Introduction:

In the early 2000s Germany was widely perceived as the 'sick man of Europe'. However, this image had changed already before the financial and economic crisis. Based on strong net exports in 2006 and 2007, growth in Germany had resumed and, even though the financial and economic crisis hit Germany quite heavily in 2008/09, the economy recovered remarkably fast. This fast recovery, coupled with the enduring current account surpluses turned Germany into Europe’s 'economic superstar' in public opinion. It is often argued that the wage moderation starting in the mid-1990s and the labour market reforms in the early 2000s were responsible for this favourable development and that the crisis countries of the Euro area periphery should now follow the German model.

In this chapter we will challenge this view taking a broader perspective and interpreting the German development against the background of 'financialisation' or 'finance-dominated capitalism', a tendency which has become increasingly relevant for Germany since the 1990s.