# Germany and the European economy **URL:** \ **Category:** Great Debates\ **Created:** [April 28, 2012, 7:20am UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215 "2012-04-28T07:20:12Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Nobody](https://avatars.discourse-cdn.com/v4/letter/n/94ad74/32.png) [@Nobody](https://boards.straightdope.com/u/Nobody)\ **Post date:** [April 28, 2012, 7:20am UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/1 "2012-04-28T07:20:12Z")
Mods, I’m sorry if this is the wrong forum. I was listening to the talk yesterday on NPR and there was a brief discussion on the European debt problem. [Transcript](http://www.npr.org/2012/04/27/151546350/week-in-politics-gdp-european-debt-crisis). > [@Week in Politics](#): > > This week, we saw more signs of the effect of the bitter pill of austerity there. The Dutch government collapsed, a star performer in the eurozone, but a dispute over budget cuts ended up bringing it down. The next president of France could well be the Socialist Francois Hollande, who says that Europe can’t just impose austerity. > [@](#): > > My point would be there’s no European economy. Maybe the Greeks should be practicing austerity. There’s no reason to think the Spanish should be, they’re in a housing bust and they’ve got reasonably low debt levels. The problem is they tried to stick a single monetary union without any fiscal union, without any political and civic union, and therefore they’re stuck with one-size-fits-all policies. > > And it’s going to be hard for them to get out of it. And it’s certainly a mistake to impose German-style austerity on incredible diversity of economies. While searching for the transcript, I also found this opinion piece from [The New York Times](http://www.nytimes.com/2012/04/13/opinion/an-overdose-of-pain-for-spain.html) > [@New York Times](#): > > Spain could be the next European economy brought down by German-led mismanagement of the euro-zone crisis. It need not turn out that way. But it surely will unless Chancellor Angela Merkel and her political allies inside and outside Germany acknowledge that no country can pay off its debts by suffocating economic growth. So that leads me to a few questions. For a while, it seems it was France and Germany calling for Austerity, but it might just come down to Germany now. How does Germany have the power to force austerity on all these countries? Were they the ones who lent the most to the other European countries? Do they have disproportionate power in the Eurozone? Let’s say European countries stop agreeing to austerity measures. What would be the alternatives? Could alternative plans be implemented without Germany’s consent? Finally, let’s say that Germany’s economy starts collapsing. Would they be willing to impose austerity on themselves? ---
**Author:** ![Donnerwetter](https://avatars.discourse-cdn.com/v4/letter/d/b2d939/32.png) [@Donnerwetter](https://boards.straightdope.com/u/Donnerwetter)\ **Post date:** [April 28, 2012, 9:17am UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/2 "2012-04-28T09:17:43Z")
> [@Nobody](#): > > Mods, I’m sorry if this is the wrong forum. > > I was listening to the talk yesterday on NPR and there was a brief discussion on the European debt problem. [Transcript](http://www.npr.org/2012/04/27/151546350/week-in-politics-gdp-european-debt-crisis). > While searching for the transcript, I also found this opinion piece from [The New York Times](http://www.nytimes.com/2012/04/13/opinion/an-overdose-of-pain-for-spain.html) > > So that leads me to a few questions. > > For a while, it seems it was France and Germany calling for Austerity, but it might just come down to Germany now. How does Germany have the power to force austerity on all these countries? Were they the ones who lent the most to the other European countries? Do they have disproportionate power in the Eurozone? > > Let’s say European countries stop agreeing to austerity measures. What would be the alternatives? Could alternative plans be implemented without Germany’s consent? > > Finally, let’s say that Germany’s economy starts collapsing. Would they be willing to impose austerity on themselves? Well, the heart of the matter is that Germany is supposed to bail out these struggling states, meaning: the German tax payer is expected to fork over hundreds of billions of Euros. Germany then can at least demand that the beneficiary countries control their spending habits. And Germany did go through painful austerity measures some 10 years ago, that was one of the issues that brought down the government of chancellor Gerhard Schroeder. ---
