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Eurocrash: a Spiegel round-up
They're not the only ones.
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Richard North 20/08/2012 Eurocrash: political rage in German
One is increasingly drawn to the view that the innermost recesses of most newsrooms harbour a staunch "little Englander" parochialism, combined with a vestigial anti-German ethos left over from WWII. Thus, the idea of German politicians entertaining a vibrant debate over the euro encroaches so much on their comfort zone that they simply cannot deal with it.
Add to that, the propensity of the media to present news in terms of conflict, and you end up with the startlingly superficial type of report that you see in the Failygraph today, courtesy of our europlastic friends in Open Europe. The title, "Showdowns that will define Europe's future", tells you a great deal – about the British media.
That said, one of the lead items in Handelsblatt today brings to light other problems – that the stories are in a difficult foreign language and, particularly, that they deal with personalities unknown to (mainly) London audiences, in political parties which defy easy description.
Thus, the headline "Kubicki Bazooka brings FDP in Rage" would not automatically wing its way to the front pages of most English newspapers, even though the story offers a fascinating insight into the state of play in Germany – and in the euro debate generally.
Wolfgang Kubicki is the Hamburg FDP party boss, with a reputation as a contrarian who delights in annoying the politicians of his own party, and especially Philipp Rösler. And now, in a commentary for the Frankfurter Allgemeine Zeitung, he has broken ranks with his party, calling for a banking license for the ESM.
The importance of this stems from the fact that – as FAZpointed out a couple of weeks ago, confusion over the ESM is one of the hottest issues in the current debate.
The text, says FAZ, has prompted experts and politicians to completely contrasting interpretations, with particular disagreements on estimates of German liability, which vary from €190 to 700 billion, even up to trillions – all on top of concerns over the marginalisation of the Bundesbank.
Giving a banking license to the ESM would allow it to tap into unlimited central bank funds to use for rescuing ailing eurozone countries – a prospect that Merkel's coalition, of which the FDP is part, view with horror.
Thus, Kubicki dropping this rock in the pool is distinctly unwelcome, even if he is pleading that he has done it "for general support of the ECB", "for the good of Europe" - and the malaise of the unpopular Rösler.
But the move is also seen as typical of what is described as the "self-destructive" tendencies of the FDP. "Especially pronounced in the FDP is the exhibitionist and self-destructive desire to hold public debates on internal personnel matters", says one of its MPs.
Looking at the situation from outside, one sees this as more evidence of German politics in disarray, especially as another report has the parliamentary state secretary in the Federal Ministry of Economic Affairs, Hans-Joachim Otto – also an FDP politician – expressing "sharp criticism" of the ECB.
Anyone who thus writes up the eurocrisis in "biff-bam" terms of Germany versus the rest, when German politicians have dispensed with the cosy consensus and are at war with each other, is presenting a false picture. The main battle is inside Germany, in a way that has not been seen for a generation.
COMMENT THREAD
Richard North 20/08/2012 Media: a dying industry
The biggest loser amongst the dailies is the BBC's favourite newspaper, the Guardian, which has sustained a circulation loss of 15.85 percent, and recently posted a £76.6 million financial loss. This paper is closely followed by the Financial Times, which managed a 13.61 percent loss.
It is in the Sundays, though, that the biggest drops in circulation are seen, with the Mail on Sundayone of the big losers, shedding a staggering 21.1 percent of its sales. However, that does not compare with the Independent on Sunday (-28.99) and the biggest loser of all, The People (-43.09).
This cannot correctly be called an industry in decline – it is in free fall. It is a dying industry. No enterprise can sustain this level of losses and expect to survive.
Why this should be the case, we have explored many times and our views scarcely bear repetition. Just the narrow subject to which we have devoted this blog to the last few weeks demonstrates the lacklustre performance of an industry which claims as its rationale the ability to inform.
Indicative of the way the industry is going, though, one recalls the triumphant front-page headlines in the 80s, when some of the newspapers were reaching new circulation peaks. But, as circulation plummets, those same newspapers are remarkably silent about their fates.
As always, if you want to be informed, even about newspapers themselves, you have to go elsewhere.
COMMENT THREAD
Richard North 20/08/2012 Eurocrash: Merkel - put up or shut up
Basically, the day of reckoning comes closer. Is Merkel going to allow Greece to go bankrupt and fall out of monetary union, or is Germany going to throw good money after bad, at the cost of her credibility when the EU once again ignores the rule violations by the aid recipients?
And is she prepared to do the latter, even at the cost of the coalition, triggering new shock waves that would leave the largest euro country without a government?
Now is the time, says the paper, to consider how the damage can be minimised and financial credibility restored. It will be crucial that Merkel and French President Hollande finally find a way of working together and develop a common strategy. On this, the success of any euro rescue will depend significantly.
