Recycling Surplus

True, part of the issue though is the nature of the debt backed monetary system. Germany being a net saver, must lend tremendous amounts of money to other nations. Because all savings are also debt in our monetary system. So Germany ends up lending money all over the place, including areas where German bankers don't really understand the situation.

Japan was in a similiar situation in the 80's and lost tremendous amounts on bad investments. Now it mainly just backs up savings with the national debt, which is now at 200% of GDP. Germany hasn't been willing to take that path so far.

[quote name='Traktion' timestamp='1306836519' post='3004952']
They also loaned a lot of money to Greece - oops!

Recycling surplus cash into countries running deficits, just so that you can accumulate a [i]greater[/i] surplus is a fools game. China is discovering this, as is Germany.
[/quote]

Yep China figured it out... China is a lot smarter than Japan and Germany.  China took the exporting as far as it could go, and got the technology they wanted, and when it couldn't be pushed farther.. they made the switch to demand led growth.  First by government stimulus, then the second phase that will play out over several decades is consumer led growth.

My feeling is Japan and Germany understand what is happening but the governments are seized by the huge industrial corporations.  Which benefit so much from this arrangement.  Whereas in China the Communist Party is still calling the shots, and only views the profits of the industrial corporations in the big picture.

A similiar comparison is between China and the US-UK.  In the US-UK without doubt the banks have seized control of the political system.  And are doing things good for the banks regardless of whether it harms the populace.  While in China the big 4 banks are owned by the state, which is ran by the Communist party.