Re:China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says
by chadcmulligan on Thursday May 25, 2017 @08:03AM
(#14416769)
So how does Germany manage to avoid the same situation?
[ Parent
| on HN ]
Re:China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says
by ethbro on Thursday May 25, 2017 @10:03AM
(#14417338)
By being politically dedicated to maintaining low levels of debt:GDP. It's easier when, as parent said, your voters remember what happens when things go really badly.
Re:China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says
by ryandamm on Thursday May 25, 2017 @01:10PM
(#14418588)
But this is actually why the euro isn't an optimal currency area. Germany's low levels of debt:GDP are a result of explicit suppression of the household sector -- a deal struck by Merkels government with labor unions to restrain wage growth.
This kept German industry competitive, and enhanced exports. This overall made the euro stronger, but not as strong as the deutschmark would have been. Greece suffered from the other end: they became less competitive by being tethered to Germany's economy.