UPDATE, see this.
http://www.project-syndicate.org/commentary/the-eurozone-s-struggling-core-economies-by-ashoka-modyThe talk of the day is the decline of the German economy last quarter. Who knows if it will be revised even more, or if the expected growth of 0,4% will even shrink more than expected. As I have said, like many, many others, the German model is based on export-led growth, and given that Germany’s main export partners are the Eurozone countries, the German economy was bound to take a hit sooner or later. With Southern Europe almost beyond hope, and even the Netherlands and Finland in a fairly bad situation, Germany has no hope other than China and the USA. That is, unless it starts to acknowledge that austerity is so totally the wrong policy for the EU, especially now. Bill Black has the goods otherwise on this issue (and the role of the media):
Germany’s export-based strategy cannot work for the world. We cannot all be net exporters. Indeed, the more that Germany exports the harder it is for other nations to export their way out of recession. The journalists also fail to note the tremendous loss that the German export strategy imposes on German workers. Unemployment is low, but German workers’ wages have been reduced materially in real terms as productivity has grown. The result is very large corporate profits and ever higher inequality.
Germany is kind of operating on the basis of a compositional fallacy – we cannot all export our way out of the crisis (unless, as per Paul Krugman, we find a star system to export to).
It is a big catastrophe that European (and especially German, Finnish and Dutch) policymakers still don’t get this crisis, and the structural problems of the euro system (only shared currency, no shared fiscal regime, banking union etc). The policy making of the Euro’s designers AND current policy makers is the great failure of our time and already millions suffer from their delusions!