The novelist and polymath Anthony Burgess published a selection of book reviews and essays in the 1980s called Homage to QWERT YUIOP. One of the pieces was called The Whip and in it Burgess discussed le vice Anglais, the derisory term given by the French to the masochistic sexual preferences of upper-class Brits.
Burgess was in no doubt that the taste for the whip had affected the way Britain had been run, and he was probably right about that. In the 1970s, the Bank of England had an instrument for controlling the amount of credit in the economy, which its practitioners lovingly called the corset. Enough said. When Denis Healey accused the Thatcher administration of sado-monetarism everybody got the reference. With its references to fiscal restraint and the tightness of monetary policy, economic management at the time was coloured by the language of the dominatrix – and still is, of course.
Why was this? Burgess thought it had quite a lot to do with the British public school system in which there existed "a kind of bond of shameful-shameless intimacy between the members of the ruling class those schools were concerned with turning out. To have beaten, been beaten, witnessed the same beatings is a red badge of something."
If he was writing today, Burgess would probably not be surprised by the alacrity and relish with which David Cameron (Eton), George Osborne (St Paul's Boys) and Nick Clegg (Westminster) accepted the need for painful austerity on their arrival in power in May 2010. What might exercise his brain would be the way in which – in economic terms, at least – le vice Anglais is no longer confined to these shores but has become the fetish du jour across the whole of Europe.
Take the report in Saturday's Guardian which said retail sales and economic confidence were down, Italian bond yields were well above the crisis threshold of 7% and Spanish unemployment had risen to 22.9%. The response from Europe's policy elite? "Italy's prime minister, Mario Monti, met [Nicolas] Sarkozy in Paris to discuss a pact between eurozone countries to be signed in March, giving Brussels oversight on debt levels and allowing it to punish countries that breach the rules." Yes, that's right. Countries are expected to suck demand out of their economies through tax increases and spending cuts and when the slower growth that results in means the target for deficit reduction is not met, they will be punished for it.
The language of S&M is also now part of the eurozone discourse. The joint letter sent last month by Sarkozy and Angela Merkel to Herman van Rompuy, president of the European Council, explaining the Franco-German plans for future governance of the single currency stressed "fiscal discipline" and the need to "detect and correct departures from sound economic and fiscal policies long before they become a threat to the stability of the euro area as a whole".
There's plenty of raw material here, given a tweak or two, for a modern version of Leopold von Sacher-Masoch's Venus in Furs. "Mario, you have allowed the Italian budget deficit to rise above 3% of gross domestic product." "Yes, mistress Angela, I deserve to be punished for my lack of fiscal discipline. Please do not spare me."
Spain is perhaps the best current example of the predilection for pain. The new conservative government of Mariano Rajoy has inherited a budget deficit running at 8.7% of GDP in the first nine months of 2011 and has set a target of reducing it to 4.4% of GDP in 2012 and 3% in 2013. This involves taking €40bn (£33bn) out of the economy this year by a combination of tax hikes and spending cuts.
The Spanish economy came to a standstill in the third quarter of last year and the crisis in the eurozone means it will almost certainly shrink in the fourth quarter. The fiscal policy planned by the new government will make that recession worse, and a contraction of at least 1.5% looks likely in 2012.
The rationale for this plan is that budgetary retrenchment is the only way to keep the financial markets happy, thus leading to a fall in long-term borrowing costs. This notion that pain is the way to pleasure is now the orthodoxy across Europe (including the UK).
Yet as Jamie Dannhauser of Lombard Street Research notes, Spain's real problem is the overhang of private sector debt from the housing bubble, which has left the banks in a precarious state. To the extent that there are concerns about the solvency of the state, they are due to fears that lenders will go belly-up leaving Madrid to pick up the pieces. Spain is uncompetitive internationally and has a dysfunctional labour market, but compared to Greece, Italy and Portugal it has a relatively low level of public debt.
Opinions might differ on what the right remedy for Spain's economic ills should be. Some might argue that the solution is a cheaper currency, others that there needs to be root-and-branch supply side reform to sort out the labour market. Still others might suggest that for Spain to survive inside the single currency there needs to be the immediate launch of common eurobonds to fund large-scale infrastructure projects.
