Following the Merkel/Macron idea of a €500 billion stimulus no one is asking the most important question: how will Germans react? Trouble could well be on its way.
Mathew D. Rose is an Investigative Journalist specialised in Organised Political Crime in Germany and an editor of BRAVE NEW EUROPE.
Germans celebrate their virtuous Black 0
Here we go again. A new European Union great Liberal Democracy Extravaganza starring Angela Merkel. Once more liberal democrats and mainstream media enthuse, this time about the “Hamiltonian Moment”, not that any of them know anything about Alexander Hamilton, beyond maybe having seen the Broadway musical, but probably not even that. Nevertheless it is the cant of the day.
It is not worth speculating what will eventually become of this newest bazooka from Berlin, which is keeping the talking heads and political pundits busy. What is however well worth looking at is the probable political resonance in Germany. And we have been here before.
Once again, as so often before, we read that even Ms Merkel’s closest advisors were surprised by her unexpected decision: by the lonely leader who rises above all other mortals and scenarios. All of this is garnished with hyperbolic comments such as “courageous”,” truly in the spirit of the European Union”, real solidarity, game changer, etc.
Actually this is all utter bunkum – a carry-over of Germany’s Führer cult. It wasn’t Valhalla calling, but Germany’s oligarchy. The truth is, that even Germany’s Stupid Capitalists are starting to join up the dots: Germany’s principal export market – and Germany lives from its exports – is the EU. The economic crisis caused by the coronavirus is going to impoverish much of the EU, especially Italy, Spain, and France (add to this that Britain seems content to crash out of the EU without a trade agreement). It is dawning on German managers that if these people are impoverished and over-indebted – state, companies, and households – who is going to buy German exports?
Previous to her Hamiltonian moment of conversion, Merkel’s government had categorically refused to provide other EU nations with grants, only loans with conditionalities, meaning the right for Germany to dictate to others how to run their country. Merkel’s definition of EU solidarity in the crisis was to increase the amount of loans to EU “friends”, not Corona bonds.
Her decision had been made for her a week earlier. On May 12th the BDI, Germany’s main business organisation, had called for solidarity with those EU nations most affected by the current economic crisis, namely an “unprecedented and ambitious” response to the pandemic. Capitalists and solidarity? Germans defying the “free market”? An anonymous source from the BDI explained to journalists: “The money we give to other EU member states will come back to Germany in the form of orders for our companies.”
German companies had read the writing on the wall after Volkswagen, scarcely a fortnight after reopening some of its main factories, had to close them again, owing to lack of demand. They have realised that there is not going to be a V recovery in Europe.
So Germany’s oligarchy devised a bold plan. Give the PIIGS & Friends 500 billion euros, then transfer the costs to those Germans who still pay taxes, the 99%, through a new and better round of austerity, completing still another massive transfer of wealth to Germany’s 1%.
Thus it is no surprise that Ms Merkel had her Hamiltonian Moment – maybe she was thinking of Lewis Hamilton who drives for the Mercedes Formula 1 team – a week after the BDI’s announcement. Merkel is now talking of grants for the PIIGS & Friends, which is being sold as the ultimate EU financial solidarity piñata party, even if analysts seem to concur that it is too little and and will be paid out too slowly.
There is just one problem: the Germans. For almost 20 years they have been bombarded by their political class and mainstream media with the imperative of parsimony, tightening one’s belt, living within one’s means, not taking on debt: the mantra that a state is like a Swabian hausfrau who knows you cannot spend what you do not have, all of which was symbolised by the virtuous Black 0.
Part of the Black 0 narrative has been the traditional racist cant about lazy, corrupt, spendthrift Southern Europeans, not to mention the Eastern Europeans, all of whom have only one goal in life: stealing German treasure. The Black 0 has proven teutonic fiscal virtue and racial superiority. The rest of Europe simply needed a bit of German fiscal discipline and all would be fine – as the past 10 years have proven not to be the case.
It is difficult to put xenophobic emotions into words, but here is a a video made by a German comedy show in 2015 distilling this angst, in this case with regards to Yanis Varoufakis who, as Greece’s new finance minister, had thrown Germany into panic and full propaganda mode with his demand for debt relief for Greece.
We have seen the same in the past years with regard to Mario Draghi, until recently head of the European Central Bank – and an Italian. To distract from the economic stagnation in Germany, the German political discourse has been a single Mario Draghi bashing. He is the man who, they explain, with his low interest rate policies, has been robbing Germans of income from their hard earned bank savings to save the spendthrift Italians. What should be clear is that real German interest rates were often negative under the Bundesbank before the euro. But Draghi is Italian and every German will tell you that you cannot trust Italians with money, so he has been an easy target in a nation with a strong racist streak. Now the head of the ECB is French – and a woman. Probably the only choice for the job that could be worse in the eyes of the Germans is Varoufakis.
