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No hat tip for Mediakritik! You KNOW he read this blog for this piece

C'mon :0

That most Germans are easily propagandized oafs is hardly new. What is new is that Germany is becoming increasingly irrelevant among the world's economies. A lethal combination, nicht wahr?

"""""No hat tip for Mediakritik! You KNOW he read this blog for this piece

C'mon :0"""""""

Yeah, that's poor style ... shame on him.

Poor style indeed.

At least the content is cheering. This issue gaining prominence in our media might be the only way to break the cartel style cooperation of the anti-american german media. Good news!

What does the EU do against this? This happened last week!


"Allah has tormented us with 'the people most hostile to the believers' - the Jews. 'Thou shalt find that the people most hostile to the believers to be the Jews and the polytheists.' Allah warned His beloved Prophet Muhammad about the Jews, who had killed their prophets, forged their Torah, and sowed corruption throughout their history.

"With the establishment of the state of Israel, the entire Islamic nation was lost, because Israel is a cancer spreading through the body of the Islamic nation, and because the Jews are a virus resembling AIDS, from which the entire world suffers.

"You will find that the Jews were behind all the civil strife in this world. The Jews are behind the suffering of the nations. "Ask Britain what it did to the Jews in the early sixth century. What did they do to the Jews? They expelled them, tortured them, and prevented them from entering Britain for more than 300 years. All this was because of what the Jews did in Britain. Ask France what it did to the Jews. They tortured them, expelled them, and burned their Talmud, because of the civil strife the Jews wanted to spark in France, in the days of Louis XIX. Ask Portugal what it did to the Jews. Ask Czarist Russia, which welcomed the Jews, who plotted to kill the Czar - so he massacred them. But don't ask Germany what it did to the Jews. It was the Jews who provoked Nazism to wage war against the entire world, when the Jews, using the Zionist movement, got other countries to wage an economic war on Germany and to boycott German merchandise. They provoked Russia, Britain, France, and Italy. This enraged the Germans toward the Jews, leading to the events of those days, which the Jews commemorate today.

"But they are committing worse deeds than those done to them in the Nazi war. Yes, perhaps some of them were killed and some burned, but they are inflating this in order to win over the media and gain the world's sympathy. The worst crimes in history were committed against the Jews, yet these crimes are no worse than what the Jews are doing in Palestine. What was done to the Jews was a crime, but isn't what the Jews are doing today in the land of Palestine not a crime?!

"I.G. Metall, the German engineering union, depicts what appear to be American-Jewish insects"

American-Jewish?? Well, I remember the Uncle Sam hats. But I don´t recall any stars of david.

Fact checking is so easy in our times...

Otherwise: good article.

I think the fact that the locusts featured a long nose/proboscis is what led to the Jewish reference. It is something of a reach —though probably not untrue— and one that I would not have made if I had written the article. In my own opinion, the question of resentment in modern Europe is not so much about the Jews, but rather that Americans have become the new Jews, in the sense of the nefarious string-pullers of European mythology that have been scorned as the source of all evils since the middle ages.

You're just jealous, Amihasser.

Don't worry, not only are most of our troops and families leaving or left, our businesses are, too.

Posted this in another topic:

Via EU Referendum:

The Market Center Blog says, quoting the left-wing New Republic:

“According to a Boston Consulting Group survey, one in five U.S. companies currently in Germany is planning to relocate at least some operations. Thus,thanks to Schröder and the SPD, Germany is not only an economically dicey investment but a politically dicey one as well.”

True enough, Jason. And more interesting still is that I haven't seen even a single comparison in the mains stream media between the use of the Jews as scapegoats for political advantage in the 1930s to the use of the US in the same light in both the NRW elections and in the (rather critical) late 2002 elections. Both periods featured a greatly troubled economy and an unstable global political situation as well.

It strikes me as a very obvious parallel.

P.S.: I am not Jewish, and have no particular axe to grind in that regard. It's just a remarkably similar technique under somewhat (but not very) dissimilar circumstances.


