As Greece is burning, Germany is sitting by cooly and calmly.. and playing Sudoku? Reporters had a heyday on Wednesday when German finance minister Wolfgang Schauble was caught playing a different kind of numbers game during a parliamentary debate over the Greek bailout.
And while we don’t know if Schauble won his Sudoku tablet game, the proposed €130 billion bailout package did win approval from German lawmakers, passing in a 496-to-90 vote, with five abstentions.
- As the debt crisis continues to occupy Europe, Germany is largely leading — and bankrolling — the recovery. (bk images / FreeDigitalPhotos.net)
Yet Schauble wasn’t able to escape criticism from his colleagues. Frank Schaeffler, a member of Schauble’s coalition partners the Free Democrats, told a German tabloid, “It never hurts to do brainteasers. However, you should ask yourself when the timing is appropriate.”
Schauble’s camp, of course, denied accusations that the finance minister doesn’t care about the bailout; a spokesperson said he was just taking a well-deserved break.
And in fact, anyone who has been following the situation should realize that Germany hasn’t been passive in the handling of the European debt crisis. Rather, the country has been at the forefront of finding and financing a solution.
Why? For starters, Germany has the largest economy in Europe. And of these, it is the only one to maintain a AAA credit rating, the highest available from ratings agencies Standard & Poor and Fitch. Similarly, Moody’s has rated Germany’s credit at its peak of Aaa. Though its strong economic position may seem positive, it has also left Germany increasingly responsible for shouldering the burden of a Eurozone bailout.
But based on recent data and forecasts, Germany seems poised to handle the onus placed on it by its European neighbors. While the Germany economy did contract 0.20 percent during the final quarter of 2011, it expanded 0.60 percent in the previous quarter. According to a recent government report, economics minister Philipp Roesler thinks the German economy will “suffer a growth dent” in the first half of the year, but he believes it will pick up in the latter half. The report suggests economic growth of 0.70 percent for 2012.
It’s an estimate that is supported by a current uptick in demand for German exports, which form the basis of its economy. Due to demand outside the Eurozone, factory orders are up. If the global economy is indeed gaining traction, as economist Ulrike Rondorf suggested, then not only will the German export market recover, but also the euro.
And here we are, back to the euro, underscoring the interconnectedness of the European economy and its dependence on Germany. All the uncertainty surrounding the liquidity and stability of Euro economies makes it a challenging time to predict what is going to happen in the European (and global) financial arena.
The euro has recently started to rise after being on a decline for much of the past year, as the DAX (the stock market index that includes 30 major German companies) has also climbed. It’s up 16.24 percent year to date.
But where do we go from here? The German economy shows signs of recovery – auto sales are up, exports are on the rise, share prices are increasing – but fears and doubts driven by the debt crisis continue to dominate the European commentary. And concerns in one part of the continent threaten the financial stability in another, much like a game, not of Sudoku, but Dominoes.