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Europeans shouldn't be denigrating Americans for their "long" work hours. We work far shorter hours than employees in the same fields in Japan, Hong Kong, South Korea, and plenty of others.
^^^^^^^
I want to be down as warning them...;-)...Curious if Spain wants to give up that 'siesta'. If they are going to ramp up time on the job I'm afraid that once they take the 'siesta' they'll never wake up out of it......because of the 'exhaustion'.
Spain already gave up the siesta a long time ago in banking/trading for example. It's stupid to think that companies/people are not smart enough to cope with the world. But in short, as many mentioned, Europe does not need to work crazy hours to be competitive. Its labour force is skilled enough.
I just think that politicians in Europe need to think forward instead of backward. The US have a way of living which is different, and relies heavily on foreign work force. Europe, due to its education level in key fundamental science and engineering sectors, does not need to do so. Instead, it should focus on providing the best productive environment for both companies and employees.
Within this context, I like Germany because the workforce is flexible and would accept some stagnation in wages as long as the job is maintained. But again, it's hard to say one country is better than any other because the world is complex and not everything applicable in one place is applicable else where. I don't believe in a system as the US, where you can underpay low skilled labour force and the sky is the limit for some other industries, to be applicable everywhere in the world. I benefit from it here, being on the right side of the fence, so I am definitely not biting the hand that's feeding me. Nevertheless, what's working in Europe might not work in the US as well.
It's very trendy to bash France currently, and there are certainly some valid reasons as pointed out in this thread but:
- Its engineers and quants are among the best in the world, especially in the ability to get the big picture and still discuss the needy greedy details
- Even American companies love them and crave to hire them and/or transfer them, despite the huge cost due to the cost benefit they get when calculating the ROI
Everyone is talking about Germany as if they are rock solid but i think Germany may be in worse shape than Italy.
Too much reliance on exports.
Not good.
It's true that Germany is very dependent on exports. During the last recession in 2009 the German GDP was down by 5.6%. This deep fall was the result of collapsing demand for German export goods. In 2009 the U.S. GDP was down by "just" 2.8%. According to the GDP figures the recession was much more fierce in Germany than in the U.S. But in contrast to the situation in the U.S. the recession in Germany had almost no effect on the general public. Employment in Germany was down by just 250k, from Feb 2009 to Feb 2010. In the U.S. the employment was down by more than 10m. Today the employment in Germany is about 2.2m above the level in Feb 2009.
The huge export surplus or more precisely the huge current account surplus is the reason why Germany is more solid than many other countries. As long as a country is able to achieve current account surplusses it will be in a very secure position. Even a severe decline in GDP doesn't have a big impact of the well-being of the general public. At the moment Germany is able to achieve small budget surplusses and the fiscal revenues in Germany depend almost entirely on private incomes and household consumption (VAT). But these tax sources are very un cyclical. Of course a deep recession would lead to rising public spendings. But even a public deficit of 5% of GDP (about 150bn Euros) wouldn't threaten the stability of the public finances. It wouldn't lead to a big rise in interest rates.
The last 10 years were the best we ever had. There is one big challenge in the future. That's the ageing population and a shrinking working population. We need more immigration, but that could lead to inner tensions. Or maybe we have to work longer hours in the future to get the work done. The government has already seized measures (longer working lifetimes). Not sure whether this is sufficient.
At the moment almost everything seems wonderful. The debt to GDP ratio is falling in record speed. Even the needed expenses for the integration of the refugees doesn't seem to be a problem. The tax revenues are rising strongly. The growth in employment is constantly rising. And we have decent wage increases. Maybe we will see a fall in exports and a declining industrial production this year, but that will be more than offset by rising domestic demand. I'm afraid that we will see another crash in the financial markets in the next years. But I am not sure about the impact on Germany.
I think that Germany is in a good shape. But that doesn't mean that there are no problems in Germany. There are more than enough problems. Some city districts in poorer cities in Western Germany are turning into a nightmare. We need more investments into the infrastructure. We need to fight the rising racism. We need more housing. We have to fight old-age poverty. We have to invest more in education (chalkboards in schools are still the norm). There are still problems in the meat processing industry (work there is often done by exploiting cheap labor from Eastern Europe).
