Europe’s strongest economy, Germany, has plans to potentially step in to bail out their careless neighbor, Greece, due to their obligation to bring distortion back into balance and to their better performing qualties over other European countries . Germany’s unemployment has been cut by almost half and they grew by 3.5% in 2010 and 2011. Additionally, they increased their market share in world exports, which exceeded their imports. Although many positive things have recently occurred, there are many reasons why they should resist demands to intervene with this plan. One issue is that Germany’s position is hardly permanent and their economic growth is estimated to slow down. With a decrease in economic growth, their debt would be dangerously high. Additionally, it would make it harder in the long run with their plan to create a fiscal union or a United States of Europe. The question asked is whether Germany really is the star performer or if lucky coincidences just occurred on their behalf. The article explains that the coincidental occurrences of improvements to their structure are more believable and that Germany should not waste their recent gains on Greece. The final advice to Germany is to promote sustainable reforms in Greece, to avoid short-term bailouts, and to lead the way to a true fiscal union for all of Europe.
2 comments:
Its very important when talking about Germany's economic strength to recognize its prominent financial services sector. They have financed much of the debt that had fueled the massive EU governments debt that have put many countries on verge on default. This is a major threat which Germany's economy faces.
I would worry that German economic growth is not guaranteed to be sustained. The idea of building a stronger union with German contributions is admirable, but even with some recovery from the recession, there are still lots of unforeseen obstacles up ahead. There's the potential for more problems and I worry that Germany is giving up a cushion for some of these struggles especially since as Tim noted Germany has already financed much of the EU debt.
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