Musings: On the fate of the German model

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.

 

Digest – Commerce: the Shogun fights deflation

 

No belly for Aso to rub

With the latest announcement of an increase in allotted funds, the Aso government has pledged over 500 billion dollars to the package as an effort to rescue Japan’s ailing economy (BBC 2008).  The Nikkei has plunged over the past few months, tipping the Japanese economy into a period of recession, and does not seem to be on a path for natural re-alignment.  The falling through of the recent bailout plan for the Big Three automakers in America caused finicky investors to be even stingier in the Japanese markets than they were being before, as the Nikkei began a new plunge with the news of the Senate’s rejection of the plan (BBC 2008).  The export-based Japanese industry has been gravely damaged by the global financial crisis, as the yen-dollar and yen-yuan ratio has increased, resulting in less money for exporters.   As governments around the world announced bailouts for their economies, it was not clear what exactly the incapacitated Aso administration was going to do.