Germany: Crisis what crisis?

Ben Chu

Why has Germany been so resistant towards signing off on more official help for Greece and the rest of the eurozone strugglers? The usual answer given by German politicians is a sort of moral hazard argument. That say they are afraid the peripheral countries won’t reform their economies if they get lots of assistance.

But I suspect that there’s another, perhaps more important, factor here too. And that is that Germany does not share their economic pain and thus does not feel the urgency of the situation.

The graph below shows that GDP in Germany has recovered since the 2008 crisis broke. But the economies of Italy, Portugal and Spain are still well below pre-crisis output. Ireland and Greece have fallen by still more. The drop in Greek output has been extraordinary.

Untitled 19 Germany: Crisis what crisis?

Germany has diverged in other respects too. German unemployment hit a record low of 6.8 per cent in January. By contrast, the jobless rate in Greece is 20 per cent. In Spain it is 23 per cent. It is 14.5 per cent in Ireland. See here:

111213 Eurozone unemployment Germany: Crisis what crisis?

Youth unemployment in the eurozone periphery is also alarmingly high. Unemployment among 16-24 year olds  is 45 per cent in Greece and almost 50 per cent in Spain. Yet in Germany the rate is just 8 per cent. See here (courtesy of Reuters):

The global youth unemployment crisis Felix Salmon 133910 1 Germany: Crisis what crisis?

A depressing thought: perhaps what is required to make a currency union sustainable is equality of economic misery across member states.

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  • Chris Edwards

    Germany might have a low rate of unemployment but most of it is in the East where some areas have nearly 20% as your graphs are about as accurate as a cheap chinese watch.
    There´s 70,000 people going to charity canteens every day to get a meal,there´s a great deal of hidden poverty in Germany as many are too proud to claim benefits,the Politicians are just as blind as British ones and they earn upto €10,000 a month with lots of extras to top up on,detachment from the reality on the streets is very real as most are professional politicians with very little experience of real life.Quite a few are lawyers and they´re the same all over the World.
     Germany has been paying a disproportionate amount of money to Greece and the Greeks turn around and call them Nazi´s and burn their flag,the German´s have to work untill 67 to get a full pension and you wonder why they´re fed up of their wheinging?
     It gets down to -20 degrees and winter lasts about 4-5 months if you´re lucky, here heating bills are expensive whilst the Greeks can sit in the sun for nothing.The Greeks have been overpaying themselves for years and must have known that the good days must be over sometime,If they didn´t save any of their loot than tough!
     I´m opposed to giving them a single Cent untill they sell off some of their huge Gold reserves to pay for their stupidity.Your graphs mean nothing!

  • Chris Edwards

    My other comment is being`Judged´before being public.

    The reason German Youth Unemployment is only 8% is that ALL school leavers are guaranteed a training opportunity if they want one,the first College training is Free as are apprentiships that start off normally at €600 a month.
     There is absolutly no reason why every other Country in the EU can´t aim for the same targets as Germany,Britain scrapped It´s State apprentiships in the ´80´s so don´t blame another Country for your own stupidity and shortsightedness.If other Countries were prepared to save money and invest in their Youth instead of totally abandoning them then your graphs would look a lot better.
     It´s quite common to pay upto 60% in tax,social security and health insurance,the Pension Scheme is set at 19.1%,down from 20% a few years ago so all these projects are paid for by Taxpayers,If Greece etc paid such rates then their Countries wouldn´t be nearly Bankrupt either.
     It´s pretty simple really,work hard and save=low unemployment, though the former Eastern parts have upto 20% unemployment because they think like British Chavs,`The Government owes us´!

  • Chris Edwards

    The citizens don´t decide anything anymore,the Greek Government has repeatedly failed to invoke any meaningfull measures and their misery is totally self inflicted.Had the EU been able to curb their spending over the last few years Greece might not be in the trouble that it now is.
     Nationalism doesn´t keep a belly full,good management of funds does!

  • Chris Edwards

    There´s a great deal of hidden poverty in Germany,there´s something like 70,000 people having to use charity canteens as the cost of living is extremely high in Germany.The value of the Euro is dropping in real terms and having to prop up those who want to retire on a full pension at 55 doesn´t help either.
     Officially there are 1 million children living in poverty in Germany,winters are very cold here and rents high,though not as high as in the UK,its certainly no paradise for the normal working people or the 3 million unemployed.

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