Any one of these approaches makes more sense than the strategy being pursued by Rajoy, which has not the slightest hope of working. As Dannhauser notes in a piece titled "Spain's new year resolution – more fiscal masochism", the government is seeking to halve its budget deficit in two years. But the only way it can do this without causing a deep recession is if there is offsetting action by the private sector to boost activity. Specifically, this means either an improvement in the current account, consumers running down their savings to spend more, or businesses stepping up investment (or a combination of all three).
None of these is remotely likely. High unemployment means consumers are saving rather than spending; companies are uncertain about the future and want to sit on whatever cash they have; Spain has high unit labour costs that make its exports expensive even in the best of times, which these are assuredly not.
"Since the other sectors of the economy do not appear willing to (fully) offset the reduction in the government deficit, the result is likely to be an even deeper and more prolonged recession," Dannhauser concludes. "This is pain for pain's sake because it will further damage market confidence in the long-term health of the Spanish economy and the banking system in particular."
Absolutely right – and not confined to Spain either. This sort of aberrant behaviour is now commonplace across the eurozone where, unlike in Britain, it cannot be blamed on the peculiarities of the educational system. Perhaps a Freud or a Jung could explain what is happening: it certainly defies rational economic analysis.
larry.elliott@guardian.co.uk guardian.co.uk/business/economics
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8 January 2012 4:47PM
Whip hand, orgy of austerity and Sacher-Masoch's Venus in Furs...
George Osborne must feel right at home. enough to make him shout Louise.
8 January 2012 5:04PM
MInd you, she isnt looking as sexy there as she does in Steve Bell's cartoons
8 January 2012 5:07PM
With austerity the name of the game in the Eurozone for the foreseeable future, it's hard to see how the Euro can survive long term. The Eurozone countries are signing their own death warrant as we speak. It's hard to see how countries like Spain, Ireland and Greece can ever grow again while they remain in the Euro.
8 January 2012 5:16PM
The Guardian does love to whip up a drama? The simple reason austerity measures are strongly in fashion is correct the decades of wasteful spending by left wing socialist governments all around Europe. Leaving right wing governments to clean up there fiscal mess, like Cameron having to clean up Browns mess.
8 January 2012 5:23PM
Any objective observer would conclude that austerity makes things worse though surely?
8 January 2012 5:31PM
Merkel's push for fiscal responsibility in Europe is understandable. The ECB's and her decision to combine the fiscal contract it implies with a monetary squeeze by not balancing the impact of the sovereign debt crisis and the decision to raise bank's capital requirement by the moderate use of QE is clearly insane.
8 January 2012 5:31PM
It's just the "controlling class" finding new ways to keep the masses in their place and encourage just enough of them to go along with it.
When I was a teenager in the late 1960s how we would have scoffed if anyone had said that, over 40 years later, we would be governed by milionaire old Etonians telling us the only way forward was austerity - and there was still enough people bovinely stupid enough to swallow it.
8 January 2012 5:36PM
We might have a single currency but every country with a big stock of public debt and a large fiscal deficit is in competition with its neighbours to issue debt at an affordable rate. It creates a European beggar-thy-neighbour problem, each nation trying to look marginally more austere than another in order to convince the markets they're a safe bet. Spaniards are learning that the Euro isn't the dream ticket they were sold.
8 January 2012 6:09PM
Austerity is done first by calvinists (Dutch and Swiss). Those people are often seen as the inventors of modern capitalism. I don't remember a whip there, but they worked hard and saved a lot. Elliott has a lot of arrogance to know it better than them.
8 January 2012 6:16PM
Selective austerity - while real money is taken out of the economy at the bottom (as it were), those lucky guys at the top receive a personal service in the form of QE.
That schoolboy question of why we can't just print money and then we'll all be rich has been answered - we can print money but we still can't all be rich.
8 January 2012 6:18PM
That's funny - I didn't realise that Italy had a left wing socialist government under Signor Berlusconi.
But it's nice to see President Obama cleaning up the mess left behind from former President Bush's left wing socialist government.
8 January 2012 6:22PM
And to add insult to injury we're all in this together.
8 January 2012 6:22PM
We will never get out of this mess with the current system. With the current levels of government debt across Europe, and the extortionate interest rates demanded by the markets, I have calculated that just paying the interest on the debt is draining 4.25% of total Eurozone GDP - money that goes directly to the banks. It's got worse recently, but over the last 15 years, the banks have been paid an astonishing 4.3 trillion euros in interest payments for the Eurozone alone. The UK paid 443 billion to the banks over the same period.
