Back on 19th May I wrote “I think Germany finally has had enough. Enough of being blackmailed by Sarkozy and enough of telephone calls from Obama. The German’s don’t like being told what to do.” (Things Get Political and Nasty). Since then tensions have risen.
My point then was that what the US needs and wants by way of conditions for an economic recovery are no longer those that Europe or indeed China need. Being openly opposed is not something the US is used to. But the disagreements are not going to go away, they are going to get worse. The fact is Europe and the US do now have different agendas and they do not sit happily together. I have written a number of pieces making this argument. (US starting Season of Pain June 22, US politics out of sync June 24 and EU?US Non-AgressionPacy June 27)
My point has been two-fold. What we are seeing is a major re-allignment of relations and the US finding itself in a weaker position than it had imagined.
Today Bloomberg carries and intersting piece which adds fact sand figures: – http://www.bloomberg.com/news/2010-07-07/hamburg-deaf-to-u-s-nonsense-as-german-recovery-reliant-on-port-exports.html
The piece gives the figures to shows that not only is Germany a very large and successful exporter it is also a large exporter to China. And the quotes show clearly that German exporters see no reason at all why they should curb their success in any way for anybody. And with the Euro down about 12% against the Dollar the US is going to start to feel that not only China but Europe as well should re-value their currency.
The US is stuck with a strong Dollar and it is hurting their chances of recovery. Certainly their chances of an export led recovery. America’s reserve currency and safe haven status allow it to have astronomical debt levels and still sell even more debt. But it is hurting them on currency value.
The US has a painful policy conundrum in front of it and is feeling that everybody else’s recoery plan are at odds with their own.
What worries me is that the most hawkish nation on earth won't take this lying down.
I think that is a lot of people's worry.
A very good site if you want an interesting perspective on politics is deep politics forum. I know some of the people there and know they are, shall we say, very well informed.
You have to dig though.