About Italy. I am pretty sure that Italy will be able to overcome the difficulties. Italy produces decent current account surplusses. That will definitely help to get out of the mess. Deficits in government budgets aren't a big problem, when the country is able to achieve current account surplusses. The unemployment is constantly falling in the European Union. Household consumption is rising. Overall I think the EU is on the right track, at least economically. Politically? It's a mess.
The huge export surplus or more precisely the huge current account surplus is the reason why Germany is more solid than many other countries. As long as a country is able to achieve current account surplusses it will be in a very secure position. Even a severe decline in GDP doesn't have a big impact of the well-being of the general public. At the moment Germany is able to achieve small budget surplusses and the fiscal revenues in Germany depend almost entirely on private incomes and household consumption (VAT). But these tax sources are very un cyclical. Of course a deep recession would lead to rising public spendings. But even a public deficit of 5% of GDP (about 150bn Euros) wouldn't threaten the stability of the public finances. It wouldn't lead to a big rise in interest rates.
This is true, but Germany exports' growth have been benefiting hugely from the European Union and other European partners. Would it had been the same country such as the US, with NYC, California and Texas earning and having accounts surplus, those states would finance the federal budget to help other states. EU is supposed to play this role in Europe but realistically, it's not enough to have an impact, hence all this discussion about private refinancing instead of a sovereign one. So how to put it... Germany had benefited from its export role as designed within the EU, and that should not be forgotten.
If for some reasons, the EU decided the exporting country would be Italy or the UK or even France, the story would be different for Germany as well.
Of course, that does not undermine its exceptional performance in the recent years.
Quote:
Originally Posted by lukas1973
At the moment almost everything seems wonderful. The debt to GDP ratio is falling in record speed. Even the needed expenses for the integration of the refugees doesn't seem to be a problem. The tax revenues are rising strongly. The growth in employment is constantly rising. And we have decent wage increases. Maybe we will see a fall in exports and a declining industrial production this year, but that will be more than offset by rising domestic demand. I'm afraid that we will see another crash in the financial markets in the next years. But I am not sure about the impact on Germany.
It's called Deutsche Bank. In short, DB has issued 2 statements, which could be interpreted as: Please no more easing, but only if easing means NIRP. As everyone has seen by now, more NIRP means a collapse in DB risk assets. But if "no more easing" means "even more QE", then go for it.
This is true, but Germany exports' growth have been benefiting hugely from the European Union and other European partners. Would it had been the same country such as the US, with NYC, California and Texas earning and having accounts surplus, those states would finance the federal budget to help other states. EU is supposed to play this role in Europe but realistically, it's not enough to have an impact, hence all this discussion about private refinancing instead of a sovereign one. So how to put it... Germany had benefited from its export role as designed within the EU, and that should not be forgotten.
If for some reasons, the EU decided the exporting country would be Italy or the UK or even France, the story would be different for Germany as well.
Of course, that does not undermine its exceptional performance in the recent years.
It's called Deutsche Bank. In short, DB has issued 2 statements, which could be interpreted as: Please no more easing, but only if easing means NIRP. As everyone has seen by now, more NIRP means a collapse in DB risk assets. But if "no more easing" means "even more QE", then go for it.
Yes, Germany has highly profited from the EU and more than all other countries especiallty from the eastward expansion of the EU. The competitive advantage compared to countries like France, Italy, Spain or the UK was mainly achieved by lower wage increases. There was for a long time the conviction in Germany that wage increases shouldn't exceed the marginal growth in productivity. Because higher wage increases leads to a rise in unemployment. I'm still scared when unions demand wage increases of more than 4%. Slightly more than the rise in CPI is enough.
Most European countries had for a long time significant higher growth rates in GDP. Often financed by debt. In my belief that was not Germany's fault. And comparing the infrastructure in Spain from 1990 to 2015? They also have profited from the EU.
And what is the value of Germany's huge international net investment position, when countries (e.g. Greece) can't pay back their debt? Will Germany ever see a service in return? I don't know whether I understand all those coherences? It seems very complicated to me.
Regarding the Deutsche Bank. I think most Germans would love to see a collapsing Deutsche Bank. Until we will realize that maybe we all have to live in poverty after such a collapse. The function of those banks is for most of us (including me) not clear. Maybe it's possible to make those banks redundant? I'm really sceptical about what they are doing.