We've been continuously told that it has to be like this. We are told, that the ECB is legally prevented from lending money to governments. Like the Bank of England, it is supposedly forced to go via the commercial banks. As a result, the banks get unlimited amounts of ECB money at 1% which they should, in principle, lend on to the governments that so desperately need it. But as we have just seen, of the 489 billion that Mario Draghi just gave them, over 90% has been parked back with the ECB.
But this idea that central banks can't help governments is a fiction. In fact, paragraph 2 of article 123 of the Lisbon Treaty, specifically allows the ECB and other central banks (including the Bank of England) to lend to "'publicly owned credit institution". And the ECB confirmed to me that these institution can do precisely what they want with the money they get, including lending it on to governments at the 1% that they pay.
The next window for getting ECB money is on the 29th February. All governments should be taking the opportunity to cut out the middle man, and save Europe 391 billion euros a year in charges.
8 January 2012 6:45PM
In Italy and Greece, fiscal responsibility (austerity) seems to mean punishing the middle and lower classes with cutbacks while the top-heavy governments continue to earn top dollars, receive many perks and have amazing pensions.
When a government stenographer can earn 290,000 Euro (no, I am not making this up)
http://www.corriere.it/International/english/articoli/2012/01/04/senate-stenographer.shtml
there is something seriously wrong with a system.
It is interesting that many of those in the Greek cabinet have millions stowed away in the bank. Where did they get the money?
Austerity measures would not have to be so profound if the 'pigs-at-the-trough' government officials in these indebted countries gave up some of their many financial perks and reduced their numbers. Nothing will happen in terms of debt reduction until the corruption and greed is defeated in these governments. Fat Chance.
8 January 2012 6:48PM
this article sums up what's happening in the peripheral eurozone all too well....it's a shame the peripherals (Spain, Italy, Greece, Ireland) can't turn back the clock to 1999 and elect to not join the euro. but, watching the problems unfold in Hungary at the moment, I am wondering if this would have in fact staved off the crisis in Spain for instance. Maybe it would still have had an unsustainable borrowing binge, although in another currency. at least though it would have had a way to get out of the recession it's in because it could have had the option of exporting (or touristing) it'self out of trouble with a cheap peseta.
8 January 2012 7:24PM
You really know your Left from your right eh?
As someone else points out above, Italy was under Berlusconi for a long time. The deals with Goldman Sachs that bought Greece to its knees was by the conservative rightwing New Democracy party. Orban in Hungary is a conservative. The Belgian's hadn't had a government for a while, but previously a conservative coalition was in power. In Portugal the PSD, a centre right party has been in power.
Ireland, Spain and the UK all had ultra leftists quasi Marxist regimes which masqueraded as neo-conservative centrists.
So, yeah spot on.
8 January 2012 7:31PM
We should emphasize the likelihood that sovereign states with falling GDP will contract their tax base and expand their numbers in welfare dependency so rapidly that even with increasing rates of tax and reduced levels of welfare benefits the deficits will actually increase.
Most puzzling is the failure of those in difficulty to get themselves organized. It is very perplexing that the Italians and Spanish cannot form the basis of an alliance which negotiates on the basis of something like splitting the euro between north and south. It would mean appalling losses of incomes and savings across the mediteranean fringe, but with unemployment around 25 % what has Spain got to lose? Much the same for Greece and several other countries.
8 January 2012 7:34PM
Lorry must be very frustrated with those with powers of decision in political arena. myself? I have given up!
I have decided to leave this society, withdraw to the hills and occupy myself with ideas that can be explored without being affected by the seeming - the undoubted - incompetence of those who exercise political power or influence in this country, especially in matters financial, political and economic.
The Aristocracy, and their descendents, as well as leaders of Financial institutions afflicted by greed ( one of the seven deadly sins!) run the show. The press, like Michel White and many others, have made a living out of comment and speculation without being able to do a damned thing about it! - even if they wanted to!
I still hope there are some out there who can help the situation, but I have just about given up.
Lorry understands better than most as an economist. But he is not listened to.
Why doesn't he join me in the hills and explore ideas he can have some control over?.
Sam Dodds
8 January 2012 7:42PM
Yep. Austerity is contractionary. Even the blindest of ideologues must see that now.
What bothers me is the lack of honesty: That this is a political rather than an economic project, where the unemployed masses are a 'price worth paying' to maintain the status quo.
Bait and switch; divert and divide.
This is deception on an incredible scale.
