What happened to the good ol days of inflation?

What happened to the good ol' days of inflation?

Post-War Germany was a fascinating place.  While East German avant-garde artists were putting together synthesizers from old electronics and creating fashion expositions out of anything and everything available (brilliantly displayed in the up-and-coming film Comrade Couture), West Germany was radically progressing in its own manner.  Indeed, the East German avant-garde movement can be seen as an artistic response to the massive changes that were taking place in West Germany, as a result of the successes of the Marshall Plan – the Wirtschaftswunder.  Just like Japan in the east, post-war West Germany went through an incredible time of redevelopment and rebuilding, catapulting it into being a global economic power.  Also like Japan, Germany focused on export – indeed, the German brand is known abroad for its high-quality automotive exports: BMW, Mercedes, Porsche – and the fate of the German economy was soon bound to the ebb and flow of international consumer demand.

With the financial crisis in full swing, however, the German economy seems to be taking a harder blow than most (especially compared to its French neighbour, now speaking more of dirigisme than rigeur).  This is because, just like Japan, the German export industry is being hit particularly hard.    While France is now in recession, the French model is still be touted as prudent, mainly because the French economy is not being affected quite as much as the British one, and far less than the economy of the United States.  When compared with the export models of Germany (and Japan), the French recession can scarcely be considered a problem. According to the Economist, German exports are predicted to fall 19% this year, with a registered first-quarter drop of 3.8%.  Worse yet, Peter Steinbrueck, the German finance minister, is now predicting a 6% contraction in the German economy.  It seems that the Germans either have to reinvent the (aptly named) German model, or simply have to wait out the storm.  What’ll it be?