SANDY! You put the cart before the horse, you nitwit. Everyone knows the US firms are not leaving due to hostility from their hosts over the past few years, but that their hosts are only now becoming hostile because the firms are leaving.

Jeez, get with the program. It's clearly all the fault of those viscous, greedy Anglo-Saxons. The Germans are far too well-organized and (dare I say?) superior to have made such an error. The conclusion is obvious by inspection.

Via Marginal Revolution, and economic blog:

American vs. European labor revisited: the household dimension
Tyler Cowen
...you ask why we Americans work more hours than do Europeans. But perhaps we don’t. While the data do show that Americans work more hours AT FORMAL JOBS, it doesn’t follow that Americans work more hours in total. The reason is that, compared to Europeans, Americans have more time-saving household appliances, as well as greater access to other time-saving amenities such as prepared foods, child care, and housecleaning services. As a result, we Americans work fewer hours taking care of our households and, hence, can work more hours earning income.

Let's not forget that buying things is much easier in the U.S. as well. Don Boudreaux just submitted the above in a letter to The Economist.

@SOTU Just ask any one from the middle east or the media there, 82% to 92% od all US citizens are evil Jooos. Perhaps the metal workers union has that opinion as well and expresses it in their propaganda/art work?

German government spokesman Anda announced that Chancellor Schröder would shorten his trip to the U.S. in June due to "domestic political reasons." He still plans to meet with President Bush in Washington and to deliver a speech to the U.S. Chamber of Commerce. The trip was originally scheduled for June 26-29, but will now be restricted to June 27 (Die Welt, AP).

Interesting. Of all the groups the Chancellor could address in the U.S. he picks the ones who can help him get re-elected. If only they would invest in Germany and create jobs! Oh, by the way, those references my party made about you guys being a bunch of locusts - we were only kidding. In other words, we hate you, please send money. Perhaps U.S. conservatives should help Schroeder's campaign as much as German liberals tried to "help" Bush.

What a strange article.
The author should better take one issue than mixing everything to get the result he wants.

Just the start. The german economic system was never like the US system and far away from beeing laissez faire. The rheinische kapitalismus or the Deutschland AG was always something very different from the anglo-american system.

With his analyse of the time in the 70s and 80 i would agree more or less but we could afford it at that time.
But germany is a unique case and the costs of the reunification has to be payed while the pressure of low cost countrie is becoming higher everyday.

What is really interesing is the difference between the US or UK and countries like Germany.
The economic growth in the US is based on private consumption with zero saving rates, high deficits and huge mortage loans based on fast growing estate prices and on a unbelivable trust that this can continue forever.
In Germany but also other european countries we see a total different picture. People save money and the small economic growth is based on export and the still strong manufactoring base.

So perhabs the US is the new model for developed countries in times of competition with India and China. But perhabs it is just the new japan with all the following problems when the party is over. I still remember at my first year at the university we had to learn the japanese management system and everything from japan was good and superior.

We will see. I belive germany has to go trough that now but the german economy is still strong and competitive and is gaining ground on the world markets.


How very odd. I save when I can. I also invest a lot of my cash in markets and other plans. Within 5 years, I've made over 50,000 in my retirement plan and paid off my mortgage. and I still live fairly well.


you sound like you are a smart guy, went to University and you are young.

Go West, young man, go West !
leave this place

@Jewels (AKA Julian

Than you are very unique in your country.

The OECD just published a survey on the different saving numbers ( just visite the homepage) or just google it it is easy to find
For the other parts of my post like the estate market you can just read your newspaper as i did some weeks ago while i visited the US. Just some weeks ago you got a new bankruptcy law that was realy good news for you banking system.


"I think the fact that the locusts featured a long nose/proboscis is what led to the Jewish reference."

Then elephants are a reference to Jews, too ;-) ? Mosquitos just have a long -um- proboscis(?). That´s stolen from Walt Disney.

"Americans have become the new Jews"

I think we should be a bit careful with these comparisons. Nobody is calling for the expulsion or extermination of all Americans.

Plain anti-Americanism (though IMO, it´s actually anti-Capitalism) is bad enough. There´s no need to artificially blow it up to a new holocaust looming ahead.


