Wednesday, April 27, 2011

Germany as the Poster Child for Fiscal Responsibility

In yesterday's post on European Debt, I noticed:
What is interesting (to me) is that debt levels in Germany are almost (or at least in the ball park) of Portuguese and Irish levels at 83% of GDP. While Ireland is WAY over their heads with a death spiraling economy, Portugal has actually been relatively lockstep with Germany; Germany's GDP and public debt levels have grown 2.7% and 32% since 2007, Portugal's 1.9% and 39%.
The below chart takes a look at Germany from a different perspective, comparing their debt dynamics (i.e. the responsible ones) to that of the U.S. (i.e. the wild child) rather than a country within the EU periphery.

While the United States has certainly outpaced Germany in terms of the amount of debt supported by the underlying economy, Germany is:
  • Not far off
  • Perhaps only lagging because they are a step or two behind (what do things look like post periphery bailout)
Source: Haver


  1. It is not really correct to compare. Eurostat is doing lots of adjustments and tries to include government debt which was not classified as government debt. For instance for 2010 Germany had the largest adjustment of all EU countries. If I remember correct it was in the ballpark of 9% of GDP

  2. As others before have noted, the difference is in the citizenry.

    German (and Japanese) citizens save. U.S. citizens do not.

    Governments' deficit/debt position relative to GDP does not tell the whole story.

  3. "German (and Japanese) citizens save. U.S. citizens do not."

    U.S. owns the printing press.
    Germany (while a very powerful member) does not.

    Huge difference as well.