Germany would consider a bourse tax as a compromise if this could bring Britain in line with its EU partners as they seek ways to tax the financial sector but its preferred option remains a financial transaction tax imposed on all 27 members, the government’s spokesman said on Friday.
01/6/2012
— Filed under: Politics
Tags: EU, Germany
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Every summer, Volkmar and Vera Kruger spend three weeks vacationing in the south of France or at a cool getaway in Denmark. For the other three weeks of their annual vacation, they garden or travel a few hours away to root for their favorite team in Germany’s biggest soccer stadium.
The couple, in their early 50s, aren’t retired or well off. They live in a small Tudor-style house in this middle-class town about 30 miles northwest of Frankfurt. He’s a foreman at a glass factory; she works part time for a company that tracks inventories for retailers. Their combined income is a modest $40,000.
Yet the Krugers have a higher standard of living than many Americans whose incomes are twice as high.
Their secret: little debt, frugal habits and a government that is intensely focused on high production, low inflation and extensive social services.
That has given them job security and good medical care as well as well-maintained roads, trains and bike paths. Both their adult children are out on their own, thanks in part to Germany’s job-training system and heavy subsidies for university education.
For instance, Volkmar’s out-of-pocket costs for stomach surgery and 10 days in the hospital totaled just $13 a day. College tuition for their son runs about $260 a semester.
Germany with its manufacturing base and export prowess is the U.S. of yesteryear, an economic power unlike any of its European neighbors. As the world’s fourth-largest economy, it has thrived on principles that America seems gradually to have lost.
It has tightly managed its budget and adopted reforms — such as raising the retirement age — that some other eurozone countries are just now being forced to undertake. And few nations can match Germany’s capabilities in producing and exporting machinery and other equipment — or its infrastructure of research, apprenticeships and financing that support manufacturing.
«German industry is strong,» said Volkmar, speaking in halting English as he occasionally looks up translations on a laptop. «People work good. That’s why the German economy is best in Europe.»
Indeed, Germany was the only major eurozone nation to escape the credit downgrades that recently hit its neighbors. And the country continues to anchor the continent’s economy.
Still, Germany has its share of challenges.
Income inequality, while less pronounced than in the U.S., is rising. Most workers, including the Krugers, have seen little or no real wage gains in recent years. The nation’s population is declining.
And now, with Europe on the ropes, Germany faces both a declining market for its exports and the prospect of having to cough up tens of billions of dollars more to help bail out profligate Eurozone neighbors.
Even so, German business and consumer confidence has held up well. The nation’s jobless rate fell last month to a two-decade low of 6,8 percent, considerably lower than much of Europe and the U.S.
And though its industrial production is starting to soften, Germany so far has maintained an impressive trade surplus with the rest of the world, including China.
Germany’s economy looks like that of the U.S. a generation ago.
In 1975, manufacturing accounted for about 20 percent of the United States’ economic output, or gross domestic product, about the same as in Germany today. Since then, U.S. manufacturing’s share of GDP has slid to about 12 percent.
In 1975, the U.S. budget deficit was a manageable 1 percent of the economy, about the same as Germany’s now. Last year, the U.S. deficit was about 10 percent.
American families in the 1970s and early ’80s typically saved about 10 percent of their take-home pay — about the same as in Germany today. The U.S. savings rate these days is in the low single digits.
Germany, like China, fiercely promotes its exports and has been reluctant to ramp up domestic spending, frustrating Washington, which wants to sell more American goods abroad.
While that may be good for Germany, many critics say the country’s lack of consumption causes unhealthy imbalances for the regional and global economies, much the way America’s overconsumption and borrowing does.
But Germany’s economic practices and lifestyle are deeply ingrained in a culture that fears debt and inflation. In many ways, for instance, the nation discourages consumerism. Its streets aren’t plastered with the billboards dotting the U.S. Taxes on goods and services are high. Many shops and restaurants in Germany are closed Sundays.
Many smaller stores don’t even take credit cards. Volkmar laughed at how consumers in other countries pull out plastic for the smallest of purchases.
«In France you pay for your croissant with your credit card. In Germany, they don’t like it,» he said, referring to both merchants and consumers.
Since paying off their home loan recently, the Krugers have almost no debt. They sock away money for old age and summer trips, and they rarely eat out.
Household liabilities in Germany have been rising, but remain lower than those of other developed countries. By one common measure, Germany’s household debts were 97,5 percent of total after-tax income in 2010, compared with 125 percent for the U.S.
Still, the Krugers and other Germans are seeing a rise in freewheeling spending, especially among the young. Volkmar said he gets a lot of credit card offers. More marketing, however, doesn’t mean a lot of consumers are getting credit.
«In truth, it’s not easy credit,» said Fasun Batmaz, a manager at a TeamBank consumer unit whose name, Easy Credit, belies the rigorous process and strict requirements. «Only a handful come in and may get it.»
Easy doesn’t describe the Krugers’ lives, either. On weekdays and every few Saturdays, Volkmar is out the door by 5 a.m., driving 45 minutes to his factory. Vera also works on some Saturdays. But neither gets paid more when they work additional hours — nor do they get paid less when they work fewer hours. Over time, the hours balance out.
A similar idea is behind a work-sharing system that many experts said helped Germany avoid the mass layoffs that swept the U.S. during the Great Recession. A company might reduce the hours of all workers to avert laying off an employee.
Germany’s lower unemployment also reflects its orientation toward formal vocational training.
