You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
If Germany is export driven how is it able to stay competitive against China et al.
- Thread starter short&naked
- Start date
M
morganist
Quote from hftvol:
See, the problem I am having with Morganist's line of thinking is that he is talking about BRIC (not PIIGS) countries to begin with. I got the impression he has a hard time to actually comprehend we are talking about Germany in this thread. That's why I politely ended the argument with him.
I agree with most your points re German manufacturing strength but not with your hinting that PIIGS suffer by having been locked into a high exchange rate. The same argument I made about Germany you can on the flip side make for all PIIGS: there was no exchange rate fixing gimmicks being played here. Nor was trade distorted. PIIGS loved German products before the fix and they loved and bought German products after as well. So did other countries continue to purchase Spanish tomatoes, Italian pasta, French cheese, Greek refurbished ships. PIIGS benefitted greatly from having joined the Euro, reminding you of who net transfer payers and receivers here always were and still are. The PIIGS shot into their own foot through irrational exuberance. Every last man standing became convinced they deserve 2 cars, their own home, and what have you. Bar, club, and cocktail prices virtually exploded in cities like Barcelona, not because of any exchange rate dynamics but because people figured out they could borrow cheap money without having to think about the consequences of repayment. That is the ONLY reason why you have a housing market problem in Spain. Greece has a lot more issues such as being a chronic liar and cheater what concerns EU membership and meeting qualifications to join the currency club. But essentially those countries created their own eventual demise not the evil German neighbor. It's an incredible slap into the face of Germans to now be accused of being the source of all hardship in Europe after having possible made some of the biggest sacrifices and largest payments to promote the well being of a united Europe as visionary and borderline impossible such unity may be.
No you keep switching the topic and moving on questions you ask your self. I made my point then I answered your direct question. The question you ask is impossible to answer it is like saying if you shot a cannon twenty years ago which way would the wind make it go. You then assume that if the wind was going east then that it will be blowing east now.
The question you ask is impossible to answer.
To get back to the original point of this thread the reason why Germany is able to maintain its comeptitative edge with China is largely down to the relationship with the Euro and the impact the value of the currency has on its exports.
I am now out of the discussion. Bye.
fortunately, because you have presented lousy arguments and backed them up in an even lousier fashion. Don't make it sound like as if its a fact that exchange rates are the driver of Germany's success. I asked you several times to back up your claims ,which you refused to do. I showed evidence that the fixing of the euro vs its constituent currencies was in fact a very smooth transition. Germany did not suddenly become competitive after the introduction of the euro. It has been for decades prior to that. Nothing you presented thus points to exchange rates being the main reason why Germany is so highly competitive.
Also you fail to address the issue that its not mass consumer items that Germany produces and markets well but expensive, most of the time the highest priced in its categories, products where the target group can be described as affluent consumers who really could not care less whether they have to pay 10-30% more or not. How do you explain this and your claims that according to your logic exchange rate are such important input to the competitiveness of German products in world markets?
But hey, it seems to be en vogue to come along with socialist arguments, which attempt to always beat down the poster boy in favor for the underdog, no matter why the losers in the economic arena got to where they are today. And anyway, Germany is always gonna be the ruthless country that committed unforgivable crimes and got its ass beaten by the allied forces. I chuckle each time I come across such individuals who live in the past and have such an ego that they are entirely closed-minded to alternative arguments, no matter how well backed-up they may be.
Sorry I could not help to put up this last comment. You can find me in the programming and algo trading segment. I will surly stay far away from arguments that are shot back and forth without any evidence provided whatsoever.
Also you fail to address the issue that its not mass consumer items that Germany produces and markets well but expensive, most of the time the highest priced in its categories, products where the target group can be described as affluent consumers who really could not care less whether they have to pay 10-30% more or not. How do you explain this and your claims that according to your logic exchange rate are such important input to the competitiveness of German products in world markets?
