 1990 and 2007. This has nothing to do with productivity enhancing reforms – or some underlying structural features of the German economy. The main reason is the country’s success in depressing its real exchange rate. Germany is now reaping the dual benefits of the depreciation of the real exchange rate inside the eurozone, and the nominal depreciation of the euro from the $1.40 plus level to the $1.20 plus level. Can this be sustained? Probably not. If the current developments persist, German companies are bound to hit capacity limits shortly, which will in turn put some pressure on the labour market. I have heard estimates according to which we may not be all that far away from that situation. I would thus expect the Germans on the ECB’s governing council to press for a monetary exit relatively soon. They need higher interest rates to prevent German wages from rising. If they succeed, Germany’s imbalanced growth strategy might continue for a little while, but this would clear come at the expense of any adjustment within the eurozone. It really is a zero-sum game." bizarre, this German is worried ! http://www.eurointelligence.com/index.php?id=581&tx_ttnews[tt_news]=2868&tx_ttnews[backPid]=901&cHash=cf7d01a6f8

Joe Noory on :

No, it's not a mirage, it's not a sign from the Gods that each of Marie Claude's personal resentments and complaints is magically correct, and some sort of Delphic Oracle... ...it's something that can be expressed as some part of a curve on a chart. They go up and down. It actually happens all the time. But the writer of the original, (presumes to be a financial writer,) but thinks it logical to [i]annualize[/i] a one time blip. What a moron. He sees momentary data implying something about the Eurolandic obsession with their pathetic resentment of other Europeans. You remember them: there's this union. Everyone in it thinks all the others are idiots, and that THEY should lord it over others. At the same time they want it to be declared by teh rest of civilization as a wise benevolent empereal overlord dictating how all should live, but does little in the world other than issue press releases indicating that they are either "concerned" or "deeply concerned" (choose one) about something the populace wish they didn't have to be told about. Moreover, the peasant-folk of the village want to be a family without the formalities of a marriage, listening to one another, or exceeding any of their own autonomy.

Marie Claude on :

again put your glasses on, the title was from the article's author the rest is your own afabulation from your own memories, doesn't have anything to refer with the EU actualities

Zyme on :

Ahhh, this might be a herald of things to come - do you guys remember Obama being portrayed as messias himself in Germany? Look at this one: http://static.wiwo.de/media/1/wiwo-34-2010-jpg_499659.jpg It's the front cover of an economical weekly here - it says "THE USA AS A RISK: Does America ruin our upswing?" :D

Joe Noory on :

Let me see if I understand the logic: through force of mind, brilliance, elan, and simply being European, they're stellar, and in a blinding lack of awareness of the German public's instincts about everyone else on earth, they should be admired for their economic success and wealth. If they have any feelings that things are going badly, it's because of America. One of the normal stances employed: "(when) they are economically successful, it is due to exploitation, so we should detest them". Got it. It's totally non-linear and self-serving. but I've got it.

Zyme on :

Naturally ;) Tbh, I simply coulnd't resist showing you this picture, as the more conservative ones of the American readers here seemed to be very bewildered by Obamas popularity in Germany. So I thought you would like to see the beginning of the turning point.

Joe Noory on :

Well, the level on which Americans can understand the German fascination with his is rather simple. The BZ headline "Daddy Cool" on the day after his election. All he could be to them is at first glance is comparable to what I likely the first dark skinned person they've ever associated anything non-negative to: a guy named Boney M who had a number one hit in the openminded paradice of Germany: "Daddy Cool". That really was all he meant to them: some kind of symbol of a racial-social divide that they magically whose form and shape they can "just imagine", and know what imaginary side they're supposed to take on it - because their last detailed portrait of this thing came from strange smear stories out of the notoriously small and insular German media, and from the 1950's.

Kevin Sampson on :

Does this sound familiar? "Eventually, we will all hate Obama, too" http://medienkritik.typepad.com/blog/2008/07/opinion-eventua.html

Joe Noory on :

Take a look at the comments where you get the typical leftist fountain of thoughtless invective: [i]Looks like Uncle Sam's er I mean Uncle Tom's (Obama) finger prints are on this smear campaign.[/i] etcetera, etcetera.

David on :

Why am I not surprised that some Americans erupt in paroxysms of hate when the president defends the First Amendment? There has always been a sizable minority who, in times of social upheaval and financial crisis, clamor to abolish our freedoms. Erich Fromm wrote brilliantly about this in "Escape from Freedom" during the McCarthy witch hunts. Now Murdoch's Fox News and GOP leaders like Newt Gingrich and Sarah Palin are driving this group into a frenzy of religious hate. Freedom of religion? Sure, just not for Muslims. And let's abolish the Fourteenth Amendment too while we're at it!

