Robert Samuelson of Newsweek / MSNBC write about The (New) Sick Man of Europe -- Germany.  First a survey of Germany's importance to the EU and the World Economy:

...Europe’s troubles stem significantly from Germany. It’s the engine that drives other countries: its population (82 million) is about a fifth of the EU’s; its gross domestic product (about $2 trillion) is almost a quarter.
        The engine is sputtering. In 2001, German GDP grew a meager 0.6 percent; this year it is expected to be 0.4 percent. Since 1991, unemployment has averaged about 8 percent; the number of jobs in Germany today is roughly what it was a decade ago. Worse, things won’t get better soon. “German underperformance could easily persist for another decade or more,” concludes a study by economists Dirk Schumacher and David Walton of Goldman Sachs.

A core reason for this stagnation is German economic policies towards the former East: 

But Germany also suffers from mistakes made during unification a decade ago. The goal was to equalize East and West German wages, even though Eastern workers were only a quarter to a third as productive as their Western counterparts. East Germany’s currency (and wages) were converted into West German marks at an unrealistic exchange rate of one to one; then, East German wages were raised more than 50 percent from 1991 to 1995. Instantly, high labor costs made many firms uncompetitive and rendered Eastern Germany unattractive for new factories. Massive unemployment resulted; it still exceeds 18 percent.
        The impulse to weld the country together quickly was understandable, if overambitious. “Germany is a rich country,” says economist Saul Estrin of the London Business School. “But suppose the United States had to integrate with Mexico and raise its incomes [to U.S. levels] in five years. It would be a stretch.”

Econ 101 is pretty darn simplistic and clear about what should happen to unemployment when you raise marginal wages above the marginal productivity rate. 

One of my favorite blogging themes is the relationship b/t economic development and political development.   An oft-cited criticism of EU foriegn policy is that their pollyanna-ish world view, shaped by their experience in building the EU itself, is misapplied to the Hobbesian Jungle that is the rest of the world.  They assume that nations and peoples can come to the same bargaining table as equals by fiat and pass coherent policy using the language of bills, resolutions, and parliamentary procedure.  They try to legislate into existence an orderly, liberal democratic world.

In the econ world, here we see the exact same mistake made by the former West Germans over-extending lessons in their economy to the "Jungle" economy of the East.  They've tried to legislate the East Germans into wealth.