France and Germany: Spending their way out of recession? August 13, 2009
Posted by Garibaldy in Economy.trackback
The BBC reports that France and Germany have exited the recession, with small growth of 0.3% in the last quarter. The reasons? Stronger exports, higher consumer spending, and government stimulus packages. I wonder will the Dublin government take note. I won’t hold my breath.
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And we await the ECB rate increase!
Andrew – You may conceivably be right but I suspect that any ECB interest rate increase is quite a long way off. The “recovery” is likely to prove very anaemic. The brilliant economist, Nuriel Roubini (who almost alone forecast the full horror of the near total banking collapse years before it happened and who forsees a decade of fragile, high unemployment and episodic downturns has said “If you did not like the recession you will hate the recovery.” France and Germany are doing better because a/ they have retained more competitive industry b/ they are thereby better placed to take advantage of the pick up in demand in Asia and Latin America. At the heart of the far more serious plight of the British and Irish economies lies the cancer of a banking system which lived off of a totally parasitic property boom.
John, can you give a reference for where Roubini said that?
Garibaldy
Plus the Germans unlike the Irish and English are not totally obsessed with house prices. Watch any news program in the later countries and it will be party time when house prices rise by a single Euro/pound.
It is a ridiculous situation as millions of UK/Irish home owners have come to see a home as their main chance, and fuck the rest. They see nothing wrong with running a roulette economy as they foolishly believe it has personally benefited them. Which if you look at the wretchedly tiny boxes we in the UK and Ireland live in, is laughable.
This is the France our media economists enjoin us to feel sorry for because of its strong trade unions, good levels of state provision and militant working class. And their outmoded notions which make them unable to produce anything as intellectually stimulating as the current American debate on healthcare. I agree with Mick, a notion has developed that your house is equivalent to your big gamble on a horse in the last race of the day as opposed to, let’s say, something to live in.
Why did Ireland copy the anglo-american model of rampant, unrestrained financial speculation and the property obsession? Despite its enthusiasm, at least formerly, for the EU Ireland still seems in the anglo-american sphere of economic policies. Why?
Fergus, I’d wager that the fact that so much of the academic and journalistic material consumed by Ireland comes from the Anglo-American sphere probably has a lot to do with it.
Fergus,
For the answer to that one should re-jig Porfirio Díaz quote, “Poor Mexico, so far from God and so close to the United States.”
Poor Ireland, so far from God and so close to England.
Tipster – I was given this quote verbatim from someone who attended an economics seminar he gave in London earlier this year (I think at LSE). But this is his website where he says many similar things – http://www.rgemonitor.com/blog/roubini/
John
Even in the middle of the boom a French economist,Bernard Maris,did a rough comparison between the “booming’ UK and “recession ridden” France and found that(apart from the food being better and access more democratic-Turkey twizzlers in school canteens are you mad!)1healthcare provision better in France 2higher incarceration rates for offenders in UK 3better public transport and so on.I’ve yet to hear Irish economists measuring the “economy” by such yardsticks.
Something that has always interested me is how throughout all the years the French and German taxpayers were able to give billions to Ireland through the EU and still run their own economies….. must have been their “low tax(for the rich) regimes”
I agree with Mick post 4
There is an obsession in the uk with house prices and ownership, probably Napoleon had it right when he descibed the English as a nation of shopkeepers.
The ROI establishment has slavishly followed the Brits down the Neo Liberal route of Privatisation Etc. After Independence the Free State retained the British model for Public Spending which counts infrastructure investment as central Government spending. Hence it always gets cut when times are tough and not enough is spent in the first place. This was offset in ROI by large investment transfers from the EU.
In France and Germany Public bodies can borrow for investment against future income streams ( Housing and Transport) without this counting as general Public Spending. That is why you have High Speed Rail systems in much of Western Europe and a crap decrepid Rail Network in the UK. The ROI is somewhere in the middle.