Loomnie

I recently read Michael Lewis’ The Big Short, a very instructive book on the recent financial that looks at the crisis from the point of view those who made money from it. So when I learnt from the Planet Money blog that he has written a piece for Vanity Fair on the country I now call home, I decided to give it a look. Apart from a fair amount of information on the apparent obsession of Germans with the human rear-end and what comes out of it, bits of the article are about German bankers, Germans and the financial crisis, and Germany and the future of the euro.

On Germans bankers and the crisis:

They lent money to American subprime borrowers, to Irish real-estate barons, to Icelandic banking tycoons to do things that no German would ever do. The German losses are still being toted up, but at last count they stand at $21 billion in the Icelandic banks, $100 billion in Irish banks, $60 billion in various U.S. subprime-backed bonds, and some yet-to-be-determined amount in Greek bonds. The only financial disaster in the last decade German bankers appear to have missed was investing with Bernie Madoff. (Perhaps the only advantage to the German financial system of having no Jews.) In their own country, however, these seemingly crazed bankers behaved with restraint. The German people did not allow them to behave otherwise.

On Germany and the future of the euro:

Either Germans must agree to a new system in which they would be fiscally integrated with other European countries as Indiana is integrated with Mississippi: the tax dollars of ordinary Germans would go into a common coffer and be used to pay for the lifestyle of ordinary Greeks. Or the Greeks (and probably, eventually, every non-German) must introduce “structural reform,” a euphemism for magically and radically transforming themselves into a people as efficient and productive as the Germans. The first solution is pleasant for Greeks but painful for Germans. The second solution is pleasant for Germans but painful, even suicidal, for Greeks.

There is not much of the substance here that those who know a little about the financial crisis and are familiar with Germany wouldn’t know, but still, it is worth the read, if only to learn about German obsessions with the said derrière and what comes out of it. The piece is here.

By the way, I haven’t been able to find a German who will confirm the obsessions.

John Lanchester in LRB:

If European monetary policy is run according to German national interests, huge structural imbalances will accumulate. The Germans will then either have to pay to correct those imbalances, or agree that the euro should not be run primarily according to German national interests. If they are unwilling to do either of those things, the euro can’t survive. It’s hard to tell exactly what Merkel thinks about all this. She is nobody’s idea of a caricature spendthrift, happily chucking money in the direction of the undeserving poor. Whenever the question of bailouts is mentioned, Merkel acts out an elaborate pantomime of reluctance to dish out more cash. It’s hard to tell whether she is really-o, truly-o this reluctant, or whether she’s hamming up her unwillingness for a domestic audience which strongly dislikes the idea of bailing out work-shy Southern Europeans. The fact is, though, that they are going to have to continue to do that, if the euro is going to continue to exist in its current form. Germany has to put the broader European interest on the same level as its own national interest, or the euro is toast. This, if you think about it from a broad historical perspective, is quite a reversal. During the 20th century, the greatest danger to European stability was Germany’s sense of its special destiny. During the 21st century, the greatest danger to European stability is Germany’s reluctance to accept its special destiny. If the German taxpayer manages, however grudgingly, to accept that it’s her duty to shoulder the burden, the euro will muddle through. But it won’t be pretty.

Here.

From the BBC: A group of rich Germans has launched a petition calling for the government to make wealthy people pay higher taxes.

The group say they have more money than they need, and the extra revenue could fund economic and social programmes to aid Germany’s economic recovery.

Germany could raise 100bn euros (£91bn) if the richest people paid a 5% wealth tax for two years, they say.

The petition has 44 signatories so far, and will be presented to newly re-elected Chancellor Angela Merkel.

The group say the financial crisis is leading to an increase in unemployment, poverty and social inequality.

Simply donating money to deal with the problems is not enough, they want a change in the whole approach.

“The path out of the crisis must be paved with massive investment in ecology, education and social justice,” they say in the petition.

Those who had “made a fortune through inheritance, hard work, hard-working, successful entrepreneurship, or investment” should contribute by paying more to alleviate the crisis.

The man behind the petition, Dieter Lehmkuhl, told Berlin’s Tagesspiegel that there were 2.2 million people in Germany with a fortune of more than 500,000 euros.

If they all paid the tax for two years, Germany could raise 100bn euros to fund ecological programmes, education and social projects, said the retired doctor and heir to a brewery.

Signatory Peter Vollmer told AFP news agency he was supporting the proposal because he had inherited “a lot of money I do not need”.

He said the tax would be “a viable and socially acceptable way out of the flagrant budget crisis”.

The group held a demonstration in Berlin on Wednesday to draw attention to their plans, throwing fake banknotes into the air.

Mr Vollmer said it was “really strange that so few people came”.

We woke up this morning to learn that the new center-right coalition of Ms Merkel’s CDU and Mr Westerwelle’s FDP have decided to cut taxes.