“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Saturday, August 14, 2010

Why is Germany Up and The USA Down?

ECONOMY | 13.08.2010
German economy eclipses growth forecasts


Official figures released Friday show Germany's largest single-quarter economic growth since reunification in 1990. The economic revival, far better than expected, is based largely on a rise in exports.

Germany's economy grew at a greater rate than forecast in the second quarter of 2010, with gross domestic product 2.2 percent higher than during the first three months of the year.

In comparison with the same time last year, Germany's economy grew by 4.1 percent for the period between April and June according to information released by the Federal Statistical Office on Friday.

"Reunified Germany has never seen such quarterly growth before," the office said in a statement. Analysts had forecast a growth rate of around 1.3 percent during the second quarter.

Exports surge

Germany's economic revival has been based largely on exports; the country is the world's second biggest exporter after China. But the statistics agency also reported that household consumption and government expenditure contributed to the unexpectedly rapid growth.

Economy Minister Rainer Bruederle said he believed growth far exceeding two percent was possible for the whole of 2010. "At the moment we are experiencing 'extra large' growth," said Bruederle.

Exports have been bolstered by demand from China and other emerging economies. The Hamburg harbor logistics firm HHLAA noticed an increase in container freight traffic of 20 percent over the period, due to the rise in exports.

Weak euro, more contracts

One reason German manufacturers are winning export sales could be that the euro is being kept low by concerns about weaker Mediterranean partners.

"It remains to be seen if the buoyancy of the eurozone core spills over to the periphery, or whether the periphery drags the core down," said Chris Williamson of the London-based economics group Markit.

The increase in German growth boosted the figures for Europe as a whole, with a one percent rise across both the 16-member eurozone and the 27-member EU. Those results, in both cases, represent the steepest growth in four years despite limited signs of recovery in some parts of the continent.

First-quarter figures were also revised, up from 0.2 percent to 0.5 percent. The global economic downturn saw Germany's GDP fall by 4.9 percent in 2009.

French Finance Minister Christine Lagarde also announced encouraging economic figures for her country. French GDP increased by 0.6 percent between the first and second quarters, double the rate expected.


  1. The differences, Deuce, can be found in the housing markets, the differences that exist between US and Them.

    Surprise house price
    increase in Germany
    Feb 2009

    Germany remains the world’s most stable housing market. Prices moved little in 2008, despite the slumping economy. Yet there’s actually some good news.

    The average price of owner-occupied flats in Germany in 2008 was €2,257 per sq. m., an increase of 1.2% on a year earlier. However, when adjusted for inflation, prices actually fell 1.3%, according to Bulwien Gesa AG, a leading real estate research firm.

    Terrace house prices averaged €235,202, while building plots averaged €205 per sq. m., both unchanged from 2007. When adjusted for inflation, real estate prices dropped 2.6%.

    The markets differ culturally, the Germans a nation of renters, not owners. They discount the "American Dream" of owning your own home.

    @ 2,257 Euros per square meter, those are pricey houses, and an average size of over 1,000 sq meters. What I'd think of as large homes, too.

    By Nicholas Marr

    Little competition from German house buyers

    You will not be met by much competition in the housing market. The percentage of Germans owning their homes is surprisingly low compared with elsewhere. At about 42 percent, it is the lowest in the entire European Union.

    Cultural and economic differences, 'tween US and Them, Deuce.

    They entered economic difficulty with reunification, their rebound has been a long time coming.

    A recovery that is distinct, it could be argued, from the current economic downturn

  2. Hard to keep the Germans beat down.

  3. Germany is an "export" economy. A 20+% drop in the currency had to set demand for those exports on fire.

  4. Rat, that would be 100 sq. meters, not 1,000. At a thousand that would be $2.2 Million a pop.

  5. Interestingly, they've, also, been investing heavily in Solar, Biomass, and Wind.

    It scared the shit out of them when they woke up one morning, and the North Sea was running out of oil, and gas, and they realized that they were going to become dependent on the Russians for their energy.

    Being a little smarter than we, they began a serious campaign to curb their reliance on the Bear's gas.

