Roubini: What Europe Needs to Prevent a Collapse

Posted by Ian Cooper - Tuesday, January 11th, 2011

From Spiegel Online:

"SPIEGEL: Last year the German economy grew by 4 percent, due primarily to exports. The US and France harshly criticize Germany for this and say that Germany should reduce its trade surplus. Should Germany be punished because its companies are so competitive?

Roubini: The German growth model will not work in the medium term, not for Germany, nor for Europe. Germany's economy relies too heavily on exports. At the beginning of the financial crisis the German slump was higher than in the US, where the crisis originated. Even if domestic demand is now gathering pace, Germany must do more, such as liberalize the service sector and stimulate consumption. And this would kill two birds with one stone: it would reduce Germany's dependence on exports and cut its trade surplus, which causes other parts of Europe to slide further into the red.

SPIEGEL: In essence, you are accusing Germany of acting selfishly, to the detriment of its European partners. This criticism was voiced loudly in the past few weeks when Germany insisted on private-sector creditors participating in the future crisis mechanism for the euro area. Was this justified?"

Read more here.

And just in case you don't feel like reading the whole Spiegel Online interview, here's a shorter version from Business Insider.


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