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There have been precious few pleasant economic surprises in the past two years, but today's news that Germany and France – the two powerhouses of the eurozone – returned to growth in the second quarter of this year is certainly welcome.

A couple of months ago, it was a strongly held belief in the City that Britain would be the first major European country to emerge from recession thanks both to the massive policy response from the government and a more flexible economy than those across the Channel.

That view has proved to be completely wrong: Germany and France both grew by 0.3% in the three months to June, while the UK contracted by 0.8%.

There are both short-term and longer-term reasons for this disparity. The "cash for clunkers" schemes on the continent seem to have provided a bigger shot in the arm to consumer spending than the one introduced in the UK. Germany's job subsidies to employers to prevent mass redundancies has blunted the impact of the big drop in demand for the country's manufactured goods on unemployment.

Hmmmm...

France and Germany are bulking up for the next squabble over Alsace-Lorraine, or whatever those nematodes fight over these days.

You just know they still hate each other!

Ivytalk wrote:France and Germany are bulking up for the next squabble over Alsace-Lorraine, or whatever those nematodes fight over these days.

You just know they still hate each other!

Probably not as much as Poland and Holland hate Germany...

Funny, they were right about that money pit of a war we're in, too. Connection?

Cap'n Cat wrote:Funny, they were right about that money pit of a war we're in, too. Connection?

Didn't they also disagree with Obama about how much government "stimulus" was needed to get the economy going again? Connection?

UNI88 wrote:

Cap'n Cat wrote:Funny, they were right about that money pit of a war we're in, too. Connection?

Didn't they also disagree with Obama about how much government "stimulus" was needed to get the economy going again? Connection?

A little bit, but they did their own stimulus packages - which all with cash for clunkers, is credited for the growth.

dbackjon wrote:

UNI88 wrote:
Didn't they also disagree with Obama about how much government "stimulus" was needed to get the economy going again? Connection?

A little bit, but they did their own stimulus packages - which all with cash for clunkers, is credited for the growth.

If I had the time it would be interesting to do a side by side analysis of the various stimulus packages. How extensive was each? How much did each invest in pork projects of legislators vs. infrastructure and other projects with greater long-term benefit? Unfortunately, I don't have enough time for that.

I've been pretty clear that I'm not a fan of the stimulus package but IMO the primary responsibilty for how poorly it was done lies with Congress (thank you Nancy and Harry). Obama had little choice but to sign it or declare war with Congress.

I also don't have as big of a problem with Cash for Clunkers as others. I'm not a huge fan but I'm not sure it was a wasted effort short-term. Long-term, I don't think it will make a difference for which automakers succeed or fail.