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Name The Continent: It Accounts For 7% Of The World's Population, 25% Of GDP And 50% Of Welfare Spending
Angela Merkel has a favourite mantra to offer troubled euro-zone countries: they should copy Germany. As The Economist notes, she put it last autumn: "What we have done, everyone else can do." Fifteen years ago, so she says, her country was widely regarded as the sick man of Europe; then it opted for fiscal austerity, cut labour costs and embraced structural reforms, turning it into an economic powerhouse. However, there is another mantra Mrs Merkel likes to repeat to her colleagues: Europe accounts for 7% of the world’s population, 25% of GDP and 50% of social-welfare spending. The Economist, and George Soros believe, Germany’s current course will exacerbate that problem as Europe's biggest economy is backsliding on structural reforms (as she preaches pre-growth reforms but implements anti-growth ones).
The gap between Germany and southern countries in the euro zone is indeed wide. Its economy is growing faster than most of theirs; youth unemployment in Germany is at a 20-year low, whereas it remains at record highs in Spain and Greece; and the German budget is in surplus, even as France, Italy and Spain struggle to hit deficit targets fixed in Brussels.
When it comes to fiscal prudence, Mrs Merkel is a paragon. Indeed, this newspaper wishes she were a little less austere, and spent more to boost Europe’s demand. But on structural reform, her record is weak. The credit for Germany’s rebound should really go to the “Agenda 2010” reforms started by her predecessor, Gerhard Schröder, in 2003. Since then Mrs Merkel has had the odd flourish—she bravely raised the normal retirement age to 67 in her first term—but overall Germany comes a lowly 28th out of 34 countries ranked by the OECD in terms of reforms since the financial crisis hit.
The Germans have an obvious riposte to this: southern Europeans had a lot of ground to make up. Less easy to explain is the fact that Mrs Merkel’s “grand coalition” government is now actually heading backwards, increasing the burden on German business.
Three examples illustrate the trend. On pensions, instead of continuing to raise the retirement age, the government is actually cutting it for certain workers to 63 or even, in extreme cases, to 61. Second, it is introducing a national minimum wage at a relatively high level, which is likely to lead to job losses, especially in the east. And finally, Mrs Merkel’s Energiewende (energy change) is not only eating up huge sums in subsidies for renewables, but also saddling German companies with electricity prices nearly three times as high as America’s.
None of these things will cripple the German juggernaut in the short term. You can even make the argument that by pushing up German costs and increasing wages, Mrs Merkel is indirectly helping her euro-zone partners. But there are many less harmful ways for her to do that. If she had wanted to push ahead, plenty of areas—energy, retailing and professional services, where Germany has some of the OECD’s most protectionist regulations—are ripe for reform.
Europe’s biggest economy is backsliding, and that sets a terrible example...
And George Soros is not so positive on what is facing Europe today:
"What is facing Europe, unless there is a more radical change is a long period of stagnation. Nations can survive in that way. Japan is just trying to break-out of 25 years of stagnation, where Europe is just entering. The European Union is not a nation. It’s an incomplete association of nations and it may not survive 25 years of stagnation.
"The financial crisis as such is over. But now we are facing a political crisis, because the Euro crisis has transformed what was meant to be a voluntary association of equal sovereign states that sacrificed part of their sovereignty for the common good into something radically different. It is now a relationship between creditors and debtors, where the debtors have difficulty in paying and servicing their debt and that puts the creditors in charge. And that divides the Eurozone into two classes – the creditors and debtors. The creditors are in charge and unfortunately the policy that Germany in particular is imposing on Europe is counter-productive and is making the condition of the debtor countries worse and worse. So, right now Europe is already growing a little bit, the Eurozone, but that’s only because Germany is forging ahead and more than let’s say Italy and Spain are falling behind. "
Seems entirely sustainable...no wonder yields are at record lows and risk premia almost the same
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Antarctica.
Nations can survive in that way. Japan is just trying to break-out of 25 years of stagnation, where Europe is just entering.
Japan is always brought up as the ultimate boogeyman. Oh my gosh it's rough in Japan! One of the highest standards of living in the world, universal healthcare and also the longest lifespan. What a hellhole!