  6. Of course, those that carry the water for Chesapeake, XTO, Massey, and Exxon, over here, have patiently explained to us how silly it is to invest in renewables.

  7. Wahabbi Oil is better than Iowa ethanol, and Canadian Natural Gas is better than free wind, and sun. It's so simple, really. It makes their stock prices go up.

  8. Did you all know that Portugal gets 45% of their electricity from Renewables, and that Finland gets 30% of their electricity from paper, and pulp mills?

    Did you know that we "used to" get a considerable amount of our electricity from industrial processes, and the Utilities got congress to pass a law forbidding competing with utilities?

    Yep. Sho nuff.

    We're Morons.

  9. They rent airbases to us so we can fly around playing the "Empire Game," and protect them, of course.

    We have over 100,000 Military Personnel in Europe.

  10. And, I'd still rather be a redneck in Mississippi than a rich man in Germany. :)

  11. "Once a moron, always a moron," I guess.

  12. Germany has a fertility rate of 1.38. That's incredibly low.

    And, puzzling.

  13. Germany did not sit back and watch their industrial and manufacturing base move to China.

    Wall Street and "K" Street did their deed with help from US law and business schools. Creative destruction you know.

  14. That was the cut and paste, rufus.

    Seemed quite pricey, to me.
    If it is my subsequent calculations that are off by a factor of 10, mea culpa.

    Beg to differ, Deuce. There was a long article on how the Chinese were buying German steel mills and moving them, lock, stock and barrel to China.

    Couple, three years ago.
    We dissected it, as I recall.

    Maybe the Germans replaced that old manufacturing capacity with something a bit more, well, 21st Century?

    Investing in manufacturing infrastructure in Germany rather than roads in Afghanistan.

    The Germans no longer invested in dreams of a global military hegemony.

  15. In 1985 the savings rate in the US at 9.2 % was
    3/4 of the German rate of 12.1%.

    By 2004 the German savings rate, while falling to 10.2%, was almost three times the US rate of 4.7%.
    The German rate climbed back to 12.8% in 2009.

    In the US the personal saving rate (personal saving as a percentage of DPI) was
    2.1% for 2007, 4.1% for 2008, and 5.9% for 2009.

    You cannot have proper capital formation without savings. German salaries are on average less than the US but at the lower end higher. Their industrial buildings are impressive.

    Mindless consumerism of imported products and over investment in housing made the difference. Getting that back to a sustainable level is the only way to get out of the mess we made for ourselves.

  16. It is an economic law: Savings is IDENTICAL to Investment...check it out...

    Germans build multi-generational houses. Every fifty years or so the houses are substantially rehabed. Obviously, building materials are of the best quality.

    I have spent weeks studying German construction, with particular emphasis on worker moral. Havng been around the horn several times, there is no worker in the world who takes greater pride in his work and who must prepare for years before being turned loose on the public.

    It should also be mentioned that the Germans rely on the best use of capital. You will find more equipment on a German building site than you would believe possible. A German master carpenter (roof framing by hand) would not dream of handling a large rafter. Instead, a ubiquitous crane will carefully lift the designated piece up to him. Wheel barrows are motorized. Shovels remain shovels, though.

    My last car was built to German specs and brought into the US; it was marvelous!

    On a sad note, low German fertility may have to do with the fact that in many parts of Germany the men are prettier than the women, although one would think the per capita consumption of beer would mitigate that. This is not the case in France, where the fertility rate is also low...go figure...

  17. "Beg to differ, Deuce. There was a long article on how the Chinese were buying German steel mills and moving them, lock, stock and barrel to China."

    Not sure what the article said about the businesses associated with those mills rat.

    The Chinese used to buy complete tooling from the US auto companies for various vehicles. But it was tooling for models obsolete here. Good deal for the Chinese. Helped them to get their nascent auto industry going on the cheap, no design costs for the vehicles or the tooling. Most of the technology simply purchased. The Chinese are good at duplicating existing technology once they get their hands on it.

    I always thought it was short term thinking on the part of US companies but it probably makes little difference in the end.


  18. We had an interesting week financially.

    The market recoiled after seeing the June Trade Report show a $7 billion deficit and seeing 30K people on the street in Atlanta applying for Housing assistance.

