Analysis: Germany's Financial Turnabout

Germany is the world's leading exporter and fourth-biggest economy, but during the global financial meltdown, it has also been among the most tightfisted. For months, German leaders have warned that spending and lending huge sums to fend off recession--such as the United States' $787 billion stimulus package--will backfire in the long run. In recent days, however, German officials have had a swift change of heart, according to a Washington Post analysis. With customers around the world no longer in a buying mood, BMWs and other high-end German exports are rapidly piling up on the docks. Analysts predict that Germany's economy could shrink this year by 5 percent, the worst contraction among Europe's economic powers, prompting authorities to consider large infusions of money to prop up struggling European countries. Last week, Finance Minister Peer Steinbrueck, who in September derided the financial crisis as "an American problem," said for the first time that Germany would intervene, if necessary, to prevent a fiscal default by other countries that use the euro. Three days later, Chancellor Angela Merkel, who had repeatedly stated that Germany would not bail out struggling neighbors, said Berlin was now prepared to do just that by organizing rescue packages for Eastern Europe through the International Monetary Fund. Read more. (Subscription required.)