Franz Kafka once wrote: “In the fight between you and the world, back the world.” Angela Merkel, however, has preferred caution, even though nations with similar recessions have unveiled huge stimulus packages. Her finance minister Peer Steinbruck recently warned of a “crisis after the crisis” led by inflation from excessive government debt. Germany has offered some emergency stimulus measures, in total 1.5% of GDP in 2009 and another 2.0% in 2010, just meeting the IMF’s November recommendations: given how quickly the economy degenerated at least 2% or more was appropriate. Although Germany claims to spend more on social security, when all stimulus spending is considered together, stimulus spending in the USA as a percentage of GDP is more than 50% higher, and in the UK, twice as high. With interest rates too low for any monetary policy manoeuvre, Germany must increase its fiscal stimulus. Ironically such stimulus should be more effective in Germany than the UK, USA and Ja ...