Grossly Undervalued?

Grossly overvalued? The main thing is, gross.


When it comes to the advantage that Germany has taken of the euro, Navarro is right about effect, if not motive.

The euro has been bad for German democracy and for German savers and may well ultimately prove to be a disaster for its taxpayers too, but it has been a boon for the country’s exporters. The euro is far weaker than the Deutsche Mark would have been (as was always likely to have been the case). This means that Germany’s decision to abandon its old currency in favor of the euro has acted as a disguised devaluation, a devaluation that has only deepened as the structural imbalances within the common currency have dragged the euro down still further.

Navarro sagte der “Financial Times”, Deutschland profitiere in seinen Handelsbeziehungen von einer “extrem unterbewerteten ‘impliziten Deutschen Mark'”.

A Fistful Of Euros…

Won’t buy you what it used to.

Remember when the (place your favorite currency here) used to be worth something? I guess it’s the euro’s turn now. Hey, what goes up must come down, right? There must be something going on in the euro zone these days or something.

Die Gemeinschaftswährung sank am Mittwoch erstmals sei Mitte Januar unter die Marke von 1,30 Dollar. Am späten Nachmittag wurde der Euro  bei 1,2988 Dollar gehandelt.

Germany home alone again

Although the Germans may not have noticed it yet.

Talk about a fistful of dollars. Underscoring the mounting friction between Germany and its G-20 partners concerning the question of finanical policy, Germany’s Finance Minister Wolfgang Schaeuble said that the US plan to pump $600bn into the US economy was “clueless” and would create “extra problems for the world”.

So, like where’s the problem?

Of course the German coalition government needs to talk tough like this because it has to convince everyone here how austere it really is–it trails the opposition in opinion polls before six state elections next year and needs a success “after alienating German voters by supporting the bailout for Greece in May.” Calling US policy makers clueless is just the icing on the cake.

Can’t wait for the G-20 meeting in Seoul next week. To take a look at “united Europe’s” stand on the matter, I mean. Although if you’d ask President Obama, he’d probably tell you that Europe just doesn’t matter.

“Eine ganze Reihe von Amerikanern betrachte Europa zwar nicht als Problem, allerdings längst auch nicht mehr als Teil der Lösung. Obama scheint dazu zu gehören.”

And thanks a million for this one, Joe:

“You won’t find a lot of Keynesians here,” explained one German economic policymaker in Berlin in September. That will not be news to anyone who has spoken to his counterparts in Washington. In their view, Germany is a skulker, a rotten citizen of the global economy, the macroeconomic equivalent of a juvenile delinquent, or worse. It is a smart aleck in the emergency ward that is the global economy. It is a flouter of the prescriptions of the new Doctor New Deal who sits in the White House.
So when Obama administration officials urge Germans to stimulate, they are wrong, but not for the obvious reasons. It is not that they want to impose socialist programs on a capitalist system that is doing well without them. It is that they want to impose demand-stimulating programs on a system that is already absolutely glutted with them. It is as if the administration’s approach were to take as a baseline whatever any given government happens to be spending, and then to insist that the figure should be, say, 10 percent of GDP higher. This is about as reasonable as assuming your child will be half as likely to get pneumonia if you send him off to school wearing two down parkas.


The spy(s) who came down with a cold

Actually, it’s their currency that has a cold at the moment.

Germany’s Finance Minister Wolfgang Schaeuble told the Bundestag on March 16 that the country may have to consider ordering “intelligence agencies to set up surveillance of who is getting together with whom for which kinds of speculative processes, and where” to protect the euro.