Post by Jaga on Feb 28, 2010 5:06:53 GMT -7
It is not good to be too frugal? I remember when I was in Germany I could see "Sparkasse" (Saving bank) at every corner!
BERLIN -- Greek extravagance touched off the biggest crisis in the 11-year history of the euro. But the world's most ambitious monetary union faces a less obvious problem that might be even harder to lick -- German frugality.
Adoption of the euro a decade ago ushered in an era of cheap credit, soaring salaries and big government in nations like Greece, Spain and Portugal. Their debt-fueled splurges are now coming home to roost, with Greece the first to come close to running out of cash to operate the government, raising fears of a default. Germany -- Europe's economic powerhouse -- is expected to take a leading role in a rescue effort to prevent a possible run on the euro and the outbreak of a new bout of turmoil in global bond, currency and stock markets.
Southern European profligacy is now the target of open distain in Germany, with many here ruing the day in 1999 that this nation of 82 million kissed goodbye to the once-mighty deutsche mark.
Yet in the years since, a significant part of economic growth in Germany, analysts say, was fueled by a surge of spending in Greece, Spain, Portugal and other European nations after they adopted the euro. In fact, a jump in sales of everything from BMW sedans to Miele washing machines in other parts of Europe helped make up for the lack of spending here in Germany -- where stagnant wages and a culture of conservative consumers has led to years of anemic domestic demand.
A growing number of economists now say that must change to ensure the euro's survival. If Greece must slash spending and put its books in order to restore faith in the euro, then Germans must also begin to consume more of what Germany and its neighbors manufacture.
...
www.washingtonpost.com/wp-dyn/content/article/2010/02/27/AR2010022701421.html?nav=hcmodule
BERLIN -- Greek extravagance touched off the biggest crisis in the 11-year history of the euro. But the world's most ambitious monetary union faces a less obvious problem that might be even harder to lick -- German frugality.
Adoption of the euro a decade ago ushered in an era of cheap credit, soaring salaries and big government in nations like Greece, Spain and Portugal. Their debt-fueled splurges are now coming home to roost, with Greece the first to come close to running out of cash to operate the government, raising fears of a default. Germany -- Europe's economic powerhouse -- is expected to take a leading role in a rescue effort to prevent a possible run on the euro and the outbreak of a new bout of turmoil in global bond, currency and stock markets.
Southern European profligacy is now the target of open distain in Germany, with many here ruing the day in 1999 that this nation of 82 million kissed goodbye to the once-mighty deutsche mark.
Yet in the years since, a significant part of economic growth in Germany, analysts say, was fueled by a surge of spending in Greece, Spain, Portugal and other European nations after they adopted the euro. In fact, a jump in sales of everything from BMW sedans to Miele washing machines in other parts of Europe helped make up for the lack of spending here in Germany -- where stagnant wages and a culture of conservative consumers has led to years of anemic domestic demand.
A growing number of economists now say that must change to ensure the euro's survival. If Greece must slash spending and put its books in order to restore faith in the euro, then Germans must also begin to consume more of what Germany and its neighbors manufacture.
...
www.washingtonpost.com/wp-dyn/content/article/2010/02/27/AR2010022701421.html?nav=hcmodule
