Published in Business Spectator (Melbourne), 8 December 2011
The whole world is watching to see what Germany’s next steps in the euro crisis will be. Will Angela Merkel finally agree to a Europe-wide debt pooling? Will the Bundesbank let the ECB at last print the trillions needed by bankrupt governments? Can the German coalition survive the Free Democrats’ referendum on the new euro rescue mechanism?
No doubt Germany is the pivotal player in the eurozone’s death struggle. Whatever Germany does next may keep the euro alive, inflate it, blow it up, condemn Italy to debt deflation, spark civil unrest in Greece, tip French banks into the abyss, end the European Union, or maybe even lead the continent to economic recovery.
But what are the Germans really concerned with? Well, judging by the most reported news stories in Germany it is certainly not the euro crisis.
Former Defence Minister Baron Karl-Theodor von und zu Guttenberg’s attempted comeback is going nowhere since he fired a broadside at the leadership of his own CSU party in a book-length interview. The national soccer team faces a horror group in next year’s European championships after they drew the Netherlands, Portugal and Denmark as their opponents. The Germans are still convinced they’ll win the cup regardless. And the nation anxiously awaits the announcement of a replacement for the retiring host of the most popular TV show.
No doubt for many, these are all extremely serious issues. But unless readers move to the business pages of Germany’s newspapers they would not realise that the euro crisis is about to reach boiling point.
And why should Germans worry in any case? Everything seems to be more or less as it always is. The Bayern Munich team is leading the national soccer league, Bundesliga; the rubbish is being collected twice a week; trains run on time (most of the time, that is); and even the stock index DAX is hovering around the 6,000 mark. If this is a European depression, you wonder what a boom would look like.
Only one German industry is facing serious troubles in this warm European winter. Unusually mild temperatures have caused a severe decline in mulled wine sales at Germany’s traditional Christmas markets. The pernicious effects of global warming show up in myriads of unforeseen ways. There may even be fewer inebriated Germans before Christmas, who would have thought?
But all of the above begs the question: what is really going on in Germany?
Strange things happen in Berlin. Last week, for example, Polish foreign secretary Radosław Sikorski gave a speech to the German Council on Policy Relations. Polish politicians are almost genetically afraid of their powerful Western neighbour. Not so Sikorski. Calling Germany an “indispensable nation”, he said “I fear German power less than German inaction”. This prompted Polish opposition leader Jarosław Kaczyñski to announce a protest march in Warsaw against the “treason” committed by the foreign secretary. How could Sikorski so carelessly give up Poland’s sovereignty, Kaczyñski blustered.
On the other side of Europe, British newspapers are once again waging war on Germany. The euro crisis is just a German plot to subjugate the rest of Europe, British tabloids and even some so-called quality papers are convinced.
And the Germans? They are unmoved by such accusations flying across the Channel. The Brits always say that, and in any case perhaps they are just warming up for the soccer tournament, which is usually the time when rampant nationalism and ugly xenophobia appear in British journalism. So no need to take that too seriously.
Of course the Spanish, Portuguese, Italians and Greeks complain about German fiscal dictates delivered to them. Angela Merkel is now regularly depicted in SS uniforms in their national media. But does this disturb the Germans? Not in the least, since it was only to be expected that these ungrateful Southerners would be whingeing and whining now that they finally have to finish their life-long siesta and start working. At least, that’s what the German tabloid press believes. And the whole South of Europe only interests Germany as a holiday destination – or as an opponent in the EURO soccer championship. So once again, nothing to worry about.
Germany’s disengagement with what is really happening in capital markets is astonishing. Not just because the Germans are so obviously disinterested in how the rest of Europe survives this crisis, but also because the Germans themselves will be the euro crisis’ ultimate victims.
As my esteemed fellow euro crisis commentator Ambrose Evans-Pritchard of London’s Daily Telegraph newspaper pointed out recently, the Germans will pay a high price for the euro adventure in some way or other, whether by paying through the nose for fiscal transfers, by giving up national sovereignty for the greater European good, by giving in to higher inflation, or by financing a withdrawal from monetary union. Or maybe, I would add, through a combination of all of the above.
The Germans are almost completely oblivious to the horrible choice they are facing. Instead they are occupying themselves with their disgraced ex-defence minister, the mulled wine glut, silly TV shows or, of course, the seminal question of whether strikers Miroslav Klose or Mario Gomez should have place in the starting eleven at the EURO soccer tournament.
It is only a matter of time until reality will catch up with the Germans at some stage. But don’t wake them up just yet. They won’t have their Christmas holidays spoilt just because some countries around them face bankruptcies.