On the occasion of th G20-meeting in Toronto, the German Economics minister Herr Schaüble said that without restoring confidence it would not be possible to get consumer spending and business investment going. Similar remarks were made by David Cameron and Señor Zapatero of Spain. All maintain that confidence is a pre-requisite to get growth going and that, therefore, it was imperative to reduce fiscal deficits. Reducing the fiscal deficit will restore confidence at first. However, reducing the deficit very quickly will introduce a dynamic that may cause the economy to decline - and perhaps depress  consumers demand even further.  It will actually destroy confidence: few businesses are inclined to invest in a shrinking economy. Cutting the deficit too rapidly or too steeply can lead to a confidence trap.

NOTE: A big experiment is now taking place in the UK - the government has cut public spending severely! Will this lead to hardship and, perhaps, social unrest? 

The two fieedback loops illustrate how  the German attitude towards its EU partners has been affected by the reunification of West and East Germany that took place in October 1990. As depicted by the feedback loop 1, before the reunification Germany was anxious to maintain the good will of other partners within the European Union in order to minimize any opposition to, and to create a clilmate propitious to, a possible reunification. After the reunification, the need and driving force to make sacrifices to promote good will disappeared and a new assertive Germany emerged. This change of attitude has been reported on repeated occasions in the international press. Without doubt, this new assertive attitude will have a profound effect on the future development of the European Union.

A simple generic rich picture WIP view of interactions among social structures and agents and Boonstra's 2016 conceptualizing power article from Ecology and Society