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Germany, in common with the rest of continental Europe, has been suffering from a lack of demand, caused in part by the Germans' high propensity to save. Other European members, subject to similar macro economic constraints, have done far better. What really sets Germany apart from its more successful European neighbours are its structural rigidities, its high wages and non-wage labour costs, and a rigid labour market. Schroeder, who came to power promising economic revival, met only partial success. His economic policies could not revive consumers' confidence, and left them in a state of suspended animation - to spend or to save. This case elicits a discussion on 'how the propensity to save' can have an adverse or favorable impact on a country's economy. It is also intended for discussing the effectiveness of Keynesian economics in reviving European members' economies within the constraints of the European Union's 'stability and growth pact' and the European Central Bank's monetary policy decisions.