Germany-US Rift Gets Deeper, As Merkel Openly Mocks Obama's Keynesian Guidelines

Tyler Durden's picture

The transatlantic smackdown is getting vicious, as Angela Merkel makes a point to demonstrate her refusal to follow Obama's policies before a business audience in Berlin. As Bloomberg reports, "Chancellor Angela Merkel championed German export strength as “the right thing” for her country, spurning President Barack Obama’s call to boost private spending as both leaders  prepare for Group of 20 talks. Merkel, addressing a business audience in Berlin today, said she told Obama in a phone call that  cutting government debt is “absolutely important for us,” exposing a second point of contention ahead of the June 26-27 G-20 summit in Canada." It appears Germany's chancellor is actually prudently thinking ahead after realizing that the recent bailout of Europe has massively angered potential voters, cost her parliamentary majority, and absent damage control, her career would come to a premature end. If that means openly mocking the pinnacle of Keynesian insanity these days, Washington D.C., so be it. It is strange that our own president has yet not realized his own political career will be very short unless he follows in Merkel's footsteps. Instead, he and the Fed will melt the market up to unprecedented highs in the months leading to the mid-term elections in hopes that this will presumably indicte just how strong the US economy is, even as fresh new millions in the GoM find themselves unemployed courtesy of some salt water content in the oily gulf. Perhaps Orszag is much smarter than people give him credit for: surely his pitchfork avoidance skills will come in very handy when the tide finally turns.

More from Bloomberg:

Reducing the budget deficit by 10 billion euros ($12 billion) per year “won’t put a brake on the world’s economic growth,” Merkel said, relating what she told Obama yesterday. Germans are more likely to spend money if they feel the government “is taking precautions” to ensure solid finances, she said.

Four days before world leaders meet in Toronto, Germany is heading for conflict with the rest of the G-20 over tighter financial regulation, a banking levy and U.S. calls to boost growth rather than cut debt.

The G-20 must “safeguard and strengthen” the economic recovery and promote “global demand growth that avoids the imbalances of the past,” Obama said in a June 16 letter to fellow G-20 leaders. He expressed concern about “heavy reliance on exports by some countries,” which he didn’t name. Treasury Secretary Timothy F. Geithner called on June 5 for “stronger domestic demand growth” in European countries like Germany that have trade surpluses.

The upcoming G-20 meeting will likely be very contentious:

Merkel said on June 11 that she expects to have a “hard time” from fellow leaders at the G-20 meeting, where Germany and France are leading Europe’s push for a global commitment to impose bank levies and a tax on financial transactions.

The G-20 faces a test of unity on the banking levy, a German government official said earlier today, warning that leaders can either pull together or split into two camps over the tax. The official spoke to reporters on condition of anonymity.

And the punchline:

Obama’s appeal “isn’t anything that goes against what we are doing,” Merkel told reporters yesterday. “If we don’t get onto a path of sustainable economic growth but have rather a growth bubble, then if the next crisis comes we won’t be able to pay for it.”

How long before our own "elected" leaders realize they should follow the will of the people, not the recommendations of economic advisers who have a 2 year shelf life?

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Steaming_Wookie_Doo's picture

Germany also doesn't outsource every last thing that isn't nailed down. And a German with a high school (Gymnasium) diploma is a well educated, functional person. Look at the VW factory in Dresden:


Brett in Manhattan's picture

Recently, saw a rerun of American Chopper, in which they visited a Mercedes plant. The place was immaculate. It was hard to believe they built cars there.

ozziindaus's picture

Don't forget that the German government encourages education to keep the unemployment number low. That's why Ingenieure haben alle Master-Studiengänge

trav7777's picture

and germany doesn't have a 25% third-world demographic with IQs averaging around 90, nor a massive, 40-year program to ensure that as many of this demographic as possible are forcibly promoted into mangement positions.

What we have here is not just a failure to communicate, but it's a study in network theory or dynamic design.  How many nodes can be total failures in an organizational network before the entire structure collapses.

The US is still playing pretend like it is 1950 and we can AFFORD to put wheelchair ramps on aircraft carriers or whatever the ADA mandates, among other things.  We are flat out fking silly and it will be the end of us.

