Morning Must-Read: Wolfgang Münchau: Germany’s Weak Point Is Its Reliance on Exports

Wolfgang Münchau: Germany’s Weak Point Is Its Reliance on Exports: "What is the reason for Germany’s weakness?...

...The root cause of the problem is the age-old over-reliance on exports--and on plant and machinery exports in particular.... There are no signs of a strong global recovery, let alone of a global investment boom. It is thus reasonable to expect a mediocre performance by the German economy for a while.... On top of that comes a demographic shock.... Now both the core and the periphery are weak. And policy is not responding sufficiently. Add the two together and it is not hard to conclude that secular stagnation is not so much a danger as the most probable scenario."

Mario Draghi has a plan for the Eurozone--an inadequate plan, an optimism-of-the-will plan (at best), but a plan. What do his policy adversaries have? The hope that somehow a strong U.S. recovery and rising U.S. interest rates will produce a falling euro and thus a renewed European export boom, and the hope that they will somehow find a way to use the debt capacity of northern Europe to induce a northern European privately-funded infrastructure boom.

Hope is not a plan.