Yes, Germany has highly profited from the EU and more than all other countries especiallty from the eastward expansion of the EU. The competitive advantage compared to countries like France, Italy, Spain or the UK was mainly achieved by lower wage increases. There was for a long time the conviction in Germany that wage increases shouldn't exceed the marginal growth in productivity. Because higher wage increases leads to a rise in unemployment. I'm still scared when unions demand wage increases of more than 4%. Slightly more than the rise in CPI is enough.
Most European countries had for a long time significant higher growth rates in GDP. Often financed by debt. In my belief that was not Germany's fault. And comparing the infrastructure in Spain from 1990 to 2015? They also have profited from the EU.
And what is the value of Germany's huge international net investment position, when countries (e.g. Greece) can't pay back their debt? Will Germany ever see a service in return? I don't know whether I understand all those coherences? It seems very complicated to me.
Regarding the Deutsche Bank. I think most Germans would love to see a collapsing Deutsche Bank. Until we will realize that maybe we all have to live in poverty after such a collapse. The function of those banks is for most of us (including me) not clear. Maybe it's possible to make those banks redundant? I'm really sceptical about what they are doing.
My point is that if the "export" role goes to some specific countries, then the others have to rely on internal consumption and debt to finance growth. It's almost automatic. Hence, it's "normal" that Germany did well in this period. However, it should always thank the EU for that role it has granted the country. That's all I am saying.
For the debt toward Greece, debt is an important concept but you should remember that Germany only honoured a fraction of Greece's demand for the war reparation. That was in 1960, and Germany expressly requested Greece to no more demand any further request for indemnity.
Also, you have to note that what helped the whole European continent was the Marshall plan, not the countries themselves. Therefore, this debt concept should be carefully thought when dealing with the Greece situation. Sometimes, only providing help is the answer.
For Deutsche Bank, it's probably one of the biggest credit derivatives market player. A year and half ago already, you could hear people discussing the potential collapse of DB similar to what happened to Lehman. Actually, DB and Lehman stock prices are strangely converging... If that's true, it's a matter of months. Well, I still think that would be fantasy though.
Nevertheless, the risk is real. Liquidity issues discussed in regard of DB are serious. I just wonder how German politicians are going to explain this bailout then... "it doesn't happen to Greece only"?
My point is that if the "export" role goes to some specific countries, then the others have to rely on internal consumption and debt to finance growth. It's almost automatic. Hence, it's "normal" that Germany did well in this period. However, it should always thank the EU for that role it has granted the country. That's all I am saying.
For the debt toward Greece, debt is an important concept but you should remember that Germany only honoured a fraction of Greece's demand for the war reparation. That was in 1960, and Germany expressly requested Greece to no more demand any further request for indemnity.
Also, you have to note that what helped the whole European continent was the Marshall plan, not the countries themselves. Therefore, this debt concept should be carefully thought when dealing with the Greece situation. Sometimes, only providing help is the answer.
For Deutsche Bank, it's probably one of the biggest credit derivatives market player. A year and half ago already, you could hear people discussing the potential collapse of DB similar to what happened to Lehman. Actually, DB and Lehman stock prices are strangely converging... If that's true, it's a matter of months. Well, I still think that would be fantasy though.
Nevertheless, the risk is real. Liquidity issues discussed in regard of DB are serious. I just wonder how German politicians are going to explain this bailout then... "it doesn't happen to Greece only"?
Re: 'Spain already gave up the siesta a long time ago in banking/trading for example. It's stupid to think that companies/people are not smart enough to cope with the world. But in short, as many mentioned, Europe does not need to work crazy hours to be competitive. Its labour force is skilled enough'
That is good. I'd suggest that the focus on the labor force revolves around economic functioning. Hopefully workers on the continent will not have to work 'crazy hours' but if there is an increase the continent will most probably have pressure on 'quality of life' issues if they are not there now. That is the human component in economic activity and that Europe would probably be attentive to that.
Also, how convenient to change the law right now with the emergency state has been prolonged and that it's forbidden to have public protest demonstrations. They could not choose a better moment.
Also, how convenient to change the law right now with the emergency state has been prolonged and that it's forbidden to have public protest demonstrations. They could not choose a better moment.
Hollande is a one smart cat
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