Germany is #1 (and we are too)

Germany has finally surpassed China, and now has the world’s largest current account surplus; $202.9 billion according to The Economist.  But the US has an even more impressive achievement; the world’s largest capital account surplus; and astounding $473.4 billion.  Germany may produce nice cars, but no one can beat our assets.

China may have lost it’s trade supremacy, but it will soon have the world’s largest building:

“Have you seen the world’s biggest building yet?” shouted Stephan Wurster, an affable 38-year-old Stuttgart native who moved here in December after three years in Beijing. Both he and Kamaljot Singh Panesar, a goateed British architect at the table, have offices in development zones mushrooming on the plains south of Chengdu, not far from a half-completed behemoth called Ocean Park. Under a single roof covering an area of about 25 football fields, Ocean Park is designed to include hotels, shopping malls, aquariums, amusement parks and a simulated ocean with a white-sand beach. (The ultimate “Truman Show” touch: the 660-foot-wide video screen that will allow beachgoers to enjoy brilliant digital sunsets, even when clouds and pollution block the real thing.)

I love Chengdu—can’t wait to visit and see that sunset!

PS.  I’ll be traveling and won’t have much time to blog for a few days.



29 Responses to “Germany is #1 (and we are too)”

  1. Gravatar of Robert Robert
    28. March 2012 at 18:19

    I live in Chengdu and have never heard about that building… Pretty pathetic that I’m now getting my local news from the place I like to get my U.S. monetary policy opinion.

  2. Gravatar of ssumner ssumner
    28. March 2012 at 18:41

    Robert, Don’t forget to visit JiuZhaiGou!

  3. Gravatar of Majorajam Majorajam
    28. March 2012 at 18:58

    No doubt! Of course the people buying those assets are beaurecrats working for foreign central banks who work for conflicted and unscrupulous politicians and autocrats, but that doesn’t change how much of a win our large and persistent pattern of consuming more than we produce and investing a smaller and smaller percentage of what we earn is. I mean, if all that can’t be seen as positive, than nothing can.

  4. Gravatar of Major_Freedom Major_Freedom
    28. March 2012 at 21:40

    But the US has an even more impressive achievement; the world’s largest capital account surplus; and astounding $473.4 billion. Germany may produce nice cars, but no one can beat our assets.

    Oh if only the capital account surplus really did signify superior assets. But alas, not all capital surpluses are created equal. In our case, a substantial portion of the capital account surplus reflects a still growing problem of foreign debt financed consumption. This particular money isn’t entering the US to be invested in income producing assets, but rather to finance consumption.

    The monthly trade deficit is now over $50 billion a month.

  5. Gravatar of Lorenzo from Oz Lorenzo from Oz
    28. March 2012 at 21:45

    Coming from a country that has a Current Account Deficit for the best part of two centuries, it is amazing how much angst folk can expend on such things. Indeed, the US has been a CAD country for far more of its history than it has been a CAS country. People forget that assets are not static.

    Personally, I think the way Americans can sell promises so cheaply is pretty clever.

  6. Gravatar of Major_Freedom Major_Freedom
    28. March 2012 at 22:17

    Lorenzo from Oz:

    Not all current account deficits are made equal.

    Imagine two scenarios: A section of shoreline where oil is discovered, in which case capital goods and consumer goods are imported into the area while the oil rig is being produced, and in the other case, a household that keeping borrowing to consume, in which case consumer goods are imported into the home.

    In both cases, there is a current account deficit (imports exceed exports) in the area.

    But one of them is not sustainable.

  7. Gravatar of Johannes Johannes
    29. March 2012 at 04:04

    Zimbabwe has 6 times as much attractive assets than the USA relative to their GDP. 😉

  8. Gravatar of ssumner ssumner
    29. March 2012 at 04:23

    Everyone, All good comments—that’s all the time I have today.

  9. Gravatar of Cthorm Cthorm
    29. March 2012 at 06:12

    Good morning. New GDP & GDI numbers seem to shed new light on the unexpected strength in hiring. Here is Cardiff Garcia. Q4 GDI came in at a relatively strong 4.4%. GDI/GDP for the second half of 2011 came in at 3.5%/2.4% respectively. So it seems to me there has been a sustained bump in growth (still well below where we should be to catch up), and certainly not driven by easier money. My gut tells me the strongest contributors were probably Nat Gas (obviously near the Bakken fields) & auto manufacturing (still benefiting from very depressed sales levels). I suppose the meta analysis now is whether the Fed is willing to boost inflation (still below their target!) with stronger RGDP.

    The continued slumber of the housing sector is interesting to me. I wonder how much quicker it would have recovered had the Gov’t not imposed foreclosure moratoriums, thereby delaying market clearance.

  10. Gravatar of Patrick Patrick
    29. March 2012 at 06:31

    There is another side to the German current account surplus. Take a look at this quote from an article I read earlier on the blog of the economist Shaun Richards.

    “Multi-speed Europe: German unemployment figures

    This morning the latest (February 2012) labour market figures for Germany have been rather eloquent in contradicting Senor Monti. From Germany’s statistics agency.

    The number of persons in employment was by 550,000 above the level of the previous year.

    the number of unemployed was down 9.8% in February 2012 on February 2011. It declined by 270,000 to 2.49 million

    The numbers illustrate the divergence between the German economy and virtually every other Euro zone economy.”

    Employment up and unemployment down is a consequence of the German current account surplus. Wouldn’t others love to be in the same position?

  11. Gravatar of OGT OGT
    29. March 2012 at 07:43

    As David Beckworth once wrote, we have a comparative advantage in creating (and selling) debt.

  12. Gravatar of Cthorm Cthorm
    29. March 2012 at 07:48

    This just in: Senate Banking Committee approves Fed nominees Powell and Stein.