But hey, it seems to be en vogue to come along with socialist arguments, which attempt to always beat down the poster boy in favor for the underdog, no matter why the losers in the economic arena got to where they are today. And anyway, Germany is always gonna be the ruthless country that committed unforgivable crimes and got its ass beaten by the allied forces. I chuckle each time I come across such individuals who live in the past and have such an ego that they are entirely closed-minded to alternative arguments, no matter how well backed-up they may be.
Sorry I could not help to put up this last comment. You can find me in the programming and algo trading segment. I will surly stay far away from arguments that are shot back and forth without any evidence provided whatsoever.
Quote from morganist:
No you keep switching the topic and moving on questions you ask your self. I made my point then I answered your direct question. The question you ask is impossible to answer it is like saying if you shot a cannon twenty years ago which way would the wind make it go. You then assume that if the wind was going east then that it will be blowing east now.
The question you ask is impossible to answer.
To get back to the original point of this thread the reason why Germany is able to maintain its comeptitative edge with China is largely down to the relationship with the Euro and the impact the value of the currency has on its exports.
I am now out of the discussion. Bye.
M
morganist
Quote from hftvol:
fortunately, because you have presented lousy arguments and backed them up in an even lousier fashion. Don't make it sound like as if its a fact that exchange rates are the driver of Germany's success. I asked you several times to back up your claims ,which you refused to do. I showed evidence that the fixing of the euro vs its constituent currencies was in fact a very smooth transition. Germany did not suddenly become competitive after the introduction of the euro. It has been for decades prior to that. Nothing you presented thus points to exchange rates being the main reason why Germany is so highly competitive.
Also you fail to address the issue that its not mass consumer items that Germany produces and markets well but expensive, most of the time the highest priced in its categories, products where the target group can be described as affluent consumers who really could not care less whether they have to pay 10-30% more or not. How do you explain this and your claims that according to your logic exchange rate are such important input to the competitiveness of German products in world markets?
But hey, it seems to be en vogue to come along with socialist arguments, which attempt to always beat down the poster boy in favor for the underdog, no matter why the losers in the economic arena got to where they are today. And anyway, Germany is always gonna be the ruthless country that committed unforgivable crimes and got its ass beaten by the allied forces. I chuckle each time I come across such individuals who live in the past and have such an ego that they are entirely closed-minded to alternative arguments, no matter how well backed-up they may be.
Sorry I could not help to put up this last comment. You can find me in the programming and algo trading segment. I will surly stay far away from arguments that are shot back and forth without any evidence provided whatsoever.
The responses you have given would indicate that you have either not read or understood the article I wrote on the topic. You may disagree with me but many other economists are saying the same thing. Your claims are going against the grain of what is currently viewed as a valid economic mechanism.
Quote from morganist:
The responses you have given would indicate that you have either not read or understood the article I wrote on the topic. You may disagree with me but many other economists are saying the same thing. Your claims are going against the grain of what is currently viewed as a valid economic mechanism.
you have not presented your case properly. the euro has been overvalued for years and still is. if you feel germany's success is due to an undervalued prove it with facts.
"Also the USD value is as much determined by oil than supply and demand so using it as a benchmark is somewhat difficult against other currencies because it will reflect the oil price at times the true demand mechanism is not reflected."
this is a disingenuous argument is like saying at times the US does not have inflation if you exclude energy and food. the market rate encompasses everything in order to come a true rate. whatever the price of oil is at a given moment reflects in part the demand for dollar at a given moment.
of course some economists believe Germany has greatly benefitted from the EU member states (though so and a lot more have the other countries from Germany's membership) and that it is now Germany's turn to open its coffers to let it rain green on Greece and the rest of Europe (which sounds as if Spain, Italy, the UK, or Greece had done so in the past which they never have). Greece even "recruited" a Nobel Price laureate (Stieglitz) to make their case. I only remember he sounded and looked incredibly stupid the last time he sat down with Hugh Hendry. So much to economists who walk around with big name plates on their chest but really little insight into the realities of this world.
