December 3, 2008
These days, the world is stunned by the German reaction to the global financial crisis: While around the world, policy makers rush to pass stimulus packages worth hundreds of billions of dollars and several percentage points of their countries’ respective GDP, the German government is sitting on its hands. While it has passed some measures which supposedly will stimulate demand somewhat, the volumes involved are miniscule. Most observers agree that the measures passed by the German government add up to significantly less than €10bn, some estimates are as low as 0.2 percent of German GDP – an impact you would usually even have a hard time to measure. What is worse, the government does not even seriously seem to consider quick action. Ms Merkel has just recently announced that she wants to take a look at the effects from the measures taken so far only in January before deciding on additional steps. Not only the international press (i.e. the Economist), but also national media is now heavily criticizing the government’s hesitant approach.