Connect to share and comment

The German perspective

Opinion: Don't expect much from "Madame No" in London.

German Chancellor Angela Merkel reacts while taking to U.S. National Security Advisor James Jones (not pictured) at the 45th Conference on Security Policy in Munich Feb. 7, 2009. (Michaela Rehle/Reuters)

Sorry, President Obama. Don't expect Germany's Chancellor Angela Merkel to pledge another stimulus package at the April 2 G20 meeting in London.

Ahead of the summit, Merkel has repeatedly rejected calls by Washington to spend more public money in Germany as part of a coordinated stimulus for the world economy.

"The crisis did not come about because we issued too little money, but because we created economic growth with too much money, and it was not sustainable growth," she said in a recent interview with the Financial Times.

Instead, Merkel is expected to push the German view: tightening regulation of financial markets, strengthening the role of the International Monetary Fund, and calling for a clear statement against rising trade protectionism.

Merkel's response to the world economic crisis has earned her the nickname "Madame No" in
the media across Europe. But to understand Merkel's hard line on spending, you need to understand German history, psychology and, of course, politics.

Fiscal conservatism in Germany — and fear of inflation — runs deep in Europe's largest economy. Indeed, the two are ingrained in the German psyche after hyperinflation in the 1920s wiped out the savings of most Germans. In December 1923, one dollar was worth 4.2 trillion marks. This hyperinflation was an economic calamity that paved the way for the rise of the Nazi party.