Home > ECB, EMU Crisis, Monetary Policy > Free Riders in Frankfurt
  1. December 1, 2013 at 11:47 am

    “Free Riders in Frankfurt” (or rather: Berlin) is a good slogan which seems to carry the day these days. But is it really true in the final analysis?

    The below article from the WSJ calculates that, from 2007-11, the German economy has lost 575 BEUR of its foreign assets. Gross foreign assets of Germany are now in excess of 7.000 BEUR, so there is a lot left for them to lose.


    What Germans don’t understand (yet) is that their current account surpluses translate 1:1 into an increase in net foreign assets of their economy. They don’t understand that yet because those losses have not yet directly hit tax payers (they were recorded at upper layers of the economy, mostly banks and insurance companies).

    If one wants to change German mentalities, silly slogans like ‘reign in your exports’ nor intelligent slogans like ‘import more’ won’t carry the day. The fastest way to scare Germans it to warn them that, by pursuing their economic model, their pensions – and, in fact, their future living standard – are at risk. I wish the debate would focus on that and not on silly things.


  1. December 6, 2013 at 4:14 pm

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