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Germany to World: No, We Won't

World markets, so depressed and beaten down last week that any news not catastrophic perked them up, rallied for a few days on more European promises to come up with a grand solution to the euro-mess by the end of this month.

Those promises were, of course, well meaning lies.  Germany and France are so far apart, and political pressures are pulling the members of the EU in so many directions, that the EU is in no position to solve its problems anytime soon.  The French are busily developing schemes to spend as much of Germany’s money as possible to bail out French banks; the Germans know they have to do something but cannot bring themselves to guarantee all the debts of the euro-zone; the rest are all calculating how to use this moment of European crisis to their own national advantage.

Today Angela Merkel sent world markets into yet another tailspin by sending forth her spokesman to announce the obvious: “Dreams that everything will be resolved and dealt with by next Monday cannot be fulfilled.” Truer words were seldom spoken; the biggest question is why anybody ever thought otherwise. There is no workable solution to the euro problems at this time and one is unlikely to materialize any time soon.  Unless we get unexpectedly lucky, we will just have to ride out the storm.

Since the 1950s the West gradually built up confidence that the answers to all important social and economic problems were known, and that policy consisted of identifying and then applying the correct technical solution.  This was a radical change from the first half of the twentieth century; from 1914 until the 1950s the West’s leaders were frequently overwhelmed by unexpected and insoluble problems.  They weren’t riding history; history was riding them, and leaders struggled, and often failed, to hold catastrophe at bay.

The technocratic confidence of the world’s business and political elite peaked in the 1990s and has been slowly unraveling since.  The European crisis and its potential to send the world spinning downhill once again is the tipping point.  If the Europeans manage to cobble something together in time to prevent a meltdown, then the davoisie may calm down for a bit.  But if the Europeans fail, and the euro falls apart or in some other way the bottom falls out of the European experiment, look for a psychological shock as profound as the economic consequences of a euro disaster.

This is more than an ordinary recession or financial crisis.  This is a test of the basic institutions and of the foundational political and economic assumptions of our world; the test isn’t over and so far our institutions and our assumptions are not doing that well.

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  • Felix Seidler

    As a German I can say that Germany will neither be willing nor able to “guarantee all the debts of the euro-zone”.

    Merkel´s current “Euro rescue policy” is quite unpopular in the German public. We Germans are not very used to protest. However, on this weekend we saw the first significant protest in several German cities. Take this as sign to what might happen over here if the German government gives more guarantees or spents more money an rescuing banks and countries.

    Mrs. Merkels coalition partner, the FDP, has a members vote on the ESM in December. The outcome is not predictable, but it could happen that the coalition breaks up due the FDP member´s decision. Throughout the party members of CDU, CSU and FDP the “Euro rescue policy” is not very popular.

    Furthermore, I would like to recommend having a look in the German supreme court´s recent decision on the EFSF; including the two interviews the supreme court´s president Andreas Voßkuhle gave afterwards to Frankfurter Allgemeine Zeitung and ZDF.

    According to the decision I can say that guaranteeing all Euro zone debt would very likely violate the German constitution.

    Last but not least I have a question to the world. After saving everbody else has failed: who is going to save Germany?

  • gooch mango

    “Since the 1950s the West gradually built up confidence that the answers to all important social and economic problems were known, and that policy consisted of identifying and then applying the correct technical solution.”

    “The technocratic confidence of the world’s business and political elite peaked in the 1990s and has been slowly unraveling since.”

    And there it is: the conceit then the cold water.

    Perhaps history has been riding them all along. Perhaps their supposed mastery of events always was just an illusion, doomed to last only as long as the debt-fueled, post-WWII prosperity fooled us into thinking life could be engineered into a perpetual series of win-win situations. Cash and prizes for all!

    It’s easy to keep the peace when everyone can be bought off. It all falls apart when the money runs out or the True Believers come over the hill… and we are facing both right now.

    (Oh, and for those of us paying attention, the peak was way back in the 70s, not the 90s. The emperor has had no clothes for decades now.)

  • Kenny

    ” …who is going to save Germany?”

    Come on. Felix. Parasites don’t think that far ahead. They will keep eating away at the host even if it’s just to buy just another day of life off of the host.

  • Tulsa Jack

    So far as I know, commentators have yet to connect the world-wide financial crisis with the feckless Marxist regime of Barrack Hussein Obama in Washington.

    In his treasonous rush to destroy America by sabotaging its economy, this contemptible thug has undermined America’s trading partners. When U.S. markets stop buying, foreign producers stop selling. No profits, no taxes. This snowball effect is especially apparent in the U.S. federal and state budgets, gutted by Obama’s regulatory obstruction, confiscatory taxation, and escalating inflation.

    Democrats in the U.S. Congress are complicit in this willful destruction of the welfare of a significant proportion of global population. Harry Reid, Senate Majority Leader, is the only person who could get rid of Obama, through the impeachment process. But like Obama, Reid is a crook, complicit in Obama’s personal fraudulent illegitimacy and in his viscous racist, anti-Semitic, anti-free enterprise campaign of lies, corruption, and demagoguery.

    Reid and Obama are public enemies. Until they are thrown out, and Big Government dictatorship is seen for the deadly tyranny that it is, the course of everyone’s lives will accelerate downhill.

  • Chaz

    This time Germany doesn’t have to destroy Europe… It just doesn’t have to save Europe.

  • Jim.

    What can institutions do when the people have failed?

    The fact is that Europeans (perhaps except Germany) have lost all sense of individual responsibility. They live in a collectivist Benthamite bubble where “all men are paid for existing, and no man must pay for his sins.”

    Instead of a world where everyone takes it upon themselves to create to excess, and that excess is shared through a free economy, they live in a world where they demand that their institutions provide everything for them. Institutions (particularly, institutions not dedicated to optimizing individuals’ productivity, through character-building, or actual material productiveness) cannot provide everything a human population could wish. They can’t even come close.

    The strength of the wolf is the pack, they believe, forgetting that the strength of the pack is the wolf.

    The painful irony here is in the youth unemployment rate. People with the energy and strength to create are stymied both by crippling regulation and creeping listlessness, born of having worthy endeavors discouraged and every need “guaranteed”. Until the money runs out.

    And the money’s running out. We’re going to see change and upheaval. I hope that the reawakening to the realities of the human condition will be gentle and not “with fire and slaughter return”, but who knows.

    We are not seeing the end of history. We are soon to see a new chapter unfold, as the Socialist state collapses of its own dead weight.

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