A Cold Harsh Economic Winter for Germany Is on the Horizon

Winter is coming, Game of Thrones

In the hit series ‘Game of Thrones’, one of the underlying themes of the first few seasons is that winter is coming. Winter in the show, however, is measured in years and not months. An economic winter is probably coming to Germany and the European Union (EU) soon, and it will be measured in years as well.

Some smaller countries in the EU have already felt the cold winds of austerity, blown in off the Teutonic steppes of Germany. A vicious circle has been created. Cuts to social programs have helped force economies to contract, which have lessened tax revenues, causing more unemployment and pain for the people. Another round of austerity is called for by Berlin and the European Central Bank (ECB)-read Germany-and the whole process is begun anew.

France has even begun to feel the sting, but may thumb their collective nose at austerity. They recognize that in times of economic malaise, spending increases do more quicker to relieve the pressure than cuts. Businesses in France want more flexibility to lay off workers, but the strong ideas of workers’ rights are imbedded in the French psyche and will be difficult to dislodge. The French are often portrayed as a people who enjoy a good work strike for the sake of it. Let’s hope they continue.

Germany's hyperinflation of the Weimar Republic always lurks beyond the surface

In the 1920s during the Weimar Republic, a loaf of bread in Germany cost a wheelbarrow of money on Monday and a truckload by Thursday. I have never sat in on any history lessons at a local school here in Munich but apparently this idea has been seared into the minds of all Germans at a most impressionable  age. Germans can be the most frugal fellows during booms, and hoarders during busts. And that’s putting it nicely.

I will not go so far as to say that economically the Germans suffer from Münchausen syndrome by proxy, like some on the far, far left of other EU countries have intimated. But it is out there.

If the EU’s economy completely tanks, or worse still, the EU dissolves, Germany’s currency will skyrocket in value and it’s exporting empire will crash as it will be unable to sell anything to anybody from this planet. Germans rarely spend money domestically on anything other than the most necessary items, so there would be little relief for the economy there.

A few months ago I recall reading in a British newspaper of how the Germans had fought for a year longer at the end of World War II than the Brits would have if faced with the same predicament. And it was not only because of a crazed dictator in a bunker in Berlin. The article stated that England would have sued for peace in the best terms available at the end of 1943 or the beginning of 1944.

After Allied bombings destroyed most of the trains, then the trucks, cars, motorcycles and even bikes, Nazi Germany still had postal service better than more than half of the world today. If a shoemaker’s shop was blown up, he simply made a sign and moved across the street and carried on about his business. History shows us that Germany will carry on until there are no more trenches to hold.

The tenacity of the Germans is a very commendable characteristic, but unfortunately, economically, it may be their undoing. The rest of the EU will be collateral damage if they don’t have the good sense to get off the current economic track.

Yes, winter is coming.

What do you think? Is fiscal frugality the way to go? Or is the Keynesian economic idea of stimulus pumped into the economy by governments a better way to go?

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Germany Still Has a Wall that Divides

Usually punctual, very comfortable

Usually punctual, very comfortable. Photo: wikipedia

If you travel by train or car in Germany for any distance, a few aspects of Germanness are inescapable. They all share similar ideas of orderliness, tidiness, and structure. Other pillars of Germanness, especially in the workplace, include punctuality, productivity, and thoroughness. These are the things that unite them, a sort of common consciousness,  a Teutonic core.

But there are great divides and differences between Germans. These fault lines are often geographic in nature. Surely it would seem that the East Germans, separated for decades by a physical wall of concrete and steel, would contrast immensely with the Western Germans. And, in fact they do. There is also a mental wall that has been even harder to overcome.

Many an Ossi has struggled mightily to come to terms with ideas of deadlines, competition and overall productivity, which come easier to those Germans who recovered from World War II in American, French or British Zones of occupation. Communism’s inferior business model, coupled with an overzealous and EXTREMELY well-organized secret police, the Stasi, adds to many East Germans distrust and narrower world view.

All of this comes a little surprise. What is a bigger surprise, and which can only be discovered after spending some time in Germany, is the polarity between Northern and Southern Germany. That is the greater divide.

When I travel back to Florida to visit my family and friends, someone somewhere invariably asks me, “Why do you live in Europe? And of all places, why do you live in Germany? France, sure, Italy great, but Germany?”

My patent response is “I live neither in Europe nor Germany. I live in Bavaria.”

Bavarians are not really Germans, but more like the Austrians or the Schwaben (think Stuttgart). Or the Austrians and Schwaben are like the Bavarians, and neither are Germans. Yes, they speak dialects of the same language, the similarities are fewer after that. It’s like trying to tell an Scotsman he’s a Brit, or a Texan he’s an American.

 

A brief history of the land that is now called Germany

Up to 60% of the German population was killed in the 30 Years War. Photo: wikipedia

Up to 60% of the German population was killed in the 30 Years War. Photo: wikipedia

For nearly 500 years, Germany served as a (the) battlefield of Europe. Sandwiched between the stronger powers (empires) of France, Russia or the Austro-Hungarian conglomerate, Germany became a sort of jetty that dispersed the waves of desire of its neighbors by providing a complicated group of territories whose rulers were often at war or in allegiance with each other. All of this changed, and was bound to change the face of Europe dramatically, with the rise to power of Otto von Bismarck.

