European financial crisis: Germany shows signs of slowdown (The Euro's savior might need saving)

Washington Post ^ | 08/10/2011 | Suzy Khimm

[SeekAndFind]

Germany’s robust economy is showing signs of a slowdown, raising fears that the linchpin holding together Europe’s fragile financial health could be weakening.

On Tuesday, the country revealed that its exports in June rose by only 3.1 percent, compared with a 20.1 percent increase in May, marking the smallest increase in 16 months. A few days earlier, an index of German manufacturing activity dropped from 54.6 in June to 52 in July — the lowest level since October 2009, marking the third consecutive month of declines.

“The fact that [the German economy is] showing signs of faltering and sources of domestic demand aren’t manifesting itself — people are worried,” said Tu Packard, a senior analyst for Moody’s Analytics.

Germany has built its economic strength on exports to China and other developing countries. As the global slowdown reduces demand in those economies, Germany could pay the price.

“They’ve managed to protect themselves so far, but what happens when the crisis hits China’s economy? China depends on the U.S.,” said Henry Farrell, a political science professor at George Washington University.

And if Germany’s domestic growth declines at the same time that its exports slow, the double whammy will be felt across the eurozone, which relies on German economic strength to bolster troubled members such as Greece and Portugal.

[Perdogg]

What the German govt would do is cut the Euro and reissue the DM and fix their own problems.

[KarlInOhio]

Imagine you are the last mountain climber on a rope. The first couple climbers have fallen over the edge of a cliff and the entire team is struggling to save them, but more and more are falling over and your traction is getting worse.

Maybe if you feel lucky you can get the second man down the cliff to cut the rest loose and you can pull those couple back up. Maybe you'll have to get the climber at the edge of the cliff to cut loose everyone over the edge. How many more who could have been saved do you condemn by delaying necessary action? And at what point do you cut yourself loose because it isn't possible to save anyone else?

[SeekAndFind]

A great analgy. I nominate you to present this to Neil Cavuto on the Fox Business Channel or to Larry Kudlow on CNBC.

[Buckeye McFrog]

I read someplace they’ve made bailout commitments equal to 133% of German GDP? That’s insane!

[MinorityRepublican]

What the German govt would do is cut the Euro and reissue the DM

Not a good idea. Would make German exports too expensive and uncompetitive.

[blueunicorn6]

Ahhhhh.....the international order of politicians union at work.

[youngidiot]

The Germans are subsidizing a lot of idiotic leftist spending in the EU. If we ever let them institute a currency in which we take part, we'll be fools. America will subsidize a lot of leftist nonsense in Europe and elsewhere. That's why I expect the idea to be proposed by our own leftist idiots soon. Once it becomes clear that the global warming scam won't work for them, they'll try something else.

[TheClintons-STILLAnti-American]

"What the German govt would do is cut the Euro and reissue the DM and fix their own problems."

No way.

The Euro is the DM now.

It's Germany's currency above all else.

The Euro will falter as the PIIGS are forced to abandon the Euro--probably to 65-70 cents against the pathetic USD, but Germany will be devoted to it's recovery and without those drains on her, she WILL bring it back.

[chuckee]

When it comes to the Western European economy, Germany IS Western Europe. France and the media always try to lump France in with Germany as an economic powerhouse. France is not. And France will be joining Italy, Spain, Ireland, Greece and Portugal as the next Pig at the hovel.Western Europe’s decades of social welfare spending is coming home to roost. And unfortunately, I think they are truly entering an economic death spiral brought on by their populations insisting on social welfare spending.Rather than accepting the inevitable that social welfare spending must be cut and reformed, look for Western Europeans to be marching and rioting in the next 2 months. They have only their collectivist mindset to blame.