World Economy

German Economic Fall Could Drive Continent Into Recession

German Economic Fall Could Drive Continent Into RecessionGerman Economic Fall Could Drive Continent Into Recession

Germany last week reported its biggest one-month plunge in factory orders since the bad old days of the 2009 recession and posted its biggest one-month drops in industrial output and exports since 2009. Germany is Europe’s economic engine, and it appears to be driving the continent right into a recession, the Huffington Post reported.

After decades of pinching deutsche marks, Germany is arguably the only country in Europe with the spare cash to throw at this problem.

Global economic leaders at International Monetary Fund meetings in Washington last weekend hammered on Germany to spend some of its money.

But German Finance Minister Wolfgang Schaeuble declared that “writing checks” won’t fix economies and even urged France and Italy to take on more austerity.

Schaeuble’s refusal to change is the latest example of a long-lasting German obsession for austerity, tracing back to the years after World War I, when inflation got so bad that Germans toted cash in wheelbarrows. Germany’s economic psyche was so scarred that it vowed to avoid inflation forever. Sounds reasonable, and that approach has worked out well for Germany -- until recently.

For the past several years it has resisted using its cash stockpile to help itself or its neighbors, despite an ongoing depression, and it has insisted that its neighbors be just as austere as Germany, plainly worsening the depression.

It’s a pathology that other nations in Europe and the world now see, but Germany refuses to admit -- even though its infrastructure is starting to crumble along with its economy.

So it falls on the European Central Bank to try to keep Europe’s economy afloat -- but Germany is fighting that, too. ECB chief Mario Draghi wants to try out some Federal Reserve-style bond-buying soon, but the head of Germany’s Bundesbank is against the idea, causing a distracting rift at the top of the central bank.

Austerity fever -- egged on by a now-discredited research report that claimed government debt is bad for economies -- has been hurting economies around the world since the Great Recession.