What Germany Got for Its $2 Trillion
 

"As the global economic crisis questions many long-hold beliefs about American and European economic policy, the U.S. press has discovered that some answers might be found across the Atlantic. Germany offers a fine case study for the advantages as well as drawbacks of increased government interference to bring the economy back on track".

----> West-Germany bought out bankrupt Socialistic East Germany back in 1990 and a lot of German tax-payer's money gets pumped into it ever since then (Would probably have been better to create a second "Austria" :-) )

http://www.time.com/time/magazine/ar...id=perma_share

summarized by http://www.tapmag.net/wordpress/2009...onomic-policy/:

"There are three lessons for the U.S. to be drawn from Germany’s attempt to spend its way out of a major economic slump:

“[T]hrowing money at an economic meltdown isn’t a cure-all.” Two decades after the fall of the wall, former East Germany still lacks behind economically. 20% of the German population live here, but the region accounts for over 30% of Germany’s unemployed.

“[B]ig spending packages don’t work if the economic policies underlying them are miscued.” The decision by Chancellor Helmut Kohl to exchange West and East German currency 1:1 sabotaged the competitiveness of East German industries.

“[S]pending so much money in such a short time is bound to be wasteful.” This one is a no-brainer. Try getting a year’s worth of shopping done in one day. Then see how much of the stuff you bought you will actually need.

What can the U.S. draw from this? Mainly that expectations for the American stimulus package should not be too high. There will be failure. Also, failing fiscal policy can partly be blamed on monetary policy not being in step. Ideally, the two should be carried out in unison."

A popular joke during re-unification:
http://img154.imageshack.us/img154/3971/zonengabyx.jpg
East-Zone Gaby (17) in Luck (Federal Republic Germany): My first banana!

Any takers?

Titanic, oh yes. :lol: There were some things from them that could rival MAD Magazine. Some.

A bit more differentiated views is needed. The biggest mistakes were that after 1989 totally unrealistic promises and timetables were given by Western parties in order to make the new voters their own, thejn that the real size of the economic chlalenge was massively underestimated and not truly realised, and that in the first years after reunification immense ammounts of money were spent throughout Eastgermany undiscriminatory, like you use to flush water on the grass with a watering can. That proved to be terribly uneffective, and the years wasted that way helped to detoriate the situation in many regions that were not helped while at the same time having lost the basis and coverage that the Eastgerman state - how ever imperfect and economically weak it was - had given them. Those regions where growth has shown up, and improvement, are profiting from less generlaised and more specialised spendings, trying to form modern economic hotspots that affected the near surrounding area for the better too. However, these are not regular examplem but exceptions from the rule. Generally, Eastgermans is much a social, deo0mcgraophic and economic ruin, and little hope for imporvements within the next 2 generation'S time. Whole regions and towns are dying, and get abandoned. The young ones move away, if they can, whoch means: the young women move away, and left behind are those men, young and old, that fialed to qualify for the Western market. Eastgermany therefore is the region in the whole EU'S territopry where the balance between younger men and women is so very much off-balance like nowehre else ineurope. This effects social and democgraphic aspects. no family get formed. Now founding of existences. No skilled workers and specliatss, no tax incomes. No public spendings. Consequence: a downward curve. If you cannot compete on the labour market in the West, you are doomed to be a loser - and many young men know it. Which has even more, subtle consequences in itself.

However, in the current economy crisis, germany spent relatively little and acted cautiously - and received heavy Flak for that from other nations. And no other capital criticises Germany as loud for that as Washington does. If berlin would have done like it was demanded in February and March and April, we would not care for debts at all and would be spending as healdessly and again with a watering can, like Obama has committed himself to.

Were germany made huge mistakes is conerning banks. We still try to give an imnpression of having a clean, innocent banking system, but more and more international insiders point out that in europe, German bankers were the most greedy and took the biggest risks of all when it came to participating in the American casino gambles. While by paperform, the German stock market monitoring was and is much tighter thatn the american ever was, the German authorities nevertheless also have miserbaly failed, like their american counterparts. That makes bankers pointing fingers at each other behaving somewhat absurd.

That'S why I find the article a bit alienating, like I also find it astounding that in recent days Obama warned of the stellar debts of the US, and the high price they could cost for the next generation. After his obessive spending, one cannot avoid the feeling that maybe it is not the right person making such warnings. Maybe the more interesting question thus is: what will America get for it's "2 trillion"?

Obama certainly has chhanged in some fields, realising the wide gap betrween idealistic wishes, and harsh reality. Sojme of that I was aexpecting, some othe tthings surprise me, and not necessarily for the better. Let's see where he will be and what he will have reached in autumn and winter this year. The varnish certainly shows the first scratches.

Throwing money at a problem doesn't work?:hmmm:
Better not tell that to the educational establishment.:o

Don't mention it here in Australia, it might get you transported!:arrgh!:

@Dan

Well I think the comparison between East Germany and the US is a bit out of scale here.
First of the entire economy of east Germany was wasted after the reunification. Those companies that were still running got shut down for either being not competitive in the (more or less) free market or they got shut down because they didn't fit to west Germany's safety and pollution regulations.
So we are talking here about one country (west Germany) that has to build up another country pretty much from zero (well the East Germans are doing their share too so it is not just West Germany all alone). That is like the US would take over Mexico, shut down all the factories there and rebuild the country from scratch. Now tell me would Mexico be at the same level as the US after just 20 years? I doubt it.
Such a process needs plenty of time and so far I wouldn't call the project Reunification a failure.
But you are right just throwing money at something without thinking about how to spend it properly doesn't solve any problems.