A convenient myth in our national economic collapse (expressed here but also countless other times) is that somehow our rising debts fuelled consumption of German exports.
This argument has been cleverly adapted by our home-grown economists/apologists from the general discussion on Global Imbalances and is correct only insofar as it states that current account surplusses should not be seen as having moral implications (prudent exporters v. wastrel importers). In every other respect it is incorrect.
Now, sadly, figures on bilateral trade balances within the Eurozone are hard to track down - they are not available on Eurostat or ELSTAT. But we have a second-best option.
For proof, turn if you will to page 7 of this publication. It shows that Greece was Germany's 27th largest export market in 2008, down from 24th in 2000 and indeed down from an unbelievable 19th back in 1990. So it's very unlikely that German export growth relied to any extent on Greek profligacy. Note however the rise in the export markets' rank of the US and China, with which German shares neither currency nor any institutional links. If anything, China is a fellow export-driven economy. Of all the PIIGS, only Spain actually went up the ranks of German export markets during the noughties.
Perhaps more importantly, if one could rewing back to 2001, one would read article after article about how badly joining the Euro was playing out for German exports. It turned out the exchange rate at which Germany joined over-valued its products, making it very hard to shift those BMWs (except to Cypriots, bless them). Ten years on the situation is reversed. Germany and some other countries kept running while Greece and some others thought they'd take it easy once they'd passed the big exam.
So there you are, apologists. Greece is not to Germany what America is to China, although it would be convenient and flattering to think so.
Who will we blame our troubles on now? Well, we could still blame them on the Euro. Our Euro is massively overpriced while the Germans' Euro is massively underpriced (evidence here). In this sense Germany is a bit like China - and although Greece is partly a victim of this implicit subsidy, we were given nearly a decade to reverse it by improving competitiveness. Instead, we pegged our wages to those of the Germans (just like they told us not to) and stifled regulatory reform.
UPDATE: A table of Germany's 2009 exports by partner, showing turnover and trade balances, can be found here.
2nd UPDATE: A further discussion of Greece's trade links can be found here.
This argument has been cleverly adapted by our home-grown economists/apologists from the general discussion on Global Imbalances and is correct only insofar as it states that current account surplusses should not be seen as having moral implications (prudent exporters v. wastrel importers). In every other respect it is incorrect.
Now, sadly, figures on bilateral trade balances within the Eurozone are hard to track down - they are not available on Eurostat or ELSTAT. But we have a second-best option.
For proof, turn if you will to page 7 of this publication. It shows that Greece was Germany's 27th largest export market in 2008, down from 24th in 2000 and indeed down from an unbelievable 19th back in 1990. So it's very unlikely that German export growth relied to any extent on Greek profligacy. Note however the rise in the export markets' rank of the US and China, with which German shares neither currency nor any institutional links. If anything, China is a fellow export-driven economy. Of all the PIIGS, only Spain actually went up the ranks of German export markets during the noughties.
Perhaps more importantly, if one could rewing back to 2001, one would read article after article about how badly joining the Euro was playing out for German exports. It turned out the exchange rate at which Germany joined over-valued its products, making it very hard to shift those BMWs (except to Cypriots, bless them). Ten years on the situation is reversed. Germany and some other countries kept running while Greece and some others thought they'd take it easy once they'd passed the big exam.
So there you are, apologists. Greece is not to Germany what America is to China, although it would be convenient and flattering to think so.
Who will we blame our troubles on now? Well, we could still blame them on the Euro. Our Euro is massively overpriced while the Germans' Euro is massively underpriced (evidence here). In this sense Germany is a bit like China - and although Greece is partly a victim of this implicit subsidy, we were given nearly a decade to reverse it by improving competitiveness. Instead, we pegged our wages to those of the Germans (just like they told us not to) and stifled regulatory reform.
UPDATE: A table of Germany's 2009 exports by partner, showing turnover and trade balances, can be found here.
2nd UPDATE: A further discussion of Greece's trade links can be found here.