**Author:** ![casdave](https://avatars.discourse-cdn.com/v4/letter/c/c6cbf5/32.png) [@casdave](https://boards.straightdope.com/u/casdave)\ **Post date:** [April 28, 2012, 10:57am UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/3 "2012-04-28T10:57:12Z")
Germany has the problem that much of its export business goes to EU nations. Their industries have out competed those in other EU nations. Germany has benefited hugely from the Euro money project by obtaining better access to these markets and it is very much in their interest not to allow those debtor nations to fall out of the Euro zone - in effect the money they are supplying in the form of bailouts and loan guarantees comes back to its own economy in the form of exports. Germany also benefits because debtor nations in the Euro zone cannot devalue their currencies, and have to stick to the same interests rates, and pretty much the same fiscal policies, so it means that German goods do not get more expensive in those debtor nations. The result is a decline in industry in debtor nations and so reduced ability to work themselves out of their problems. The German taxpayer may think they are bailing out those other economies, but most of the money comes back to them anyway - once the crash comes, Germany will go down the toilet pretty badly, since they will have destroyed their own export markets. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [April 28, 2012, 11:59am UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/4 "2012-04-28T11:59:31Z")
> [@casdave](#): > > Germany has the problem that much of its export business goes to EU nations. Their industries have out competed those in other EU nations. > > Germany has benefited hugely from the Euro money project by obtaining better access to these markets and it is very much in their interest not to allow those debtor nations to fall out of the Euro zone - in effect the money they are supplying in the form of bailouts and loan guarantees comes back to its own economy in the form of exports. > > Germany also benefits because debtor nations in the Euro zone cannot devalue their currencies, and have to stick to the same interests rates, and pretty much the same fiscal policies, so it means that German goods do not get more expensive in those debtor nations. The result is a decline in industry in debtor nations and so reduced ability to work themselves out of their problems. > > The German taxpayer may think they are bailing out those other economies, but most of the money comes back to them anyway - once the crash comes, Germany will go down the toilet pretty badly, since they will have destroyed their own export markets. Casdave has summed it up nicely-Germany got enormous benefit from the euro-it got access to European markets, and because of the fact that their European competitors had smaller home markets (and higher costs), German manufacturers were able to dominate those markets. In other words-why is the Greek army over-equipped with German Leopard tanks? And why is Greece (or used to be) one of BMW’s largest European markets? Basically, Germany kept its factories running by putting its European competition out of business. The German Central Bank kept things going by loaning money back to the debtor nations. Now the whole thing is coming crashing down- Greece now has a 3rd-world income level, and cannot buy many Leopards and BMWs anymore. I look for a serious euro crash this summer. ---
**Author:** ![Donnerwetter](https://avatars.discourse-cdn.com/v4/letter/d/b2d939/32.png) [@Donnerwetter](https://boards.straightdope.com/u/Donnerwetter)\ **Post date:** [April 28, 2012, 12:27pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/5 "2012-04-28T12:27:42Z")
Germany has always had a very successful and competitive export industry. It’s not as if this had only started in 2002 when the Euro was introduced. The Greek certainly did not spend every single Euro on importing BMWs, tanks or lederhosen from Germany. I think this aspect is grossly overestimated, however it was widely used, back in the day, to sell the concept of a common European currency to the sceptical German public. ---