Compare Japan to America - all that wonderful growth in USSA - and which country has been better to the average citizen? That growth doesn't amount to whole hell of a lot if majority of citizens are worryabout being able to pay for emergency surgery without going broke, or retire without resorting to a diet of catfood.
when i hear pro-growth i suck hard.
when i hear anti-growth i puke.
suck or puke, bitches!
any of the girls down here in the z'hedge basement suking it?
did jamie diamond's left nut right this piece?
jeeez. you gotta be kiddin.
And George Soros is not so positive on what is facing Europe today:
Is he not the problem? Who the hell is he to criticise!
"I'll take 'Broken Continents' for $800 Alex"
@James_C(assh)ole
Compare Japan to America - all that wonderful growth in USSA - and which country has been better to the average citizen? That growth doesn't amount to whole hell of a lot if majority of citizens are worryabout being able to pay for emergency surgery without going broke, or retire without resorting to a diet of catfood.
Presumably you think a period of 25 years of stagnation will also lead Europeans and Americans to enjoy 'one of the highest standards of living in the world, universal healthcare and also the longest lifespan'?
What a douchebag you are, over, and over, and over again.
Chester,PA
Germany's robust social programs are indicative of a thriving economy with a well defined moral progress that manages human resources with dignity. Is this article skewed through the prism of wackadoo isolationist or is it missing the /sarc tag?
Yeah, I totally agree. Don't mention the poor. The solution of course has to be very Americanski. Kick 50 million people out of the system and pretend they are not there and blame them for crimes of the rich and shout USA, USA! And quote some sociopath who helped the Nazis ripping off his own people. http://www.fireandreamitchell.com/2010/09/07/george-soros-says-he-has-no...
Man living with homeless people under bridge exposes growing problem http://www.wdsu.com/news/local-news/new-orleans/man-living-with-homeless-people-under-bridge-exposes-growing-problem/25697130 49 Million Americans Are Dealing With Food Insecurity http://theeconomiccollapseblog.com/archives/epidemic-of-hunger-new-report-says-49-million-americans-are-dealing-with-food-insecurityWelfare in the US is the art of taking money from productive people and funneling it through welfare recipients and into the pockets of big business, thereby making the rich richer.
The War on Poverty has not worked and can never work because it's based on a flawed premise: reducing something by subsidizing it. It does work for the rich, however.
Well, money only ever trickles up under capitalism.
And, we could stop giving aid to the poor. Then, many of them would die. So, that would reduce their numbers. Presto! Less poverty.....
No, dipshit, without capitalism, the excess value that technology enables us to create just gets squandered instead of being invested in projects that generate wealth... and employment for the poor you care so very much about.
But feel free to escape evil capitalism and adopt a joyous hunter-gatherer lifestyle. Oh, you can't? Because you live on a landmasss that never reversed feudalism? That's not capitalism's fault, moron.
"Europe accounts for 7% of the world’s population, 25% of GDP and 50% of social-welfare spending."
...and that's why Russia has no plans to conquer Europe.
Why conquer something that will fail on it's own anyways.
Germany has a strong middle class, and its CEOs do not make hundreds of times what its workers earn. Funny how that works. And funny how authors like this can simultaneously observe that what Germany is doing works, but then say they need more of what isn't working elsewhere to "fix" it.
Exactly.....welfare fucking spending in the nSSA/uSSA goes to the fucking banks in socialized losses as well as to Oligarch Corps who live tax free. Ass backwards. And american media loooooove to make out welfare as some sort of social crime, yet corpro america is so far onto the welfare tit it may as well be skin graffed to it.
Where do they get the 50% number ? Its the US that has the most welfare cases.
total bullshit number
They weren't counting corporate welfare.
In Germany vw workers get ~$67 / hr, in America ~$20. When's Germany going to learn that unions are the spawn of satan??
No idea where you get that kind of information. A highly qualified engineer might make that kind of money, but no worker in Germany comes even close to 50 EUR an hour. At VW, which is one of the high paying companies, a qualified mechanic with several years experience can get to around 4k EUR gross a month incl. night shift bonus, which equals about 2.4k net, i.e. approx. 25 EUR an hour before taxes.
Don't try to argue with James_Cole with facts - he doesn't understand that they're any different from the ideas he finds deep in his ass.
Martin Winterkorn at VW makes 15,3 Million Euro. A worker at VW makes around 50k a year, if he's lucky. Therefore the CEO of VW makes approx. 300 times as much as a worker at VW. Just one example of many.