Interesting comments.

There are some points I would tend to disagree with you about but really they are minor and reflect more about how events are viewed.

You stated Germany had the time in the 70’s and 80’s not to address structural changes to its economy. That actually is not true. The issues facing Germany in the 70’s and 80’s were not so great that need for change was as evident as it is today. Parts of the reason for this was there were few benefit claimants, benefits were small and there was a high rate of employment. Even today Germany resists making changes. So by failing to act when the changes would be small and more manageable Germany made a decision to do nothing.

As much as you would like to think Germany is unique, it is not as both the US and the UK and Japan all have had internal economy problems. Each nation had to address these to move the nation and economy forward. The UK took action first, followed by the US and later Japan. You fail to recognize in the US in the 80’s there was the issue of the savings and loan banking clean up. This cost billions of dollars. It was painful for many people. During this time both America and the UK were also faced with economic challenges from other nations in the form of cheaper goods. Many of those nations now face the same challenges the US did at that point in economic history.

Saving rates are also an interesting topic. Americans tend to be more of a nation of investors. The OECD does really not capture this. Americans also tend to be more of an ownership society.

You are correct Americans tend to view the future as something that will be better. This attitude is picked by the various studies done by such organizations as PEW Reports. Europeans with the exception of the UK tend to fear the future. This too impacts on both saving and consumption. Added to this to the reality of the condition of the various governmental benefit programs, it is easy to see why the Germans save more than Americans.

One has to compare what has been promised with what can be delivered by the state in the future. This realization of promised future benefits is a topic of discussion today in the US. It takes into account such things as government spending, tax receipts, demographics, etc; Americans realize they must save for their own retirement if they want that retirement to be one of enrichment.

Germans by making individual decisions to save more and consume less really is a statement of how they view the future.

As to whether the US is going to be a model for other nations, or if it will become a new Japan, you actually mean Japan of the 80’s when real estate prices lost touch with reality. There too is a difference between those two periods, which is not apparent. The Japanese real estate bubble was the results of land speculation and commercial property. In the US today if a bubble results it will be from an overbuilding of individual homes. This type of bubble is much easier to manage and has been managed once before in the late 70’s.

So whether the US is a model for other nations going forward time will determine. What I can assure you is Germany will not be the model.

Finally Germany economy is built on exports. Many of those exports go to American and are consumed. I for one wished American consumption was not as great as it was but it is what is driving the world economy. The world economy gets little help from Germany.


Germany's is an export-based economy. It is much closer to the Japanese economy of the 1980s than the US economy is. If you want to look for a prolonged hangover once the party ends, Germany is the place to look, not the US.

I agree the US savings rate is a huge problem. But that total lack of a savings rate is what is propping up a lot of the export-based economies. Sarkozy (sp?) in France at one point managed to insist the US must cease importing so many goods (to correct the exchange rate), so it could import more French goods (which would then be comparatively cheaper). He used other words, but that's precisely what he said.

The Germans' current misfortunes may largely be an artefact of the system coming back into balance. If it weren't for the Chinese (and Japanese) buying huge amounts of US Treasuries, the US would already have had to raise interest rates, thereby slowing consumption and increasing savings. Where then would be any German exports?

While on the matter, a huge proportion of Chinese imports (China is a net importer if you exclude the US) are components for assembly and resale (mostly to the US). While they buy a lot of steel and concrete for factories, etc., that too is export-driven. Either the Germans would have to start buying Chinese goods, or they'd see a drop in their exports to China as well.


> The OECD just published a survey on the
> different saving numbers

"Capital gains on equities, 401(k) plans, and home values are excluded from measurements of personal saving; when they are added, total U.S. domestic saving is around 20 percent of GDP--about the same rate as in other developed economies."


I've never bought the argument that American's don't save. This article proves me right. We prefer to stick our money in 401k plans and the stock market.

