German Politics

[CountDeMoney]

Yeah, Pence and Tillerson are going to have to get used to that.  Pence I can see tolerating that;  as a career politician, he is as much a whore as the women he hates--but Tillerson, not so much.  The man ran a Fortune Five, he's only going to play houseboy for so long for that sociopathic moron.

[Zanza]

The nomination of Martin Schulz, the former president of the European Parliament, has given the Social Democrats in Germany a massive boost in the last two weeks. A first opinion poll sees them ahead of the Conservatives and the personal approval rating of Schulz is higher than that of Merkel. This could be the end of Merkel's political career or it could just be a brief flicker in the opinion polls. The Social Democrats have languished around 23% in opinion polls for years now and have all of a sudden polled about 31%. I don't think they polled ahead of the Conservatives anytime in the last 10 years or so.

[Duque de Bragança]

If Martin Schulz brings such hopes, then the previous candidates must have been hopeless. 

[Zanza]

If Martin Schulz brings such hopes, then the previous candidates must have been hopeless. 

The SPD has more or less been on a downward trend for a while now...

1998 Gerhard Schröder 40.9% (opposition, won)
2002 Gerhard Schröder 38.5% (incumbent)
2005 Gerhard Schröder 34.2% (incumbent)
2009 Frank-Walter Steinmeier 23% (junior partner in coaltion)
2013 Peer Steinbrück 25.7% (opposition)

Interesting enough, Steinmeier is the most popular German politician these days and will be elected as our next figurehead president next week.

[Duque de Bragança]

So Schröder was a high point? 

[Zanza]

So Schröder was a high point? 

Yes, 1998 was their best result in a generation (previous high was in 1980 under Schmidt).

[Malicious Intent]

Shows how much people were fed up with Kohl.

[Duque de Bragança]

Shows how much people were fed up with Kohl.

This makes more sense but Schröder does not seem like an improvement, in hindsight.

[Zanza]

Surplus war
Germany's current-account surplus is a problem
But not for the reasons Donald Trump thinks it is


WHAT awkward timing. On February 9th Germany reported the world's largest current-account surplus, of about €270bn (almost $300bn), beating even China's. Meanwhile, the country with the world's biggest deficit remains America, which under its new president, Donald Trump, is browbeating friend and foe alike in the name of putting "America first". Mr Trump's economic adviser, Peter Navarro, has even accused Germany of currency manipulation. By his logic, Germany "exploits" America and others because it uses the euro, which is weaker today than the old Deutschmark would be, making German cars, machines and other exports more competitive.

Coming just weeks after Mr Trump casually threatened to slap a 35% tariff on imported BMWs, such talk has Germans' full attention. His verbal assaults on the rules-based trading order, along with his disdain for NATO and the European Union, strike at the heart of post-war Germany's identity and national interest, which is to be embedded in Europe and the West as a peaceful mercantile nation. But if Mr Trump thinks the angst he is causing gives him bargaining power over Germany, he is naive.

His administration's mistake is to attack Germany with flawed logic. Yes, the euro is weak relative to the dollar. But so are other currencies. Germans think Mr Trump has only himself to blame. He has promised huge tax cuts and increases in infrastructure spending, which will drive up interest rates in America, boosting the dollar. Mr Navarro's suggestion that Germany deliberately attempts to weaken the euro makes no sense. The European Central Bank (ECB) may be based in Frankfurt. But its president, Mario Draghi, is keeping interest rates near zero and buying bonds (in the European version of "quantitative easing") primarily to stimulate economies outside Germany.

Indeed, German economists and pundits are Mr Draghi's most vocal critics. They have complained for years that low interest rates rob German savers and ruin German life insurers. If the government shows restraint in criticising Mr Draghi, that is thanks to another German tradition: respect for the independence of central bankers. When Mr Draghi began loosening monetary policy, "I told him he would drive up Germany's export surplus," Wolfgang Schäuble, Germany's finance minister, told Tagesspiegel, a German newspaper. "I promised then not to criticise this course publicly. But I do not then want to be criticised for the consequences of this policy."

By choosing the wrong line of reasoning, Mr Trump has unwittingly let the Germans off the hook in a more fundamental debate. After all, Germany's trade surpluses have been controversial for years. Long before Mr Trump ran for office, the European Commission in Brussels, the International Monetary Fund in Washington, America's treasury department and the OECD, a club of mostly rich countries, were already berating Germany for causing imbalances in the European and global economies.

The real German problem

Their analysis starts more than a decade ago, when German employers and unions agreed to restrain wage growth. Workers weren't thrilled, but everyone agreed that Germany was not competitive enough. This amounted to a devaluation of Germany within the euro zone. The best way out of today's imbalances, economists say, is not to keep cutting wages in down-and-out countries like Greece, but to let them rise in Germany. Wages have been going up—by 2.3% last year—but should grow faster.

The other factor is that Germans, in an ageing society, have for years been saving much more than they invest. Individuals are filling piggy banks for their retirement. And firms, expecting lower returns from older, smaller populations in the future, are investing abroad instead of at home. At the same time, the government, also citing demography, in 2011 adopted a "debt brake", limiting its new borrowing at just the moment when ultra-low interest rates would make debt service almost free. The resulting excess savings are capital that Germany sends abroad. They are the corollary of Germany's current-account surpluses.

There is a case that Germany invests too little. Marcel Fratzscher, an economist, estimates this "investment gap" at €100bn annually. Many in the centre-left Social Democratic party (SPD) agree with him. They include Martin Schulz, the SPD's freshly chosen candidate for chancellor in the election scheduled for September 24th. He has jolted his party in the polls. The SPD is now roughly even with the centre-right bloc of Angela Merkel. Should Mr Schulz win, government spending could rise.