LoneStarHog's picture

But...but...what about all of the entrepreneurs on eBay, Multi-Level Marketing like Shaklee & Avon not only buy and sell to one another, but some of these entrepreneurs ship globally...You mean that we can't support a multi-trillion economy with the likes of these?

If one really wants to see just how lazy and worthless American's have become, just try one of the Multi-Level Marketing scams...I did a research paper back in 1995 which included gathering real data from first-hand experience in MLMs...Everyone would attend the FIRST meeting to get all signed up and GET RICH, but when it came to getting off their lazy asses and DOING something, well forgetaboutit!!

HarryWanger's picture

USA also has millions of computer programmers who write apps. That must account for something, right?

Postal's picture

The US has just enough people with just enough knowledge of code development so they can debug the stuff written in India and China.

Calculated_Risk's picture

More than what your punk ass is worth.

ocd's picture

Excellent thoughts but you've forgotten the other industries that keep this soon to be train wreck rolling for now.  Strippers, beer and the medical industry.


When I watched CNBC's "Last Days of Lehman Brothers" the other day, I noticed a line from Paulson.  He said 'we've got to hold this together for just a little while longer'.  Now that could've been in reference to the Bush administration or something else.


Personally, I think we're done and one day soon, the Chinese are gonna show like some angry collectors for the Mafia.

(now for the math test)

trav7777's picture

No.  the Chinese are the Bamboo Lounge.  WE are the mafia.

Let them all fail's picture

Without the generous pension benefits which are being laid to waste, this is only going to get worse.  The labor is too cheap in Asia, our corporations will never sacrifice cost-cutting in order to have more jobs here and increase our manufacturing presence.

That said, it seems the Chinese are becoming aware of their slave-labor state and demanding more compensation, though for now the increases are insignificant.  Though we'll just move labor to exploit some other country when this gets too expensive.  Its a disgrace to see what our corporations are paying these workers.  And to anyone who says that "well you wouldn't be willing to pay more" if the labor moved elsewhere, I say, maybe not, so then I wouldn't buy their products, so what?  Maybe their executives will be forced to cut their insane compensation packages, OH NO!!

firstdivision's picture

How dare the Rineland tell us we cannot spend to our hearts content, only to drive the world into yet another crisis. 

Hondo's picture

She's right.  I only hope she can stand her ground.  Obama and the idiot policy makers he has on staff have NO business telling anyone how to manage their economy.  They have already f***** this one up (and most others through incompetent oversite / all administrations to blame here).

Muir's picture

"It is strange that our own president has yet not realized his own political career will be very short unless he follows in Merkel's footsteps."


As someone who voted for him and has friends on the far left, I can tell you that he is a one term President.

Even if Sarah Palin runs with Barry Goldwater as the Republican ticket, I'll stay home and watch Turner Classic movies.

King_of_simpletons's picture

The global credit problem that we face now is unfixable with the current terms of diplomacy and verbiage. World War III or massive economic pain world wide will hit the reset button.

Canucklehead's picture

I'm curious about your fixation on Sarah Palin.

To me, the far left and the far right are basically the same.  One wants the oligarchs inside Government and from that position to own everything.  The other wants the oligarchs to own everything, including Government.  They both revere the same oligarchs.

Sarah Palin is the opposite of all of that.  That was why she was selected by McCain.  Her approval ratings in Alaska were very high, coming from both sides of the political spectrum.

How did the far left expect Obama to "play out"?  After all, he was the oligarch's point man.  He defined their marketing "brand".  When you heard of "Hope & Change" what did you think was going to happen?

Muir's picture

"How did the far left expect Obama to "play out"? "



They expected Obama to play to the far left.


(that was a trick question, right?)


(As for Sarah Palin, if you think that it is right to give her the launch keys to thermo- nuclear warheads - then you stand for everthing I detest in the U.S., ignorance, stupidity and arrogance.)




On the flip side:

Don't be so gloomy. After all it's not that awful. Like the fella says, in Italy for 30 years under the Borgias they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland they had brotherly love - they had 500 years of democracy and peace, and what did that produce? The cuckoo clock. So long Holly.


ZakuKommander's picture

Well said, in all respects.

Your inquiry linking Sarah with nuclear warheads was spot on -- it cannot but help to make one shudder. If one's popularity in Alaska -- a welfare state of there ever was one -- and her background of Wasilla mayor and half-term governor there are regarded as qualifications for Leader of the Largest Military Empire the world has ever seen, one can only cast hope aside.

trav7777's picture

Refresh my memory here - what were Bama's qualifications prior to this job?  Answer: none.

