The Five Wise Men

The government-appointed panel of independent economic advisers nicknamed the 'Five Wise Men' otherwise known as The German Council of Economic Experts proclaimed their expectations for 2010 and 2011.

Their predictions included consistent economic growth, lower unemployment and reduced budget deficits. They spoke of a stable if relatively flat path of growth. They also spoke strongly of the dangers inherent in their forecast.

Specifically they warned the government, and actually all politicians not to revert to populist economic policies geared to win votes but render the the running of the country unmanageable.

They advised against any "rash cuts in taxes" by the government, or "excessive increases in wages" by the trade unions. The tax cut comment was clearly aiming at the junior partners in the Merkel government the FDP, whose basic campaign platform was tax cuts. The FDP is suffering in the polls and so are pushing hard to introduce cuts sooner rather than later. The comment on wages was aimed at the opposition who recently appear to be pursuing blantantly populist policies almost regardless of the consequences.

One can only hope that the government and the opposition recognises that it is explicitly in the "good times" that one should save in order to smooth out the hard times. It is interesting when the only thing a party has to offer is by pandering to the rich with tax cuts, or to push for higher wages and increased spending as a means of getting elected.

The government is currently adhering to the advice clearly stating that their priority is to reduce the budget rather than to cut taxes, and that full employment was a major goal for her government.

It's not that hard. The economy is booming in Germany. Tax revenues are higher than expected. Unemployment is falling. This is the time to fix things, so that when things take a turn for the worse, which they will, the nation is in a position to weather it.