Other German economists, such as Clemens Fuest, doubt that the gap is big. In the 1990s, after reunification, investment soared as eastern Germany got new roads, buildings and plants. Eventually that exceptional spending had to end, says Mr Fuest, and recently Germany's investment ratio has been stable. In 2015 it was 19.9%, a bit higher than the EU average. Boosting investment is a good idea, he thinks, but no realistic increase could reverse a current-account surplus that amounts to 9% of GDP.

If Germany really wanted to attack its surpluses, it would have to do something drastic, he thinks, such as lowering value-added tax (making goods cheaper, domestic or foreign) while raising payroll taxes (making only German labour dearer). But that is a non-starter politically. Another option is for the government to stop saving and start deficit-spending. But that too is anathema in the Berlin consensus. As the German campaign heats up, all sides are instead likely to praise the surplus as a sign of export prowess. Sigmar Gabriel, the foreign minister and a leading Social Democrat, gave a taste of this defiance when he responded to Mr Trump's tariff threat by taunting America to "make better cars". One day, when enough elderly Germans actually cash in their savings, German surpluses will turn to deficits. Until then, Germany's policy stand-off with the world will continue.

http://www.economist.com/news/europe/21716641-not-reasons-donald-trump-thinks-it-germanys-current-account-surplus-problem

Nothing really new, but a good enough description of the current macroeconomic imbalance finds itself in, the reasons for it and the few things the government can or wants to do about it.

[Zanza]

http://www.politico.eu/article/nato-survival-will-depend-on-germany/

OPINION
NATO survival will depend on Germany
Europe is $100 billion short of strategic autonomy. Berlin could close that gap.
By   FABRICE POTHIER   2/15/17, 4:49 PM CET Updated 2/15/17, 6:46 PM CET

The United States will meet its commitments in Europe but NATO's European members have to step up on their defense spending — that's the message U.S. Defense Secretary James Mattis will try to hammer home when he meets with European counterparts in Brussels.

What we're not likely to hear is that the answer to the alliance's spending woes largely hinges on just one country: Germany.

With Europe's largest GDP and by far its strongest economy, Germany is the swing state in European defense. If Berlin commits to spending the recommended 2 percent of GDP on defense, it would add $30 billion of defense spending in Europe — a large share of the $100 billion surplus that would be generated if all European members and Canada met their targets. The move would significantly boost European defense.

On the flipside, marginal increases from Berlin — along the lines of what it has done since 2014 — would keep European defense spending stuck between 1.2 and 1.3 percent of GDP, an embarrassingly low average considering Europe's share of global GDP is larger than the Americans'.

The question, however, is whether Germany can — or indeed should — become the leading military power in Europe.

German leaders are well aware of their NATO allies' expectations even if they are not always publicly expressed. Despite Berlin's initial resistance to sign NATO's defense pledge, its defense budget has increased every year since 2014. The German defense ministry has secured some hard-won increases from Finance Minister Wolfgang Schäuble, the keeper of Germany's austerity budget, and Chancellor Angela Merkel has repeated on many occasions her commitment to increase defense spending.

But behind the encouraging statements, Germany only allocates a disappointing 1.2 percent of GDP to defense. The Bundeswehr is underperforming and has a limited ability to deploy its own troops or those of its allies. Germany is one of the world's leading defense manufacturers and exporters, but too much of its defense budget is apportioned to personnel spending. No wonder, then, that German pledges to increase spending are usually met in Paris with an ironic shrug that it will only serve to make German officer pensions more attractive.

Getting Germany to punch closer to its weight will not be easy. Berlin's next coalition in the Bundestag will have to break with two powerful dogmas of post-World War II Germany: a balanced budget and a pacifist mindset.

Both ideas are deeply entrenched in Germany's political culture and institutions. But should Merkel be reelected and commit to greater military spending, it would not be the first time the pragmatic chancellor instigated a radical shift with incremental steps. Just look at her refugee policy or her firm stance against Russia, which clashes with major German industrial interests and coalition partners.

Germany's postwar doctrines are not as intractable as they seem. One of Merkel's own predecessors, Konrad Adenauer, already partly broke with one when he decided to rearm Western Germany against the advice of many in his own party in the early 1950s.

Some European politicians and security experts have indulged in wishful thinking that Donald Trump's presidency could mark Europe's chance to assert itself as a more autonomous power. But the numbers tell another story.

Europe is $100 billion short of strategic autonomy. A recent closed-doors exercise with former top officials from the Pentagon and U.S. military as well as senior European officials revealed that neither side could properly defend Europe from Russian hybrid attacks. The U.S. is over committed globally and, in the best case, will only commit to a marginal increase of spending in Europe. The Europeans still lag behind in terms of modern warfare capabilities.

Now more than ever, $100 billion is a long shot. Other important European players — such as Italy, Spain and the Netherlands — are either too small or too economically weak to have much of an effect on the European defense balance. In this scenario, Germany's $30 billion could make all the difference between a stronger Europe or a weaker one.

Short of that, any talk of a European defense union, or even of a European pillar within NATO, will remain just that — talk.

That has the potential to be a dominating theme both in domestic and foreign policy for the next legislative period starting after our federal elections in September. If there is a coalition of Social Democrats, Greens and Left Party after the election, that will never happen. But on the other hand the realization that Germany needs to step up here could be a stumbling block for such a coalition ever forming in the first place. But even among the Social Democrats a lot would grumble about a major increase of military spending, so a continued government by conservatives and social democrats would have problems to make good on this too.

[Solmyr]

For once, Europe wants to be dominated by ze Germans. This is your chance!