Have a Good NEWS

own history of Germany shows that the economic downturn dictates to other nations that stores problems for the future

A country facing profound economic and political: the government is on the verge of bankruptcy and is a fierce austerity, public employees take huge cuts in wages and taxes are increased dramatically, economic depression and unemployment rates are exploding, people are fighting each other in the street that the collapse of banks and international capital fled the country. Greece in 2011? No, Germany in 1931.

head of government is not Lucas Papademos, but Heinrich Brüning. "Hunger chancellor" cuts in government spending by decree, bypassing parliament, while GDP falls without limit. Two years later, Hitler came to power eight years after the Second World War will begin. Current Policy is always different, but the parallels are alarming economic.

As countries in the current crisis, the key issue in Germany in 1931 was foreign debt. The United States was the largest creditor of Germany, Germany's debts were denominated in U.S. dollars. Since mid 1920, his government had borrowed large sums of money abroad for repair service payments vis-à-vis France and Great Britain. As foreign financing credit Roaring Twenties in Germany - the economic boom after the hyperinflation of 1923. As now in Spain, Ireland and Greece, Germany 1920 increase is due to a credit bubble.

The bubble burst when the U.S. financial markets collapsed in 1929. U. S. Investors and banks have been hit hard, losing confidence and reduce risk - especially investment in European assets. The flow of credit in Germany, Austria and Hungary came to a sudden halt. U. S. Investors Reichsmark did not want - the currency of Germany - but the dollar, a coin of the German Reichsbank could not print. The withdrawal of dollars from Germany - especially the German bank deposits -. Leads to the depletion of foreign reserves of the Reichsbank

to earn dollars from Germany had to turn its huge current account deficits into surpluses. But as the crisis countries today, Germany was caught in a monetary system with fixed exchange rate, the gold standard, and could not devalue its currency. However, even before leaving the gold standard, Chancellor Brüning and his economic advisers feared the inflationary effects of devaluation and a repeat of the hyperinflation of 1923.

None of dollar liquidity abroad, the only way the government could transform the current account deflation was strong and the cost of wages. In just two years Brüning government spending reduced by 30%. The Chancellor has raised taxes and cut wages and social security costs facing rising unemployment and poverty. Real GDP fell by 8% in 1931 and 13% a year later, unemployment has increased by 30% and saved money overflowing out of the country. The current account moved from a huge deficit into a small surplus.

But there was enough money in global markets. In 1930, Congress had introduced the Smoot-Hawley tariff, to prevent imports. Countries with debts in dollars were cut from the U.S. market and failed to win enough money to pay their debts. The situation does not improve when President Hoover proposed a one-year moratorium on all foreign debts of Germany. The moratorium was opposed both by the French - who insists on German reparation payments - and the U.S. Congress. When Congress finally approved the moratorium in December 1931 was too little too late.

Germany is to insist on its current account surplus. These are, by definition, the deficit of the countries in crisis. So keep these countries to earn money to pay their debts. In addition, Germany is strongly opposed to credit liquidity from the ECB. German economists and the central bank to justify the passivity of the ECB to the threat of inflation. But the mixture of historical lessons of the crisis of hyperinflation in Germany in 1931 and 1923 of deflation and unemployment.

This lack of criteria can be cons-productive: the reputation of Germany in Europe is already declining, political tensions in countries in crisis with record unemployment rising dramatically and more Euro area likely separation would jeopardize the German economy, in particular banks and exports.

Find best price for : --Germany----Portugal----Brüning----Lucas--