'Merkalism' rules OK!

So Frau Merkel, allegedly the leader of the German Right-wing, has done a deal with the socialists in order to form a working coalition to govern the country.  As always when trying to cut a coalition deal with any Left-wing political party the agreement contains some hefty handouts to certain favoured groups which will win applause for today's politicians but will hand a shit sandwich to the next generation who will be presented with the bill! 

In Der Spiegel they have an interesting article which summarises the main editorials from various German newspapers. The one that caught my eye was from the conservative Die Welt which summed up the coalition deal, thus:

The coalition contract reflects the spirit of regulation-loving statism. The very policies set in motion by former Chancellor Gerhard Schröder through his reforms of social and labor laws that created the breathing room needed for the economy to flourish and for unemployment to fall are now being systematically dismantled. In the case of the SPD [the Socialist party], this is the result of shame over the success of Schröder's Agenda 2010 (which cut worker protection and benefits for the long-term unemployed and also cost the party votes). In the case of the conservatives, it's attributable to 'Merkelism' -- e.g. a chancellor who has transformed her CDU into the first postmodern political party in Europe, one in which the idea that 'anything goes' is now an actual party value." [My emphasis]

"The message this sends to the rest of Europe is disastrous. We preach austerity to the debt crisis countries and yet we continue to fatten Germany's already plump social system instead of putting it on a diet. Germany can no longer be considered a role model for Europe."

I am not proud to say that in respect of political parties who stand for "anything goes", 'Dim Dave' beat Frau Merkel to the winning post years ago, in fact, I reckon that despite his Eton education he would have difficulty spelling the word 'conservative'!  However, somewhat to my surprise, even the Left-leaning German editorials are critical of the political beneficence being ladled out to the German people who have no idea of the future costs of a minimum wage, retirement age being cut by four years, dual citizenship for children of immigrants and hefty pension increases for women with children.

Meanwhile but still on German affairs, the WSJ has another interesting sidelight on German finances.  We all know that - to their credit - Germany regularly clocks-up massive surpluses much of which is expressed in terms of personal savings.  However, Stephen Fiddler wonders where all these savings are going?  The answer, alas, is not good:

"A high export surplus means de facto that you invest a lot of saved money abroad," the European Union's economic commissioner Olli Rehn told the German newspaper Bild in an interview published Sunday. "That may make sense. What we have seen, though, is that not all German savings were invested sensibly, but instead went into toxic securities in the U.S. for instance."

Others put it less diplomatically."German savers give their money to the financial system and it gambles it away," says Sony Kapoor, a financial expert who runs the think tank Re-Define.

It sounds harsh, but some German studies show losses on German savings abroad have been spectacular, running into several hundreds of billions of euros since 2006.

Oh dear, what a pity, never mind - and by the way, what's the German for 'sucker'?

 

Related articles

World from Berlin: 'Germany No Longer a Role Model for Europe'

Germany: not yet the real deal

You: Merkel's conservatives strike power-sharing deal with German rivals

Merkel Agrees SPD Coalition to Raise Spending Without New Taxes - Bloomberg

Comments

[Glesga]

David. Trottel = Fool or Wally.

[Furor Teutonicus]

XX So Frau Merkel, allegedly the leader of the German Right-wing, XX

Fuck off!

She is a born and bred bastard commy twat!

A leapord does not change its spots, once a Stasi agent ALWAYS a Stasi agent.

[Furor Teutonicus]

XX We preach austerity to the debt crisis countries and yet we continue to fatten Germany's already plump social system XX

What?!?!

WHERE??

ONE example; This year... (nun, 2014, this tax year,) pensions are set to be lower than BRAZIL! (See if I can find the link), Ooohh, BUT we ALL know who DID get a nice big fat raise this year don't we?

Aye, bastard asylum seekers now get exactly the same money from the dole as a German who has worked for 50 years, and has had the missfortune to be made redundant a shadow before pension.

XX what's the German for 'sucker'? XX Lutscher. The way you mean it does not exist. Für dumm verkauft, would be the closest. (Sold for a fool)

[David Duff]

FT, I do wish you would stop beating about the bush and just come out and say clearly what you mean!

[dearieme]

"We all know that - to their credit - Germany regularly clocks-up massive surpluses": why is it to their credit? Who's the they in 'their"? What sort of surplus do you mean?

[David Duff]

If a nation can so arrange its affairs that it is able to produce a surplus of goods and services beyond what is required by the home market then it can export, usually, more than it imports which produces a surplus of wealth which will be either re-invested, or distributed in dividends/wages, or taxed by a 'grateful' government or a mixture of all three. Whatever, the wealth of the nation grows bigger. Compare and contrast with our own dear country where each year we *increase* the national debt by borrowing!