Lou - its the same as the old shibboleth that "Americans don't give to charity" - when you dig into this one you quickly learn that the only numbers that are used are direct government contributions to various causes

So we end up with some figure like Germans contribute $100 per capita and Americans contribute $75 for example

They completely ignore PRIVATE charity efforts - which are huge in the US and virtually non-existence in Europe

And they don't exist in Europe not because people aren't charitable by the way - but because people think Government is the channel for such efforts

Always be careful with comparisons eh

Peter said: "The economic growth in the US is based ... on trust ..."
That's the major difference to Germany.

@ poguemahone
Quote "And they don't exist in Europe not because people aren't charitable by the way - but because people think Government is the channel for such efforts "

which does have some logic, as Germans are taxed more.

I for example never give anything to any charity because I pay enough taxes and they are used to pay for various "charitable" efforts.

I like the American version better. Then I can decide who gets the bucks.

I agree it does have a logical foundation - as much as I dislike the system as you do

What irks me is these regular reports that show "the average Dane gave 3% to charity while the average American 2% in 2000"

And ALL they are counting is official gov't charity - like US foriegn aid v Danish foriegn aid

They leave out the private charitable contributions - and the Church contributions

And based on the empty European churches that leaves out a lot

Via Instapundit:

GREG DJEREJIAN: "I have to say, reading this kind of risible crap gets me in the mood to say let's all get behind John Bolton, shall we, and send him to USUN soonest. Particularly the comments of the German Ambassador to Washington, Wolfgang Ischinger, so dripping with condescension, disingenuousness and hypocrisy: 'we tend to think of ourselves as more experienced in the way societies evolve,' '(t)his is very complicated, '(c)hanging the way people think often has to do with religious and cultural issues...Americans think, Let's solve the problem in the next four years!' I mean, how many silly, tired, protest-placard stereotypes can the good Ambassador mutter on about in one short interview with the New Yorker?"


Agree on the 401K/savings accounts comment.

Why in the world would I want to settle for 2% when I can get more even in bonds?

There is no comparison between what's in our 401ks v. savings accounts.

And if you consider the older you are, the more you put down on a home, why should the downpayments be excluded?

The cash is coming from somewhere.

And no, we're not like Japan, we fire people in waves if we have to.

Anyone remember the late 70s and early 80s rustbelt?

CA/Silicon Valley skated thru it, the Midwest didn't.

But SoCal had a housing bust around 1993, IIRC.

I have been retired for 7 years now (age 55 on corporate pension) Now I also receive Social security.
Knowing the German system very well, I would not want to change my retirement for a German retirement.
For decades, the American corporate system has been encouraged by the lawmakers to provide benefits. i.e defined benefit plans, 401K, Keogh, etc. Private accounts range from SEP to IRA, Roth IRA,. The American worker has been inundated with all those systems for so long, it has become a way of life for most to take care of themselves in their later years.
These numbers, as well as Housing equity or Stock and Bond ownership are not included in the savings rate.
That concept has not yet been embraced by a European socialist leaning populous. They still expect Government to provide for their future regardless of the fact that due to the declining and aging population, benefits can't continue at the same pace.
In 15 years 60% of Germans will be over 55 years of age. Do they really believe that 40% will take care of them?
It may provide an exit strategy (Auswanderung) that will compound the issues regarding life as we know it in Germany. After all, how much Tax, regardless of what you call it can be placed on the German citizen?
At least you can't go over 100%, or can you? :)

In the US, the increase in the economy is measured like everywhere else as an increase in GDP.
Another situation you may want to compare is productivity between the US and Germany. This is something that may answer a lot of your questions about the state of business in Germany and its future?


Perhabs i should just present some numbers that helps sometimes.

While we agree on the consumption issue and that Personal (household) consumption ($7.7 trillion) currently makes up 71% of U.S. GDP. in just the last 6 years it has risen by 4%. Personal consumption as a percentage of GDP is at its highest level since WWII. What is unusual, and not the historical norm, is that personal consumption growth has grown considerably in comparison to GDP growth since the late 1990s and over the last 3 years in particular.
So household consumption’s contribution to GDP growth has had more of an impact in recent years vis-à-vis other such inputs as business investment (down), government expenditures (up) and exports (nullified by the trade deficit).
During weak past economic periods personal consumption averaged about 0.9% real annual growth, while in the current phase household purchases have been about 2% higher, at 3% (4.8% gross). This represents a minimum windfall of about $125 billion a year, or 1.25% of real GDP (2.5% nominally), that otherwise would not have found itself into the economy had the current economy followed historical patterns.

