Friday, 4 February 2011

The Economist gets it wrong (again...)

I'm always amazed at the number of people outside of the financial world who think the Economist is a great magazine.

Oh, sure, I read it. But I don't take it too seriously. Their habit of embedding ideology in reportage is irritating. But it's their prognostications that make their "analysis" so laughable. Take a look at this week's edition:

Germany was the star performer among the rich G7 countries over the past ten years...

Last year its GDP grew by 3.6% ... America managed 2.9%. Growth in the rest of the euro zone probably fell short of 1%. Exports have been Germany’s main engine: they jumped by 21.7% in the year to November. In the first ten months of 2010 sales to China were already 17% higher than in the whole of 2009 and 46% higher than in 2007. 

- The machine running smoothly, 3 Feb 2011

Compare this with what they were announcing just 5 years ago:

[The] coalition may well not last much more than two years. The risk is not only that Ms Merkel's coalition will follow wrong-headed economic policies; it may also turn out to be unstable as well. Poor Germany.

- Taxing Times, Angela Merkel's coalition programme risks doing serious damage to the economy, Nov 17th 2005

As if to justify their change of heart, The Economist makes this absurd claim in the latest magazine:

Germany’s biggest companies ... a decade or so ago seemed to have been left behind by foreign rivals ... Siemens, which used to be content to sell overengineered and overpriced trains and generators to captive German buyers, has taken a leaf from GE’s book...

Huh? Was The Economist not aware of the magnetic levitating train that Siemens started building for the Chinese over 10 years ago?

What Germany has done is encourage and concentrate on engineering while the profligate Anglo Saxon economies outsourced technology and ran up debt.

I put my money where my mouth is regarding Germany and in 2007 sold my shares in British banks and  bought an apartment in Berlin shortly after. I avoided the crash and the investment has done quite nicely.

I've come to recognize that reading The Economist can seriously damage your wealth.

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