Germany's investment problem

"We all know that Euro membership has been of doubtful benefit to periphery countries such as Greece and Portugal. But Germany has been a net beneficiary of the Euro, hasn't it?"

"And it is also a story of too-tight fiscal policy. Instead of increasing its own borrowing to compensate for the fall in NFC borrowing, the German government gradually reduced its fiscal deficit - indeed in 2007 and 2008, it was net saving (running a surplus). On the face of it, this looks sensible: after all, we are led to believe that governments should net save during booms. But not, emphatically not, when there is a growing current account surplus. A persistent current account surplus is contractionary over the medium-term, because it by definition means that productive investment is leaving the country."

http://coppolacomment.blogspot.co.uk/2013/12/germanys-investment-problem.html

Can Germany do quite well while the rest of the euro zone is struggling?

"Various surveys seem to show that Germany's economic situation is likely to be decent in 2013 (even though the fourth quarter of 2012 was poor) while that of the rest of the euro zone is likely to be very poor. 

Can there really be such a gap between Germany and the rest of the euro zone? For this to be the case: 

- German exports outside the euro zone would have to be substantial enough and sufficiently fast-growing. However, these exports are not more favourable for Germany than for the rest of the euro zone; 

- German domestic demand would have to be markedly faster-growing than that of the other euro-zone countries, in particular in view of the stronger growth in real wages in Germany. Household demand growth is slightly positive in Germany, but is not vigorous since real wages are increasing by only 1% per year, and business investment is declining as much in Germany as in the rest of the euro zone."

http://cib.natixis.com/flushdoc.aspx?id=68886

What do countries want in the long term?

Ciekawe porównanie kilku państw przygotowane przez Natixis.

"Some OECD countries have extremely clear long-term strategies: 

- Germany wants to remain a large industrial country integrated in globalisation; 

- The United States (thanks to a reduction in labour costs and energy prices, perhaps exchange rate depreciation), the United Kingdom (thanks to a reduction in labour costs and in the tax burden on companies, perhaps also exchange rate depreciation), and Spain (thanks to a reduction in labour costs) want to reindustrialise. 

But we cannot see any clear strategy in France or Italy: 

- Competitiveness continues to deteriorate; 

- Taxes are not attractive; 

- Deindustrialisation continues; 

- Exports of services are not growing."

http://cib.natixis.com/flushdoc.aspx?id=68860

Europe needs a hegemonic Germany

Ciekawe rozważania o roli Niemiec w Europie w najbliższym okresie.

Should Germany then try to emulate America? Germany does not have the capacity to do what the United States accomplished from 1980 to 2008; that is, to operate as a gigantic vacuum cleaner sucking into its territory other nations’ net exports, at the cost of ever expanding deficits. Nor should German taxpayers be expected to reflate the bubbles that burst in 2008 (in their own banks, in and around the Greek state, in Irish and Spanish real estate markets etc.). Burst bubbles should be allowed to remain… burst. But meanwhile a hegemonic Germany would find ways to channel the huge pools of stagnant savings into productive investments in the Periphery where they shall produce the incomes that must pay down debts and maintain the level of intra-European demand German companies need to remain competitive both within and without Europe.

http://yanisvaroufakis.eu/2013/02/22/europe-needs-a-hegemonic-germany/