Now the big question where does all that money come from??

You belive that americans save as much as others and this above is still true. So the income of americans must have had a huge increase in the last years but that has not been the case. Although many americans are realy religios this needs a strong faith.

what makes this recent consumption binge so miraculous - it has taken place, until recently, in a complete drought of business spending. Certainly government spending can make up for some of this. For example, in 2002 and 2003 in total business spending had fallen by $82 billion, which, using the multiplier, might have impacted the economy by $164 billion.

Obviously there are two sides to every coin and the other side of U.S. personal consumption onslaught is heaps of household, or consumer debt, egged on by record low interest rates. Household debt in the U.S. has increaed (. In 1950 U.S. household debt to disposable income, basically after-tax income, was 34% (if disposable income was $10,000, households had $3,400 in outstanding debt). This figure grew to 58% by 1960 and levelled off eventually reaching 69% in 1980. As of the end of 2003 that ratio stood at 115% and rising. This means that the outstanding debt on a disposable income of $28,400 (the current U.S. per capita average) is now $32,660 (for every $10,000 of disposable income, households now have $11,500 in debt). During the last 3 years total household debt increased by about $2 trillion, about the size of the entire economy of Germany, while disposable income rose by $1.15 trillion.
So the average american has 10000 dollar credit card dept with high interests but also a lot of savings htat do not acure in the statistics. This must be a very good investment to make economic sense. Don´t forget the tax cut policy financed by public debt that even let Eichel look like a good guy on that issue.

Now the real estate factor in that game.

The increase in household debt over the years can be attributed mostly to the huge increase home-related mortgage debt and to a lesser extent pure consumer credit. Mortgage debt has increased from about 40% of disposable income in 1970 to 60% in 1990, to about 83% as of 2003. The problem is that the gap between mortgage debt growth and disposable income growth continues to widen.
Due to low interest rates and higher housing values, the re-financing and cashing out of mortgages in 2002 alone resulted in the conversion of $180 billion to cash. Most of it went directly into the economy.
Now the interest rates go up and if mortgage rates were to rise 1% the payment to income ratio would rise to above 21% of the monthly income(similar to those in the 1990-92 recession), and a 3% increase would make it 26% (similar to those in the 1980-82 recession.
So houses will become a very costly asset in the US for a lot of consumers and for quite a significant number too costly. Mortgages are not paid off with housing equity, they are paid off with monthly income. So the prices of houses is like the price of stocks. You only can gain money when you sell it until that day house prices are no real money.

I don´t belive that the US economy will be in big trouble in a short time but the question is isn´t that all a mentality thing and perhabs not so much a question of a anglo american system. Given the fact that the numbers of the UK are even worse on these issues.

Peter, have you also factored in the largest transfer of wealth this country has ever seen?


How much real estate do you own? I own 2 houses and 12 acres of Forest land with a cabin on it. We have a retirement account that we have been putting money into for 20 years on top of social security and our retirement plan from work. What kind of retirement accounts do you have? I have 20,000 USD in the bank just for emergencies. How much do you have? I am not that unusual.

On another note. US real estate is still cheaper than most places on the planet you would be willing to live. People are fighting to come here and buy a part of it. You will not be able to say that about Germany. The input of new persons and families into the US real estate market is not going to suddenly stop. The market for real property does go up and down but it's no where near the level you are worried about. Most people still have fixed interest home loans. Unsecured debt is a problem in many places not just here. I got rid of all my unsecured debt. We pay cash.

I think your arguments are interesting but wrong. I am an US citizen with a positive out look, not an EU citizen with a negative one that may be the difference.

Lou -
They also like to call people's morgages "personal debt" when it suits them. They criticize this as though people are bingle drinking on credit cards when they're actually building wealth.

