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The Economist was right when it recently reported that Germany's current-account surplus is too high.Some say that Germany has a high export volume because it manufactures high-quality products, while others argue that Germany imports too little, because its wages are too low.Germany thus has a surplus of savings over investments, and needs to save less and invest more.The excessive Keynesianism used to legitimize indebted eurozone countries' lack of budgetary constraints during the crisis also caused capital to be sucked out of Germany, when investors actually tried to retreat from Southern Europe.In fact, roughly half of the net foreign assets that Germany has accumulated through its past current-account surpluses now comprise mere Target claims on the Bundesbank's balance sheet, which currently stand at 861 billion euros (just over $1 trillion).Second, southern eurozone countries and the U.S. could finally return to a policy of disciplined debt management. This would reduce their imports from Germany and hence capital outflows from Germany, which is measured by the current-account surplus. Logic dictates that Germany cannot simultaneously reduce its current-account surplus and continue to extend cheap public and private loans to other countries.
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