FRIDAY MAY 21, 2010

Feeling sorry for the Germans

The Germans are being asked once again to bail out a neighbor.  The Germans are one of the few countries that learned its lesson about hyper inflation.  It is a rare feat for countries to remember the pain of inflation 80 years after the fact.  Do Americans, and more importantly our politicians, remember 1980?  Based on our spending policies and debt levels, apparently not!  The Germans have managed to maintain fiscal discipline better than any other developed country.  Their reward is being declared the Chief Bailout Agent for the world.  First, they had to absorb East Germany and the awful remnants of Communism.  Then, to some extent, they had to help with the latest economic crisis even though their economy avoided the worst of the subprime debacle.  Now, they are once again being asked to bailout their profligate neighbors to the south.  One can't help feeling sorry for the Germans.

However, there is one silver lining in this for the Germans.  The main consequence of the Greece situation is a strong deterioration in the value of the Euro.  The German economy is an export driven economy.  The Germans are rightfully angry with the latest bailout of Greece, but their economy will be given a shot in the arm by a weaker Euro, as their high value products will be cheaper world wide.  Look for strong export growth out of Germany.  Maybe we shouldn't feel that bad for them! 

POSTED AT 1899-12-30 08:19:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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