The Iron Chancellor put Germany on the road to power. Photo: wikipedia

The Iron Chancellor put Germany on the road to power. Photo: wikipedia

When Germany united, through Bismarck’s masterful abilities, some great timing and luck, it immediately proved too strong for Denmark, the Austro-Hungarian Empire, France, and eventually Russia. Only Great Britain could compete and contain the new industrial and military behemoth. Germany’s ability to produce, organize and analyze was beyond comparison with other major countries then, and is still so today. This has caused a plethora of problems for Germany-and her neighbors. It caused them then as it causes them now. Germany is, and has always been, the question of Europe. It is still so today.

After a few embellishments, or half-truths (lies), Bismarck was able to unite the peoples who shared a common language-German-under a banner that would one day at different points terrorize, amaze and astound the rest of the globe.

Germany will continue to do so, though one hopes that their darkest days of the Third Reich are behind them. Many in Europe are not so sure, though it’s hard to determine if it’s politics being played or authentic fear. The quicker the rest of Europe (and the world) can resign themselves to (or rejoice) the fact that a reunified Germany is a world player, the better off it will be.

Southern Germany, Austria and Switzerland would be a formidable economic union

But how unified is Germany? Are there still many obstacles to overcome before they can truly take their place upon the Pantheon of Nations as their robust economy demands?

From east to west in Germany, the differences are stark and clear. Certainly those Germans residing near the border with Poland can’t be very similar to those Germans abutted against France. And they are not. But they are both more German than the Bavarians, those strange, independent and wonderfully quirky Bavarians, who queerly and surely seem to share few of the qualities of their more northern kindred.

Munich's most famous attraction (non-museum). Photo: wikipedia

Munich’s most famous attraction (non-museum). Photo: wikipedia

Americans think of sausages, beer, Audi, BMW, Schweinebraten and Knödel (roast pork and dumplings), Munich, beer gardens, Neuschwanstein (Cinderella’s Castle), Mozart, Einstein, the Romantic Road, the Alps, Mercedes, Nuremberg Parade Grounds, Nazism, FC Bayern, etc., when they hear the word Germany. Most of these first thoughts are either mostly Bavarian or completely Bavarian! Not German! Thyssenkrupp, E.ON, Ruhrgebiet, Currywurst, cabaret, Reeperbahn, Berlin, Hamburg, Dortmund, and the close proximity to one another of more than 25% of the total German population in North-Rhineland Westphalia, that is Germany!

In Bavaria’s sort of sleepy capital, Munich, closes at about 11pm every night. Goths are really strange. Many people still listen to Oom Pah-pah music in Bavaria, or a more modern version led by Helene Fischer. Pretzels are everywhere. Wagner’s music confounds, excites and is controversial. It’s played regularly. Festivals of planting, harvesting and moon phases abound and held weekly in Summer. A few extra kilos on the frame is still considered attractive-and normal. Bavarians drive south for fun-many have never been to Berlin or any other more northern German city.

Northern Germany has most of the vice. Photo: wikipedia

Northern Germany has most of the vice. Photo: wikipedia

If anyone wants to see a real German city, send them to Hamburg. Or Cologne. Berlin is in the midst of major transitions, it needs a few years. Maybe Dortmund, or Düsseldorf, or Hannover, those cities are real German.

Ruhrgebiet. This is Germany. Photo: wikipediaGermans have an edge, a strong affinity for industry, gray, rain and melancholy. Germans like hard rock, a bit of graffiti, wayward souls sleeping in the streets. Germans are accustomed to a bit of broken glass. Bavarians want (and have) little of that. Only the Swiss can call the Bavarians untidy. Germans eat more than pork and the trimmings-Bavarians can survive on only pigs and potatoes. Germans drink beer with strange names like Kolsch or Altbier, Bavarians drink the champagne of beers-lager, less bitter. Bavarian beer comes in big mugs, not flute glasses. Germans drink at night, Bavarians might have a beer for breakfast. Young Bavarians go to bed before midnight; Germans are in the shower preparing for the night’s festivities.

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For many years Germans were united in their basic political desires, win the Cold War (another war fought almost entirely over the idea of what to do with Germany), the World Cup and dominate Formula One. Now that they have them won, they are beginning to divide on ideas about the EU, integration, etc. Many Bavarians wouldn’t mind a separate country. The possibility of a chancellor for all of Germany being Bavarian is slim. Not impossible, but very slim.

If one is to get the EU’s support, it must be able to win the support of Germans (and Bavarians) from north to south. This is a more difficult task than winning that support from east to west. The Berlin Wall may be no more, but there still exists one that runs from east to west. But, regardless of the geographical location of native German speakers in Germany, one thing is certain. They all make jokes about the Austrians.

So maybe a recent report of a union of Austria, Switzerland, Bavaria and its neighbor to the west, Baden-Württemberg, was simply a silly season (Sommerloch) story, to tide us over till school starts. School does start later in Bavaria than the rest of Germany. Oh, Bavaria has more bank holidays than the rest of Europe. Go figure.