This was the theme of a long article I wrote which was published by The New magazine back in April: The Modern German Economic Model is a Myth. In it I made the point that Germany, all by itself, couldn’t keep the EU economy going for very much longer. Here was my conclusion:

All of this, then, puts Rudolph’s excessive exuberance about how well the German “model” is working and how it will work to pull other slowing economies back to health into proper perspective. The German economy most definitely is not providing “unparalleled prosperity and security for German and citizens”, it has not successfully “managed the political wonder of re-unification and strong economic development” while incorporating “sound public finances.”

On the contrary, any country wishing to adopt such a model will likely soon begin to enjoy the same results: an economic slowdown, a demographic challenge of heroic proportions, a state that will shortly become unsupportable, a likely decline in its fertility rate and the resulting implosion of its population. In short, if Rudolph’s model is adopted, it won’t take but a generation or two before Mark Steyn’s prediction comes true, that Germany and most of its neighbors will “devolve into quaint locales for vacationers, romantic poets and history buffs.”

Having said that I kept waiting for evidence to show up in the economic reports from Germany. The article was written in March and published in April. It’s now July. Here’s this from yesterday’s International Business Times:

German exports declined in May at their fastest pace since 2009 because of the slowdown in key European and markets, adding to worries that the country’s recovery was losing momentum.

The Federal Statistical Office said that exports declined by 2.4% in calendar-adjusted terms from the previous month to €90.4bn ($116bn). Economists expected a 0.1% increase in exports…

On a year-on-year basis, exports declined by 4.8%, primarily due to a 9.6% decline in demand from other countries in the euro area. Imports declined by 2.6% from the year-ago month.

Exports to the Eurozone, where Germany sends 40% of its shipments, declined by 9.6% from the year-ago month, and exports to the European Union (EU) fell by 7.1%.

Germany’s economy shrank by 0.7% in the last quarter of 2012, and I used that data in my article. The first quarter results showed the economy “rebounding” with a gain of 0.1%. That was a fluke:

A recent purchasing managers’ survey indicated that the export situation in Germany would not improve in June as bookings in the manufacturing sector continued to decline for a fourth straight month.

So there it is: the German “model” of a huge state, high taxes and a strong economy making it all work, isn’t working. I expect more bad news as time rolls on.

 

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