What do Germany and Japan have in Common, Besides the Axis?

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**Easy E**

Problems on the horizon?

http://www.businessinsider.com/germany-japanification-stagnation-eurozone-2014-11?utm_source=slate&utm_medium=referral&utm_term=partner

Three things have happened in the last 48 hours that tell you a lot about the state of the German economy:

1. Inflation and GDP figures were confirmed. Germany grew by 0.1% in the third quarter, with inflation of 0.8% in October.

2. German politicians have negotiated "schwarze null", the first balanced budget for the country since the 1960s.

3. Jens Weidmann, the president of Germany's Bundesbank, played down the idea of the European Central Bank buying sovereign bonds (usually described as quantitative easing).

These are all microcosms of the problems facing Germany. Growth and inflation are at very low levels, politicians (and voters) are extremely reluctant to pursue fiscal stimulus, and Germany's monetary policy representatives are some of Europe's most hawkish.

It's easy to see where this is going. A relatively ageing population, low inflation, low growth, and a political climate that doesn't really seem that unhappy with any of this is what precisely happened to Japan in its lost decade (or two).

It's easy to get wrapped up in the fact that Japan saw deflation during this period. Germany might not see that, but inflation and real growth combined, known as nominal growth, looks set to be extremely low, just like it was for Japan.

Chris Scicluna and Robert Kuenzel at Daiwa Capital Markets have some policies that might help fend off the German economy's slump.

Here are Kuenzel and Scicluna's policy prescriptions:

Fiscal stimulus. Germany's budget is now practically balanced. But it's got room within the EU's fairly strict rules to run a deficit of up to 3% of GDP. Borrowing costs for the country are practically non-existent, so it's hard to see downsides to a little loosening here.
More public investment. Thankfully, Germany has a lot of things to spend a potential stimulus on. The IMF itself has flagged up the declining quality of Germany's famous infrastructure, so the stimulus would also go towards with its own merits.
Cut taxes. Building roads, bridges and fixing ports takes a while, and the effects are spread over a long period of time. If you want to boost German spending soon, tax cuts are they way to go about it.
Structural reform. Germany's economic reforms in the early 2000s are now lauded as an example to other nations, but it has actually slipped a little. Energy policy is in a mess after Angela Merkel's 2011 nuclear moratorium, and with the population ageing, which Scicluna and Kuenzel say makes a decision to cut retirement ages in some sectors "plain perverse".
If that list sounds familiar, that's because it's not unlike Japanese Prime Minister Shinzo Abe's three arrows, with some public investment thrown in. There's no monetary arm, because German monetary policy is controlled by the ECB (although Germany policymakers could stop arguing against easing).

Sceptics could reasonably argue that both Japan and Germany have a problem that can't be solved by monetary or fiscal easing: that it's just the standard for an ageing, highly productive and advanced economy. But if the Japanese experience has taught us anything so far, it's that there's very little harm in trying.

But it took 20 years for Japan to get Shinzo Abe and Haruhiko Kuroda as Japanese PM and Bank of Japan governor. Given the attitudes of many Germans, it might take just as long to get their own radicals.

Read more: http://www.businessinsider.com/germany-japanification-stagnation-eurozone-2014-11#ixzz3J4cl2oFw

**mitch_rifle**

So ww3

**KingCracker**

I'd love to say "America stay out of ww3" but we seem to love getting our hands stuck in cookie jars.

**Bromsy**

KingCracker wrote:
I'd love to say "America stay out of ww3" but we seem to love getting our hands stuck in cookie jars.

Well, someone has to keep winning these things.

**feeder**

Bromsy wrote:
KingCracker wrote:
I'd love to say "America stay out of ww3" but we seem to love getting our hands stuck in cookie jars.

Well, someone has to keep war profiteering then third man in these things.

Fixed.

**Bromsy**

feeder wrote:
Bromsy wrote:
KingCracker wrote:
I'd love to say "America stay out of ww3" but we seem to love getting our hands stuck in cookie jars.

Well, someone has to keep war profiteering then third man in these things.

Fixed.

Isn't that what I said? But faster?

**Grey Templar**

The one good thing about WW3 is the possibility of mecha.

**Ashiraya**

Grey Templar wrote:
The one good thing about WW3 is the possibility of mecha.

While I agree mecha makes it tempting, I'd still argue the drawbacks are greater.

**Waaagh_Gonads**

The writer seems to think that Keynesian economics (which have repeatedly been shown to be shockingly wrong in shortening recessions) are the way forward.

