"Austerity, wage restraint and more competitiveness for everybody – this is the prescription of German policy makers to today's crisis countries like Greece, Ireland, Portugal, Spain and Italy. Germany has applied similar policies in the first half of the 2000s and now high growth rates and low unemployment seem to be the results of those polices. However, if one reviews Germany's economic policies since the euro's introduction in 1999, one finds that growth was strangled by austerity and labour market reforms. Further, the heavy reliance on exports due to Germany's high competitiveness meant (and still means) that Germany directly profits from the debt induced growth in its export partners, i.e. the exact policies that the German government now renounces as irresponsible. Further, Germany's good economic performance since the 2008 financial crisis is not due to austerity or labour market reforms but to expansionary fiscal policies and a reduction in hours worked.In this article, it will be shown that German economic policies until the 2008 crisis did only work because Germany's European trade partners were pursuing the exact opposite policies. Germany's insistence that other countries have to copy German policies is based on the fallacy that all countries can increase their relative price competitiveness."

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