The Krugers’ older child, Thorsten, was interested in books from an early age, and prepared for a university education. Their daughter, Nadine, got a vocational diploma in social work that included three years of schooling after high school, with the final year being on-the-job training at half-pay.
About one-fourth of all German businesses take part in this apprenticeship program; six out of 10 apprentices end up getting hired permanently, said Dirk Werner of the Cologne Institute of Economic Research.
The practice, he said, is a key reason why Germany has one of the lowest unemployment rates for 15- to 24-year-olds — about 9,7 percent according to the Organisation for Economic Co-operation and Development in Paris. In the U.S., the comparable rate is about twice as high.
Volkmar and others also attribute part of the lower unemployment rate to the German work ethic. Yet Germans, on average, work far fewer hours a year than Americans, thanks partly to five or six weeks of vacation.
The amount of the Krugers’ vacation time is typical for most Germans.
When they go to France, the Krugers take an old Volkswagen camper, but still expect to spend about $3,000 over three weeks.
Over the recent winter holiday, they took the 45-minute train ride into Frankfurt to buy Christmas presents. They picked up practical gifts — a breakfast tray, cutting board and sleeping gown for Nadine. For Thorsten, the couple bought a tool kit made in Germany.
Volkmar laughed when asked why he bought tools for his son. Thorsten asked for it, he said, adding a bit sheepishly, the «Volkswagen camper needs repair.»
01/5/2012
— Filed under: Society
Tags: Germany, middle class
The European Commission Thursday said it will sue Germany for a second time over the country’s so-called Volkswagen law which it says violates free movement of capital in the European Union and effectively shields the company from a hostile takeover.
11/13/2011
— Filed under: Business
Tags: Germany, Volkswagen
Expressing concern over the «painfully slow» progress of negotiations between India and European Union (EU) on the proposed free trade agreement (FTA), Germany said that there was no way the treaty could be signed before the India-EU summit to be held in February, 2012, in New Delhi.
Eurogroup head Jean-Claude Juncker criticized Germany’s slow pace in dealing with the euro zone debt crisis in an interview published in Der Spiegel magazine on Sunday.
09/30/2011
— Filed under: Politics
Tags: crisis, Germany, Jean-Claude Juncker
The German coalition government led by Christian Democrat Union Chancellor Angela Merkel is facing its most serious crisis since it took office in 2009. The issue also raises serious questions for the whole European Union. On the face of it, the CDU’s problems have been precipitated by the Vice-Chancellor and Economy Minister Philipp Rösler, who heads the right-wing Free Democrat Party (FDP).
This junior partner has defied Ms Merkel’s directive against public discussion of the Greek economic crisis by arguing that Greece should be expelled from the eurozone. The third coalition partner, the Christian Social Union (CSU), has followed suit, calling for the expulsion of all highly indebted member states. Ms Merkel had ordered the silence on Greece with a view to minimising instability in the financial markets, which had been exacerbated by the apparent failure of recent talks between the Greek government and an international troika comprising the International Monetary Fund, the European Central Bank, and the European Commission.
The highly divisive German debate over the Greek crisis is primarily political in nature. The FDP’s impressive vote share of 14,5 per cent in the 2009 general election has plummeted. In provincial elections earlier this year, the party lost its conservative stronghold of Baden-Württemberg to a Green-Social Democrat coalition, and lost all its seats in Bremen, the Rhineland-Palatinate, and Mecklenburg-Western Pomerania.
Party leader Guido Westerwelle stepped down in May. With its poll ratings now around 3 per cent, the party faces meltdown. For its part, the CSU, which has a majority to defend in Bavaria in 2013, may be distancing itself from Ms Merkel well in advance. After all, EU law does not permit direct bailouts of member states, and the prospective Athens bailout in fact stems from a Franco-German initiative. The German right therefore has some basis for complaining that prudent Germans are bailing out profligate Greeks. As for the Chancellor herself, she has tried only to quell market jitters and has said nothing about the ways EU institutions operate. The Greek budget deficit crisis occurred mainly because the EU’s financial bodies failed to restrain the profligacy of the centre-right New Democracy government that was in power between 2004 and 2009. The European Financial Stability Fund, created in 2010, will do little to cure the deadly Hellenic ailment. The backdrop to the German right’s opportunism and bloodletting is the deepening democratic deficit within key institutions of the EU.
In the past couple of weeks, the Left Party in Germany has started a vehement campaign for the introduction of Eurobonds. Hardly a day has passed without one of the party leaders declaring, «Eurobonds are essential» (Gesine Lötsch, party chairperson), or «unavoidable» (Gregor Gysi, fraction leader), and even that Eurobonds were «proposed by the Left Party» and are «now being discussed everywhere» (Klaus Ernst, party co-chairperson).
08/26/2011
— Filed under: Без рубрики
Tags: Eurobonds, Germany
A UN committee has sharply criticized Germany’s social and education systems, saying the country fails to provide equal opportunities for immigrants and women. It’s also not doing enough to help poor children and the elderly, the UN says. But the German government alleges the report isn’t based on facts.
07/12/2011
— Filed under: Society
Tags: children, Germany, immigrants
Almost 200 German economics professors have signed a declaration rejecting current proposals to resolve the eurozone debt crisis, instead calling for a way for distressed countries to declare bankruptcy.
02/3/2011
— Filed under: Finance
Tags: default plan, Germany
German Chancellor Angela Merkel’s government said it will meet European Union budget-deficit rules this year and won’t stop there, as it seeks to browbeat other EU states into tackling debt levels to tame the euro-area crisis.
