When Things Go South…Then North

Daimler, the maker of Mercedes-Benz autos and trucks represents Germany’s industrial might. However, when even Daimler announces that they are feeling the effects of the European economic crisis, then you know something’s up; it was an ominous sign for the continent. In the past, its been that German exporters have been seen as a beacon of stability in a land troubled with dysfunctional governments, shaky banks, and the large amount of unemployed youth, including the worst automotive slump in the last two decades. Daimler’s foggy forecast for 2013 indicates that relatively healthy countries such as Germany, Austria, and Finland are at the verge of  falling into recession which has been plaguing their neighbors to the South.

In the case that Germany does fall into a recession, a lot of things would be dragged along with it. Germany and the 26 countries of the European Union together represent the world’s second-largest economy, plus a German recession would cause a further delay in the recovery of the European economy and negatively affect growth in the United States, Asia and Latin America. According to Carl B. Weinberg, chief economist of High Frequency Economics in Valhalla, N.Y. “The E.U. has made Europe a much more cohesive economy, which is good when things are going up,” he said. “But when things are going down the multiplier is very strong. An outgoing tide lowers all ships.”

Written by Kevin Zhang




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