And you are correct, I did not read your article, and I never claimed I had. Your article was not the topic under discussion in this thread in case you forgot. But I came across others of your writeups and all I can say is I am not particularly impressed at all. But let's stick to the topic at hand.
You still have not backed up a single of your claims. So far all you did was setting up claims and opinions and feelings you have without the slightest proof or backup or reference to numbers. If you think everything is impossible to measure and thus assign probabilities then you could as well just keep quiet, no?
And you are correct, I did not read your article, and I never claimed I had. Your article was not the topic under discussion in this thread in case you forgot. But I came across others of your writeups and all I can say is I am not particularly impressed at all. But let's stick to the topic at hand.
You still have not backed up a single of your claims. So far all you did was setting up claims and opinions and feelings you have without the slightest proof or backup or reference to numbers. If you think everything is impossible to measure and thus assign probabilities then you could as well just keep quiet, no?
Quote from morganist:
The responses you have given would indicate that you have either not read or understood the article I wrote on the topic. You may disagree with me but many other economists are saying the same thing. Your claims are going against the grain of what is currently viewed as a valid economic mechanism.
Set the start date before the adoption of the Euro:
Germany current account
Spain currrent account
France current account
Under the old mark, Germany would not have amassed such a huge current account surplus at the expense of its trading neighbors.
Germany current account
Spain currrent account
France current account
Under the old mark, Germany would not have amassed such a huge current account surplus at the expense of its trading neighbors.
wait, you just committed a great statistical analysis fallacy, spurious correlation. I could also link tons of historical events up to Germany's success as exporting nation. You are arguing in the same way as Morganist:
a) "I entertain you with funny stories and at the end I suddenly make a completely unrelated claim: So, Germany would not have amassed such huge current account surpluses at the expense of its trading partners.
b) by the way your claim was never the topic under discussion. Of course, when one nation gains in terms of trade balance, the other nation shows the mirror image, barring any other exogenous flows. This is of course a simplified picture but you get a very good idea when you look at the trade balances between the US and China. We are talking about why Germany is so successful as an exporting nation in the wake of China's rise as super power and exporting powerhouse. Trade balances are nothing but a mere reflection of trade between countries. I do not derive any value from your statement at all.
c) regarding the data you referenced, you completely ignore that Germany was struggling for over 10 years with the immense cost of its re-unification. This includes sky high unemployment, transfer payments in the billions of euros and companies focusing on a completely re-defined home market instead of opening up new exporting venues. In addition to that, you compare a traditional exporting nation with countries that never put an emphasis on exports. You can compare Germany with Japan and Korea, but you cant compare Germany with Spain, Greece, Indonesia, or the Philippines, at least when it comes to analyzing exports and trade balances. The mid-90s was a time China really started to heat up and pump out mass consumer items, much more comparable to product mixes in Spain, Greece. You can't blame Germany and the euro fixing and explain the decrease in trade balances of every country on this earth. Why, for example do the trade balances of many other of Germany's neighbors not look at all alike the one of Spain and Greece? I am afraid the answer is a lot more complicated. It certainly does not easily point fingers at Germany as many of our economist friends try to make us believe.
d) Related to c) you cannot compare completely different product mixes. Germany produces top-notch category killer products while Spain and Greece produce tourism and tomatoes and feta cheese. If you do not delineate such vast differences then you ignore possible other shifts in global macro economics.
a) "I entertain you with funny stories and at the end I suddenly make a completely unrelated claim: So, Germany would not have amassed such huge current account surpluses at the expense of its trading partners.
b) by the way your claim was never the topic under discussion. Of course, when one nation gains in terms of trade balance, the other nation shows the mirror image, barring any other exogenous flows. This is of course a simplified picture but you get a very good idea when you look at the trade balances between the US and China. We are talking about why Germany is so successful as an exporting nation in the wake of China's rise as super power and exporting powerhouse. Trade balances are nothing but a mere reflection of trade between countries. I do not derive any value from your statement at all.
