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More Storms Brewing in Europe

The latest Open Europe roundup of news from across the pond paints a bleak picture of the state of Europe’s union. As regular VM readers know, the expanding debt crisis has led to intense squabbling among European governments about the role of the EU. Today’s harvest of bad news adds more detail: France and Germany disagree over bank recapitalization plans, Italian ministers are pointing fingers at the Spanish, while Malta and Slovakia continue to hold out over the EU bailout fund. Most interesting, however, is the news from Germany, where the Stern newspaper reports [German] that eighteen percent of Germans would back a party to return to the D-Mark. From the Open Europe report:

Stern reports that a new Forsa poll has found that 54% of German citizens want to return to the D-Mark. In Eastern Germany, the figure was 67% and the poll suggested that a party supporting the reintroduction of the D-Mark would have a potential national vote of 18%. TAZ quotes Hans-Olaf Henkel, the former head of German employers’ federation BDI, saying, “if the FDP doesn’t manage to do it, we need a new party, and I am standing ready to join it.”

Many Germans never quit pining for their beloved D-Marks, but this is a new extreme. If a pro D-Mark, populist anti-bailout party gets anywhere close to 18 percent support, German politics will change.  It only takes five percent of the vote to get seats in parliament, and the new party (the D-markcrats?) would be one of the three largest parties at that level of support.  The only alternative to bringing it into the government would be a “grand coalition” between the Socialists, Christian Democrats and the Bavaria-based Christian Social Union.

What this means concretely is that Chancellor Merkel needs to deal with anti-euro voters or lose her job — and she knows it.  Unpopular bailouts of ‘lazy, spendthrift’ southern countries to prop up a currency Germans dislike will not do the trick.

The political constraints on all of Europe’s leaders are tightening as the economic crisis moves unpredictably toward a climax.  Stock markets breathed a sigh of relief after signs that the European governments were at long last willing to face the bad news about the banks, but there is little sign yet that the Old World political establishment has found a sustainable path out of the woods.

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  • Kenny

    Mr. Mead, the EU is a mess and can you imagine what the situation would be like if the U.S. was not providing security for the whole bunch of them.

  • Thomas in Texas

    “D-markcrats” Ha! Best pun on Via Meadia to date.

    We have to laugh or else curl up in a fetal position with despair.

  • Kris

    “eighteen percent of Germans would back a party to return to the D-Mark”

    Guess the Euro-party’s over…

  • Jim.

    WRM, could we have some analysis on whether the presumably mighty German economy could actually afford to bail out the Southern countries?

    After all, Ireland is in trouble because its government agreed to eating the poisoned stew that was their banking system.

    Could the South Eurozone’s debts similarly overwhelm the North’s strength, if the North tried to cover for it?

    And if there is a significant risk of that, what Prime Minister — public servant of a sovereign people — could ethically ignore that risk?

    On the other hand, if you can come up with a convincing argument that it really would be worse for Germany if they protected their own interests rather than choosing to follow Greece off a cliff, I’d like to hear it. Please forgive my skepticism, though.

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