Ben Attacks Germany’S Trade Surplus

[evetsm]

As Draghi points out in the link above, caused by germany running persistent trade surpluses.

Very sad indeed for german workers being taken for such mugs by the german elite/industrialists.

It's not, it's caused by trade partners having nothing of value to export, including the UK .

You are advocating destroying the innovators instead of the rest matching the innovators. You are advocating destroying the most productive, instead of catching up with the most productive and then exceeding them. Typical Keynsian race to the bottom.

[evetsm]

Well look, its impossible to engage with this sort of nonsense. Read the links, dont read the links, I really dont give a f&ck. Im not here to educate you. I post for people who are interested. If youre not interested or want to peddle some personal view of the way global trade balances thats fine. But Im not wasting my time on it.

Arrogant twerp..

You can give a blizzard of links, it won't change a thing, it will still be wrong to want to destroy the most productive and innovative manufacturers.

Edited May 4, 2016 by evetsm

[wonderpup]

If Germany suppressed its own people's wages how did they afford to save so much ?

Who is 'they'?

If I own a factory and pay my workers low wages I can generate a larger surplus for myself. If I bank that surplus it can then be used to facilitate loans to places like Greece where returns are higher than in Germany. Thus you get a psudeo virteous circle in which the surplus's of the German rich become a form of vendor financing that stimulates the demand for German products in other countries- which works really well untill the debt levels get too high and the game blows up.

Had that surplus instead been paid out in higher wages the demand created would not have been based on lending but on the income of German labour- a far more sustainable situation.

No one is arguing that the Germans are not successful or don't deserve to be more wealthy than other nations- the problem is that because that wealth is not widely shared in Germany it creates the scenario in which the wealth is not spent into the wider EU economy but shows up instead as loans from German Banks to other nations. So instead of healthy and sustainable demand derived from wages you get ersatz demand derived from debt.

[dugsbody]

Who is 'they'?

If I own a factory and pay my workers low wages I can generate a larger surplus for myself. If I bank that surplus it can then be used to facilitate loans to places like Greece where returns are higher than in Germany. Thus you get a psudeo virteous circle in which the surplus's of the German rich become a form of vendor financing that stimulates the demand for German products in other countries- which works really well untill the debt levels get too high and the game blows up.

Had that surplus instead been paid out in higher wages the demand created would not have been based on lending but on the income of German labour- a far more sustainable situation.

No one is arguing that the Germans are not successful or don't deserve to be more wealthy than other nations- the problem is that because that wealth is not widely shared in Germany it creates the scenario in which the wealth is not spent into the wider EU economy but shows up instead as loans from German Banks to other nations. So instead of healthy and sustainable demand derived from wages you get ersatz demand derived from debt.

Germany has (or had) a lower gini index than the UK. It is a stable and nice place to live. They do not have a debt fuelled housing ponzi. I think the common German person would very much object to Keynesian leftists trying to enforce their particular brand of economic social justice onto Germany.

[evetsm]

Who is 'they'?

If I own a factory and pay my workers low wages I can generate a larger surplus for myself. If I bank that surplus it can then be used to facilitate loans to places like Greece where returns are higher than in Germany. Thus you get a psudeo virteous circle in which the surplus's of the German rich become a form of vendor financing that stimulates the demand for German products in other countries- which works really well untill the debt levels get too high and the game blows up.

Had that surplus instead been paid out in higher wages the demand created would not have been based on lending but on the income of German labour- a far more sustainable situation.

No one is arguing that the Germans are not successful or don't deserve to be more wealthy than other nations- the problem is that because that wealth is not widely shared in Germany it creates the scenario in which the wealth is not spent into the wider EU economy but shows up instead as loans from German Banks to other nations. So instead of healthy and sustainable demand derived from wages you get ersatz demand derived from debt.

"they" are the German people. Personal savings

"Germany Personal Savings Ratio

Household Saving Rate in Germany increased to 10 percent in the fourth quarter of 2015 from 9.50 percent in the third quarter of 2015. Personal Savings in Germany averaged 12.11 percent from 1960 until 2015, reaching an all time high of 17.30 percent in the second quarter of 1975 and a record low of 7.80 percent in the first quarter of 1960. Personal Savings in Germany is reported by the Deutsche Bundesbank."

http://www.tradingeconomics.com/germany/personal-savings

Germans(individuals) still love saving :

https://global.handelsblatt.com/edition/98/ressort/finance/article/germans-still-love-saving

Edited May 4, 2016 by evetsm

[wonderpup]

They do not have a debt fuelled housing ponzi.

If their EU customers were funding their consumption of German goods with borrowed money then the German economy was itself a debt fuelled ponzi- and a lot of that money was borrowed from German banks. Think about it- every transaction needs both a seller and a buyer, and if the buyer can't fund their purchase from the profits of trade then where do they get the means to pay?

Without credit the ability of a place like Greece to buy the products of Germany is limited- so the success of German exports to Greece was dependant on the Greeks borrowing the money to fund their consumption.

And a system in which the profits are the product of expanding debt obligations is by definition a ponzi scheme.

