A ‘Schloss’ in the air?

Article published by Bill Cash’s European Journal.

In 1991, Germany’s former Chancellor, Helmut Kohl, famously declared that European monetary union without political union was a ‘castle in the air’. Yet Germany now seems determined to realise Kohl’s ambition and its tool appears to be ‘austerity!’

There is no doubt that Lehman’s collapse in 2008 helped Germany’s aspirations. Angela Merkel had campaigned against the Hedge Funds for years before Lehman’s collapse. Devastated by the disaster, and stories of fraud and malpractice, American bankers shouldered sole blame for the tragedy, even though the arrival and departure of an indigestible flood of German money was a major cause.

After the arrival of the euro a flood of German money had hit the US. Then European interest rates started to rise. In 2007, under pressure from the German Bundesbank, the ECB raised interest rates yet again; American and British banks cracked under the strain and foreign money fled. In 2008, the ECB raised interest rates once more and Lehman’s Bank collapsed. There was no Anglo-Saxon money now to help the PIGS. So they became dependent on Germany.

The PIGS – Portugal, Italy Greece and Spain and Ireland – have now become Germany’s priority. They have been revealed to be idle, greedy and corrupt and newspapers have had a field day, exposing their bloated public sectors and how their citizens avoid paying tax. Yet, that is not the whole story. Following the euro’s arrival the PIGS were also showered with German money, nearly $1.5 trillions worth. After Lehman Brothers crashed, the tap was turned off and Germany demanded deep spending cuts. Employment has fallen to depths not seen since the Great Depression.

Why are the PIGS are so keen to cling onto euro zone membership? The answer is not hard to find. For years, around half of the EU’s budget has been spent on agriculture, and much of that has been spent in their countries. Southern European hillsides have been adorned with olive trees as Northern Europeans discover the delights of olive oil, pasta and wine. The PIGS don’t want to forfeit the finance, which helps some of their poorest citizens.

Unfortunately, the price of receiving it from Brussels is rising all the time. European President, José Manuel Barroso, is now calling for nations to sign over their fiscal sovereignty to Brussels, the aim being to create an ideal area, where corruption vanishes, taxes are paid and inflation is eliminated for ever. The model is Germany, where inflation has been low for years. Yet Germany could be accused of achieving low inflation at the cost of hyperinflation elsewhere.

Everyone remembers Germany’s 1923 hyperinflation. Pictures of destitute Germans, carrying bundles of waste-paper money, have been indelibly imprinted on our minds. Germany’s campaign against paying its ‘huge’ First World War reparations payments beggared the German people.

Germany won the argument that the war reparations demands were too high and the European Union’s premise now is that all European nations were responsible for the 1st World War. Yet no one has remarked on the fact that German industry gained an advantage from its Great Inflation because it wiped out the country’s internal debts and ‘taught the German people how to work’.

Germany also had hyperinflation after the 2nd World war and was given an advantageous exchange rate when its currency was stabilised. By the late 1960s, Vietnam-war-torn America was finding it hard to compete. Eventually Germany agreed to re-value its currency on condition that it could buy gas from the Soviet Union and be assisted to invest in Brazil, which had a previous history of high inflation and defaulting on loans. In the 1980s and 1990s many East European countries would suffer from hyperinflation before receiving German investment.

That era is over. Inflation is now an anathema everywhere. Indeed Germany is so keen to stamp out inflation at home that German workers have not had a pay increase, in real terms, for ten years. No wonder they are not keen to help Southern Europe! Meanwhile German industry has profited from the PIGS entry into the single currency because its exports to them have surged, rising strongly in Greece, doubling in Italy, and almost tripling in Spain!

Before the 1st World War, influential right-wing German politician, Heinrich Class, declared that German unification had been incomplete because it failed to include all Germans. He campaigned for an area, he called Mitteleuropa, which would comprise all those he considered of ethnic German stock, in Northern Europe, the Austro-Hungarian Empire and Romania. Mitteleuropa would be bound together initially by a customs union, and this would prepare the way for the creation of community-wide legal and political institutions.

Self-determination on the basis of language seems to rule today. Yet while some states (like Britain and Spain) seem to be splintering into ever-smaller countries, Germany has appealed to all the people in Russia who have had antecedents in Germany, to apply to become German citizens. It is also appealing to those beyond its borders, in East and Southern Europe, who can claim ethnicity and ethics like its own. Being German has become a brand. No wonder the French have become alarmed! Meanwhile German wrath seems to have become concentrated against France’s friends in Southern Europe. The French don’t want the European Union to be transformed into Mitteleuropa!

Knowing Germany’s previous ambitions to have a European empire should reassure us that the euro is not going to disappear. But whether Germany has ever envisaged creating a crisis in Europe, for political and economic ends, is another matter. It sabotaged the European Exchange Rate mechanism for its own ends in 1992; its capital flows, to and fro across the Atlantic Ocean, and down as far as the Mediterranean, massively distorted world markets before the Lehman crash. It therefore seems perfectly possible that it could cause chaos again for future purposes. Yet these won’t include the destruction of the euro, just the European Union’s transformation into the political and economic form it desires. And it already has a scapegoat – those bankers who created mayhem in 2008!

The City has decided to adopt a policy of appeasement towards Germany, in the worthy aspiration of being appointed to look after the European Union’s money. Yet Germany regards appeasement as weakness and many European politicians believe silence to be an admission of guilt. So it is not surprising that European President, José Manuel Barroso, declared to the European Parliament at Strasbourg on 12 September 2012:

‘We should not forget what was the origin of this crisis, and I have to say to Eurosceptics, no, it was not the Euro. No it was not the Euro! … it was not the Euro that created the problem; it was the irresponsible behaviour of the financial sector’!

José Manuel Barroso has reiterated this so often, people may be beginning to believe him. Yet he has forgotten the old German proverb, so appropriate on this occasion, ‘Who is responsible, the pig, or the one who fed it?’

The pigs in America, Britain and Southern Europe have admitted that they were almost criminally greedy and foolish. The one who fed them, seemingly, has got off scot-free!

 

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              How Hitler Came To Power describes how what amounted to a conspiracy of the German military and industrial cliques, manipulated Allied leaders and misrepresented the Treaty of Versailles to further their ambitions, with zero regard for the human cost.
             Germany was far stronger economically by 1929 than she had been before the First World War. How Hitler Came To Power makes the case that she was primarily responsible for the Wall Street crash. By 1931 she was the greatest exporter in the world, with a mountain of cash in the bank. Yet the German people were subjected to high taxation, mass unemployment and misinformation in the cause of ridding Germany of the shackles of Versailles and returning the country to dictatorship