As we discussed two weeks ago [9], it would appear Germany's lack of willingness to throw itself on the pyre of self-sacrifice and not adopt a global Fairness Doctrine - as engendered by the US Treasury's (and IMF's) bashing of the core European nation's for maintaining its export strength and daring to keep Europe in tact and thus a periphery-damaging strong Euro - is gathering steam. None other than Europe itself is now 'probing' Germany's trade surplus, using enhanced powers over how euro nations manage their economies with the IMF urging German Chancellor Angela Merkel to curtail the trade surplus to an “appropriate rate” to help euro partners cut deficits.
As we previously noted, [9] Jack Lew (and everyone else) appears surprised at the following chart all of a sudden...
[10]
It is also a complete shock to the US Treasury that the current layout of the Eurozone - the same Eurozone that the Fed has stepped in on numerous occasions to bailout, common currency and all - was simply to facilitate German exports to fellow European countries.
Which is probably why, after years of saying nothing, in its semi-annual currency report released yesterday and "employing unusually sharp language, the U.S. openly criticized Germany's economic policies and blamed the euro-zone powerhouse for dragging down its neighbors and the rest of the global economy."
And now - it's the Europeans jumping on the 'Bash Germany' bandwagon...
Via Bloomberg,
European Union regulators began a probe of Germany’s trade surplus, using enhanced powers over how euro nations manage their economies.
The decision to step up monitoring of imbalances in the German economy follows criticism that the country’s current-account surplus -- which at 7 percent of gross domestic product is the second highest in the euro area -- is limiting exports from other euro countries by adding to the strength of the single currency.
The opening of an in-depth review into the imbalances in Germany’s economy comes after the U.S. Treasury blamed German surpluses for draining European and global growth. The International Monetary Fund also reprimanded Germany for its surpluses, urging German Chancellor Angela Merkel to curtail the trade surplus to an “appropriate rate” to help euro partners cut deficits.
“Crucially, a rise in domestic demand in Germany should help to reduce upward pressure on the euro exchange rate, easing access to global markets for exporters in the periphery,” EU Economic and Monetary Affairs Commissioner Olli Rehn said in a blog post on Nov. 11. “Removing the bottlenecks to domestic demand would contribute to a reduction in Germany’s external trade surplus.”