[wonderpup]

"they" are the German people. Personal savings

"Germany Personal Savings Ratio

Household Saving Rate in Germany increased to 10 percent in the fourth quarter of 2015 from 9.50 percent in the third quarter of 2015. Personal Savings in Germany averaged 12.11 percent from 1960 until 2015, reaching an all time high of 17.30 percent in the second quarter of 1975 and a record low of 7.80 percent in the first quarter of 1960. Personal Savings in Germany is reported by the Deutsche Bundesbank."

Exactly my point- when income is distrubuted unequally you end up with less spending on consumption and more saving;

Germany displays highest wealth inequality in eurozone

A study by a leading economic think tank has shown worsening financial inequality in Germany in recent years. In no other eurozone nation are there such big differences between the rich and many poor.

The survey by the Berlin-based German Institute for Economic Research showed on Wednesday that the gap between the rich and poor in Europe's biggest economy had been widening steadily in recent years.

Differences in financial assets that the affluent and the less well off had at their disposal were larger than in any other nation of the 18-member euro area, the study pointed out.

It said that while one percent of people making up the richest members of society owned an average 800,000 euros ($1.1 billion) per person, roughly a fifth of the German population had not amassed any private capital at all.

The authors of the survey compared data collected in 2007 with figures from 2012 and found the gap between the rich and the poor had widened further - not least due to a labor market reform which had made it even harder for jobless people to retain a bit of their wealth and be entitled to unemployment benefits at the same time.

The result has been that almost two-thirds of jobless people had no financial assets at all or were indebted.

http://www.dw.com/en/germany-displays-highest-wealth-inequality-in-eurozone/a-17458083

It's blindingly obvious that if most of the wealth is concentrated among fewer people the result will be higher savings and lower consumption because demand is function not only of wealth but of numbers- even a billionaire does not need ten haircuts a day- so to make a living as a barber you need that wealth more evenly distributed- having one super wealthy customer a month will not keep you in business- unless they tip really big or you can persuade them to pay well over the going rate for a haircut.

By engineering their society to suppress the incomes of the poorer half of their society the Germans gained a competitive advantage in labour costs but also limited the ability of other nations to sell to their population- this is a zero sum game in which the competitive benefits for German exporters translated directly into a lack of marketing opportunites for other countries to sell their goods to Germany.

[zugzwang]

Exactly my point- when income is distrubuted unequally you end up with less spending on consumption and more saving;

http://www.dw.com/en/germany-displays-highest-wealth-inequality-in-eurozone/a-17458083

It's blindingly obvious that if most of the wealth is concentrated among fewer people the result will be higher savings and lower consumption because demand is function not only of wealth but of numbers- even a billionaire does not need ten haircuts a day- so to make a living as a barber you need that wealth more evenly distributed- having one super wealthy customer a month will not keep you in business- unless they tip really big or you can persuade them to pay well over the going rate for a haircut.

By engineering their society to suppress the incomes of the poorer half of their society the Germans gained a competitive advantage in labour costs but also limited the ability of other nations to sell to their population- this is a zero sum game in which the competitive benefits for German exporters translated directly into a lack of marketing opportunites for other countries to sell their goods to Germany.

Can't argue with that, but it's worth noting that in response to international pressure Germany introduced a minimum wage in 2015. Frozen this year, I've read that it could rise by as much as 5% on Jan 1st 2017, in line with general wage developments across the country.

Clearly, they've some way to go to overhaul the French or Dutch but they're really not that far behind the UK. In purchasing terms, of course, Germany is streaks ahead of the UK.

[evetsm]

Exactly my point- when income is distrubuted unequally you end up with less spending on consumption and more saving;

http://www.dw.com/en/germany-displays-highest-wealth-inequality-in-eurozone/a-17458083

It's blindingly obvious that if most of the wealth is concentrated among fewer people the result will be higher savings and lower consumption because demand is function not only of wealth but of numbers- even a billionaire does not need ten haircuts a day- so to make a living as a barber you need that wealth more evenly distributed- having one super wealthy customer a month will not keep you in business- unless they tip really big or you can persuade them to pay well over the going rate for a haircut.

By engineering their society to suppress the incomes of the poorer half of their society the Germans gained a competitive advantage in labour costs but also limited the ability of other nations to sell to their population- this is a zero sum game in which the competitive benefits for German exporters translated directly into a lack of marketing opportunites for other countries to sell their goods to Germany.

by this logic the uk should be the greatest exporters in the world, because our geni coefficient is greater than Germany's ! In fact by this logic Brazil should have the biggest savings in the world and the highest manufacturing exports.

for the Keynesians up is down.

.

Edited May 5, 2016 by evetsm

[dugsbody]

Exactly my point- when income is distrubuted unequally you end up with less spending on consumption and more saving;

http://www.dw.com/en/germany-displays-highest-wealth-inequality-in-eurozone/a-17458083

But income isn't distributed unequally. It is only the wealth, when measured in a certain way, appears to be. Again, when I last looked at this, it seemed to be because Germans are by and large not home owners, do not have a ponzi housing bubble to inflate their appearance of wealth, and do not want one, because they have proper tenants rights and people are content to rent long term while using actual productive investments to fund retirement.