Last Tuesday morning, I drove off the Stena ‘Hollandia’ in the Hook of Holland en route to Germany and on to Croatia.

On either side of the road, houses were confidently decked out with sparkling orange flags as the Dutch nation prepared for the semi-finals that night.

They had every reason to be confident. By the time I arrived in Passau in Bavaria, the Netherlands were already one-nil up.

The journey from Holland leads you directly to the industrial heartland of Germany – theRuhrValley – and then onto the financial capital, Frankfurt, and towards the innovation hub – Bavaria.

When you drive through Germany you can actually see the economy.

By this I mean you can see the power of Germany in the constant flow of trucks transporting Germany’s exports out of the country.

This is the single biggest difference between driving across Britain from Holyhead to Harwich (which I did last Monday) and driving in Germany.

There is a different type of traffic in England. It is leisurely, mainly cars and coaches, and the motorways are relatively uncongested.

In Germany, the traffic is industrial, almost purposeful.

Trucks, if not quite outnumbering cars, are everywhere and you get the sense that this is a place that makes things, whereas in England there is precious little evidence of any industry on the roads.

This is an economy that doesn’t make much any more and what it does, isn’t transported in the back of lorries.

You can feel the German current account surplus on the A3 autobahn which takes you from north to south through the world’s second-biggest exporter, after China.

In the Ruhr, you are driving through an area that shouldn’t, according to most simple economic analysis, exist. After all, how could German heavy industry compete at the high-cost level in Germany with the likes of China? But it does, and not only does it compete, it wipes the floor with its cheaper competitors.

Years ago, when I was studying the German economy, a German lecturer of mine told me that if you wanted to understand the German way of doing things you had to understand the primacy of the white blue-collar, male worker in policy-making.

She explained that keeping the industrial worker productive, in work and on a good wage was a legacy of the rise of Hitler.

The post-war government had to ensure that the source of fanatical politics – mass unemployment among young working-class men – was avoided at all costs. She argued that once you got this, lots of things in modern Germany fell into place.

Yet while this might explain policy from the top down, it doesn’t ensure success, and the fact that large parts of the Ruhr are still producing despite the high costs has to be thanks to brilliant management at the firm level.

To generate the sort of productivity required to keep factories open, there needs to be enormous investment in people, in upgrading skills and making sure that the systems are constantly evolving and adapting.

Contrast this with England, where concerns for the white working-class male revolve largely around policing, law and order, and the Burberry brand.

It is hard to explain how the country that at one stage invented almost everything could have let its industrial might wane so dramatically in one or two generations. But that is what has happened.

As a result England is dependent on foreign capital to pay its way.

Germany, on the other hand, generates so much surplus capital from its exports that it doesn’t know what to do with the money.

This makes it reckless. Contrast the long-term thinking of Germany’s industry with the short-termism of some of its banks.

As you continue ontheA3 past Cologne and move on towards Frankfurt, the financial centre of the country, you approach the centre where the decisions are taken on where the money goes.

The companies make so much money and then put the cash on deposit in Frankfurt, but this money then has to be lent out somewhere.

A country with so much cash can finance almost everything, but here’s where Germany’s dilemma becomes apparent.

The German government is obsessed with austerity and wants to cut back on expenditure.

This means that the German banks need to find another productive home for all the cash.

This is why they recycle it in other European countries.

So German banks lend the cash to the likes of Greece, Spain and us.

They simply can’t do anything else. In a sense, Germany is in a cul-de-sac of its own making.

The heavy machinery of the Ruhr gets exported and the cash comes back to Frankfurt and is then lent out to the rest of Europe, in order that the rest of Europe can buy the products made further south on theA3 autobahn, the car-building and electronics hub of Bavaria.

If the rest of Europe hasn’t got the money to buy Germany’s consumer goods, Germany has to lend us the money to do so.

That is what is happening.

Today Irish banks owe German banks €127 billion and this pattern is repeated all over the EU. So the Germans are caught by their own success.

By being such a brilliant exporter, Germany has ensured that industry in other EU countries struggles, so the other EU countries fail to generate the surpluses they need to finance themselves.

They then must borrow the cash to preserve their living standards and they borrow the German cash that the Germans have to lend because the German government doesn’t want to spend the money at home.

This cycle pretty much ensures that the booms and busts we have seen on the periphery of Europe are a permanent feature of the euro.

The implication of this is that Germany will have to accept the increased risk of periodically being defaulted as the downside for the rest of the EU buying its goods.

I am not saying this is fair, I’m just saying that’s the way it goes. And this is where English history comes in, because when England was the workshop of the world, its capital was invested by the City in all sorts of foreign places and it too suffered periodic defaults.

Are the Germans prepared to pay this price? As I sat with the locals in Passau in Bavaria watching the second half of Holland against Uruguay, I got the distinct impression that they hadn’t figured out the question yet, let alone the answer.

When they do, I wonder what Germany will decide?

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