April Fool’s Day Has Become a Permanent Feature
There must be something in the water. After the world was forced to endure the almost physically painful nonsense emanating from various Japanese officials on the alleged benefits of its clearly failing monetary debasement program, it is the EU’s turn to prove it is run by a bunch of economically illiterate nincompoops (to put it as politely as possible).
They are complaining about Germany, the only country that actually still has the economic strength to possibly keep the rickety euro zone from blowing sky high should the debt crisis return. Specifically, they are complaining about the fact that people the world over love to buy German products, while Germany’s citizens concurrently like to save, which leads to Germany sporting a large trade surplus. The other side of this trade surplus are of course Germany’s capital exports and investments abroad, about which we have as of yet heard no complaints uttered by anyone.
According to the Telegraph, the EU may even end up imposing a fine on Germany for having a trade surplus.
“Germany’s current account surplus will smash all records this year, risking a serious political showdown with Brussels and the ultimate sanction of EU fines.
A joint report by the leading German institutes, or “Wise Men”, said the country’s external surplus would keep rising to a modern-era high of 7.9pc of GDP this year, far above the 6pc limit set by Brussels under the new Macroeconomic Imbalance Procedure.
The Commission warned Germany late last year that it faced possible sanctions if failed to do its “homework”, either by boosting consumption at home or by weaning its economy off excess reliance on foreign markets. The threat caused consternation in Germany’s press and a vitriolic exchange with Brussels.
The rest of the eurozone can order Germany to present an “action plan” to bring down its surplus. If Germany is relegated to the “corrective” phase of the mechanism, and if it then fails to deliver on demands, the EU Council of Ministers can then demand that Germany pay a deposit of up to 0.1pc of GDP. This money is seized if Berlin still fails to remedy the imbalance.
“We are looking under the bonnet at the German economy and monitoring this closely. If there is systematic abuse, and they don’t respond, sanctions are available,” said an EU official. The fines are imposed by a “reverse qualified majority vote”, making it hard to block.â€
