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German economic recipe to ruin the Eurozone via wage race to the bottom

The German economic recipe to ruin the Eurozone is through wage race to the bottom? According to Institute of German Economy in Cologne:

Export success – Cost matters

The international comparison shows: The lower the unit labour costs – the ratio of labour costs to productivity – compared to the competition, the greater the export success in most cases.

Of course, everybody knows that: cheap labor⇒ competitiveness ⇒ export.

The point is: does Germany presses for austerity translated in “low wages” just for the purpose of increasing the Eurozone chances to be competitive?

It was only last weekend when Finance Minister Wolfgang Schaeuble complained about “competitiveness” being one of the main problems in Greece and not the debt.

According to the Institute in Cologne:

Unit labour costs in Germany increased during the first half of the 1990s as a result of the integration of the weaker economies of the former East German states and high-cost labour agreements. However, the country has managed to largely reclaim its export strength since that time.

Greece considerably improved its unit labour cost position during the four years prior to the introduction of the euro. The common currency then led to a credit boom and to quickly escalating unit labour costs that only declined again in the course of the euro crisis.

It was only last weekend when Finance Minister Wolfgang Schaeuble complained about “competitiveness” being one of the main problems in Greece and not the debt.

And the conclusion is …what? that Germany uses Greece as its experiment in austerity-to-death lab in order to see how much he can go with dumping wages and salaries and then enforce his lethal treatment to the whole of the eurozone?

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11 comments

  1. Giaourti Giaourtaki

    His is best in competition, he made lots of gold-medals as a racer in Olympic Games

  2. This is what happens when you allow fools with no grasp of economics to make political decisions about economic structures and strategies. Politicians do this all the time, and everywhere the public tolerates their stupidity and incompetence.

  3. You ‘ve got it KTG. Here is the recipe directly form the Fuhrer: we take a poor small country; arrange treacherous and loyal to us leadership; force loans on it; arrange that these loans cannot be repaid; drive its citizens to the ground via ever escalating crazy taxes. Once every bit of property has been lost (i.e. confiscated) and given to us, we can have a ready made slave force whom we can work to death. Huge productivity gains plus all the land.
    If successful repeat throughout Europe. If not ….?

    • If not, Germany will start another world war and see what it can get out of that.

      • Giaourti Giaourtaki

        With what army? These cowards LET bomb and mass-murder civilians in Afghanistan by the even more cowardly murderers of US-airborne, both are true heroes of war, have no balls for real fight and bomb whole nations just like Hitler did with Guernika but one thing is for sure all of their authorities would love to have Pablo Picasso’s painting about that on their wall – painted with the blood of their victims.
        If Greece wants to get the war-reparations out of these fraudsters and corrupting bastards and take revenge for 50.000 austerity-deaths just invade and overrun’em with 4000 tanks, it takes max a long weekend, first take Krankfurt and then take Berlin – pillage it and bury it in the grounds like Troy.
        Like Anti-germans say: Deutschland Verrecke!

        • Actually, if Greece were to do that (overrun Germany) they’d be doing us a favor. I’m sick and tired of the way my country behaves towards the rest of Europe and I seriously think someone needs to come and put us back in our place.

        • That’s weird, I had one of my comments deleted for for the first time…when I was actually agreeing with Giaourti here…if that was somehow misunderstood I’m sorry.

        • Believe it or not, this was exactly what I was saying a week ago to some friends who asked me what I would do had I been the prime minister. Seriously, I would use the fact that Greece and Germany are formally at war (there has not been a peace treaty yet ending this status between the two countries) and would attack on the grounds of their continued hostility against us and the refusal to repay the 1942 loan plus interest. Then let us see who would try to take their side and defend them. The only snag is that we have to find leaders who are not treators…
          The 4th Reich is morphing into a dangerous bully state; tolerating its actions will eventually lead all Europe into bloodshed, including Germany itself. Very perceptive EastBerliner, Merkelites and their bankers are a danger to all, you and us alike.

  4. Not quite. Compared to other European countries, German labor unions actually demanded modest salary increases. That kept German labor unit costs lower than that of other countries. Germany hereby became more competitive and it increased its productivity. The reunification tax (imposed to finance the reunification but that continued after it was paid for) filled Germany’s coffers. Money was lend to whomever wanted to borrow and this money came back with interest. It also functioned as an export subsidy. And when the SHTF in Greece, an EU tax payer backed bailout was given to German, French and Dutch banks (that had made bad investments in Greece). This is bad capitalism.
    This is the story of why Germany is more succesfull than other European countries. Nevertheless, there is a race to the bottom.