Merkel rejects Obama warnings that cuts will damage global recovery

Source: The Independent

Germany and the United States appear set for a heated showdown at this weekend's G20 summit in Canada after Chancellor Angela Merkel flatly rejected warnings from President Barack Obama that Europe's attempts to save its way out of the debt crisis could put fragile global economic growth in danger.

Germany has the continent's largest austerity package, which will see up to €80bn worth of spending cuts imposed under a draconian savings programme agreed by Ms Merkel's coalition government a fortnight ago.

...

President Obama has written to European leaders in the run-up to this weekend's G20 summit setting out his fears. "I am concerned about weak private sector demand and continued heavy reliance on exports," he wrote in a clear reference to Germany. It was announced in Berlin yesterday that Ms Merkel, the leader of Europe's largest economy, had spent 15 minutes on the phone with the US President discussing the matter.

However, in an attempt to regain badly needed popularity following her perceived bungling of the euro crisis, Ms Merkel refused to concede to US fears about growth inhibition. Defending her savings programme yesterday, she insisted: "Good savings programmes speed up private consumption because they give people a sense of security." Her agenda at the G20 is to secure an agreement for a bank and financial transaction tax.



Read more: http://www.independent.co.uk/news/world/europe/merkel-rejects-obama-warnings-that-cuts-will-damage-global-recovery-2008751.html

spending conservatively ...

The Free Democrats 'free market' foolishness is going to sink you.

It was an interesting piece. I wonder if hell be at the G20 lingering in the background with anything interesting to say

The point was about how he paid down his debt to eliminate interest payments, which boosted Canada in the long run.

You can't cut your way out of recession. The problem with Germany is they are uber afraid of hyperinflation and will go to any and all lengths to avoid even a hint of inflation. Obama's strategy of letting the Federal Reserve print as much money as fast as it can and give to the very bankers that brought on the recession is anathema to Germany. (Obama's economic strategy team is dominated by the Milton Friedman/Chicago School of economics which actually believes that simply by printing free money, a depression can be cured).

So Merkel finds herself opposing Obama's Fed with no alternative to also opposing deficit spending.

Things could get really, really, really ugly in Europe as more people will have less and less money and services. When that happens, it creates a cheap and easy political scapegoat, new immigrants.