The middle class in Germany is fading as fast as everywhere else. All official numbers like unemployment are falsified with all sorts of tricks. One third of the recipients of Hartz IV, which is the social security, are working full-time earning less than the social security rate, so that they have to claim benefits in addition to survive. Our infrastructure is falling to pieces. We have food banks in even the smallest towns. 19.4 % of the under 18s and 48 % of the old-age-pensioners live in poverty. Over 350000 families had their electricity cut off last year, because they can no longer afford to pay their bills.
Detroit? Oh...that's seven, not point seven. I guess Detroit isn't a continent either.
Detroit feels like a different continent if you live there.
I was born there. My folks escaped the following summer with me.
Get your ass back there and pay some taxez, bitch! The mess is all your fault!
Yessir Mr Obama.
Better yet how about a Michigan exit tax/weath tax! Plus your first born!
Better yet how about a Michigan exit tax/weath tax! Plus your first born!
Same EXACT story here. I wonder how many parents made the decision to leave once they had children to look out for?
.7 Mile
OK. Europe accounts for 7% of the world's populaion, 25% of GDP, 50% of social welfare spending, and 20% of defense spending.
The US accounts for 5% of the world's population, 25% of GDP, 20% of social welfare spending, and over 40% of defense spending.
I guess the lesson here is you can afford to help your own people, if you aren't acting as the world's policeman.
up voted for most of what you said, except I couldn't disagree more with "acting as the world's policeman". Maybe you can clarify.
Do you mean the traditional idea of 'policeman' who is a servant of the community to help and protect the general populace, or do you mean the 'I just shot your dog' policeman, because I can't name a single time where the US has acted as the world police.
More like the "I just shot your dog and your whole family. Now, give me the damned oil." sort of policeman.
Correction: if you aren't acting as the world's premier mafia family ... running drugs, protection rackets and turf wars all over the planet.
Water is the new poppy.
One TRILLIONAIRE name STEWART RESNICK own's almost ALL the water in CALIFORNIA and most of the BOTTLE WATER company's on earth.
He's the biggest poltiical contributor in CALIF, and he gives 50% to each party.
He's a dual passport holder.
If you want to talk water, then you must talk about Stewart Resnick.
But my favorite Asset in his Portfolio is SUTERRA, which is a company now under ZIO control that manufactures airborne pill's that can be delivered by drone at +40,000 feet, and depending on thickness of particulates take 1 week to six months to release the bio-warfare component. Technology is called bio-cyanate encapulation technology, ... CRAZY GLUE coating on Botulism. Most research is on Sterilization selective by race, sterilize males by race, the old game in conquest in the history of the world.
airborne "Sterilization selective by race"
Quick cure for Detroit maybe?
Yes, I bow to your more accurate correction.
She's proud of the welfare spending.
She was never qualified; she went along for the ride, and had no clue it would get bumpy.
She's had years to serve her constituents, and watched it all fall into precariousness.
False leaders are the name of the game, 'til they can't be.
Merkel has absolutely no qualifications and absolutely no leadership skills, she a master opportunist though.
well as young "nude fraulein" of East german youth movement -- her photo apparently is diffused on the Net-- who had a physics degree, she must have impressed party hacks with her then young looks.
And when the Wall fell she definitely impressed old Helmut Kohl who made her the iconic "east german" maidchen to cement re-unification.
Very opportunistic is right. Today's Germany was architectured by Gerard Schroeder. It cost him the next election.
Give me 75 trillion in fiat derivatives and I'll make my country the number one in the world.
Upon reading this article it quickly moves to the USA welfare HO, but let's talk about WHO feeds at the PIG TROUGH.
COPS, Government Lawyers/Judges, Hangmen, prison guard's, .. MILITARY PENSIONS make up the vast majority of COSTS to the entire FEDERAL budget the money spent on WELFARE HO's is quite small, yet the right-wing likes to HARP.
Sometimes here on ZH you post STOCKMAN, I remember well when he's was RAYGUN's econ advisor for just a few months, RAYGUN wanted to cut the budget stockman said "Well its true that most money goes to DEFENSE, but most of that defense money goes to GOLD-PLATED MIL PENSIONS and SALARY'S", "If somebody wante to save money, you go after the real costs", ... well after STOCKMAN said that he got fired.
