The Reluctant Hegemon

What’s up with Germany these days?

With the Greek bailouts, they’ve conspicuously said that they don’t want to lead the Euro-zone, they just want everyone else to follow the rules. But Germany is the undisputed kingpin of continental Europe. They have the largest economy, largest population, and largest trade surplus. Since German manufacturers compete on quality, not on price, a stronger Euro doesn’t hurt their exports all that much.

Germany has become the indispensible nation. No solution to the European debt crisis is possible without their assent, or without their input. That’s one of the ironic twists of the Strauss-Kahn fiasco: the Frenchman had excellent communications with both the Greek and German leaders.

But Germany doesn’t like being indispensible. It means that they’re always wrong. In foreign policy, if they’re aggressive they’re establishing a Fourth Reich; when they abstained in the Libyan vote they were accused of being pacifists. Because Angela Merkel insisted on institution of austerity programs in Greece, Ireland, and Portugal before pledging hundreds of billions towards a bailout , it is German meanness, not generosity, that is noted.

If a populist figure arises in Germany who could exploit the public’s resentment of its involuntary leadership, Germany could pull back from full engagement. But that doesn’t seem likely right now. Instead, we have a Germany that must choose—between provincialism and a global role.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-12T10:47:28+00:00 May 19th, 2011|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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