This is how Count Draghila sucks our bank accounts empty
While he has been in office we have lost billions
BILD newspaper (with the largest circulation in Germany)
Apparently every national political class needs its xenophobia to cover up its own true policies and failures. The real danger begins when they start believing it themselves. How acute this has become in Germany became clear at the beginning of May when Germany’s Constitutional Court challenged the authority of the European Central Bank and the Court of Justice of the European Union, putting Germany First. The Constitutional Court has always been seen as an emergency parachute in case German fascist animal spirits went too far. Not any more. Needless to say, most Germans were euphoric about the judgment. Finally someone was willing to stand up to the ECB and the EU.
Now let us scroll back to the year 2015. Ms Merkel makes a lonely and courageous decision following a call from Valhalla telling her that the minimum wage that had just been introduced in Germany would damage company profits and there were a million Syrian refugees as potential cheap labour to undermine this, waiting at the border. Her aids tell her she might get the Nobel Peace Prize to boot if she lets them in. So she opens the border in a courageous, truly in the spirit of the European Union, real solidarity, game changer, etc act, in what was actually a great humanitarian policy, even if it was motivated by capitalist greed.
German citizens, who had suffered through years of austerity, with stagnating wages, loss of job security, a rapidly deteriorating infrastructure, correctly asked why there was suddenly money for refugees, but never any for them? Of course in the traditional liberal democratic narrative those raising such questions were designated racists and neo-nazis (like those who voted for Brexit, and initially against the Gilets Jaunes). So all was OK.
But things were not OK. In response to this arrogance of the German political class the far-right, neo-liberal German political party, Alternative for Germany (AfD), suddenly became a major political force, coming in third at the last general election, ahead of the Greens, Liberals, and Left Party.
The AfD has been doing rather poorly recently for the simple reason that they are on the wrong side of the coronavirus. The main motivation of German voters is fear. Fear is also the essential tool of far-right parties. Currently the German establishment is warning of the dangers of the coronavirus and actively protecting its citizens. The AfD can only claim that there is no coronavirus, it being a conspiracy in support of the climate crisis conspiracy. In the end though: no fear, no cheers. Thus the party is currently losing support, and when parties do poorly they start to fragment, which is the case with the AfD at the moment. At the same time Ms Merkel’s party has recovered in the polls.
With the arrival of the coronavirus the German government has suspended the Black 0 and introduced a fiscal package worth almost one trillion euros, more than half its 2019 GDP. This sum is greater than the domestic economic support of all the other EU countries put together. That may sound like a lot of money, but most of it is going to large exporting corporations. Many normal German workers are in financial difficulties. 2.6 million are unemployed, another 10 million are furloughed, which means reduced wages. These numbers are set to continue rising. More important is the fact that German politicians are promising to reinstate the Black 0 as soon as possible, including austerity, which will make the past ten years look like a cake dance, to pay for the recent massive wealth transfer to the oligarchy. And now these citizens are being told that the PIIGs & Friends are going to be given 500 billion euros! For free!
Thus we will probably encounter a political situation even more explosive than the one after the arrival of the refugees in 2015. Following 20 years of austerity propaganda and the alleged superiority of the Germans because of their fiscal discipline, there could be a renewed surge of AfD support should the EU provide grants to the “lazy and corrupt” financed by Germany.
Other discontent is cropping up as climate activists have to watch as the German government gives billions to some of the most polluting firms in Germany instead of a reorientation towards a greener economy. Before the corona crisis, the government had already sabotaged Germany’s CO2 reduction programme in support of these same major German polluting industries, so that the nation could not fulfil its Paris Climate Accord pledge for 2020 (Ironically, thanks to the coronavirus, Germany might just achieve it now). The German car industry – Volkswagen, BMW, and Daimler – are planning to pay out billions in dividends this year while accepting billions from the government for furloughed workers and demanding further billions for subsidies to boost sales and profits for further dividends. The airline Lufthansa is scheduled to be rescued with nine billion euros in a deal which no investor would ever enter into. For the bankrupt company Germany will receive 20 percent of the shares, thus without a blocking minority, and have only two board members whose participation in decision making will be very limited. For young Germans who have become politicised by the climate crisis, this is not going down at all well.
A major political backlash could well be in store for Germany. While the political class seem to believe that their citizens will be eternally thankful for their handling of the corona crisis, this is never the case. Thankfulness is always short-lived. And as long as the German oligarchy believe that their politicians can easily manipulate and cheat German citizens, while German citizens believe that their politicians manipulate and cheat them, there are troubled times ahead.
This interesting graph from the Financial Times makes an important point. While citizens of other major European economies a not spending, but saving money in the bank accounts to deal with the crisis, German bank accounts are being depleted. Not because Germans are spending (consumer spending is sinking), but they are putting cash under their mattresses because they do not trust their elite.
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