Busch?  Same answer. 

WTF does it really fucking matter?  You guys' hardon for Sarah Palin, both for and against, totally makes me laugh because it's completely STUPID

Canucklehead's picture

Thanks for your honest answer.  That's how I thought the far left expected things to play out.  It's a shame it isn't going to happen that way.

Oh well, in for a penny, in for a pounding...

hangemhigh's picture

with all due respect, sir, sarah palin is george bush in a skirt.  her understanding/knowledge of critical issues is a mile wide and an inch deep.

without her her team of media-con handlers to program her with soundbyte response she would  sound like just another small state governor in way over her head...........

her, yomama, dubya, they are all prototypical, bought and paid for, sock puppets.


Papasmurf's picture


As someone who voted for him and has friends on the far left, I can tell you that he is a one term President.

Even if Sarah Palin runs with Barry Goldwater as the Republican ticket, I'll stay home and watch Turner Classic movies."


You and your friends should have done that last election.


Mongo's picture

Obama will muster the entire army of the think tanks available on the planet and send them in a US-taxpayer funded jet to Berlin to make a verbal assault on Merkel. Wait and see. After G20 Angela Merkel will be ... a changed person...

Mitchman's picture

Go Angela go!  Rub it in his ugly face!  The Germans may not be perfect, but at least they are heading in the direction of some sanity.

exportbank's picture

Certainly the president has Dr. Krugman on his side. The Dr. is recognized and honored as one of the greatest economists of all time - however, that seems to mean squat because he's an awful mathematician blessed with a complete lack of political understanding. Advocating a spend now - we'll save it later option to a senator or congressman is a green light to fiscal madness - only coming to an awful end in collapse because addicts can't stop spending or promising (buying your vote).

Mathematical sanity must be embraced and yes today's standard of living will take a 25% hit but that's better than a 45% hit five years from now.

Turd Ferguson's picture

"Certainly the president has Dr. Krugman on his side. The Dr. is recognized and honored as one of the greatest economists of all time - however, that seems to mean squat because he's an awful mathematician".

Shirley, you mean this in jest as it is so obviously contradictory. In case you are serious, let me correct you. Krugman is NOT one of the greatest economists of all time. He is, however, one of the greatest douchebags of all time. 

Assetman's picture

I really don't think he is joking.

And don't call him Shirley.

exportbank's picture

Assetman... YES - I was joking but I guess it backfired on me as some of you thought I was actually being complimentary to Professor Dr. Krugman.

Brett in Manhattan's picture

Krugman, like most academics, is disconnected from the real world.

What reason, other than insanity, could bring him to recommend that consumers, already overburdened with debt, increase their spending?

Seriously, what could Krugman do if he were send out into the real world with no money? Could he drive a cab? Could he manage a 7-11?

Astute Investor's picture

Krugman has drunk to Keynesian kool-aid for so long he doesn't know any better.

Learn It

Know It

Live It

hack3434's picture

Krugman will commit hari kari once he discovers the failure that he truly is.  

Brett in Manhattan's picture

William K. Black addresses this subject. Black doesn't believe that a sixty year old man will ever admit to being wrong about everything and to having no useful skills.

Do you think Krugman could cut it as a bellman at a NYC Hotel?

exportbank's picture

Of course I meant it in jest - being an economist or a reader of Tea Leaves is the identical art - the magic of the gypsy.

squidward's picture

Germany capitalizes on the rest of Europes failures.  A weak Euro drives their export driven economy, leaving much room for austerity without painful cuts.  Staying on this path, when the Euro finally fails they will then pay off their debt and purchase fire sale european assets with newly minted Uber-marks. 

hound dog vigilante's picture

As they should. DE paid for the modern infrastructure in 6-8 PIIGS. If the rest of Europe (+ N. America) are not interested in producing world-class products, then let them suffer the consequences. Success/solvency is a choice, not a pre-determined fate.

LoneStarHog's picture

I am sooooooooo jealous.  Since I am not known for bullshit (diplomacy), I would give anything to be a member of the G20 so that I could actually get right up close and personal with The Messiah and GET IN HIS FACE with the TRUTH.

