German economic advisor sees worst crisis since 1945
DPA/The Local · 22 Mar 2008, 14:42
Published: 22 Mar 2008 14:42 GMT+01:00
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Peter Bofinger, one of Germany’s so-called “wise men” who advise the government on economic matters, wrote in a guest commentary in the Bild am Sonntag that the international financial system is in its worst crisis since World War II.
He added that there were clear risks to Europe’s largest economy, mainly due to the continued strength of the euro.
“The federal government can not simply look away,” he said in a separate interview with the Passauer Neuen Presse .
“Since autumn, the euro has increased by around 10 percent on the dollar,” Bofinger said. “A 10 percent increase means half a percentage point less growth for Germany.”
He stressed the differences between the situation in Germany and in the United States.
“The growth upswing in Germany is not an upswing bought on credit,” he said. “Where there is no credit bubble, there can’t be a credit burst.”
But in addition to stronger government intervention, he also recommended changes in lending practices so that loans once again go through traditional banks, and not via less conventional intermediaries.
As to a prescription that would alleviate the world’s economic ills, Bofinger said an international effort would be more effective than any single national approach.
“Those countries which in recent years have registered a big balance of payments surpluses – China, Russia, Japan, Germany, Switzerland and oil-producing nations – should together consider how to make a contribution to revive the global economy,” Bofinger said.