An interesting take on a conundrum all-too-rarely faced in discussions of the crisis: how to revive demand without pumping up the kind of credit excess that will almost certainly lead to another crisis. Bertrand Benoit, the Berlin correspondent for the Financial Times, writes that this issue has turned into a big point of contention between Germany’s (and hence, to a not inconsiderable degree, the entire Eurozone) policymakers and Anglo (US, UK, etc) ones.
Why the Germans just hate to spend, spend, spend
By Bertrand Benoit
Published: November 28 2008 19:24 | Last updated: November 28 2008 19:24
To the German radio presenter, the real news about the measures announced by Washington on Tuesday to jolt banks into lending again was not so much the astronomical costs, but a little-noticed comment in Hank Paulson’s statement.
“Millions of Americans,” croaked the US Treasury secretary, were being denied credit or facing rising credit card rates, “making it more expensive for families to finance everyday purchases”. The notion that families should finance everyday purchases on credit, the anchor commented, “suggests Washington has still to understand what brought us there in the first place”.