Another thing Merkel must do, the paper concludes, is resists the temptation to drag out the decision till the elections. Neither Greece nor the eurozone would be best served by delay.
COMMENT THREAD
Richard North 20/08/2012 Eurocrash: Germany has already paid enough
Germany has instigated two world wars and both lost, he writes. It cost millions of people their lives and created untold suffering. The Germans were often "Hitler's willing executioners".
In the eighties, Sulik's family emigrated from Slovakia to Germany. He attended several German schools and remembers well how much time was devoted to German war guilt and reparation.
Billions have been paid in compensation and still Germany feels it necessary to give submarines to Israel. And Germany should have paid a great deal; after all it had done terrible damage. But, asks Sulik, how long will it now pay in the euro crisis?
On 27 September 2011, the then German president Christian Wulff visited Slovakia. Sulik was at the time in office as president of the Slovak parliament, and the coalition government was about to vote on the increase of the EFSF. When he asked why Germany supported the increase - which Sulik opposed - Wulff replied: "You know, we have historical obligations".
But, writes Sulik, anyone who did something wrong in the war must now be at least 90 years old. There can be no more than a few thousand people left. So, asks Sulik, how long should the Germans pay for everything? 50 years? 100 years? Forever?
Brantner, he says, has argued for joint liability, claiming that this is about anything but money. Rather, it is about solidarity, historical responsibility. These are fine words, Sulik says, but it still all comes down to money.
Wolfgang Schäuble, born in 1942, pays willingly - even if it is not his own money, but the taxpayers. And so are most politicians quite generous. But Schäuble's childhood was overshadowed by discussions about collective guilt and reparation. Nevertheless, Sulik says, when a young politician like the upcoming 33-year-old Franziska Brantner writes: "We have a joint liability for the debts of other euro countries", I am amazed.
Supposedly, Germany has to do this to save its exports and therefore jobs. Germany should therefore pay for the southerners, so that people there can buy German products.
Besides the trivial question of what good is exporting if the exporting country pays itself, there is a lot trickier question: if things are being given away, would it not be better for Germany to give them its own citizens instead of foreigners?
Or it is argued that without community liability, the eurozone will collapse? But if this is turned round, community liability means that the eurozone is already broken. That is why there is Article 125 of the EU Treaty - the so-called no-bailout clause. It states that everyone is liable for its own debts.
However, says Sulik, as a Slovak he might not care whether Germany becomes a Christmas goose, if it were not for two factors. First, he is convinced that liability for others' debts leads to a situation where no one feels responsible for their actions.
Why, for example, should the Greeks choose someone other than Alexis Tsipras who basically says do not save, Germany will have to pay. Germany already pays billions to Greece (at the same time that Mrs Merkel is in Greek newspapers depicted with a swastika on her arm; this is a bad joke).
Another example is Slovenia, which has made enormous efforts to make savings, yet has still been downgraded by the rating agencies. The Slovenians are now at a crossroads: either they can work harder to avoid debt and thus "reward" Spanish banks, or they can relax and go into debt like everyone else.
If they remain solvent, they have to pay for the rescue of other countries. That's the dangerous thing about the union liability: The result is an incredibly strong motivation to go into debt. If someone then promises to balance the economy, they are ridiculed. By any rights, debt will never be avoided.
This applies specifically to Italy and France, which refuse any control and will refuse because they are "grand nations". And Grand Nations will be dictated to by Brussels, but when it comes to anything more than about getting German money, the European idea ends very quickly.
The second factor affects Slovakia more. Slovak politicians have unanimously declared "adherence to the German course" for reasons of state. Whatever Germany does, we do it as well, says Sulik.
So if Germany for whatever reason rescues someone, Slovakia rescues someone as well Lately, Slovakia, the poorest country in the eurozone, has had the honour of saving private Spanish banks. We do not even have a continuous motorway link between the two major cities, says Sulik, but we save private banks in a much richer country.
The real problem is the acquiescence to the risk arising from liability, which ultimately harms other countries seeking to do business responsibly, for example Slovakia.
There have been several attempts to save the eurozone, with two dozen crisis summit. Germany has been hit hard and the price for Germany's exports has not been paid. The figure is currently at €730 billion, as well as a 27 percent joint liability for any loss of the ECB.
Eventually, there will be nothing else left for the German politicians to do other than to pull the rip cord, otherwise the eurozone will be a huge mess. Germany does not need any more guilt. It has already paid enough.
COMMENT THREAD
Richard North 20/08/2012
Monday, 20 August 2012
After our "scoop" in the Booker column yesterday (picked up, I am happy to say, by Raedwald), I continue to mull over why it is that the British media seem resistant to reporting the events in Germany.
When a prestige German newspaper is saying this, you know something is up.
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