Wolfgang Schauble — the German Finance Minister who made headlines last week blasting QE2 — takes on Tim Geithner and the currency-war debate in an excellent, in-depth interview in Der Spiegel.In particular, he takes on the idea pushed by Tim Geithner, that the world’s major exporters have some sort of obligation to limit their current account surpluses via the currency market.
Naturally Schauble rejects this view:
SPIEGEL: But the German economy benefits from the fact that German industry has focused primarily on foreign markets and wages have hardly gone up in years. The Americans see this as unfair.
Schäuble: The German export successes are not the result of some sort of currency manipulation, but of the increased competitiveness of companies. The American growth model, on the other hand, is in a deep crisis. The United States lived on borrowed money for too long, inflating its financial sector unnecessarily and neglecting its small and mid-sized industrial companies. There are many reasons for America’s problems, but they don’t include German export surpluses.
SPIEGEL: The US government sees it differently. It wants to see German exports to the United States curtailed in the future once they reach a certain threshold. Will you give in to the pressure?
Schäuble: The proposal is not acceptable for Germany under any circumstances. If we were to introduce such measures, we would be restricting international competition. But for years we, together with the Americans, have believed that world trade needs to be opened up further. We should stick to that approach and, for example, press ahead with the Doha round to promote world trade. This would stimulate global growth far more effectively than a bilateral agreement on quotas.