So far this year, German trade with its eurozone partners has been in balance. Figures released this month from Destatis, the federal statistics office, indicate Germany has bought as much from its partners as it has sold to them.
This is a dramatic turnaround. In 2007 and 2008, Germany was running a trade surplus of more than $130 billion a year with the rest of the eurozone.
Since 2000, Germany built a cumulative trade surplus with the rest of the eurozone worth more than $1.3 trillion. German banks used much of that money to buy Greek, Spanish, Italian and other sovereign bonds, financing the deficits of those countries and thus building up the debts that have lain at the heart of the euro crisis.
Now this "doom loop" is coming to an end. Some of the reasons for that are depressing; the hard-hit economies of southern Europe can no longer afford to import so many German goods. Despite very modest growth in the German economy, estimated at 0.1 percent this quarter, the eurozone as a whole is in recession, contracting for six quarters in a row.
Other aspects of the turnaround are more hopeful. The southern Europeans are exporting again. Spain, for example, will probably enjoy a modest trade surplus this year. From a low of just more than $65 billion in exports in 2009, Spain is on track to export $91 billion worth of goods this year.
This isn't good news for Germany and, since the European economy depends on the health and vigor of its German component, the long-term implications of this turnaround are worrying.
In summing up the latest trade data, it is important to examine each feature in turn. German exports overall are down 4.8 percent from a year ago. The country still enjoys a healthy trade surplus, running at more than $130 billion a year and while it is too soon to identify a clear trend, the combination of slowing growth in emergent markets and reduced demand in the eurozone suggests German exporters will face tough challenges ahead.
German exports to the rest of eurozone, which accounts for 40 percent of total exports, are down 9.6 percent from a year ago. Eurozone demand has shrunk, the inevitable result of the austerity and public spending cuts that Germany has demanded from its eurozone partners. In May of this year, Germany was running a trade deficit with the rest of the Eurozone, exporting $42 billion of goods to them and importing $45 billion of goods from them. These figures are a real surprise.
Germany cannot exert the same leverage on other EU members, like Britain and Sweden, that aren't in the eurozone but while their imports from Germany hadn't declined so fast, they have still shrunk.
So German exports to the European Union as a whole are down 7.1 percent from a year ago. Germany's closest and most traditional markets are no longer feeding Germany's export machine. Overall, German exports in May this year fell at their fastest since the worst months of the global recession in 2009.
German exports outside the European Union are down 1.6 percent from a year ago. This is the ominous news. For most of this recession, Germany had been making up the shortfall in its exports to Europe by exporting much more to China, Russia, Brazil and other emerging markets. But they are slowing appreciably.
Above all, China is slowing is the massive overcapacity China faces in its steel, cement and shipbuilding industries mean that it will be some time before China is again in the market for Germany's advanced machine tools and manufacturing systems.
Without Germany, the rest of Europe is in grim shape. The latest prediction of the International Monetary Fund sees a worse than expected recession this year and very little growth next year.
"The centrifugal forces across the euro area remain serious and are pulling down growth everywhere," the IMF said.
Greece is still missing its targets for privatization of public job cuts. Portugal is in political crisis over the cuts. Italy's debt (Europe's largest) has been downgraded to BBB, which is near-junk status.
And now the German juggernaut is slowing.
This may help ease the euro crisis by ending the previous pattern of massive German trade surpluses with its European partners but it does so at the cost of savage unemployment and bankruptcies. Europe is shrinking its way back into shape.