Last month the United States criticized Germany and called for the Merkel government to do more to stimulate domestic demand.
Now the Europe Commission has joined the critics and this has been followed up by other European Union officials that are calling for more liberalization of Germany's services sector and for Berlin to increase infrastructure investment to stimulate demand.
The specific thing setting off this "outburst" is the fact that Germany is growing, at a 1.5 percent annualized rate in the third quarter, and is achieving this positive growth through a large trade surplus.
The call is for Germany to engage in more credit inflation and lower itself to the rest of the heap.
Germany is resisting.
I say that Germany is doing something right because everyone else is jealous of Germany's position, and, therefore, attacking it.
This is what happens when someone is on the right path and others don't want to have to "bite the bullet" and do what is necessary for themselves in order to become successful themselves.
This "call" in Europe just never ends for it has been going on for quite some time now. The nastiness has shown no ends as the "Nazi" name has often re-appeared over and over again.
Overall, the eurozone posted an annualized 0.4 percent rate of growth in the third quarter…not very good. Of the largest three countries in this area, two nations experienced a decline in economic activity in this quarter…the two being France and Italy. (Note that these three nations produce two-thirds of the real GDP of the eurozone.)
France is also experiencing a cut in its credit rating which was announced about a week ago.
Spain posted a small gain in economic output in the third quarter and the unemployment there dropped slightly to a little less than 26.0 percent. Youth unemployment there remains in excess of 56.0 percent. A concern in Spain is that deflation may actually be on the horizon.
And, what are the two major issues hanging over the non-German nations in the eurozone? The first issue concerns how far these countries are in debt and the second relates to the low labor productivity that exists in the countries.
So, rather than get their house in order, these countries want Germany to do the adjusting.
Unfortunately, this is not the way to correct the situation.
As I have written many times before, it really tells you a lot about your economic policies if those policies carry you into the position where you have no good policy alternatives to choose from in attempting to get out of your current position, or, if you have to beat up on others in an attempt to pull them down into the position you are currently experiencing.
And, what do we see on the positive side? It has just been reported that Ireland has pulled itself out of the economic malaise that it was in…not unlike what most of the eurozone is going through…and will do so without having to draw on the credit line that was set up to provide funds if they were needed.
Furthermore, England seems to be experiencing more rapid economic growth, signaling that it has moved on beyond its period of deep austerity.
There is cause for hope in the eurozone, I believe, but there the recovery from the depths still has a ways to run.
One such positive bit of news is the state of the financial markets in Europe. Not only is the interest rate on German bunds low but the spreads over the German yield that other countries are experiencing on their sovereign debt are at lows that have not been experienced for quite a few years.
Secondly, there has been a substantial flow of funds back into European financial markets from the United States. These funds had left Europe traveling to the United States as a safe-haven during the time when investor confidence in European officials was extremely low. The movement back into Europe is a good sign…for the eurozone.
Third, the euro continues to be relatively strong compared with the US dollar. I believe that the euro will continue to rise against the US dollar in the future. The reason for this is that I believe that Europe will stay the course and follow the German lead, no matter how much complaining and griping that accompanies it. I believe that this policy stance, led by Germany, will continue to trump the ongoing credit inflation that exists within the United States and will lead to a further decline in the value of the US dollar relative to the euro.
Europe still has to work on a unified banking system and to work on coordinating national budgets in some kind of unified fiscal policy but I believe that they will eventually accomplish this. I just may not be around to see these things happen…
If the eurozone can "stay the course" and continue to get their "act in order" then I look forward to an economically strong Europe. Germany must be doing something right and I hope that the Germans continue to stay firm in their efforts.