8 January 2012 7:52PM
Maybe, just maybe the governments of Europe their best advisors and proper economists are right and the guardian and cif'ers are wrong.
8 January 2012 7:55PM
Spain is an interesting case as it complied with all debt limits for the Euro, something Germany and France didnt. The real problem was the crash of the property / building boom. For most municipalities up to 80% of income was from the taxes for the issue of building licences and rezoning of land. Whilst they were building 800,000 new homes per year (more than the USA wih 4x the population) plus countless shopping centres there was no problems in repaying debt (municipal and national) and for huge municipal infrastructure projects (Madrid spent 6000, million€ on putting the ringroad underground). This year less than 40,000 new homes have been completed, so local taxes(rates) have increased dramatically, on top of increases in food prices, electricity etc....further curtailing spending power.
It wasnt just the jobs in actual construction but all the supply chain;, windows, doors, furniture...all of which are slowly closing or downsizing.
Under these circumstances more austerity is madness. Madrid and Barcelona are already totally dead as no-one has money to go out (except to look), Businesses are holding on hoping for better days but they are unlikely to come and many more businesses will close if only current levels of activity continue.
It is wrong to assert that the EU or Germany paid for everything, as with other countries only areas below 90 of average EU income levels recieve help from the EU (like Liverpool or the Rhur valley). It is more correct to say that all home purchasers including the many foreigners (now totally abscent) paid for all the roads, theatres, museums etc
8 January 2012 8:06PM
You can not print your way to prosperity.
8 January 2012 8:10PM
You cannot print your way to prosperity.
8 January 2012 8:26PM
Not really, its simple equations - if the state is contracting and the private sector isnt stepping in, whose going to take up the slack to avoid demand collapsing??
8 January 2012 8:29PM
"Maybe, just maybe the governments of Europe their best advisors and proper economists are right and the guardian and cif'ers are wrong."
Be specific - what are they correct about???
8 January 2012 8:32PM
so youve said twice, can you slash yourself to auserity???
8 January 2012 8:47PM
As has been said many times - over the past 20 years (in some cases, like France, 30+) governments have been taking more and more from future tax revenues through borrowing as well as ramping up tax raising measures (consider VAT rates for example over the past 30 odd years) to meet the inexorable greed of spend..
We have now collectively reached a limit. Economies have to reset and some GDP output may well be lost.
Austerity hasn't really kicked in yet because we're still borrowing very heavily per annum (UK a particular case in point) to balance the books.
Some on here are getting confused re governments. Most if not all, and particularly Itialians have been state-spending like there's no tomorrow. The music's stopping.
There are subsidies and benefits that permeate most levels of European society (and US for that matter). That is pretty socialistic in anybody's definition. The US is no different. Look no further into mortgages if you're not sure.
In terms of Guardian contributors, I consider Mr Elliott one of the more intelligent. This article has made me re-appraise that observation..........................
8 January 2012 8:49PM
This is possibly the silliest comment I have ever read in the history of this newspaper. Tintin's question-mark is apt - no doubt wondering how his profile came to be highjacked by the right-wing.
This truth, obvious to most people, but worth repeating to the dim-witted, is that bankers brought the financial system to its knees through corrupt practices (see the award-winning documentary Inside Job).
Governments then used taxpayers' money, normally used for health, education and housing, to bail out the corrupt "too-big-to-fail" banks. In one of the biggest rorts ever perpetrated on humankind, private debt was thus transformed into public debt. Unemployment and poverty is the result.
8 January 2012 8:49PM
Yes, austerity for the sake of deleveraging is contractionary. Yes, you could make fun of that by comparing it to sado-masochism. Yes, that is fearsomely droll. Does the writer propose to borrow our way out of trouble to finally pull the house down on us? Or do we inflate our way out and steal savings and pensions while we're at it? Is there a sexual aberration that compares to that?
8 January 2012 8:50PM
That's not economics, but religion. Did you ever hear about market economy. When the state borrows less, intrest rates go down and private investors will borrow and invest. It is the only way to economic growth.
Austerity has to done some time. Many governments don't want to do this in good years, so it has to be done during a recession. I cannot change this. Keynesianism is a kind of corruption.
8 January 2012 8:53PM
You appear to be posting under the wrong article. This would have been more apposite to the Danny Blanchflower offering, which imputes considerable success to the Obama money printing strategy.