**Author:** ![casdave](https://avatars.discourse-cdn.com/v4/letter/c/c6cbf5/32.png) [@casdave](https://boards.straightdope.com/u/casdave)\ **Post date:** [April 28, 2012, 2:09pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/6 "2012-04-28T14:09:50Z")
If you have a balance of trade problem, the traditional, and easy convenient way is to devalue your currency - its also the lazy way since it means the local national politicians do not make direct budgets cuts to programs and services. Its much much harder to take responsibility and to make industry actually work, its much less popular with the local politicians are recognisably involved in making the austerity cutback, whereas devaluation usually takes some time to impact directly and also can be blamed upon ‘the markets’ or foreigners’ and is thus a ready made excuse for local politicians. The Euro puts the brakes on all that, now local populations have to live with he consequences of their national spending, lack of investment, lack of modernisation and high levels of consumerism. Greece has been especially irresponsible, in not having accurately accounts, knowing that this was the case, and yet making national plans based upon them. Add in the national pastime of tax avoidance and evasion and an EU that is complicit in this deception and you have most of the explanation you need. Ordinary Greeks don’t have too much say in all this, except at election time when they vote for political bribery - and all of us will always vote in our own self interest - we will never vote for responsibility - not in any westernised economy. We all like simplistic blame and simplistic solutions, but we are all in this one way or another and we all have some part of this to carry. Germans are naturally believing they are blameless, maybe the majority of them are, but ultimately if they take their ball home, they will still suffer the end results of a Euro-crash, and wider markets around the world will take a hammering too, to say nothing of the loss of confidence which on its own can be a very major cause of recession. The US and the far East cannot afford the Euro-zone to go down but neither of these trade areas are likely to step in if there is little credibility in the Euros themselves - in the end, Germany may withdraw somewhat, the other major zones may stand on the sidelines, and the world economy will take such as knock as to make Japan’s last two decades of stagnation look like a profit party in comparison. ---
**Author:** ![Ximenean](https://avatars.discourse-cdn.com/v4/letter/x/aca169/32.png) [@Ximenean](https://boards.straightdope.com/u/Ximenean)\ **Post date:** [April 28, 2012, 2:40pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/7 "2012-04-28T14:40:21Z")
When people say that the arrangement benefits Germany, I wonder if it would be more accurate to say that it benefits German exporters. For the average German in the _Straße_, I’m not so sure. They probably do get the benefit of more jobs, true. But the fact that German exports are artificially cheap in the rest of the eurozone is counterbalanced by imports being artficially expensive. Some of the benefits that German workers would have received through their higher productivity, in the shape of cheaper holidays to the Med, cheaper imported food, and so on, have not materialised. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [April 28, 2012, 2:57pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/8 "2012-04-28T14:57:00Z")
Looking back up to the OP, I have some serious doubts about the sanity of those claiming Spain shouldn’t follow austerity right now. It’s not a matter of whether you _want_ it or _like_ it: Spain has no choice in the matter! With the debt rating cuts, they simply can’t afford the debt they have now, must less taking on more. Ximenean, you are probably correct. Moreover, the German-European situation almost certainly can’t go on as it is. The trouble is that nobody has an easy, painless way of solving it, and nobody really wants to take tat first step and recognize the facts. Asa result, everyone wants to get theirs now, taking the visible over the invisible. And for German workers, it’s a lot easier to keep the jobs they have in a global down economy than to hope for possible benefits down the line. That said, I don’t think ultimately any nation on the Continent has a choice in the matter. ---
**Author:** ![Nobody](https://avatars.discourse-cdn.com/v4/letter/n/94ad74/32.png) [@Nobody](https://boards.straightdope.com/u/Nobody)\ **Post date:** [April 28, 2012, 6:07pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/9 "2012-04-28T18:07:08Z")
So basically, right now, it’s Germany bailing out the other Eurozone countries? Let’s say after a while things don’t get better and they cry, “Enough with the austerity!” If Germany says, “Fine then, no more bailouts.” Is/are there any other country/countries that could step in? ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [April 28, 2012, 7:12pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/10 "2012-04-28T19:12:48Z")
