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OTOH, Münchau also drafted a rosy scenario, which happened to come about (at the expense of what Euro partners?).

I simply cannot see how Germany can produce robust growth in such an environment, not even in 2011. If that scenario prevails - as I believe it will - the new constitutional law will produce a pro-cyclical fiscal policy with immediate effect.

One could also construct a virtuous cycle - the second outcome. If Germany were to return to a pre-crisis level of growth in 2011, and all is well after that, the consolidation phase would then start in a cyclical upturn.

Assuming the figures on Schland's economy are accurate, 2010 was actually one of marked success compared to 2009 predictions, and the prognosis for 2011 is for more of the same. If that's true, what did Münchau miss?


"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Tue Feb 1st, 2011 at 09:07:34 AM EST
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