German fiscal policy and the German economic recovery

Germany’s cabinet is poised this week to approve a 2011 budget as part of a four-year programme of public spending cuts meant to serve as an example to other European governments without jeopardising the country’s increasingly robust economic recovery.

The economy is continuing to grow, unemployment has been falling for twelve months, and the long-term fiscal picture is improving.  Plenty of vacations are being postponed.  You don't have to think that real shocks caused the downturn to believe that real factors provide the way out.  The full story is here.

Beggar thy neighbor?  Don't blame the productive.  Besides, a lot of what the Germans are producing and selling is inputs for other people's production:

Ulrich Reifenhäuser, managing director and owner of plastics machinery maker Reifenhäuser, said his company was struggling to cope with an order increase of more than 100 per cent in some months this year.

You may recall that Alex — a prophet of the MarginalRevolution — has long predicted Germany as an economically undervalued country.  Now that events have caught up with him, he needs a new pick…


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