There are lots that _could_. There aren’t any that _would_. The IMF would probably wind up bailing out Spain and the Netherlands. Greece is such a basket case that it’s probably best to just allow for a market correction there. Other wealthy countries, like the UK, will feel an almost equal impact from a Eurozone standoff, but the UK is not an zone member and has less of an interest in bailing anyone out. Apart from that, the UK has its own debt problems. A lot of people upthread have pegged this as a problem with German industrial dominance, but there’s more to it than that. Most of the Eurozone is in the proposed “fifth stage”\* of the [demographic transition model](http://en.wikipedia.org/wiki/Demographic_transition#Stage_Five), where birthrate tails off dramatically at the same time as life expectancy increases. Having a country full of old people means you have less crime and less political turmoil, but it also means you have reduced productivity. That was a big part of Japan’s “lost decade”: an aging population, and stagnant population growth due to tight immigration controls and low birthrate. I suspect China’s one-child policy will result in an even more dramatic recession when the pre-1979 generations reach retirement age. \*that’s what it was called when I was in college, and it was more of a theory based on patterns in Italy and Japan then a certainty. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [April 29, 2012, 11:10am UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/11 "2012-04-29T11:10:26Z")
I mean, Greece owe billions of euros that it cannot repay. So why can’t the creditors demand that hard assets (art, land, buildings, subway systems) be liquidated and sold for cash? So what if the Athens subway system is now owned by a German bank-who cares? As long as the present situation goes on, I see no solution. Why not bite the bllet, have a national yard sale pay off the debts and start over? ---
**Author:** ![PrettyVacant](https://avatars.discourse-cdn.com/v4/letter/p/49beb7/32.png) [@PrettyVacant](https://boards.straightdope.com/u/PrettyVacant)\ **Post date:** [April 29, 2012, 4:18pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/12 "2012-04-29T16:18:47Z")
> [@Nobody](#): > > For a while, it seems it was France and Germany calling for Austerity, but it might just come down to Germany now. How does Germany have the power to force austerity on all these countries? Were they the ones who lent the most to the other European countries? Do they have disproportionate power in the Eurozone? > > Let’s say European countries stop agreeing to austerity measures. What would be the alternatives? Could alternative plans be implemented without Germany’s consent? ‘Austerity’ is a single word for a policy, the policy is that the German and French states, and also - primarily French - banks will not allow their debtors to default on any part of their loans. Instead they insist on the return of all the capital, and on squeezing the working classes of the indebted nations for as much interest as they can gain for as long as they can. Too much was loaned by the owners of capital, they charged interest according to the perceived risk, and they refuse to acknowledge it is impossible for several countries to repay the entirity of loaned capital, never mind the interest. Loaning is a risk, that’s primarily why interest is charged. A level of managed default is inevitable from Spain to the UK, it’s only a matter of how much pain the respective electorates will be willing to bear and at what point they have enough of this ridiculous charade. ---
**Author:** ![PrettyVacant](https://avatars.discourse-cdn.com/v4/letter/p/49beb7/32.png) [@PrettyVacant](https://boards.straightdope.com/u/PrettyVacant)\ **Post date:** [April 29, 2012, 4:23pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/13 "2012-04-29T16:23:08Z")
With regard Germany, I believe it was only last year China replaced Germany as the worlds largest exporter by value. The key mechanism is that the southern European countries keep down the value of the Euro, allowing Germany to export outside the EU at artificially low prices. The entire euro project is based around Germany exporting beyond the EU, and Germany building its economic empire. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [April 29, 2012, 5:18pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/14 "2012-04-29T17:18:48Z")
> [@ralph124c](#): > > I mean, Greece owe billions of euros that it cannot repay. So why can’t the creditors demand that hard assets (art, land, buildings, subway systems) be liquidated and sold for cash? > So what if the Athens subway system is now owned by a German bank-who cares? > As long as the present situation goes on, I see no solution. Why not bite the bllet, have a national yard sale pay off the debts and start over? Why would anyone _want_ to own the Athens subway system? It’s revenue-neutral at best. ---
