Merkel's scary quote

In today's Herald Tribune interview, she utters these unsettling words, in the context of resisting urges to get on the stimulus bandwagon:

“International policy is, for all the friendship and commonality, always also about representing the interests of one’s own country,”

Alas. Here is the crux of the problem, in one tidy sentence. When the leader of Europe's largest economy (and the third largest in the world, after the US and Japan) speaks in such a bluntly nationalistic tone, we're all in trouble. And while Gordon Brown is sending us happy signals (British PM Points to Coordinated Progress Before Economic Summit) that Europe will be united at the G-20, Ms Merkel could not be more starkly in opposition to anything 'coordinated' along the US/UK model of fiscal stimulus and bank rescues.

And Ms Merkel certainly has skin in the game. As the Herald Tribune points out "she finds herself at the helm of the world’s largest exporter of goods at a moment when world trade is collapsing". (In her defense, she also finds herself the leader of a rapidly aging populace, making spending challenging and deficits more difficult- tho by no means impossible - to finance in the future). Let's not lose sight of the fact that Germany is one of the world's largest surplus nations. If surplus/export nations feel they do not need to act on fiscal stimulus, look out below! And do note that China - another massive surplus/export country - has itself embarked on a massive stimulus program. Germany could learn a lesson from the Chinese, it would seem, if not from the Americans and our deficits.

Per Martin Wolf, one should never expect much economic leadership from the Europeans. But you'd think that the leader of the world's largest exporter would be keenly interested in finding ways to stimulate global demand in the midst of a 'collapse' in global trade and the worst economic crisis since the 1930s. I rather think that could even be construed as being in Germany's self-interest and be marketable in a re-election campaign....

Merkel is acting as though this crisis is not as bad as it is. (She's not alone in this - see Congressional Republicans, for one large group in denial.) Recall how she pretty high-handedly refused to help out Central and Eastern European nations a few weeks ago. There's one more quote along these lines which struck me: “On an international level, we must all recognize that after the crisis we need to return again to solid financial policies" "After the crisis...."? What an amazingly passive construction! Sounds to me that the German Chancellor is assuming that this crisis will somehow magically solve itself, and shall soon pass, and that Germany thus need not change anything it's been doing for years now.....

Such thinking seems guaranteed only to deepen this crisis.

Here's the article: Merkel Is Ready to Greet, and Then Resist, Obama