Skip to content

Germany to Benefit from Lower US Credit Rating

"Standard & Poor's warning the United States could lose its AAA rating may ultimately bring investment to Germany, reduce interest rates on its bonds and help the country lower its own debt," writes Deutsche Welle:

"Standard & Poor's reassessed US sovereign debt and decided to put it on negative watch for the first time, meaning there is one-in-three chance the ratings agency will downgrade the country's hitherto cast-iron AAA credit rating in the next two years. "Germany wins in this equation because it gets a dividend through stability," said Clemens Fuest, a member of the German finance ministry's technical advisory committee. "Interest rates will be pressed down as a result." Germany maintains a secure AAA rating, pays less for a 10-year bond than the United States, and has a constitutionally-mandated 'debt brake.' In Europe, German bonds, known as bunds, have long been the benchmark for investors. (...)

Continue reading "Germany to Benefit from Lower US Credit Rating"

Kinder Surprise Eggs Banned in the United States

Since it is Easter, CNN writes this:

Kinder Eggs, a popular European chocolate egg that contains a toy inside, is banned from importation into the United States because it contains a "non-nutritive object embedded in it."

With the Easter holiday around the corner, the agency issued the reminder this week, warning that the candy is considered unsafe for children under 3. Last year, Customs and Border Protection seized 25,000 of them in 1,700 incidents.

Continue reading "Kinder Surprise Eggs Banned in the United States"

Europe's Indispensable Nation

Germany is Europe's "indispensable nation," in charge of "the unipolar moment within the eurozone," and it is to the EU what the United States is to NATO. That's how European and US think tankers compare Germany with the US:

David Rothkopf in Foreign Policy (via atlantic-community.org):

To the extent the EU, NATO, or the G20 have an effective future, Germany will be central to setting the parameters of the agenda. For some, the notion that so many issues important to the future of the world depends on the international engagement of a benevolent Germany will seem more than a little ironic. So too will the fact that Germany has become Europe's indispensible nation. But these are among the game-changing facts of the 21st century. Germany is not just the wallet of Europe, it also must necessarily be Europe's spine and its heart.

The European Council on Foreign Relations makes another comparison with the US. Financial Times:

"Rarely has Germany been as important in Europe - or as isolated - as it is today," say Ulrike Guérot and Mark Leonard in a new pamphlet for the European Council on Foreign Relations. "There has been a kind of 'unipolar moment' within the eurozone: no solution to the crisis was possible without Germany, or against Germany."

Constanze Stelzenmueller wrote in another Financial Times article about Germany: "In economic terms, it is to the European Union what America is to NATO: the superpower that gets to call the shots."

Germany should lead? No thanks. Most Germans rather want their country to be a bigger version of Switzerland. We prefer to just sell our cars, machines and tools around the world, play soccer, watch Tatort, and attend to our Gartenzwerge (lawn gnomes).

Germany's Embarrassing Policy on Iran

Never has Germany been more isolated, wrote Former Foreign Minister Fischer regarding Berlin's position on Libya. The Merkel-Westerwelle government alienates our Western allies with its dealings with Iran as well. Apparently, Germany's foreign and economic ministries agreed to let India pay 9 billion euro to Iran via Germany's central bank.

The United States had pressured India's central bank to end previous business transactions with Iran via an Asian bank. Now Germany's government appears to be undermining these sanctions. India gets about 15 percent of its crude oil imports from Iran. Sources in German: Handelsblatt and Zeit. In English: New York Times.

According to Spiegel International the stands in connection to the release of two German journalists from Iran.

Are Germany and India new best buddies? Both abstained in the UN Security Council on Libya.

Dialog International writes about "The Westerwelle Doctrine", which "would seem to dictate that Germany will seek out different international partners depending on how the domestic winds are blowing.  Germany is happy to align with the US and Great Britain, as long as it doesn't require the use of force or the commitment of resources.  Otherwise it will join with Russia, Brazil or India."

Atlantic-community.org wonders how Germany can repair the damage to its international reputation and convince voters of the right course at the same time. Foreign policy makers and experts in Germany and around the world criticize Germany's position on Libya. However the majority of Germans seem to approve it.  Any ideas?

UPDATE (April 5, 2011): AP: "A plan for India to funnel oil payments to Iran through Germany's central bank at a time when Tehran faces international sanctions has been scrapped, a German government official said Tuesday."



Social Mobility

Social Mobility is an issue that comes up time and again in the comments section of Atlantic Review and other blogs. Why? Because fairness and equal opportunities are so important to the US and European self-image. Or in the words of the researcher of the London School of Economics: "The level of intergenerational mobility in society is seen by many as a measure of the extent of equality of economic and social opportunity."

In 2005 they published these "disturbing findings" (HT: Influx):

A careful comparison reveals that the USA and Britain are at the bottom with the lowest social mobility. Norway has the greatest social mobility, followed by Denmark, Sweden and Finland. Germany is around the middle of the two extremes, and Canada was found to be much more mobile than the UK. Comparing surveys of children born in the 1950s and the 1970s, the researchers went on to examine the reason for Britain's low, and declining, mobility. They found that it is in part due to the strong and increasing relationship between family income and educational attainment.

My guess is social mobility declined in many countries in the five years since the publication of the survey. Fortunately, the situation is still better than in North Africa. The lack of social mobility was the key factor in the protests/revolution.

Europe and China: Weapons for Investment?

Atlantic Community:

EU countries mired in debt are getting help from an unlikely source: China. The ascendant superpower is buying up large amounts of European bonds and investing heavily in euro zone countries. Moreover, there is talk of a reversal of the long standing EU arms embargo on China. Is this all a coincidence?

Kurt Volker, a former U.S. ambassador to NATO and now managing director at Center for Transatlantic Relations at Johns Hopkins University commented: "If all this were to play out - that is, lifting the embargo, subsequent sanctions, etc. - it would be a new low point in U.S.-E.U. relations." (HT: NATO Source)

I agree. I hope the EU does not lift the arms embargo. In my opinion NATO countries should not sell any arms to non-NATO members.

Plutocracy: US Media Concerned about the Political Influence of the Super Rich

Conventional wisdom used to be that Europeans envy the rich, while Americans hope to emulate them. Now, Americans are increasingly concerned about rising inequality and the influence of the tiny elite of the super rich.

Plutocracy is a very popular topic of discussion in the US media at the moment. I am quite surprised.

It can't be a coincidence that even mainstream and center-right publications like Foreign Affairs, The American Interest and The Atlantic write about it extensively right now:

Continue reading "Plutocracy: US Media Concerned about the Political Influence of the Super Rich"

Blaming Each Others Financial Policies

From a Washington Post editorial:

ABOUT TWO weeks ago, Germany's finance minister described U.S. economic policy as "clueless." We don't want to sound childish, but after yet another bailout for an insolvent European country - about $137 billion for Ireland - we are inclined to ask: If the United States is clueless, what does that make Germany? The de facto leader of the crisis-ridden, 16-nation eurozone, Berlin has not performed its role brilliantly over the past year.

A good defense of German policy against US criticism of its "export-led growth model" can be found on Atlantic Community: Stop Lecturing and Do Your Homework, America!

Thomas Kleine-Brockhoff: America's argument about the Chinese currency manipulation may be valid but it is also a distraction. It is America's own lack of competitiveness that is hurting the US more than anything. America will be able to revive the credibility of its global economic leadership only when it stops blaming its democratic peers and instead starts doing its homework.