Germany May Not Offer Best Lessons for Weaker Euro-Zone States - WSJ.com - 0 views
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In fact, some economists view the German reform narrative as a myth
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Wage restraint was instead a function of weak demand after the collapse of the reunification-fueled construction boom in the mid-1990s.
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Even if one accepts the story, economists also point out that Germany undertook its labor-market reforms when the winds of the world economy were extremely favorable. The global economy was growing, and China and other emerging economies were sucking in machine tools and other capital goods in which German manufacturers excelled.
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While German interest rates remained little changed, rates in Greece, Spain, Portugal, Ireland and Italy tumbled, fueling consumption and swelling their imports of German cars and other products.
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"The ECB was created with the mission to avoid the inflation of the 1970s and 1980s, when there was global inflation. Now we have global deflationary pressure, we need a different point of view," he says.
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They say it's arithmetically impossible for every economy in the world to build growth on the German model of export success; and if every country in the euro zone is to do it, they need to find others willing to run big deficits in the rest of the world.