8 January 2012 8:56PM
"That's not economics, but religion. Did you ever hear about market economy. When the state borrows less, intrest rates go down and private investors will borrow and invest. It is the only way to economic growth. "
Economics is not a science and could well be considered a religion for its advocates at the extreme.
When the state borrows and spends less aggregate demand falls and that leads to a fall in output unless the private sector spends more. Seeing as were in a liquidity trap lower interest rates do not stimulate private sector demand, even if funds were available which they are not. Therefore cuts lead to fall in output ie recession and higher borrowing.
If cutting spending were a simple way to prosterity the 1930s would have been a time of plenty. History would suggest they were not!!
8 January 2012 9:08PM
Lower intrest rates do stimulate private investment. Your story is just short term and an extreme one. Spending is still increasing as you will know and there is no deflation.
The thirties has been a special period, because by far the largest economy in the world had a trade surplus of 19% and no budget deficit at all.
8 January 2012 9:12PM
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8 January 2012 9:15PM
Larry:
The Germans went through restraint etc.. after reunification. Their experience is that it works.
The fact is that the Germans simply won't bail out the periphery unless the periphery takes a lot of pain first. Ireland having a higher GDP per capita than Germany, and Greece having a higher household post tax income than Germany, are widely seen as simply taking the p**s.
There is no way any one with money is going to bail out the Southern Europeans whilst they have retirement at 50 either.
8 January 2012 9:16PM
"Lower intrest rates do stimulate private investment. Your story is just short term and an extreme one. Spending is still increasing as you will know and there is no deflation."
No they do not. Private investment depends on businesses being confident there is demand for the goods/services which flow from that investment. The cost of funds maters little if the top line sales forecast is flat/negative.
So, if low interest rates stimulate investment, how do you explain it falling by 24% in 2009 when rates were at an historic low??
http://www.guardian.co.uk/business/2010/feb/25/business-investment-plunges
"The thirties has been a special period, because by far the largest economy in the world had a trade surplus of 19% and no budget deficit at all."
Indeed, but doesnt that sound eerily similar to today with Germany and Chinas trade position also draining demand from the world economy?
8 January 2012 9:19PM
German experience is that you can supress domestic demand and export surplus production when world demand is buoyant. It certainly worked from them if you consider high corporate profits and exports coupled with supressed domestic wages a success.
It cant be applied across the eurozone as by definition trade has to balance - how can all enjoy export led growth if someone elses surplus is anothers deficit and overall demand is being cut??
8 January 2012 9:25PM
Didnt link again - apologies for the double post
"Lower intrest rates do stimulate private investment. Your story is just short term and an extreme one. Spending is still increasing as you will know and there is no deflation."
No they do not. Private investment depends on businesses being confident there is demand for the goods/services which flow from that investment. The cost of funds maters little if the top line sales forecast is flat/negative.
So, if low interest rates stimulate investment, how do you explain it falling by 24% in 2009 when rates were at an historic low??
http://www.guardian.co.uk/business/2010/feb/25/business-investment-plunges
"The thirties has been a special period, because by far the largest economy in the world had a trade surplus of 19% and no budget deficit at all."
Indeed, but doesnt that sound eerily similar to today with Germany and Chinas trade position also draining demand from the world economy?
8 January 2012 9:27PM
It is simple. When vast numbes of people have no buying power, consumption stops, demand is reduced and so is production.
Further, global competition brings about adjustment of prices to the lowest denominator which essentially means establishing third world standards all over the globe.
8 January 2012 9:27PM
Well said. Many Guardian/Observer readers seem eurofanatical and totally uncritical of German policy. Crazy people. Germany pushed the Euro for self-interested reasons not for idealism's sake. It made German exports 30% cheaper overnight;and as the Euro falls because of the anti growth policy of the EU,German exports increase.
Guess who they exported too? Greece,Italy, Portugal, Spain:killing their manufacturing.That made them more dependent on....Germany which now refuses the expansionary conomic policy which would enable them to grow and then compete.
Germany is using the same trick as China to increase their own exports and worsen global imbalances: cheap exchange rates. This is a beggar my neighbour approach.
Both Germany and China need to change their policies which in the end will bring ruin to all. Why any progressive would wish to be under the control of such a policy defeats me. It is selfish and destructive.
8 January 2012 9:29PM
"Ireland having a higher GDP per capita than Germany, and Greece having a higher household post tax income than Germany, are widely seen as simply taking the p**s."