So keep it up UNICORN's talk about WELFARE HO's in the USA or EUROPE, but the because parasites on the FEDERAL PIG TROUGH enjoy free FIAT to INFINITY is the gold-plated PENSION system for the PRAETORIANS.
Lastly FUCK all the LAWYERS and JUDGES that created this system, for they are the BIGGEST welfare HO's of all.
I like the post. I've always considered the lawyers and judges to be privateers, with papers from the oligarchs to "legally" plunder the masses. The oligarchs need the praetorians, as insulation, a buffer, to distract from those behind the curtains. Secret prisons, secret courts, torture, who executes these crimes, the praetorians.
whatever George Soros "asserts" .............my immediate reaction (and considered advice) is to do the opposite. Hence this 'analysis' reads like a NYTimes editorial (or worse, like Paul Krugman wrote it)
The Koch Brothers are evil etcetera......but Soros, Buffett, Munger and Lewis (Progressive Insurance in Cleveland) can run amok and basically act like the LAClippers owner....and no one dares call them out.
When will Jon Corzine ever get indicted or even investigated ........is all I want to know
Corzine will go to jail, when Goldman Sach's is shutdown. When will that be?
Leave it to a race obsessed American to drag in the LAClipper owner into the argument
Bundy/Palin in 2016. That ought to tie it all up with a bow.
sorry ...I was not clear> My point about LAClippers owner was not about 'race' but rather the blatant hypocrisy, largely by the 'news' & 'sports' media.
The guy was a prominent Dem, major party donor, classic California 'big cheese', NAACP Lifetime Achievement Award winner ...all the typcial boxes checked to 'influence' (manipulate) the"system". And it was apparent this guy always was what he was.......yet never any 'attention' ....just accolades.
So ask yourself cynically, why is the LAClippers owner NOW getting a spotlight he deserved a long, long time ago? Ask that simple question and all of sudden 'race' becomes another 'excuse' for something else........ Who wanted to or would most likely benefit from a 'takedown' of this slippery salamander? Just askin'
Welfare or social welafare? The headline says one, the article another.
What is included in social welfare? Medical, pensions, education / tuition / aprentice programs / training ? Comparing welafare amongst various countries is difficult without defining it very specifically.
Personally, I do not consider the things I mention above as being in the generally negative conotation of welfare. They and some other things are social welfare. The things that need to be taken care equitably for your society to fare well.
Long term investments in your economy. But longterm is no longer much of a concern, for business, business people, parents of children in a society.
Another article this day had graphs and statistics of what people are worried about in their lives, financially.
Did they ask if people were worried that their children will be screwed? Seems the only worry represented was having to chip in more for tuition for their kids. Not what kind of gutted 3rd world country the kids will be living in.
Politicians are gutless, paid for schills. Who go along with the lie that you don't have to pay the mortgage or upkeep on a country.
The free market will magically, selflessly shell out for it.
The free market no longer thinks past bonus payday.
Society will not fare well.
It's easy to spend money on social programs when you don't have to defend yourself. Here's to hoping that Putin rolls the tanks into Berlin.
After 2 world wars, we'd prefer Germany didn't "defend itself."
Germany tried to play by the rules (for the most part) and run balanced spending as required by Maastricht treaty -- which all of Europe supposedly agreed to.
If Europe can't keep its promises, that is not Germany's fault or responsibility. No amount of leadership from Germany can make the deadbeat countries honor their promises.
The economist made a few interesting counterarguments that I hadn't considered -- but the post completely fell apart when George Soros was quoted. A self serving oligarch that thinks everyone else should be held to standards he doesn't keep himself -- a lot like the other US oligarch Warren Buffet: tax the middle class, Buffet needs another tax break, another special SEC exemption, another bailout.
If Soros thinks a certain policy would help -- you can bet your life it won't help YOU. It will help HIM.
Just print more money, what is the problem?
'Americans' would like to see the success of Germany as a success of their mantra hard work etc
Yet the reality is squalidly other for 'americans'
It is an 'american' world and as such, when it comes to consumption, the path of least of resistance is taken.
It means that areas of the world have been consumed at an inequal rate.
When it comes to 'americans' in Europe, Africa was the path of least resistance for massive consumption (the US had the Indian lands)
This was distributed unevenly among 'american' countries, England and France leading the path while Germany, whose path in Africa, was devastating.