    It was a wake up call to the "Haves" who suddenly realized how thin the veneer is.

    To me, it was an interesting reaction to the idea of very anemic growth versus the threat of a double dip. Apparently, a lot people had bought into the idea that we were in a V recovery but did not realize how long it will take to climb out of the hole we're in.

  19. I suspect that people like me have pulled in the horns and just aren't spending for much of anything beyond the basics and essentials.

    Unfortunately, we still have to shell out the $hundreds for the unforeseens like auto AC repair. (Like the $800 that flew out of my pocket yesterday).

    The new paradigm is "Minimalist" with "Less is More" as its mantra.

  20. Whit,

    The police in Atlanta (actually a suburb) were in riot gear. The temperature was about 99 with an index of 112. As I recall, over sixty folk were arrested. At least 20 were evacuated to hospital by ambulance.

    Yesterday, an elderly lady in Atlanta was tasered by police when she became "violent" during foreclosure eviction. While little known, Georgia will be found to have reached many firsts during the Great Federal Housing Ponzi Project, among which will be the largest number of banks to be closed.

  21. This comment has been removed by the author.

  22. The Germans sold off their old technologies, to the Chinese. There was a lot of unemployment, restructuring, etc. etc.

    The Germans did the same thing that we did, in that regard. As you correctly point out, Q.

    But the end result differs.

    Part of that is based upon the emphasis on the housing market as an economy driver. In the US an ideological and philosophical pursuit of "The American Dream" coupled with government policy that promoted the same.

  23. Deuce,

    I liked habu, believing him to have been a good Marine. My sole complaint, leading to our duel and his demise was the question DR's alleged son, allegedly serving in Iraq at the time. In anger habu crossed a line, demeaning DR's sons service, as a cook as I recall.

    Habu is probably the brightest blogger known to me, followed close by buddy larsen. I am sorry for his loss. In fact, I wish he would return, given that he did understand rules of evidence, and linkage and had the good sense to know that Islam is the problem.

  24. Germany is an "export" economy. A 20+% drop in the currency had to set demand for those exports on fire.

    There is demand for demand. Germany and China compete for demand, but Germany exports top-shelf items and China fills up the Wal Marts. When home prices are rising, Americans borrow against their equity and create demand. We haven't worked through all the foreclosures yet. I'm thinking we're only halfway through.

  25. Florida wants their own immigration law to be even tougher than Arizona's. Obama appoints a State-Suing Czar to keep up.

  26. An ex: The new Buick Regal that's just now showing up on our docks is built in Germany. Badged as an Opel, I believe. I think bringing it over here was a bit of a last minute decision, almost certainly based on the temporarily weak Euro.

  27. It was his comments about DR's son, an artilleryman, if I remember correctly, that caused my opinion of Habu to spin on a dime. Caused me to question everything he'd ever said.

  28. Yes, now that it is mentioned, I think it is correct that DR alleged to have a son serving in artillery, allegedly in Iraq. Habu slighted the young man's service...too bad...Marines do not diddle Marines :(

    Habu could debate reasonably, respectfully, citing sources and presenting evidence. He did not make some obscure, uninformed comment and disappear for a few days until others had forgotten it - other than Linearthinker, of course :). Furthermore, he was not so pretentious as to feel that others were obliged to take his word as gospel because he was habu or his sources unimpeachable on the face of it.

    Could he become explosive? Yep

  29. T,

    I inquired about your religion, presumably for the same reason Trish did some time ago: As the years have passed and you have traveled your religious odyssey, your personality has changed with each stop along the way. I just wanted to know with whom I was dealing. And I hope you have found peace, at last.

    During WWI and WWII both we and the Brits damaged and/or sank our own naval vessels...the fog of war...poor kids...On one occasion, a battleship carrying Mr. Roosevelt was nearly attacked by other American naval assets. Had that happened, I guess we would be debating the question of Mr. Roosevelt's murder by renegade members of his cabinet and the military.

    My point in posting the legal score on the Liberty controversy is self-evident - Israel 13, the opposition 0. In doing so, no slight is intended, but the legal record is what it is. We Americans forbid double jeopardy, much less triskaidekic jeopardy.