EMU crisis deepens as slump reaches Europe’s AAA core

From Ambrose Evans-Pritchard at The Telegraph:

The German economy slowed drastically over the early summer and may be on the cusp of a double-dip recession, dashing hopes that Europe’s industrial engine would eventually lift EMU’s southern bloc out of slump.

This is bad news.  I believe that the prognostication will come to pass.  One way to avoid it would be to expand German consumption, but this is easier said than done.  German savings rates have been high for decades.  The German consumer has an innate distaste for excessive debt, and indeed, the German system of consumer purchase discourages purchase on credit.  Cash is used to much greater degree than in the Anglo-Saxon economies.  Card purchases tend to be through debit rather than credit cards.  Given its historical memory and sheer logistics, this is unlikely to change any time soon.


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