If you have an increase in net worth of 10% per year, without a cent deposited into a bank account, is your savings rate still zero? As these statistics are calculated, everything not put into a bank is considered spent, including what you put into your IRA/401(k)/403(b) account! The increase in your home value has at least zero effect; investments are a negative in calculating the savings rate. Those numbers are nonsense.

@Peter: I don't know where you are getting those numbers, but they are pure horse malarky. What is the definition of "disposable income" in the numbers you are citing? That is where the devil is. I don't have time to fisk them all right now, but to take one example: In 1950, your number of $3400 in household debt would have been about right for a middle-class household of the time -- but I don't know of any middle class people who had $10,000/yr in disposable income by any definition of the phrase. If there is one thing that might tend to shore up the quoted numbers, it would be taxes. But there have huge changes in the tax status of household debt since 1950, and that tends to complicate any straightforward analysis.

@Mitch: you make a good point. Most of those studies that whine about non-existent savings rates in the U.S. (I've been hearing that same song played since 1970 at least, and it never changes) make it a point to discount from their numbers the investment vehicles most commonly used by U.S. taxpayers, such as stocks and 401Ks. I used to think this was just sloppy methods, but now I'm pretty well convinced that it is done deliberately to make Americans look greedy and selfish.

Tech nightmare may ruin Europe


Paris, May 26: The European technology sector is under pressure from strict labour laws and a lack of start-up firms, and needs a major push if it wants to create another Nokia or SAP, executives said on Wednesday.

Venture capitalists pump only one-fifth as much into start-up companies in Europe they do in the United States, and the founder and chief executive of unlisted, Luxembourg-based Skype said the reason for slow activity was tough conditions.

"We want our vacations and our social luxuries. This is not the best environment to start a company. It is much more difficult here than in the United States or China," said Niklas Zennstrom at the Reuters Telecoms, Media and Technology Summit....


Ahhh, yes, those eeevvvviiilllll American/Jewish VC vultures.

Talk to your unions, they have the money.

Via Bros. Judd.

Frogistan's voting "non," whatcha' gonna do?


Whatever sources you are quoting are leaving out lots of other factors that are equally important when viewing the numbers you are presenting.

This is especially true about the increase in mortgage debt. When you look at the numbers you present it fails to address the increase in home ownership. Today more Americans are buying and owning homes than at any other time in history. The current percentage is 68% for the US. For Germany it is 43%. I would compare the percentage of home ownership in the US to any other nation in Europe. As I stated America is an ownership society.

Your numbers also fail to address affordability. Be assured one cannot obtain a mortgage if 83% of their disposable income would be consumed in housing costs. So the question becomes is a mortgage considered to be part of disposable income or is it something else.

We need to address just what is disposal income.

You are presenting these at the aggraded level but Americans do not act in a collective manner. They act as individuals.

When a young couple buys a home they probably have a low net worth with a very high debt load. As time passes, their mortgage costs decrease as a percentage of their income, (assuming a fixed rate mortgage) because their income is actually growing if only by a cost of living allowance, (view this as inflation.) Their net worth is also increasing because the fixed assests (in this case their home) is also increasing.

Probably within the next 18 months my own debt to income ratio will be much different than it is today. The reason for this is my job may relocate. I have an option of selling my house and rolling my net gains into a new home, moving and renting, or keeping my current home and purchasing another home. What I will probably do is keep my existing home and purchase another home. I will turn the home I am in now into an income producing property by renting it. In my personal case, the rental income with result in an increase in household income as the mortgage and associated costs are less than what the projected rental income will be.

Peter, where all your positions fall flat is they fail to address net worth. The below is taken from the US Census Home Economic Report for 2003 for the period 1998 – 2000. (Link http://www.census.gov/prod/2003pubs/p70-88.pdf)

. Two of the most important defining factors of economic status in the United States are income and net worth. When considered alone, income—the resources a household or person receives from a job, transfer program, or other source— provides an incomplete picture of economic well being. Only when the wealth or net worth—the difference between assets and liabilities—a person or household has at any given time is considered in conjunction with income does a better understanding of economic health and well-being emerge.

