Load shedding

Topics: European Union, Germany, Macroeconomics Pages: 2 (445 words) Published: November 20, 2013

As we all know it was Germany who insisted to propose and impose austerity measures on its neighbors, in order for this European nations to balance their national deficits. However, after looking at the latest treasury report on foreign economic and currency policies, the question is raised on weather Germany has maliciously taken advantage from this policy. Mainly because at the present time, Germany has the biggest trade surplus of any nation in the entire globe, and by a huge margin deference. Germany has a fairly high debt level. It is about 82 percent of the country's gross domestic product and much higher than 100 percent of its GDP once. Germany's liabilities to all European institutions are accounted for. The German economy is inherently strong due to its high productivity, but its exports have added competitiveness because the euro, as a common currency that reflects the average of the euro-zone countries' combined competitiveness, is undervalued; making German exports more affordable internationally at the expense of its neighboring countries' exports It is obvious that it was required from Germany to spend more, however, they are spending less than they should in order to help bring a trade balance to the whole Europe. The high unemployment and the decline of economic growth in which these other nations in Europe have been forced to adopt are being perhaps more severely affected as a result of Germany's lack of spending. We agree with economist Paul Krugman, when he points out that Germany has not delivered their part of the bargain resulting in much worse economic growth decline to all the European nations, forced to reduced their deficits. Here we are many years later with an entire European continent adapting economic policy that promotes lower growth and lower inflation.

Consequently the harsh persistent austerity measures combined with Germany's conservative economic policies exert enough pressure to keep demand subdued leading to lower...
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