[dearieme]

David, that's the most terrible rubbish. A sustained surplus on foreign trade just means that the stuff you export is more valuable than the stuff you import. So you are impoverishing yourselves.

[Glesga]

F.T. You sound like a Nazi. Bastard asylum seekers! I think we will have to invade Europe again. We will send our asylum seekers in first to take care of the mines.

[Lawrence Duff]

Die Welt article is garbage.

The problem for the Eurozone is the 40% competitiveness gap between the Jerries and the Club Medders. If the Club Medders do austerity to close the gap by, say, 10%, and the Jerries do austerity and increase the gap by, say, 10%, then the gap stays at 40%. Problem continues unchecked.

Merkel can't do a direct fiscal transfer to the Club Medders or let the ECB loose with the printing press, because the Jerries will revolt. But she can do the third, and last, best thing, and close the competitiveness gap by domestic laxity (if that's the opposite of austerity). Increase wages, lower taxes, higher spending. The Jerries will love the increased standard of living, the Club Medders will love the boost to their exports and the lower competitiveness of German imports, and the Eurocrats will love the recovery in the fortunes of the Euro.

It's good politics and good enough economics to turn the Eurozone and all its interested parties round, without offending the Jerry constitutionals.

And with a flourishing Eurozone, you can forget your Ukip Brexit wet dream.

SoD

[Lawrence Duff]

Off topic, but I just read a quote from a Ukrainian, bitterly disappointed at the rejection of the EU's integration offer: -

“I have no words,” said Yuri Litonchenko, 29, wiping away tears. “I wanted our country to get out from under the thumb of the people running it.”

I thought, where did I hear that before just recently? Then I remembered B in the place I'm working now. B is from Portugal, a fantastic character, who sounds like Jose Mourinho when he talks, proud and bright, an IT migrant who, like me, prefers the sedentary pace of the Thames Valley over the cut-and-thrust of Silicon Roundabout.

In B's own words, after a conversation with me that will be deducible from the comment itself: "Listen, Lawrence, I would rather be German, or EU, than Portuguese, if that means I don't have to be governed by the crooks and crooked system of my country. EU / Germany (like us, he conflates the two) is a better existence for Portugal than Portuguese government. We must never leave the Euro, let alone the EU, until we are a province of EU / Germany, like Bavaria."

That stunned me into silence. Then seeing my incredulity, he continued: "But I can see you are different here. You look down on the EU, its governance is more crooked than your own, whereas we in Portugal look up to it, as fairer than our own. And you're right, now I've been here a while, I see you are a very fair country, you have that certain something. I see the pecking order: Britain, EU, Portugal."

It's a coffee break I won't forget.

Merkel will complete her victory over the Euro-states, and bring the governance for the stay-at-homes of those countries "up" to the level of EU / Germany. This new German fiscal expansion, or laxity, is exactly the tool to do it. Let her consume the vile political elites of peripheral Europe to her EU bosom.

And we'll have B, and all the other B's, who recognize a pecking order when they see one.

SoD

[David Duff]

No, DM, if you have a surplus that you can sell abroad for money then you are better off - assuming your imports are less. However, much depends on what you do with the surplus. The government may/may not waste/invest it on sensible/silly things but whatever they are they will be paid for by foreigners' cash! Private people also earn either by wages from the increased productivity required to satisfy foreign markets or by increased savings. The WSJ article to which I linked indicates the dangers of how you invest those savings.

Of course, in a sense, you are *impoverishing* the nations to whom you export if they are running at a net trade loss - much as Germany has done to many of the Euro countries.

[David Duff]

Lawrence, I take your point, or rather, the point made by your Portuguese friend but it all depends on Germany cracking the whip over the Euro-elites most of whom come from all the other nations of Europe. True, to a certain extent they control the purse strings, but those wily Euro-fanatics in Brussels will twist and turn and use every trick in the book to make Europe into their own image - in other words, just like Portugal!

And I'm not sure Germany financial laxity will do that much to help Europe because most of the Med nations simply do not have the sort of economies that will allow an expansion in exports to a sophisticated market like Germany. Wine, foodstuffs and holidays - and that's about it!

[Lawrence Duff]

Looks like DT's Roger Bootle reads D&N: http://www.telegraph.co.uk/finance/comment/rogerbootle/10487194/Scotland-may-prefer-to-go-it-alone-but-the-EU-has-lessons-for-countries-that-secede.html

Does B have a plagiarism case?

SoD

[David Duff]

Thanks, Lawrence, an excellent article particularly his point thatsome geopolitical arguments are not reducible to the mathematics of economics.