Introduction:

In the contribution "Financial crisis, global recession and macroeconomic policy reactions - The case of Germany" Eckhard Hein and Achim Truger analyse the long-run imbalances underlying the present crisis with a focus on developments in the U.S. and Germany. From this analysis it is argued that, for the near and not so near future, the U.S. will no longer be able to act as the driving force for world demand. This will have major implications for economic policies far beyond immediate responses to the crisis, in particular for those countries which in the past have benefited from soaring U.S. demand - i.e. countries with huge current account surpluses, in particular China, Japan and Germany. Against this background the short-run economic policy reactions towards the crisis are analysed, with a special focus on the question whether the German economic policy regime will tend to meet the long-run requirements for economic policies to prevent sustained deflationary depression in major parts of the world. It is shown that, whereas in the short run German fiscal policy has quite unexpectedly played a sensible and stabilising role, in the medium and longer term a relapse into the traditional neomercantilist policy regime will be an obstacle to the necessary rebalancing in the Euro area and the world economy. Therefore, the elements of a Keynesian New-Deal are sketched, consisting of a re-regulation of the financial and the real sector, a re-orientation of macroeconomic policies, and a re-construction of international macroeconomic policy co-ordination.