Tuesday, 29 November 2011

Merkel just does not get it!

I never thought it possible that a Polish Foreign Minister would one day state:

" I fear German power less than I am beginning to fear its inactivity"

Photo Gallery:Merkel Against the World - (4 Photos)But he said it!    Radoslaw Sikorski, the Polish Foreign Minister said so in a speech in Berlin last Monday and wrote it again in the Financial Times on Tuesday.

And he is perfectly right, because Chancellor Merkel simply does not get it.

When the Euro architecture was agreed principally between Chancellor Kohl and French President Mitterrand it was clear that its architecture was flawed.   So much so that the German Central Bank, the Deutsche Bundesbank  (BUBA), was totally against the Euro project as proposed.    BUBA maintained that a monetary union ought to be the end result of political integration rather than a catalyst leading to it.

And technically BUBA was right.   But the politicians base their decisions on visions not cold mathematical calculations.   And Kohl and Miterrand forced ahead over-riding all objections in launching the Euro project knowing that all things being equal, in the fullness of time, when the flaws in the Euro architecture lead to an economic crisis, European leaders with the right vision for deeper European integration would cash in on the crisis to force deeper economic and fiscal union which can only become acceptable as a choice of the lesser evil when the cost of the crisis would justify the shedding of national sovereignty to centrally shared pooling of such policies.

We are now right in the heart of the crisis.    This is the time to cash it in through promotion of deeper integration as part of the rescue arrangements.   Visionaries turn crisis into opportunities.  But Chancellor Merkel has no European vision.    She goes by the calculator rather than by the grand political vision of her predecessor and mentor Chancellor Kohl.   She has done nothing, absolutely nothing, to prepare her people for the big changes they must swallow in order to protect the 60 years of peace and prosperity following the atrocities the German Nation inflicted on humanity in the first half of the 20th century.

And worse than that Chancellor Merkel acts as if Germany is suffering the crisis because of others and therefore should let others suffer whatever the consequences.  Perhaps somebody has to remind the Madame that:

  • Germany was the first to break the Euro Stability and Growth Pact and set a bad example for the others and removed the moral authority of the Commission to discipline subsequent offenders.
  • Germany is the biggest beneficiary of the current arrangements of the Euro as it has kept the foreign value of the currency much lower than the Deutsche Mark would have been thus keeping German exports competitive
  • Germany is also enjoying low interest rate at the expense of other Euro states who have to pay unsustainable rates
  • The ECB accommodated Germany in keeping rates low to help the integration of East Germany and this has been a prime source of the property bubble in Spain and Ireland which caused so much misery to these states.
If Germany wastes this crisis and fail to show the visionary leadership to save the Euro and force deeper European integration we will all burn in hell.   Probably hell is like a depression 1930's style followed by military conflagration.   But perhaps someone should remind Frau Merkel that the most to suffer would be Germany itself

Chancellor Merkel in particular would do well to read a research published  by UBS top economists where they estimate that the cost of bailing out Greece, Ireland and Portugal together would amount to a little over €1,000 per person in a single hit, whereas the break-up of the euro will cost a single hit of between €9,500 to €11,500 per person and an annual hit of between €3,000 to €4,000 per person.

Frau Merkel, if you still don't get it than get ready for hell!

1 comment:

  1. These last 2 days when we really came near the edge it seems like usual the crisis is being tackled more seriously. Hope it is not too late!