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Schaeuble “blames” weak euro & ECB policies for German export surplus

It is not secret that Germany categorically opposes the policies of the European Central Bank. What bothers German most are the zero interest rates. However, economically strong Germany is the winner of the opportunities a weak euro offers.  Economists predicts that this year, Germany’s current account surplus would probably hit a new record of 278 billion euros.

In the name of the common currency, ECB head Mario Draghi suggested last week that Germany should use fiscal room for manoeuvre to decrease its export surplus. The answer came from Finance Minister Wolfgang Schaeuble and it was not the answer Draghi could have expected to be.

Germany has no plans to reduce its export surplus, Finance Minister Wolfgang Schaeuble said on Friday, as the European Central Bank (ECB) has not changed its monetary policy which has led to a weaker euro which in turn boosts German exports.

Schaueble dismissed a suggestion this week by ECB head Mario Draghi that Germany should use fiscal room for manoeuvre to decrease its export surplus.

“Even before the European Central Bank decided its policies of unusual monetary policy, which also led to the euro exchange rate falling significantly, I said that we will increase German export surplus,” Schaueble told reporters.

“If the surplus in the euro zone as a whole rises by a total of 3.6 percent , one should not be surprised that the German export surplus has also risen, if not by 3.6 percent but by 2 percent,” he said before meeting other European finance ministers.

When asked whether he had any plans to decrease Germany’s export surplus, Schaeuble said: “I haven’t heard that the ECB is changing its monetary policy.”

Berlin expects domestic demand to be the sole driver of economic growth this year, with an estimated expansion rate of 1.7 percent in 2016.

The Munich-based Ifo economic institute has said Germany’s current account surplus would probably hit a new record of 278 billion euros ($313.28 billion) this year, overtaking that of China again to become the world’s largest. (Reuters)

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  1. No no, it is the cheap German Euro (they got a favorable exchange rate to the Euro). On top of that comes the reunification tax funded accumulation of Euro (that continued even after the reunification was paid for…). All this filled the coffers of German banks that then loaned it to whomever wanted to borrow. Not only did this money come back with interest but also functioned as an export subsidy. And German workers and unions agreed to moderate salary increases which made German products more competitive than similar products from other countries.
    That is the story behind Germany’s export surplus.

    • And not to mention that austerity killed off the competition.

    • ‘A cheap German Euro’ ? I’ll say. According to Bernard Connolly the optimum rate for the Euro for German viz the US Dollar it should be $2.35. Same calculation for Greece and it ought to be 35 Cents. You can’t square that circle. And at a current rate of $1.12 you can see the problem. Less than half the value for German, and triple the value for Greece. The Euro really is an insane idea.

      • Yep. But the Euro is a “political currency”, not an economic one.
        Connolly got fired from the EC for his ideas about the Euro.

        • The original design of the eurozone (by serious economists) excluded weak economies (explicitly, Greece and Portugal), and required substantial convergence with the German economy, as the implicit pillar of the euro. This plan was rejected in 1998 by the European Commission — acting on instructions from the French and German governments — and the current eurozone design was made by amateurs. Europe is a catastrophe because its arrogant and moronic politicians think that they can play their little games, and contradict market forces and all economic logic. Schaueble is in the same category of arrogant morons, although with a different agenda — namely, taking instructions from big business to act in their long-term interests.