Some European leaders are at odds with President Obama's economic agenda, which encourages more stimulus spending. Analysts assess the challenges at this week's G20 summit.
Read the Full Transcript
It's a gathering of the world's wealthiest nations that together account for than 85 percent of global economic activity. There's a lot at stake and some clear differences of views about how best to go forward.
We look at it now with Thomas Kleine-Brockhoff, a veteran German journalist and now senior director for policy programs at the German Marshall Fund; Minxin Pei, senior associate in the China program at the Carnegie Endowment for International Peace; and Martin Wolf, associate editor and chief economics commentator at the Financial Times.
Well, Thomas Kleine-Brockhoff, the loudest, perhaps the most public war of words in recent days has been between the U.S. and Europe, centered in Germany, over the idea of a stimulus package, something President Obama wants very much. What's the resistance from — how do you explain the resistance from Germany?
THOMAS KLEINE-BROCKHOFF, The German Marshall Fund:
Angela Merkel, the chancellor, is going to London to be the iron lady of continental Europe. She'll be a fiscal conservative. She'll oppose any new fiscal stimulus.
And the reason for that is multiple. First of all, continental Europeans believe they've already done something. They've done…
In terms of a fiscal stimulus?
They have spent considerably, especially the Germans, the biggest package. The Brussels think-tank Bruegel has estimated that those European stimulus packages amount to about half of what the U.S. stimulus package is. When you then add the automatic stabilizers, basically, the welfare system in Europe, it comes close, although it doesn't make up the difference, but it's very close.
Secondly, they think a new stimulus will cause inflation, as they believe the U.S. stimulus will cause inflation. And that triggers the memory, especially of Germans. It's not depression and deflation that the collective memory recalls; it's inflation that led to Adolf Hitler.
So if you have the old lady on the street being asked about Obama's stimulus package, she'll probably ask, "Isn't he printing money?" So that's what Chancellor Merkel alludes to.