If Ireland and Greece really wanted to take the p**s theyd default on those loans that the French and German banks foolishly made. At the moment theyre enduring deflation in the hope of the jam tomorrow. If they stop doing this it wont be those states requiring a bail out but the entire French/German financial system. Either way it will cost them.
8 January 2012 9:34PM
Sadly, I think future historians will be devoting much time and energy to explaining why it is that in this period senior policymakers became so obsessed with a tiny handful of variables (public debt, inflation), while willfully ignoring not just good economics or common sense, or for that matter, basic humanity (seeing inflation as more important than employment), but for now we are stuck with it.
Lots of blog space has been devoted to the question of why the ECB along with most other Central Banks (the Swedes being a rare exception, which probably explains why they are doing so well now) are behaving this way. Some are speculating it is simple corruption - they are doing what bankers tell them. It may be that they in thrall to misguided economics theories, or it is simply old style groupthink.
My personal explanation is that they are obsessing about public debt because they are so terrified by private debt that they are desperately trying to find a problem they can face up to, like someone rearranging deckchairs on the titanic. If you look at this set of graphs you can see clearly that public sector debt is really a minor issue - the huge elephant in the room (especially in the UK) is the gigantic level of private debt, much of in the form of leverage created by the financial sector. i don't think its a coincidence that the countries with the largest private debt are the countries with the largest financial sectors.
8 January 2012 9:44PM
Germany and China have a trade surplus of 2 or 3% at the moment. Can you mention a country with trade surplus of 19%, except small oil exporters like Norway?
8 January 2012 9:56PM
"Germany pushed the Euro for self-interested reasons not for idealism's sake. It made German exports 30% cheaper overnight".
Fantasy.
I was working in Germany at the time the Euro was introduced.
My salary bought almost exactly the same when paid in Euros as it has when
I was paid in DM.
Also money I transmitted to the UK received the same exchange rate.
(and bought the same goods in the UK as before).
Absolutely negligible effects from the transition.
Also the Germans as a whole were not too interested in having the Euro -
seeing how successful the strong DM had been.
It was the French who were the main proponents.
Germany has not, since 1949, been interested much in selling price-sensitive goods,
as is common knowledge.
In many ways having a strong currency (the DM was never devalued) is a huge advantage -
it cheapens the cost of importing raw materials and components.
It's the GBP that slumped against the Euro (later) - but not many other currencies.
8 January 2012 10:04PM
Why are you grasping at 19%, I never made an equivalent % claim - maybe perhaps because you havent made any counter arguments to the fact that low interest rates dont stimulate private invesment and that reducing demand in this environment leads to recession?
Do you not accept that the trade surpluses run by Germany, China and Japan are draining demand from the world economy and that adjustment only via demand reduction in the creditor nations is going to lead to a downward spiral?
Have a read here for a good summary of these surpluses are doing:
http://www.southcentre.org/index.php?option=com_content&view=article&id=1264%3Asb45-a6&catid=144%3Asouth-bulletin-individual-articles&Itemid=287&lang=en
8 January 2012 10:07PM
"Germany pushed the Euro for self-interested reasons not for idealism's sake. It made German exports 30% cheaper overnight".
"Fantasy."
Not fantasy but it certainly didnt happen overnight, it was the result of a decade of domestic wage/consumption suppression coupled with a fixed euro parity.
8 January 2012 10:09PM
@ilovewales
that is a blatant lie.
that is a blatant lie too.
After a 0.1 sec Google search I found on
http://daniel-workman.suite101.com/germany-s-trade-buddies-a10156
the following:
for 2009 it's similar, see
http://topforeignstocks.com/2010/08/15/germanys-top-trading-partners-and-export-goods/
Do you have any personal grief with Germany?
8 January 2012 10:14PM
A downward spiral can happen with unemployment with deflation. I do not see it, but it could happen when China's growth goes down or something happens in Greece.
8 January 2012 10:16PM
You really cant consider the impact of bi-lateral German trade on Portugal etc by quoting gross German trade stats - the relatively small size of the Portuguese, Greece etc economies means they wont show up but they are VERY significant to those small economies with a trade deficit.
Have a read here for what happening in the peiphary of the eurozone:
http://www.dw-world.de/dw/article/0,,5349490,00.html
8 January 2012 10:25PM
"A downward spiral can happen with unemployment with deflation. I do not see it, but it could happen when China's growth goes down or something happens in Greece."
?? Have you not seen the trends in eurozone unemployment figures and industrial production/consumption ??