THE GERMANS WALK OUT
By MARCUS WALKER, from the Wall Street Journal
BERLIN–The exit of Germany’s top man at the European Central Bank is likely to feed some Germans’ worst fears about the euro: That the currency, which was meant to be as strong as the old German mark, is turning into the wobbly Italian lira writ large.
For Germans, JÃ¼rgen Stark’s resignation from the ECB’s executive board on Friday is a painful sign of how the country’s cherished financial rigor is being compromised as European authorities cater to the needs of heavily indebted Mediterranean countries such as Italy and Greece.
“Our most important euro-banker throws in the towel,” Germany’s mass-circulation tabloid Bild declared online Friday. Mr. Stark was vehemently against the ECB’s purchases of “junk” government bonds of southern European countries, Bild wrote.
Bild, whose fulminations are closely watched by German politicians, recalled that former German Bundesbank chief Axel Weber also resigned earlier this year over the same ECB policy. The paper has voiced fear that the euro could turn into a weak, inflation-prone currency when Italian central banker Mario Draghi becomes ECB president. (Bild later appeared won over by Mr. Draghi’s promises to uphold German-style monetary discipline.)
Mr. Stark’s successor–the hot favorite is deputy finance minister JÃ¶rg Asmussen–will likely have to act tough to reassure the German public that the country can still assert its interests and financial values at the ECB.
When Germany joined the euro, German voters hoped that the new ECB would be as rigorous in fighting inflation as the Bundesbank, trusty guardian of the old German mark. The ECB has so far enjoyed a good reputation in Germany. Many German economists have also defended the ECB’s recent crisis management, including its bond-buying program, as unorthodox but necessary.
But the short-order exit of Germany’s two most senior central bankers could exacerbate ordinary Germans’ fear that the euro crisis, and European institutions, are slipping beyond their control.
Four-fifths of Germans believe the worst of the euro crisis is yet to come, and 57% are worried about their savings, according to an opinion poll for state television network ARD earlier this month.
Mr. Stark’s departure could make it harder for German Chancellor Angela Merkel to convince voters that her euro-crisis strategy is sound. Although the government is expected to win a Sept. 29 vote in parliament on strengthening the euro zone’s main bailout fund, future rescue measures could be a harder sell, says Thorsten Polleit, economist at Barclays Capital in Frankfurt.
Despite Germans’ disquiet about the euro-zone crisis, there is as yet no sign of a groundswell of opinion against Germany’s euro membership. Virtually the whole of Germany’s political class, and most of its business elite, want to keep the euro despite the agonies of the current crisis.
Nearly two-thirds of Germans say the country can prosper only inside a strong EU, according to the ARD poll. But the same proportion oppose bailouts of cash-strapped euro members, the poll found.
Many German politicians are worried about the risk of a backlash to the euro, even though no party or credible public figure has yet taken up that cause. Instead, Germans are yearning for the euro they thought everyone had agreed to–a currency based on strict rules, including fiscal discipline by national governments, and a central bank that doesn’t finance government debt.
Dr. Pinna says:
The Germans have been very wrong in the last century. They followed Hitler to their total destruction! Now they are following the European Central Bank and a group of leaders chosen by bankers.
CAN THE GERMANS SUPPORT THE PIIGS?
NO! This is a mathematical certainty. Population numbers are totally different than when the E.U. came into being. In the last fifty years the population of Germany has grown by ten million and that of the EU by 100 million. The Germans cannot support this additional mass of humans.
All of Europe is in debt, but the PIIGS do not have the financial means of repaying their debt. With all their austerity measures, the debt
keeps growing and their income keeps falling.
The PIIGS are not exporting countries. Their income is derived from tourism and a small amount of farming.
The Northern EU countries can pay a portion of the outstanding debt of the PIIGS, but ultimately they will find themselves incapable of supporting this group of at least 180 million people.
The world economy is rapidly falling. The day when the money runs out will come within two years. The more money that the Northerners give to the banks, the weaker they will become. When the crash hits, these people will turn on their politicians for leading them into poverty. That is why the two shrewd bankers quit.