**Author:** ![stw004](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@stw004](https://boards.straightdope.com/u/stw004)\ **Post date:** [April 29, 2012, 5:48pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/15 "2012-04-29T17:48:07Z")
> [@ralph124c](#): > > I mean, Greece owe billions of euros that it cannot repay. So why can’t the creditors demand that hard assets (art, land, buildings, subway systems) be liquidated and sold for cash? > So what if the Athens subway system is now owned by a German bank-who cares? > As long as the present situation goes on, I see no solution. Why not bite the bllet, have a national yard sale pay off the debts and start over? Because banks don’t want to own those assets. Were the banks to foreclose they would be stuck with a bunch of assets that noone wants to purchase at anything less than a steep discount, if the Athens subway system were profitable it wouldn’t have a problem paying for its cost of debt to begin with. This leaves the bankers in a pickle because the only options they have are to, 1) Foreclose and take a huge loss on their investments, 2) Hope that somehow the EU can get Greece to at least be solvent enough to pay for their debt. ---
**Author:** ![Nobody](https://avatars.discourse-cdn.com/v4/letter/n/94ad74/32.png) [@Nobody](https://boards.straightdope.com/u/Nobody)\ **Post date:** [April 29, 2012, 6:08pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/16 "2012-04-29T18:08:54Z")
From everything I’ve heard on the news, and elsewhere, Greece did deserve its harsh austerity measures. But for countries who don’t have high tax avoidance, and who don’t cook their books; Although spending cuts are reasonable to some degree, if austerity is the only solution given, then frankly, in my opinion, it seems kind of punitive. And, although from an opinion piece, if this (from the New York Times link in the OP) is correct, continually pushing austerity measures seems pointless. > [@The New York Times](#): > > Austerity, the one-size-fits-all cure prescribed by Ms. Merkel, is not working anywhere. After weeks of misleading calm, and despite huge injections of liquidity by the European Central Bank, countries are slipping back into recession, unemployment is climbing and deficit forecasts are worsening. Bond markets are especially [jittery about Spain](http://www.nytimes.com/2012/04/11/business/global/spain-bond-yields-rise-reviving-fears-of-a-renewed-euro-crisis.html) and Italy, two of Europe’s largest economies. ---
**Author:** ![Ximenean](https://avatars.discourse-cdn.com/v4/letter/x/aca169/32.png) [@Ximenean](https://boards.straightdope.com/u/Ximenean)\ **Post date:** [April 29, 2012, 6:47pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/17 "2012-04-29T18:47:38Z")
I seem to remember that some Finnish politicians did actually make noises about using Greek islands as collateral for bail-out loans. I’m not sure how serious the suggestion was, or if it was just posturing, but they certainly didn’t seem happy about having to lend money to Greece. ---
**Author:** ![Honesty](https://avatars.discourse-cdn.com/v4/letter/h/f04885/32.png) [@Honesty](https://boards.straightdope.com/u/Honesty)\ **Post date:** [April 29, 2012, 6:50pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/18 "2012-04-29T18:50:46Z")
> [@smiling\_bandit](#): > > Looking back up to the OP, I have some serious doubts about the sanity of those claiming Spain shouldn’t follow austerity right now. It’s not a matter of whether you _want_ it or _like_ it: Spain has no choice in the matter! With the debt rating cuts, they simply can’t afford the debt they have now, must less taking on more. This is an interesting argument. However, keep in mind that Britain just recently slipped into a double-dip recession after implementing a smorgasbord of austerity measures and tax cuts for the rich. If Britain is an example, it seems to suggest that during a financial crisis, government intervention and taxes on the wealthy should be robust not less. We’ll see though; it’ll be very interesting to see how this austerity stuff pans out in a few years. - Honesty ---
**Author:** ![brickbacon](https://avatars.discourse-cdn.com/v4/letter/b/898d66/32.png) [@brickbacon](https://boards.straightdope.com/u/brickbacon)\ **Post date:** [April 29, 2012, 6:59pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/19 "2012-04-29T18:59:56Z")
> [@stw004](#): > > Because banks don’t want to own those assets. Were the banks to foreclose they would be stuck with a bunch of assets that noone wants to purchase at anything less than a steep discount, if the > Athens subway system were profitable it wouldn’t have a problem paying for its cost of debt to begin with. This leaves the bankers in a pickle because the only options they have are to, 1) Foreclose and take a huge loss on their investments, 2) Hope that somehow the EU can get Greece to at least be