The German economy

[Yupster]

The Wall Street Journal had an interesting story about the German economy today. If there are any Germans on tonight, I'd like to get your firsat-hand opinions.

The basic point of the story was to say that the German economy was in a crisis. There were many similarities with the US economy, but it was worse.

Major points I got from the story...

Since 1970, the number of workers paying payroll taxes is up 4 %. The number of people drawing pension checks is up 80 %.

In the past these demographic changes have been addressed by raising the payroll taxes, but that's no longer considered an option.

The unemployment rate is 11 %, and over half of the unemployed have been so for more than a year. Our unemployment rate is 6+ and the percentage of those unemployed for a year is under 10 %.

Germany is having massive job relocations, especially to eastern Europe. It gave examples of companies moving to Czech Republic especially, and high tech jobs especially.

If there are any Germans on tonight, please give your opinions. Is Germany in as much trouble as this article seemed to say it was?

[On the Road]

1. My Cousin Johann is a Lawyer for the German Railroad

I just spent a week with him and his family in Brussels. We talked a lot of politics and economics.

I heard a lot about the problems the West German economy had in absorbing East Germany. For political reasons, the monetary exchange and other economic rewards were made very generous for the East Germans, which helped them but hurt the entire economy.

He also talked about the upcoming demographic crisis, which is worse than the US due to lower fertility rates, lower immigration, and especially the generous German social security system.

I'm sure there are upsides. Germany is still a heavy net exporter. Economic intergration will help Germany expand its economy throughout Europe. Europe as a whole may do better under a liberalized and intergrated EU structure. Germany's technical and industrial base are the biggest and best on the continent. But it does have some serious challenges.

[mhr]

2. US Unemployment is 10.6%

not 6.4 %.

It all depends on how you count. In this respect the US economy shares some aspects of the German economy.

The government keeps track of six different unemployment rates U1-U6.

U3 is the commonly cited rate you see in the press. This only covers people filing for unemployment insurance. U6 covers U3 plus all the people that have exhausted their unemployment benefits.

These numbers can be found at www.bls.gov.

A good article discussing U1-U6 can be found here:

http://www.kansascity.com/mld/kansascitystar/business/5962629.htm
-------------
May 29, 2003

Unemployment: It depends on how you define it

By DIANE STAFFORD
Columnist

You've been out of work for 18 months and know 15 others who are vainly
job hunting. You suspect that the 5.8 percent unemployment figure for
April is government propaganda.

In your world, things are much worse off. And, guess what, in your
world, you're right.

The "real" unemployment rate for you is 9.8 percent. You can look it up.
It's every bit as real as the 5.8 percent that was reported in the
media. So what's the deal?

The deal is that there are six government-sanctioned definitions of
unemployment. The six measures produce a broad range of unemployment
numbers. For April 2003, the range was a scant 2.5 percent to a scary
9.8 percent.

Snip ...........

[Sirius_on]

3. 10% may very well be correct.

Out of the 10% I would have to say that 6-7% of them are desperatly looking for work, while the other 1-2% would not want a job under any circumstance. The remaining percentage would not work even if you put a flame undre there ass (circa 1997), simply put...they are too lazy to work.

[Yupster]

4. So which definition

are the Germans using?