c) regarding the data you referenced, you completely ignore that Germany was struggling for over 10 years with the immense cost of its re-unification. This includes sky high unemployment, transfer payments in the billions of euros and companies focusing on a completely re-defined home market instead of opening up new exporting venues. In addition to that, you compare a traditional exporting nation with countries that never put an emphasis on exports. You can compare Germany with Japan and Korea, but you cant compare Germany with Spain, Greece, Indonesia, or the Philippines, at least when it comes to analyzing exports and trade balances. The mid-90s was a time China really started to heat up and pump out mass consumer items, much more comparable to product mixes in Spain, Greece. You can't blame Germany and the euro fixing and explain the decrease in trade balances of every country on this earth. Why, for example do the trade balances of many other of Germany's neighbors not look at all alike the one of Spain and Greece? I am afraid the answer is a lot more complicated. It certainly does not easily point fingers at Germany as many of our economist friends try to make us believe.
d) Related to c) you cannot compare completely different product mixes. Germany produces top-notch category killer products while Spain and Greece produce tourism and tomatoes and feta cheese. If you do not delineate such vast differences then you ignore possible other shifts in global macro economics.
Quote from Covertibility:
Set the start date before the adoption of the Euro:
Germany current account
Spain currrent account
France current account
Under the old mark, Germany would not have amassed such a huge current account surplus at the expense of its trading neighbors.
What is common sense for some:
How Germany Free-Rides on the Euro
The footnoted paper citation is worth the read too.
How Germany Free-Rides on the Euro
The footnoted paper citation is worth the read too.
no opinion on your own? Why you engage with others? Just to waste their time? I can cite tons of papers by those who advocate Germany did not enjoy any major exchange rate advantages. So what? Original thinking is what matters.
Regarding your referenced article, we all know where Roubini stands, no surprise here.
The only, truly only argument Ed Dolan brought forward to support his view that Germany benefits from a cheap Euro was this ( I cite):
"Germany, in contrast, can have its cake and eat it too. It is impossible to know what Germanyâs exchange rate would be if its currency were independent, but as good a guess as any is that of Boris Schlossberg, Director of Currency Research at forex trader GFT, who thinks it would be the equivalent of about two dollars per euro. "
-> Don't you think this is funny? I mean, this is Roubini's econ venture (the NYU professor and economist), written by Ed Dolan who graduated at Yale and taught at, forgot, was it Duke? So this guy is citing the opinion of a Mr. Nobody Boris Schlossberg working at GFT? You know what GFT is? Yes its the same FX lets-rape-retail type of bucket shop as FXCM. Don't you find that slightly funny that the only reference we find to the reason why Ed Dolan believes the euro is undervalued is an opinion by a third rated (if at all) economist working at an fx house? Sorry but even my 15 minutes put in for my last post looks a lot more logical and provides more reasoning that this. Embarrassing is all I can say.
Regarding your referenced article, we all know where Roubini stands, no surprise here.
The only, truly only argument Ed Dolan brought forward to support his view that Germany benefits from a cheap Euro was this ( I cite):
"Germany, in contrast, can have its cake and eat it too. It is impossible to know what Germanyâs exchange rate would be if its currency were independent, but as good a guess as any is that of Boris Schlossberg, Director of Currency Research at forex trader GFT, who thinks it would be the equivalent of about two dollars per euro. "
-> Don't you think this is funny? I mean, this is Roubini's econ venture (the NYU professor and economist), written by Ed Dolan who graduated at Yale and taught at, forgot, was it Duke? So this guy is citing the opinion of a Mr. Nobody Boris Schlossberg working at GFT? You know what GFT is? Yes its the same FX lets-rape-retail type of bucket shop as FXCM. Don't you find that slightly funny that the only reference we find to the reason why Ed Dolan believes the euro is undervalued is an opinion by a third rated (if at all) economist working at an fx house? Sorry but even my 15 minutes put in for my last post looks a lot more logical and provides more reasoning that this. Embarrassing is all I can say.
Quote from Covertibility:
What is common sense for some:
How Germany Free-Rides on the Euro
The footnoted paper citation is worth the read too.