Thread: Is Germany Using its Jackboot, Like Bismark?

Interesting article.

http://www.europeanfoundation.org/my_we ... marck.html



Wednesday 16 November 2011
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Sara Moore: Is Germany using its jackboot, like Bismarck?

In January 1871, after the end of Bismarck’s successful war against France, a celebration was held at the Versailles Palace, near Paris, to mark the foundation of unified Germany. It comprised almost exactly the same number of states as in the European Union today, and was similarly unequal in size, ranging from mighty Prussia down to tiny principalities. Like the present leaders of the European Union, Bismarck decided to have a new currency.

Bismarck and the stock market crash of 1873

It was much easier for Bismarck to whip the four kingdoms, six grand duchies, five duchies, seven principalities, and three republics, each with its own constitution and representative system, into a fiscal union than Mrs Merkel and President Sarkozy with the euro zone, because of his success in battle.

Germans indulged in a huge stock-market spending spree after their victory over France, sparking an investment flurry everywhere. Then, flush with French gold from the spoils of war, Bismarck decided to raise interest rates, cease minting silver, and to institute the popularly named Goldmark only two years after unification. This caused the international value of silver to plummet. Money became scarce and the Vienna stock exchange collapsed, followed by Berlin and Wall Street. Austrians would rant against the ‘unwise expansion, insolvency and dishonest manipulation’ of the Vienna stock exchange for years.

Germany in the depression after 1873

In the aftermath of the 1873 stock exchange debacle, Germany and the whole of the western world suffered a long depression. Yet Bismarck realised that the foundation of Germany’s success would be a strong economy and he was prepared to help to enable it to succeed. Although the private German banks lost their power after 1870, and many small banks collapsed, the newly founded Deutsche Bank emerged from the stock market crash unscathed and soon became the right-arm of industry. Smiled upon by government, the years of depression eventually produced the triumph of German big industry on world markets, under Prussian dominance.

Germany and the 1929 stock market crash

The 1929 crash bore marked similarity with the 1873 crash in that it was associated with the return to the Gold Standard, huge capital flows from Europe to America, and rising interest rates. In addition there was a political dimension, when insiders who had put their trust in Germany suddenly became aware that they had been deceived. In the crash’s aftermath there was a deep depression.

The 2008 crash

There was no spending spree in Germany after the euro arrived. As German wages stagnated, or were lowered, Germans invested their money abroad. Indeed, Britain’s former Prime Minister, Gordon Brown, asserted in his International Herald Tribune article, on 21st August 2011, that the ‘German banks were supplying the drinks’ for the stock market boom in America and Southern Europe. Naturally others joined in the party. Indeed it seemed as though the world was awash with cash. Eventually, however, the European Central Bank started to raise interest rates. Then the ECB, egged on by the Bundesbank, raised them yet again, first to eradicate internal, then external inflation. Commodities tumbled worldwide, European money deserted Wall Street and Lehman Brothers collapsed. Many, many books have since been written by the bankers, lamenting their foolishness and greed.

The future?

After 1873 and 1929 we had dreadful depressions. It seems that we are going to have one now. What is worrying is that Germany seems to be using deflation for political ends, as it did between 1930 and 1932. People don’t know exactly why Germany has chosen the present period in which to eliminate its budget deficit but it is making it almost impossible for the weaker euro zone countries to grow their economies, while eliminating their debts. One also has to ask why Germany lent money so wantonly to the PIGS -Portugal, Italy, Greece and Spain - only to transform them into pariah states?

Echoes of the 1930s

The request to the IMF and the rest of the world to help the European Union’s finances is also worrying. In the aftermath of the 1929 stock market crash it was popularly believed that Germany was weak. Indeed, few people know that in 1930 and 1931, money was lent to Germany from impoverished France, Britain, Switzerland and America to help it pay its debts. However, Germany was not weak in 1931, just using deflation for political ends. Indeed, it was later revealed to be the greatest exporter in the world, with a secret mountain of cash in its coffers. Meanwhile, the money lent to Germany from France, Britain, Switzerland and America at the time, merely made those countries poorer.