• Median household net worth increased from $49,932 in 1998 to $55,000 in 2000.5 • Median household asset values of stocks, rental property and Individual Retirement Accounts (IRA and Keogh accounts) also experienced significant increases between 1998 and 2000.

• The median household value of other financial investments fell during the same period from $24,367 to $22,000. Other financial investments include mortgages held for sale of real estate and amount due from sale of business or property.

• Median home equity for households was $59,000 in 2000, significantly higher than the 1998 median household home equity of $55,263

. • In 2000, median household net worth varied from $7,396 for households in the lowest income quintile to $185,500 for households in the highest income quintile.

• In 2000, median household net worth generally increased with the age of the householder, rising from $7,240 for householders under the age of 35, to
$108,885 for householders 65 and older.

Joe, then everything went blooey.

I've always wondered how those "savings" stats are calculated. We set aside about half our gross income into various tax-deferred and tax-advantaged accounts, as well as taxable investments. We keep very little money other than the emergency fund in bank accounts - anyone will tell you that these are awful places to park money. So, we figure that we save half our income. Does the "national savings rate" reflect this?

You enjoy tossing numbers out. What do you think of these?

Notice anything about how they are different?

BERLIN, May 24 (Xinhuanet) -- Germany's economy grew by one percent in the first quarter of this year, the strongest quarterly growth in four years, the government said on Tuesday.

The federal statistics office Destatis confirmed a preliminary estimation published on May 12 that the third largest world economy saw its best performance since early 2001.

The 1 per cent growth in GDP seen by Germany in the quarter was powered entirely by exports, which rose 2.9 per cent, according to the Federal Statistics Office.

Germany's first quarter growth performance was regarded as exceptional and the current quarter expected to be much weaker.

US economy increased at an annual rate of 3.5 percent in the first quarter of this year, higher than the rate of 3.1 percent announced last month, the Commerce Department reported on Thursday.

The gain followed a rate of 3.8 percent in the last quarter of 2004 and a gain of 4.4 percent for the full year

Wenn Sie in den USA leben, müssen Sie sich natürlich auch als Botschafter Ihres Landes verstehen. Das bedeutet dann auch zu relativieren, zu erläutern, zu erklären und auf die großen Potentiale und Chancen von Deutschland hinzuweisen.

Instead of disputing statistics, let's think basics. The RATE of savings is generally irrelevant. If I have $10 million generating an 8% return, or $800 thousand per annum, and save none of that income, I'll have to suffer on just $800 thousand next year. Poor me.

If I have an annual income of $150 thousand and save 2% of it, or $3 thousand, I have saved more than someone earning $20 thousand and saving 10%.

In other words, the savings rate is one of the stupidest statistics ever invented. It ignores wealth and income.

What may be a more serious problem for the US is that government deficits chew up a huge amount of net new US savings each year. Those savings could go into productive investments (of course getting rid of Al Quaeda is not considered a productive investment by economists so economic thought does have its limitations.) Nevertheless, the US manages to generate huge private investment each year. The reason is that the rest of the world ships to the US each year much more in real goods and services than the US exports to the rest of the world.

In other words, the entire rest of the world is economically supporting the US government deficit while the American people continue to invest and prosper. I call that brilliant.

Why does the rest of the world do it? Well they are still lost in mercantilism and so like to swap cars and oil and coffee and chocolate for little green, rectangular IOU's from the US government. I call that stupid.

Perhaps the rest of the world will smarten up some day and refuse to take any more dollars. Then, (this is economics 101) first the price of dollars will fall to the floor, second the price to the US of imports will skyrocket, third the US will stop importing such outrageously expensive stuff, and fourth the export driven economies of Japan, China, and Germany will tank.


Or, in other words :

"The rest of the world thinks investing in american government expenses is better then investing in their own people and companies".

Which, of course, is exactly what happens.

Or even better :

"The rest of the world think american officials, the scum of american society, are smarter then their most brilliant entrepreneurs."