  13. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    29. March 2012 at 08:12

    Don’t expect the train to take you there;

    ‘The boom has turned to a bust, and the issues facing rail are symbolic of the risks in China’s broad infrastructure spending: 1) It is a key source of rent seeking and grey income; 2) The fast build-out may have come at the risk of quality and safety; 3) Projects are far ahead of demand and have dubious cost-benefit rationales; 4) The lack of demand for the infrastructure and the cash flow mismatch have guaranteed the unsustainable rise of debt at MOR and local governments. If China is to get rich tomorrow, [Fixed Asset Investment] needs to slow today.’

  14. Gravatar of StatsGuy StatsGuy
    29. March 2012 at 10:08

    Statistically, we’ve known for a long time that skyscrapers predict financial crisis.

    Just sayin’

  15. Gravatar of Morgan Warstler Morgan Warstler
    29. March 2012 at 10:27

    Perhaps in Scott’s absence we should all post links to pictures of hot women, to help with his google juice.

    Becky (and anyone else) feel free to post links hot men.

    I’ll start:

  16. Gravatar of StatsGuy StatsGuy
    29. March 2012 at 10:36


    “I think the way Americans can sell promises so cheaply is pretty clever.”

    I think you mean sell promises at such a high price. We get paid top dollar for our promises, so to speak.

  17. Gravatar of ChacoKevy ChacoKevy
    29. March 2012 at 11:55

    Can’t wait to get out of work to follow Morgan’s link. I anticipate nothing less than epic troll!

  18. Gravatar of Jason Odegaard Jason Odegaard
    29. March 2012 at 12:35

    Haha, funny Morgan. But I was hoping for a Rickroll.

  19. Gravatar of Art Patten Art Patten
    29. March 2012 at 13:01

    @ Major_Freedom: “In our case, a substantial portion of the capital account surplus reflects…foreign debt financed consumption.”

    How so? They sold us goods, we gave them dollars. They then swapped those non-interest bearing liabilities of the USG for interest-bearing ones or for non-USG assets.

    The desire of foreign entities to sell things for USDs results in a healthy capital account; calling it “foreign debt financed consumption” gets it backwards, I think.

  20. Gravatar of Art Patten Art Patten
    29. March 2012 at 13:04

    @ Cthorm: Growth “certainly not driven by easier money.”

    This is probably heretical here, but could it not be driven by USG budget deficits persistently in the high single digits?

  21. Gravatar of Becky Hargrove Becky Hargrove
    29. March 2012 at 13:21

    Do your real classrooms ever get this unruly?

  22. Gravatar of Doc Merlin Doc Merlin
    29. March 2012 at 14:59

    “I think you mean sell promises at such a high price. We get paid top dollar for our promises, so to speak.”

    Yep. Although I wonder what the price would be if the Fed didn’t buy any.

  23. Gravatar of Rien Huizer Rien Huizer
    29. March 2012 at 17:52


    Enjoy! I finally got it: your post talks about how architects are designing beautiful buildings whose designs are used solely for a very different purpose, to gain access to state resources (“marketing”). But you meant to criticise the use of another type of design expert, the economist, in a policy marketing role when the political sponsor calculates that the attractive design will create space for the politician’s selfish behaviour. INstead of going to Chengdu, you should visit nearby Chongqing. Retro Maoist benevolence.. No need for experts, just social forces

  24. Gravatar of D R D R
    30. March 2012 at 05:37


    Increased foreign demand for dollars means that U.S. exports to the rest of the world become more expensive and U.S. imports from the rest of the world become less so. That pretty much assures a larger trade deficit.

    Much more interesting is the question of why there is such demand for dollars.

  25. Gravatar of Morgan Warstler Morgan Warstler
    30. March 2012 at 12:57

    econbloggers thing was great.

    Scott has to start picking better fights. At least this much should be apparent whenever he’s speaking:

    Also, I’m pretty certain I better understand DeKrugman’s want of Fiscal.

    It’s because of my theory about the GOP spending all the money.

    His voice dripped with derision when he spoke about all the work he did during Clinton administration to get to a balanced budget, and then just 18 months it was destroyed when GOP took over.

    He cannot ever bring himself to get fooled into caring about budgets again, because he knows what all they sacrificed under Clinton.

    For him more fiscal spending is not about fixing the economy, it is the actual goal…. the end in itself.


  26. Gravatar of Morgan Warstler Morgan Warstler
    30. March 2012 at 13:26

    I friggin called it!!!!

  27. Gravatar of Lorenzo from Oz Lorenzo from Oz
    1. April 2012 at 01:08

    Statsguy: Yes. I made meal of saying selling something you can make so cheaply for so much.

  28. Gravatar of ssumner ssumner
    1. April 2012 at 12:17

    Cthorm, I think monetary easing might have helped a bit in the 4th quarter, although it’s hard to be sure. But real factors certainly explain some of the growth.

    I agree that the RGDI numbers are probably more accurate than RGDP.

    BTW, Never say “GDI” or “GDP” over here unless you mean nominal. 🙂

    Patrick, I doubt the CA surplus played a role. We had a huge deficit and Germany had a big surplus in 2005, and yet German unemployment was more than double US levels–they were called the sick man of Europe.

    I’ll be taking the fast train from Beijing to Shanghai this summer.

    Morgan, As usual, it took me about 15 seconds to “get it.”

    Becky, No. I’m much more boring in the classroom.

    Rien, Clever, but seriously in China today Maoism is just another fashion style.

  29. Gravatar of genauer genauer
    3. April 2012 at 11:29

    I always wonder, how people want to understand german unemployment etc. numbers without talking reunification and income distributions

    for CA please see page 4 of:

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