Chapter 141 EU 'fiscal discipline' must be learned

Having said that, I do not deny that Germany is too globalized and too Americanized.Although Germany's large enterprises are very competitive in the globalized economy, they are now showing signs of decline.Daimler is a notable example. In 2007, Daimler announced that it could no longer support Chrysler and chose to let go. Siemens, a representative large company in Germany, strictly reviews the economic value added (EVA) every quarter, and implements management methods that have never been thought of before.I know the way Siemens does business well, and I'm sorry to hear about them recently because they are heavily influenced by the way they are run in the US.

The American-style quarterly management method, the method of market value, the tendency to focus on shareholders, and achievementism...these drawbacks of American-style management have all been implanted. However, one thing that cannot be forgotten here is that German companies have the special factor of "Germany is a member state of the European Union".What would happen if Germany were not a member of the EU?Can he still be respected by the world like he is now? Why is the factor of "EU membership" so important? Neither Japan nor the United States have strict financial management, and they don't take capital operation methods seriously at all. Even if the country is heavily indebted, it doesn't worry about it.However, because the EU has the Maastricht Treaty (Maastricht Treaty), EU member states are fiscally disciplined.

This is the minimum condition for joining the EU, and the guidelines that must be followed - curbing inflation, low interest rates, reducing fiscal deficits (accounting for less than 3% of GDP), reducing government debt (accounting for less than 60% of GDP), and stabilizing the country Currency to Euro exchange rates, etc.Under the influence of these special factors, the influence of the euro has become stronger. If Japan wanted to join the European Union, it would be rejected immediately, so you can see how good these special factors are.Some member states have reached these benchmarks, and some are working hard to achieve them, so the euro is highly valued in the market.

I once mentioned the euro in "New Capital". I think there will be a war between Europe and the United States, the euro and the dollar in the future, that is, the "Battle of the Atlantic".This bold idea is based on the strictness of EU fiscal discipline. If all EU countries abide by this discipline, the influence of the euro will become very strong.At that time, the citizens of the United States will also exchange their dollars for euros.That said, I think international diversification will start with the Americans, it's just that the subprime issue may make that day come sooner.

The euro has just surpassed 25% of the world's reserve currencies, and the U.S. dollar has remained above 60%.However, soon the euro will exceed 30%, and the dollar will drop to 50%.Although the yen used to account for 10% of the world's reserve currencies, it now accounts for only 3%.The yen will not become an international currency. As an investor, the European Central Bank (ECB) has insufficient means to protect exchange rates. The flaw in this mechanism was exposed in the financial crisis.I think as long as this problem is solved, by 2020, the EU will become the world's largest country worthy of the name.

With fiscal discipline, the currency will be trusted, which is also associated with the country's credit.However, Japan does not.Therefore, in the long run, the influence of the yen will not become stronger. The U.S. finances are the same as those of Japan, so the influence of the U.S. dollar should not be too strong in the future.Like this, with fiscal discipline, the country will be trusted and the value of the currency will increase. Due to the impact of the financial crisis, European countries have introduced different countermeasures.After the financial crisis comes to an end, it is necessary to summarize these countermeasures and restore the overall lineup of the EU.If only the leaders of the countries had the wisdom of the leaders of the European Union (Jacques Delors, Giscard d'Estaing, Helmut Schmidt)...

Of course, the most important thing to learn is fiscal discipline.