Go figure...


Locust Capitalism
By Hans-Werner Sinn

Germany invented socialism. Karl Marx and Friedrich Engels were Germans. The Social Democratic movement that shaped the modern European welfare state also originated in Germany. Although the country profited greatly from its reintegration into the world trading system after World War II, Germany never really came to terms with Anglo-Saxon capitalism and skepticism about it still runs deep.



to make all this much more simple.

Where is the source of the growth and

much more important will or can this continue.
I find this trust and spending very interesting in these days where all developed countries feel the heat of competition and outsourcing. The reaction is completely different.

As we see during the first Q1 the consumption growth is still going on even with high oil prices. I am not an expert in macro economics but i find this very interesting. While for countries it is very popular to belive that debt is not a real problem privat people are different.

You got an income Y

You can spent it (c) or you can save it (s) if you want to make a difference you can invest it (i) in stocks .
But you can not have consumption at a particular level and savings (investment). That does not work.
So if you want more consumption with savings at the same level as before you need more income.

you need to borrow money than you can spent even more.
But you have to pay the interests and at some point you have to pay it back ( because you are not a country)and a bank can become a very unfriendly institution i know this i work for one.

Someone posted here that the saving rate is irrelevant or stupid. Savings are potential future consumption and when it is compared with debt income and other specific numbers it shows a picture of the future.

Jeff really got my point do we live in a world where the facts and numbers i present are not true anymore or simply irrelevant. Do we have a post industrial area where in some ways the USA (perhabs all developed countries) is the Rome of the 21 century or will this find an end.
Is the advice for a bright future to spent no matter if you have the income to do so because that´s our new system and it works so well.

@ Peter

I said that the savings RATE is unimportant, not that savings are unimportant. I also explained why the RATE of savings is unimportant. The rate of savings equals savings flow per period divided by income flow per period. Not only is it an irrelevant statistic, people familiar with US economic statistics know that the methods used by the US government to compute that statistic are seriously flawed.

Using your notation, the savings rate =
S / Y. Please explain to me how that ratio tells you anything about the amount of investment, about the amount of future income, about the amount of savings. You say you work for a bank. A person has $10 million in the bank invested at 2%, providing an income of $200 thousand per year. The person saves none of it this year so the person's savings rate is actually 0%. That poor unfortunate will have ONLY $200 thousand in income next year: is that a disaster in the making? No.

Wealth and income are of course important, and American wealth per capita is very high as is income. But the savings rate does not measure those things.

And yes, so long as the rest of the world continues to operate in a mercantilist nevernever land, the US can continue to invest and consume more than it produces. In essence, the rest of the world makes a gift each year to the US. So your equation should read
G + Y = C + S + I. (By the way, your notation is inconsistent with the meaning of those symbols in standard macroeconomics.)


Interesting you chose to ignore GDP growth.


Your example is childish and i hope you know that.

I only want to show Joe why it is not possible what he posted because

1. if Joe is right than the US statistics and the growth numbers are (and must be) wrong

2. If the numbers are correct he can´t be right.

The point i wanted to talk about is where is the source of grwoth in the US and is it perhabs a example for other countries because of the higher growth numbers compared to other developed countries.

My personal answer to that is no.

I want to give another perspective to the problem. The problem of credit card companies and banks.
These companies can not allow this debt people to retire or die without paying their loans back because otherwise they will have a huge problem. But the debt is not only a problem of young or younger middle aged people who perhabs have the chance to stop and start paying back. SO it will be a huge burden for the banking sector in the future. Even if 85% of the loans are mortages. As written loans, mortages have to be payed by the income and not with the value of the asset (house).
What do you belive happens to a estate market if banks are forced to do this in 1%, 5%, 10% of the cases. In a estate market where at the moment 30% of the buyings are speculations, investments and in many cases the mortage is even higher than the value of the house ( at todays really high prices).
What do you think was the goal or reason why you got a new bankruptcy law several weeks ago. It brings time and the hope that there will be a soft landing in combiation with moderate rate increasings by the FED.

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