Commentary on Political Economy

Wednesday 7 September 2011

Currency Wars - Germany and the Euro

As friends would know, we have argued for quite a while that Germany needs the euro more than the "periphery" need it - for the same reasons why yesterday's move by the Swiss central bank (SNB) provoked the effects we predicted. Here is the Wall Street Journal on that development:

The usual German refrain from its political and industrial-financial capitalist elites is that German industry is the most competitive in Europe, perhaps in the world, so it ought not "to pay" for the eurozone crisis, and that it is the "periphery" that must engage in "austerity" to compete its way out of this crisis. Of course, the argument does not make any sense because one country's surplus is another country's deficit, so that German elites would have to explain to German workers that they have been subsidising their banks and export industries (the survivors and inheritors of the Nazi dictatorship) so that Greeks and Italians could enjoy the fruit of their production through "loans" that will never be repaid! (Have a look at this paean for "austerity" in Europe from that total bastard who goes by the name of Wolfgang Schauble - Germany's finance minister in the FT

Ultimately, the German elite is stuck with a crisis that will be bigger than that in 2008 (Lehman Bros.) because its banks will have to be recapitalised (plenty of US competitors well cashed-up to take up the offer, as we have predicted here!) or otherwise....
Otherwise the eurozone will have to break up! And in that case you can imagine what will happen to the new Deutschemark once it is restored: it will shoot up to the sky like a rocket and make German exports so uncompetitive that the German elites will have an even greater crisis than what they would have if they agreed "to bail out" the EU periphery!

There you have it. A capitalist system that is based on the ideology of competition will always find it very difficult to retract and explain to simple people like us that capitalism has nothing to do with "competition" but rather with the ability of current social resources to pro-duce more social resources that can then be used to command even more "living labour" - workers - in a way that does not lead to galloping inflation or excessive "social emancipation".... Which is why, as we argued below, Martin Wolf's calls for Western capitalist governments to expand public spending will fall on deaf ears, unless.... Unless "we" force them to do it!


  1. The Euro still needs to be more competitive in the trading. It's a good move for the region though.

  2. Market attention is still largely focused on the Eurozone and a currency at considerable risk. Pressure is building on a wider range of constituent parts of the European currency union as notably Germany finds a debt auction a little more than half subscribed.

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