Then communism took over in part of Asia. Big poppa commie had many, many flaws. One flaw was that it always upped the resistance to consumption of the area. Big poppa commie was never a match for 'americans' in terms of consumption and it also withdrew a large region of the world to the 'american' consumption party.
What is happening today?
Africa is closing to depletion of resources. As a result, european countries that drew a lot from it, are tanking.
In the meantime, Germany is connected to the East, which happens to be the place that was preserved by big poppa commie.
That is all. The german secret. Their opening to the East, a part of the world that was preserved from 'american' consumption. Which is now challenged by the ganglord, the US.
na, the real secret is that germany hides that it has the best educated workforce.
worklife in germany starts for the most with a "lehre" thats like a highly specific bachelor, but the its not declared as bachelor because germany has its own system thats different from world standards.
germany has bachelor/master at university and geselle/meister(yeah that means bachelor and master in german) at the workplace.
if u compare both together with the numbers in the us, germany has a bachelorquote highly over 50% and the most arnt bachlor in liberal arts or things like that but bachelors made at bmw or siemens(or any other big or small employer), highly specific and made while working in the studienfield.
makeing a swift in production is much easyer and work/h is much higher than with a lesser educated workforce.
'Americans' and their infinite growth meme. It always come up one way or another. Funny, even when warned that from the beginning, with the hard work thing, they keep going.
Outsourcing goes hard in Germany as they tap in the Eastern pool. They either move factories to the East or import workers from the East.
Hence the total nonsense.
Education is nothing without the resources to convert. 'Americans' have tried to sell the idea that they can overcome the environment, with the present result.
The connection to the East allows Germany to maintain a number of educated people.
Elsewhere in Europe, educated people who do not benefit from the opening to the east, fail to find resources to convert so educated people are trending down.
The most educated shipwright cant build a ship when swimming in the middle of the ocean.
As the old saying goes, ship carpenters drown like other sailors.
outsourcing to other countrys or getting workers from the east isnt that big in germany. the trick is to oursource inlan with inland workforce. many companys rent bigparts of the workforce, thats much cheaper even if u have to pay a bit more per hour. u dont have to pay all the other cost. the other cost are realy high in germany.
Official: Merkel wants a "Treuhand" for Europe!
http://failedevolution.blogspot.gr/2014/04/official-merkel-wants-treuhan...
Germany's "solutions" to all problems has always been to shove them under the carpet, .. thankfully Germany has a big carpet.
If things get rough across the globe expect eyes return to Europe, where they continue to talk. I have not written much about the Euro-zone as of late because nothing is really happening. Only Germany is doing well as money flows into it from the weak countries aroud it seekung saftey.
The Euro-zone is engaged in a talkathon, with fear of an immediate collapse off the table the members of the Euro-zone much like their political counterparts in America just talk about solutions without any action. Below is an article updating what is not happening in Europe.
http://brucewilds.blogspot.com/2014/04/euro-zone-update.html
Has Frau Merkel been involved in a sex scandal?!:
http://littlefun.org/uploads/524dc7abe691b226d3c4428d_736.jpg
is that Merkel on the right?
Reforms under Chancellor Schroder were helped by favourable market conditions in the European block and the US.
Any invitation to mimic the current German economic conditions at this period of time is totally unfair.
I would have loved to see how Germany coped with this crisis unequipped with the required reforms.
Germany passed reforms at the right time without any sign of considerable recession. The possible imbalances and spillover effects did not affect the block. This implied indirect support to Germany whilst Schroder was reforming.
Merkel should understand this concept and stop being too Euro-Pangermanic
Soros: "The financial crisis as such is over. But now we are facing a political crisis"
Financial crises over?? You could have fooled me Mr Soros. The financial crises has simply expanded and engulfed politics.
The financial crises will be over when the EU Project & Euro are dead and buried and the likes of Barroso are told to go find a proper job.
At that point, each member state goes back to managing its own economic & monetary policy. Recovery begins the next day.
It is easy to guage where the 'sympathies' reside for those who
denounce and disparage societal expenditures on pensions, health care, and education.
Should have built a moat around America after the revolution to keep European idea and ideals out...
the Economist is notorious for Germany-bashing.
Soros is Soros.
there are much bigger stories all happenning at the same time now through end of the year leading towards global, systemic changes.