Thursday, August 26, 2010

A German Speaking Too Soon

Hans-Werner Sinn has always been a fairly outspoken German economist.  Not too long ago he was telling Paul Krugman that he was wrong to be telling Germans to be spending more in no uncertain terms.  Now he's giving us a rather bold statement about where the world is currently, on Project Syndicate.

He starts by asserting that the Financial Crisis is over.  I'm not totally sure about that.

He ends by talking about Germany, and how it's now booming.  We should point out that Germany grew by an impressive 2.2% last quarter, but as has been said elsewhere, this is just one data point.  Sinn, however, is convinced that Germany is now booming.  We'll have to wait and see.

He ends with a somewhat perplexing statement:
The explanation for this divided world is that countries like Greece, Spain, and the US, which experienced a long boom financed by huge capital imports, now face growing difficulties in finding foreign finance.
Now Greece and Spain I can understand having growing difficulties in finding foreign finance, but the US?!  Perhaps Sinn is taking his opposition to anything Krugman writes to new levels, but Krugman has been fairly clear, using interest rates on long-term bonds and the like (so data, not just opinions), that actually, international investors still see the US and the US dollar as a safe haven for their assets.

For your interest, Krugman himself debunks the theory that Germany is some economic miracle here.

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