The European Union is regarded as weak today and has asked the whole world to help it with its problems. Yet on the face of it, it does not seem so poor. It has, as a whole, less debt than America. Italy, which is regarded as the next basket case after Greece, has 2450 tons of gold and is the world’s 6th biggest industrial economy, France, which is being made to pay more for loans, is the world’s fifth wealthiest, while Germany is even more powerful. If Germany was not set on deflating in its own economy, it could give other euro zone states the chance to grow and sort out the debts, which were incurred, in part, because of its reckless lending. The very least that it could do is to abandon its plan to eliminate its fiscal deficit by 2015. Otherwise it will looks as though it wants shove the jackboot in, to pay off old scores and dominate, not unify Europe.

http://www.thetrumpet.com/

Germany’s Next
Casualty?


In Washington this week, President Obama and
his finance gurus held emergency closed-
meetings with top European leaders. Mr. Obama’s alarm at what is
happening in Europe was palpable in his post-meeting press conference.
A financially healthy Europe is vital to American interests, he
reiterated, which is why the “United States stands ready to do our part
to help them resolve this issue.”
Although the president didn’t explain what he meant by “do our part,”
there was a burst of headlines following his remarks declaring that
America was preparing to bail out Europe. The White House quickly
doused the story, with Press Secretary Jay Carney confidently stating,
“We do not in any way believe that additional resources are required
from the United States or from American taxpayers.”

Less than two days after Carney’s promise, Ben Bernanke announced
that the U.S. Federal Reserve, in consort with other central
banks, was cutting the interest rate it charges on loans. The Fed did this
for one reason and one reason only: to make it cheaper for ailing Europeanbanks and corporations to borrow dollars to pay their bills. Meanwhile,just as the Federal Reserve announced its cheap money bonanza,EU finance ministers were demanding that the International MonetaryFund (imf) contribute more to the European Financial Stability Facility,the eurozone’s diminutive bailout fund. Of course, an increase in
funds from the imf stands to impact most members of the organization.
But guess who the largest contributor to the imf is? About 20 percent of
the imf’s funding comes from America.

Call these “programs” what you like—loans, collective financial security,
an emergency rescue, an act of altruism, an act of self-interest—the
reality is both are essentially bailouts. “Stripped to essentials, America
is once again having to rescue Europe from itself,” is the way Telegraph
columnist Ambrose Evans-Pritchard put it. Jeremy Warner, one
of Britain’s leading finance pundits, agreed. “Faced with Europe’s abject
failure to sort out its own mess,” he wrote, “the U.S. Federal Reserve
has been forced to come riding to the rescue instead.”

This is incredible. Germany refuses to bail out its neighbors—its
legal, political and financial partners, fellow members of the European
Union. Instead, it leaves it to the U.S. Federal Reserve to click its
printing presses into a higher gear and churn out the cash to bail out
indebted European banks and states.
There is even talk of the U.S. directly bailing out faltering European
states by purchasing sovereign bonds.

Can you imagine? The U.S. federal government is swallowed in debt
so high it’s incomprehensible, multiple states and counties are fighting
off bankruptcy, the national economy is seizing up, many major banks
are struggling to stay solvent, unemployment is high and likely to soar
and U.S. industry is wallowing. Yet, in spite of this perilous
outlook, pressure is mounting on America to take dramatic and risky
measures—even including sinking hundreds of billions of dollars into
purchasing foreign bonds—to rescue Europe!

Don’t you wonder how this happened? There are plenty of people,
states and factors to blame for Europe’s financial problems. But there’s
one main reason the crisis has been allowed to reach critical mass and
the point where the euro and the eurozone are now days from total collapse.

That reason?
Germany.

More than any other factor, Germany’s inaction, its chronic dawdling,
its half-hearted measures, its deliberate and uncompromising
control of European fiscal policy (via the ecb), has brought Europe—and
the world—to this point!

This financial crisis, the worst in modern history, has brought European
countries to their knees before Germany. Now it’s threatening
to spill over and inflict terrible damage on American banks, corporations
and manufacturers—and at the worst possible moment for the
U.S. economy! Whether you believe it to be intentional or not, Germany
has pushed Europe to the precipice. In doing so, it has single-handedly
created a scenario in which the rest of the world, most especially the
U.S., feels increasingly compelled to take on enormous risk and intervene
to rescue Europe.

When will we wake up and see reality? Germany isn’t simply exploiting
this crisis to conquer Europe, it’s using it to gain leverage over the
world, including the United States!