Government stimulus does not promote growth, the reduction of government interference and reduction in excessive taxation to stimulate private enterprise promotes growth.

Governments can throw billions at the economy, unfortunately governments are very, vey inefficient at getting that money to where it is needed (people with jobs).

I personally would love it if my country was running a surplus. When it last did before the international financial crisis the surpluses were repaid to taxpayers through further tax cuts, stimulating growth and causing more tax revenue due to low unemployment and strong wage growth, whilst in a respectably low inflation band.

**Sigvatr**

I still laugh my ass off with people now being surprised that saying "No" to nuclear power results in higher cost.

Who would have thought?

Hahaha.

Germany still has to learn a hard lesson - if someone is constantly dragging you down, you gotta let loose and let him handle his problems on his own. If he can't...let him fail. This goes for both inner problems (millions of € wasted on unemployed and the system surrounding it) and external problems ("Hey, you lied to us? You had financial problems right off the bat? Np, we'll bail you out. Oh, you can't pay it back? Np, you don't have to!").

If Germany decides to go down that way, it will fail. Hard. And we'll have moved to the US

**Hybrid Son Of Oxayotl**

Sigvatr wrote:
Germany still has to learn a hard lesson - if someone is constantly dragging you down, you gotta let loose and let him handle his problems on his own. If he can't...let him fail.

You means banks and CEO, right? Of course you do! No more golden parachute!

**Da Boss**

Germany's problems are linked to the broader recession in the Eurozone, I reckon.

The nuclear ban is stupid, and unsustainable. No way is Germany going to be able to supply it's energy needs with renewables, and fossil fuels are unsustainable fiscally and environmentally.

Germans are very conservative fiscally though, so I doubt any stimulus package will be forthcoming. The autobahn could really do with some spending, but I doubt it will get it.

The "bailouts" are being paid back though, Ireland is paying over 8 billion a year servicing it's debt from the bank bailout at the moment. Which is quite fair, given the Irish government's terrible regulation of the banking industry. But German banks invested money there too, and took advantage of that poor regulation, and have been shielded from the consequences.

**Sigvatr**

The nuclear ban makes so sense to begin with. If every country around yours has nuclear plants...well...do the math.

But I still LOVE, LOVE, LOVE seeing people who now complain that energy prices are rising. Hahaha.

Automatically Appended Next Post:

Hybrid Son Of Oxayotl wrote:

You means banks and CEO, right? Of course you do! No more golden parachute!

Whether you like us or not, we're a country's life support

**Hybrid Son Of Oxayotl**

Sigvatr wrote:
Whether you like us or not, we're a country's life support

Sooo, you mean everything else should risk failing, but CEOs and banks? Those should be protected from anything bad that could happen to them?
Sure, makes perfect sense. After all, if they fail, it is of consequence to no-one else, so why should we try to give them an incentive to not fail?

**Sigvatr**

Where did I say that?

**Hybrid Son Of Oxayotl**

Explicitly, nowhere. Implicitly, when you answered to my comments that implied banks and CEO must suffer the consequence of their failure by “Whether you like us or not, we're a country's life support”

.

**TheDraconicLord**

Grey Templar wrote:
The one good thing about WW3 is the possibility of mecha.

Well, Japan already wants to make the real-scale Gundam they have move by 2019, so, yeah, *crosses fingers*

"Challenge the dream: GUNDAM moves and it moves the world"

Bringing global knowledge together to challenge the ultimate dream! The aim is to make the 18m GUNDAM move.
To achieve this ambitious goal, we will develop a global project based in Japan, building a project team and collecting ideas and plans from around the world.
Cutting-edge technology, global knowledge and a strong passion that goes beyond the borders of countries and disciplines will make GUNDAM move.
GUNDAM will bring the greatest entertainment of all time to reality.

http://gundam-challenge.com/en/

**Sigvatr**

Hybrid Son Of Oxayotl wrote:
Implicitly

Ask before assuming

**Hybrid Son Of Oxayotl**

Do you mean I could, for instance, using an interrogation point at the end of my sentences? Because that is precisely what I did.

**Sigvatr**

I'm confused.

**Ensis Ferrae**

TheDraconicLord wrote:
Grey Templar wrote:
The one good thing about WW3 is the possibility of mecha.

