Friday, November 1, 2013

Germany Reacts To US Treasury Report Which Is Critical Of Its Export Based Economy

The US Treasury report, which has generally been critical of China in the past, has shifted its focus to Germany.  Germany's export surplus is greater than China's and internal spending on consumption has been stagnant.  The critical Treasury report came at a bad time because German's are still seething over the revelations of NSA surveillance.  On the other hand, growth has been slow in the eurozone and some believe that Germany could do more to stimulate consumer demand.

The problems in the eurozone create a real dilemma for Germany.  They have been able to manufacture high quality products which they are able to sell successfully on global markets.  It does not make much sense to criticize Germany for its success in an area where the US and the UK have been less successful.  It is also hard to blame Germany for the lack of success by countries on the periphery of the eurozone who have numerous structural problems which make them less competitive within the eurozone.  On the other hand, it is important for all of the countries in the eurozone to maintain the common currency.  Germany may have to do more to insure the success of the eurozone.

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