Well, actually – the prefered choice would be none of them, but given the alternatives. Here’s the laydown – Germany has been, compared to others, relatively sane during this crisis. Sure – they had a clunkers programme, and they spent some money on saving crappy banks. But as far as the figures go, they are miles behind the US, UK and other nations when it comes to spending. Agreeably, this could be simply because the German economy wasn’t so desperately mismanaged compared to others.
While Merkel and Steinbrück have stood up for fiscal responsibility, the latter has recently gone quite bonkers, and is calling for a “financial services tax” of 0.005%. Luckily, Steinbrück is a social democrat and may be out on his head after the German elections, but one does wonder – what would cause a minister of finance to come up with this insane kind of “Tobin-style” tax? Oh, and speaking of the Tobin tax – we fully expect the discussion of taxing currency trades will re-surface as american politicians and economists blame “evil speculators” for the coming dollar crash. The only difference from when Nixon said it is that this time it isn’t about gold flowing out of the Federal Reserve, because there is no link between gold and the dollar. Instead, it’s going to be about people no longer accepting dollars as payment.