Well, Japan already wants to make the real-scale Gundam they have move by 2019, so, yeah, *crosses fingers*

"Challenge the dream: GUNDAM moves and it moves the world"

Bringing global knowledge together to challenge the ultimate dream! The aim is to make the 18m GUNDAM move.
To achieve this ambitious goal, we will develop a global project based in Japan, building a project team and collecting ideas and plans from around the world.
Cutting-edge technology, global knowledge and a strong passion that goes beyond the borders of countries and disciplines will make GUNDAM move.
GUNDAM will bring the greatest entertainment of all time to reality.

http://gundam-challenge.com/en/

Except that, you that if Japan invents an actual "mecha" German engineers will take that robot/design and turn it from a "normal" mecha into a Transformer.

Really, I see no downside to this.

**Hybrid Son Of Oxayotl**

Hybrid Son Of Oxayotl wrote:
Sooo, you mean everything else should risk failing, but CEOs and banks? Those should be protected from anything bad that could happen to them?

See, questions, not assumptions.

**Alpharius**

Did you just allow yourself to answer...yourself?

**Sigvatr**

Ahhh, I gotcha.

I was just making a general remark. High rollers / big companies usually get a lot of hate, yet it's they / us that really maintain a state and allow it to work, not the other way around. I'm not working at a bank though

Bailing them out for their own mistakes might sound stupid, but it wasn't an entirely bad idea. If all of them would crash, then everything went down with them.

It's not like they were Greece.

**Hybrid Son Of Oxayotl**

Sigvatr wrote:
High rollers / big companies usually get a lot of hate, yet it's they / us that really maintain a state and allow it to work, not the other way around

It is both way around. Without states, big companies cannot exist. Can you imagine being an entrepreneur in Somalia?

Sigvatr wrote:
Bailing them out for their own mistakes might sound stupid, but it wasn't an entirely bad idea.

Why do you think it sounds stupid? That seems very sensible to me. Much more sensible than focusing on, say, unemployed people, because the individual failings of one CEO of a big company is going to be WAY more detrimental to society.

**Da Boss**

The problem with the bailouts is that while things are going well, they want the profits and the bonuses and the ridiculous pay. As soon as things go badly, the taxpayer is expected to look after them.

If they have this much importance, that they can't be allowed to sustain the losses that are part of capitalism, it is a sign that our entire economy is unhealthy. I think the truth is that the economy could sustain those losses, but were successful in influencing policy to ensure that they were protected.

It's capitalism if it suits me, socialism once it doesn't, and that rankles with a lot of people.

**Easy E**

Waaagh_Gonads wrote:
The writer seems to think that Keynesian economics (which have repeatedly been shown to be shockingly wrong in shortening recessions) are the way forward.

Where is Sebster when you need him.

Here I was pretty sure the Chicago/Austrian/Hayek school and received a black eye after the Great Recession.

**whembly**

Easy E wrote:
Waaagh_Gonads wrote:
The writer seems to think that Keynesian economics (which have repeatedly been shown to be shockingly wrong in shortening recessions) are the way forward.

Where is Sebster when you need him.

Here I was pretty sure the Chicago/Austrian/Hayek school and received a black eye after the Great Recession.

Sebster has been quiet lately... we miss him.

Fellow Aussie Dakkaroos™, I know AU is kinda big... but, check on him would ya?

**Sigvatr**

Hybrid Son Of Oxayotl wrote:

Why do you think it sounds stupid? That seems very sensible to me. Much more sensible than focusing on, say, unemployed people, because the individual failings of one CEO of a big company is going to be WAY more detrimental to society.

I am...pretty...sure that this is meant to be ironic, but alas, it's the truth. If 1000 unemployed would suddenly disappear, that's 1000 less for that statistic and, in the case of Germany, 1000 x less spending amount X per month.

If a huge company suddenly disappeared, the state's suddenly facing a giant hole it'd be unable to fix.

**Grey Templar**

Ensis Ferrae wrote:
TheDraconicLord wrote:
Grey Templar wrote:
The one good thing about WW3 is the possibility of mecha.

Well, Japan already wants to make the real-scale Gundam they have move by 2019, so, yeah, *crosses fingers*

"Challenge the dream: GUNDAM moves and it moves the world"

Bringing global knowledge together to challenge the ultimate dream! The aim is to make the 18m GUNDAM move.
To achieve this ambitious goal, we will develop a global project based in Japan, building a project team and collecting ideas and plans from around the world.
Cutting-edge technology, global knowledge and a strong passion that goes beyond the borders of countries and disciplines will make GUNDAM move.
GUNDAM will bring the greatest entertainment of all time to reality.

http://gundam-challenge.com/en/

Except that, you that if Japan invents an actual "mecha" German engineers will take that robot/design and turn it from a "normal" mecha into a Transformer.

Really, I see no downside to this.

The downside might be that the chance of invasion by giant alien monsters is directly related to development of mecha.