LyrArc Article Gist
Krugman sees Germany's Chancellor Angela Merkel and her Finance Minister Peer Steinbruck stalling an overall stimulus plan for the whole of the EU. Merkel told a political party meeting that Germany "wasn't going to participate in this senseless race for billions." And Steinbruck said Britian was engaging in "crass Keynesianism". True Germany has not been on the debt financed consumption binge that the UK has been in and does not have a housing bubble bursting like the UK, but says Krugman Germany is also facing a crisis like the rest of Europe. Ifo, German Research Insttitute points to the worsening crisis in Germany as the worst since the 1940's. Part of the reason is that Germany is abig exporter and its medium sized companies are big exporters and a large part of the economy. With the slowdown in China and the rest of Asia these exports have been hit hard. See the links to this. What happens without acoordinated response in the EU? Krugman warns that it would lead to leakages in which the advantages of the stimulus by the rest of the EU would not be as effective as with a coordinated response including Germany the biggest EU nation. He expects Merkel to wake up to the need for this once she sees the new numbers.