Germany’s super competitiveness

" It is the debt, stupid! "
-------- Original Message --------

Subject:	Re: Germany's super competitiveness
Date:	Sun, 20 Jun 2010 20:03:21 -0700
From:	Jas Jain

Jas: "China and Japan would do relatively well during the depression as the largest creditor nations in the world."

 

Peter Eliades: "US was largest creditor nation in the 1930s. Did it do "relatively" well during that depression??

 

Thanks, Peter. I apologize for condensed statements. Please allow me to expand and clarify myself. My forecast, based on the debt situation in major consumer countries, is that all economies, consumers as well as producers, are going to be affected by the global depression that I expect to be deeper than the Great Depression. What I see is that China and Japan would weather it better and would come out of it in lot stronger position vis-à-vis indebted countries. To answer your question directly, the Great Depression began in the US and was caused by the economic behavior in the US during all of 1920s, i.e., for a long period preceding the depression. Americans, even those unemployed, faired better than people in many of the countries affected by the US-led depression. The Dust Bowl, a separate event than the economic/financial causes of the Great Depression in the US during 1930s, did cause lot of displacement and hardship on people in the areas affected. It started in 1930, but the worst of it, compounded by severe draught, began after the general industrial economy had already put in the bottom in 1933 and lasted for 6-10 years in the various affected areas.

 

In terms of other countries, the German economy, having recovered from the hyperinflation, did very poorly in the early years of 1930s and we know the terrible outcome. Canada, very dependent on the US demand, did very poorly. Now, think for a moment what would be America's position during the WW II, had the US not been the largest creditor nation. Conversely, what would have been the outcome had Germany been the largest creditor nation?! What would have been the outcome of the WW I had the UK not been the largest creditor nation in 1914 and Germany were? The point I wish to emphasize is that the Great Depression was made in the USA and so would be the Greater Depression, or the next global depression. It would be a continuation of the Crisis that began in the US in 2007 and was caused primarily by economic behavior in the US during 1995-2007. There is something about the American econo-political system, especially, since 1913 that leads to prolonged and severe depressions. The difference between how America faired after the Great Depression and how it would fair after the Greater Depression is indeed to be found in its transition from the largest creditor nation to the largest debtor nation. It is the debt, stupid! I hope that this clarification is helpful.

Best regards,
Jas

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