I would also be happy to lie down on the floor so that I could GET IN THE FACE of Tiny Turbo Tim.  I will admit that when standing up I just might happen to step on the LYING BASTARD and have to clean the soles of my boots. They are already full of horseshit from cleaning the stables, so adding Timmy, while a step down from horseshit, won't bother me.

digalert's picture

Should Merkel now be hauled before congress for a dog and pony show? Then be ordered, right after McChrystal, to the White House for a beating after bashing the great "O"? hah

QQQBall's picture

McChrystal dissed Oprah?

Paul Bogdanich's picture

"Perhaps Orszag is much smarter than people give him credit for: surely his pitchfork avoidance skills will come in very handy when the tide finally turns."


There will be no pitchfork avoidance if and if / when the tide ever turns.  Everyone knows this.  The danger now is knowing that the battle is lost and that an economic contraction is schedued to set in later this year that they take the economy to a war-time footing by starting a major regional war in the gulf.  Then  they can blame the fall economic disaster on the high price of oil and terrorists and what not.  You err in underestimating the nefarious nature of these beasts.  They are quite murderous.  View all below them as slaves and vassals to be bought and sold at their leisure.  They respect neither God nor man and will have no qualms about starting a regional war.   

linrom's picture

Peter Orzag was sold as a 'boy genius', who when he was 5-years old would compute cash flow statements from reading corporate reports just for fun.

overmedicatedundersexed's picture

Germany & Russia, history will repeat.

Think Putin is sitting on his hands watching soaps while Brussels burns?

Russia has resources, Germany has ,well those all too smart, das goote engineers. Germans did not forget who pissed in the punch bowl last time. (Obuma getting ready to be suckerpunched by Germany very soon.)

EU will fall - does China join the Axis this time (in place of japan)??..Southern Europe was not worthy for the last go round..Italy and Spain are much too metro-sexual now. But Iran and Syria seem real I am sure they are on board.

I hope the DDept and CIA/NSA have gamed this


told with some tongue in cheek but who would have thought we would elect a man who may not even be a real citizen??


walküre's picture


You are on the right track but you're confusing the writers with the actors:

"I hope the DDept and CIA/NSA have gamed this"

If what you suggest comes to pass, it will be scripted, edited and produced by said organisations, your very own tax funded federal war gamers.

Wars don't just happen.

overmedicatedundersexed's picture

"Wars don't just happen"..Sorry to have mislead you with nuance..think COLD WAR & New reserve currency , all the benefits to those in power without too many caskets crowding Dover air base hangers.

the world needs a balance to USA, so the power elites can control the outsiders like worked great for many decades ..until Russia screwed the pooch.

Only fear is having an inept lazy CIC and ideologue Administration here in US to screw it up and turn it hot.

walküre's picture

There is the "world" and then there is the "US"

How about this for balance?

The US is a pretty isolated empire these days.

Speaking of 'screwing the pooch'.. are you sure the Russians fucked up more than the American Bankster Gangsters?

overmedicatedundersexed's picture

give the banksters gang bangers a few more trillion and then I will agree..QE 2 will just about do it..and we (USA)  will have screwed it beyond belief.


Paul Bogdanich's picture

"Wars don't just happen."

I agree and I never identified who I was talking about I merely described my belief in how their little black hearts work.  The current politicians we call "leaders" are easier to herd than sheep even if they are not of a similar mind.  It's just astonishingly nefarious.  Makes a total mockery of the enlightnment idea of human progress.  Still I think they do it as they are all about retaining their power and this is the only way I see at this point.  If they try the internal divisions like black, versus indentured white versus indian versuus slave versus poor but free versus conservative versus liberal versus homosexual or whomever I think it turns against them as the recent theft is too fresh and too obvious to obfuscate.  I think they know this.  So I think they go back to an us versus them, freedom versus tyranny, versus christianity versus islam versus judiasm versus whomever type approach.  Resurrect the message of the old Grim Brother fairy tales and change the names.  Good propoganda.  Easier to sell in the current circumstance.  Even so I still find the depraved indifference to human life and the idea of progress absolutely repellent.  I am very saddened.  I earnestly hope I am wrong but I know of no historical precident that would indicate that this should be the case.  That somehow things will be "different" this time.