solvent enough to pay for their debt. That’s not really answering the question as there are plenty of things Greece owns that would be profitable to an investor. The reason private creditors cannot take, or force the sale of government asset is sovereign immunity. In the [US](http://en.wikipedia.org/wiki/Sovereign_immunity_in_the_United_States#Federal_sovereign_immunity), that immunity means the following: > [@](#): > > In the United States, the federal government has sovereign immunity and may not be sued unless it has waived its immunity or consented to suit. See Gray v. Bell, 712 F.2d 490, 507 (D.C. Cir. 1983). The United States has waived sovereign immunity to a limited extent, mainly through the Federal Tort Claims Act, which waives the immunity if a tortious act of a federal employee causes damage, and the Tucker Act, which waives the immunity over claims arising out of contracts to which the federal government is a party. The Federal Tort Claims Act and the Tucker Act are not as broad waivers of sovereign immunity as they might appear, as there are a number of statutory exceptions and judicially fashioned limiting doctrines applicable to both. Title 28 U.S.C. § 1331 confers federal question jurisdiction on district courts, but this statute has been held not to be a blanket waiver of sovereign immunity on the part of the federal government. > > Congress has also waived sovereign immunity for patent infringement claims under 28 USC § 1498(a), but that statute balances this waiver with provisions that limit the remedies available to the patent holder. The government may not be enjoined from infringing a patent, and persons performing work for the government are immune both from liability and from injunction. Any recourse must be had only against the government in the United States Court of Federal Claims. In Advanced Software Design, the Federal Circuit expanded the interpretation of this protection to extend to private companies doing work not as contractors, but in which the government participates even indirectly. The case of Greece is likely not much different. [Here](http://www.npr.org/blogs/money/2012/01/26/145868170/no-hedge-funds-cant-foreclose-on-the-acropolis) is an NPR Planet Money article/podcast talking about this issue with regard to Greece. [Here](http://www.npr.org/blogs/money/2012/01/26/145868170/no-hedge-funds-cant-foreclose-on-the-acropolis) is another one in the FT. This [site](http://www.quora.com/Sovereign-Default/What-happens-when-a-country-defaults) puts it succinctly. > [@](#): > > The issue with a sovereign default is that there is really nothing standard or well-defined about it. There is not really a supra-national financial or legal body that oversees every single country and tells it what to do when it finds itself in a default situation. This element of uncertainty in Europe right now (particularly in the PIIGS countries) is what’s causing the distress in financial markets. If Greece (or another European country defaults), the outcome will likely be negotiated in a very ad hoc and bilateral manner. Correct me if I’m wrong (I may be), but I believe the vast bulk of European sovereign debt is unsecured, which means no one has a legal basis for forcing the country to liquidate its assets to pay off the debt. However, they may choose to do so, or choose to engage in further austerity programs, or restructure their debt, or a plethora of other options (pretty much a similar set of options available to companies or individuals). But generally the result is unpredictable ex ante. So there is no basis for forcing them to liquidate assets in the same way an individual under similar circumstances might have to. ---
**Author:** ![Ximenean](https://avatars.discourse-cdn.com/v4/letter/x/aca169/32.png) [@Ximenean](https://boards.straightdope.com/u/Ximenean)\ **Post date:** [April 29, 2012, 7:01pm UTC](https://boards.straightdope.com/t/germany-and-the-european-economy/620215/20 "2012-04-29T19:01:02Z")
[QUOTE=Honesty] This is an interesting argument. However, keep in mind that Britain just recently slipped into a double-dip recession after implementing a smorgasbord of austerity measures and tax cuts for the rich. If Britain is an example, it seems to suggest that during a financial crisis, government intervention and taxes on the wealthy should be robust not less. We’ll see though; it’ll be very interesting to see how this austerity stuff pans out in a few years. [/QUOTE] The UK spending cuts haven’t really kicked in yet, so I don’t think we can make conclusions like that. So far, the government has concentrated more on the raising taxes side of things. [Next page](https://boards.straightdope.com/t/germany-and-the-european-economy/620215.md?page=2)