Joe Noory on :

Actually, based on the stock litany of enemies, even dragging out the band's old standard, Eugene McCarthy, the one acting to silence the diversity of ideas is the likes of you. My other question is: what [i]religious hate[/i] are you talking about? Some ginned-up theory from the ideological fever swamp? People are entitled to oppose something like the O/T mosque that I think your compulsion is leading you to. No-one is suggesting that the first amendment be suspended. By the way, the separation of church and state is to protect governance FROM religion, not the intrusion of the state INTO the practice of any religion. But if you MUST ask why it is that people would not want to see a mosque opposite the site of the bombed World Trade Center, you first have to ask yourself why it's being put there. This, from my experience, is how it works in Christian villages in Lebanon. It is a practice that has been taking place for centuries in the near east: some mysterious character buys a piece of land, and before you know it, someone builds a mosque there, regardless of whether or not there's a muslim within miles of it. It's the marking of territory to intimidate, and with a view of the dichotomy as one of warlike hostility against any and all. It's what happened in my mother's ancestral village, one established by people running away from a "covert or be beheaded" campaign of Muslim outreach. There literally aren't any Shia, Sunni, of Druze housholds within 20 km, and the residents of this village from which two saints have come from have to listen to a recorded Mu'azin's call blaired out. It was built by a "charity" funded by an association loosely connected with the Iranian government. This is the marking of territory for the purpose of the medeivil practice of intimidating people into conversion. Surely that will do quite a bit to advance 1st amendment style rights! Knowing how to mouth the words of interfaith empty babble, the word "reconciliation" gets thrown around, but virtually none among those involved in the building of the mosque believe any of it with sincerity. This is the exact same thing. Some of them probably don't even think that no-one can hear them snickering. The gullible will buy any the trash talk about "reconciliation", as though they are at the annual interfaith society summer picnic and softball game hosted by the local Unitarian congregation. They are inept and naive, and would throw not only their fellow citizens, but also co-religionists under the bus in order to tell themselves that they think they've bravely defended the right to free speech. This is what piques my curiosity... Have you ever found yourself saying, oh, I don't know, that Fox, Sarah Palin, or any of the other symbols in your pinata party, should, perhaps - [i]cease to hold their opinions[/i]... [i]cease to air their views[/i], or [i]cease to exist[/i]? Then I think you'll answer your own question as to who's first thoughts turn to totalitarianism. Otherwise I invite you to air your feeling that any kind of American that doesn't support you politically is a totalitarian, and to do it from the tallest church tower in Saudi Arabia.

Pamela on :

Did you ever notice that when it comes to things like disseminating child porn or burning the flag, the lefties start baying about free speech and the first amendment? But when you mention Rush, Beck, et. al., the first words out of their mouths are "Fairness Doctrine"

Pamela on :

>>Now Murdoch's Fox News and GOP leaders like Newt Gingrich and Sarah Palin are driving this group into a frenzy of religious hate

Pat Patterson on :

Well of course there's a difference because when some, who even comment here, accuse others of racism it's simply because they understand and care more about these issues. Places of worship are denied and sometimes retroactively denied permits to build since the founding of the country. I wonder where the Left was then they ignored the building of an Episcopalian church in my area was blocked by first a public vote and then rezoning. Let's not even dwell on the amazing fact that an Episcopalian church, with its shrinking membership, was built at all, but be aware that there is also the doctrine of compelling interest where the state has the right to interfere with religion when it interferes with the rights of the majority. But then that would be no fun and cause a failure to reach the smugness quota for the year. I wonder where David was when Mormon temples and stakes were picketed and the members called the vilest names because of Prop 8 in California? No peep from him then but the usual inveighing against people that he doesn't even know.

Joe Noory on :

Let's get back to what we've really learned in this off-topic sub-thread... that there are people roaming this earth who believe that the only possible topic that could possibly matter would be their shallow invective of any fellow citizen of theirs who doesn't agree with them. SO important that a discussion about someone trying to annualize a abberant quarterly GDP report into a treatise on teutonic perfection - has to magically become akin to a third-world village feud about a mosque - which really isn't about a mosque. It could have been about a cheesy lamp made out of a pineapple, all that matters is that David has to take his peevish invective about other Americans beyond our shores where it seems even pettier. It's because some people out there are just that broad. [i]respect[/i]

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