Germany: Stimulus free-rider

The United Nations' International Labor Organization (word file courtesy of Dani Rodrik) is keeping tabs on the world's stimulus packages. The charts make for interesting reading, filled with fun depressing financial crisis factoids.

For instance: Which countries haven't sorted out or passed their packages yet? Austria, Denmark, Greece, Iceland (no money to spend?), Ireland, New Zealand, Poland, Sweden, and Turkey.

Who's spending the most, in terms of percentage of G.D.P.? Spain (8.1 percent), China (6.9), and the United States (5.5). Brazil's the biggest cheapskate. Its $4 billion package amounts to a mere two-tenths of a percent of G.D.P.

Already, the blogosphere's parsed the data to decide which countries are pulling their weight and which are relying on others to do the spending for them.

Justin Fox at Time's The Curious Capitalist praises the U.S. and China and derides, well, everyone else:

"The concern is that if we in the U.S. do lots of stimulating and other economies don't, much of the money will just leak out overseas as we spend on imports but others don't buy our exports. China seems to be doing its part, but most of the developed world is not."

Ezra Klein agrees:

"We're doing a lot. China is doing a lot. Everyone else isn't....the global economy will be slower than it needs to be, which means national economies will be slower than they need to be (if Caterpillar's international sales sag, they'll cut U.S. jobs)."

Singled out for specific vitriol in the blogosphere is the Eurozone -- in particular, Germany, which has come under regular fire from the likes of Paul Krugman et. al. for free-riding on others' efforts. 

Megan McArdle writes:

"Europe is dropping the ball here. The euro area is being notably stingy with both fiscal and monetary stimulus, and I'm not the only one who's stonkered by it.  If fiscal policy remains too tight, it threatens the very union they're supposed to be protecting--how long can Greece and Italy, Ireland and Spain, suffer under a tight regime before one of them pulls out?  And if one of them pulls out, the other weak sisters will pay sharply higher interest rates to compensate for currency risk, probably forcing them out as well."

If there's already global tension over which countries need to do more, just think when the arguments inevitably begin over who started it...

Andreas Rentz/Getty Images


Morning Brief: China's plan

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China's National People's Congress opened today with Premier Wen Jiabao promising aggressive stimulus measures to help the country through the global recession. Wen set a target growth rate of 8 percent for the year, down from 9 percent last year and 13 percent in 2007. Wen did not specify exactly how the additional $586 billion in stimulus would be spent, though Wen did promise measures to boost domestic demand and stimulate consumer spending. Asian markets gained on news of China's new spending.

Wen also said his country is willing to open negotiations with Taiwan on political and military matters due to recent "major breakthroughs" in cross-strait relations. Again, Wen did not go into the specifics of when or how these talks would be conducted.


A defiant Sudanese President Omar al Bashir vowed to resist the International Criminal Court's warrant for his arrest on war crimes charges. Sudan has ordered several international aid agencies to leave the country in retaliation.

The U.S. navy is close to handing suspected pirates over to Kenya for prosecution.

Barack Obama renewed U.S. sanctions against Zimbabwe.

Middle East

Israeli police recommended bringing corruption charges against Prime Minister Ehud Olmert.

Iraqi Kurds have been expanding their territory, setting up a potential flashpoint for conflict after U.S. withdrawal.

A car bombing at a market in Baghdad killed 14.


Kyrgyzstan now says they're willing to negotiate a deal to keep U.S. troops in the country.

Pakistan's opposition says this week's attack on the Sri Lankan cricket team is evidence that the country's security has broken down.

Chinese officials have imposed unofficial martial law in Tibet, writes the New York Times' Edward Wong.


General Motors warned it may soon be facing bankruptcy.

The two officials ousted in President Raul Castro's cabinet shakeup have apologized for their "mistakes."

The Mexican government is concerned about getting less U.S. funding for its war on drugs.


Eurozone interest rates were slashed to a record low 1.5 percent.

NATO is moving toward reestablishing ties with Russia.

Speaking before the U.S. Congress, British PM Gordon Brown asked for international unity in fighting the global "economic hurricane." All in all, he seemed to get a much better reception on the hill than he did at the White House.