Occupy the space to the left of the European Council. There’s a lot of it

This morning’s Irish Times reports that German opposition leader, former environment minister, and Social Democrat Sigmar Gabriel was in town. And what did he say? Every damn thing.

THE AUSTERITY measures being imposed on Greece are “mad”, and indicate that Europe learned no lesson from the rise of the Nazi Party, Germany’s main opposition leader said yesterday. Sigmar Gabriel, the chairman of the Social Democratic Party and potential future chancellor, said the measures were “mad” and amounted to an “evil circle”….At a seminar organised by the Institute of International and European Affairs in Dublin yesterday, Mr Gabriel cited the example of Weimar Republic chancellor Heinrich Brüning, who cut successive budgets during the Great Depression. Germany ended up with six million people unemployed. Brüning’s cutbacks contributed to a rise in support for the Nazi Party, which grabbed power in 1933.

He went there. Wham.

Mr Gabriel said it would be “impossible” for Greece to solve its problems without a policy for growth and unemployment. He accused the European Council of leading the country into a “dead-end street”.

Mr Gabriel said countries such as Greece and Italy should have taken advantage of lower interest rates when they joined the euro zone to develop their economies and infrastructure and become more competitive. Instead, they used it for current spending.

That, at least, isn’t controversial. But this is:

He also criticised his own country, which had accumulated about €1 trillion in savings that could have been invested in the real economy, but instead went into high-risk investments and real estate.

Well, yes. As I said back in May, 2010:

Every Sparbuch is the flipside of a tax break for a mobbed-up developer setting fire to a Greek hillside. Obviously, it would be silly to hold individual German savers responsible – but the Great Banks of Frankfurt, the institutions through which the German trade surplus is recycled?

However virtuous all those savers in Exportland were (if you go with Angela Merkel) or however successful German internal devaluation was (if you go with Kantoos) or however ruthless German politicians and executives were in demanding wage cuts in Germany and a massive trade surplus with the rest of Europe (if you go with me), it seems pretty clear that the European financial sector failed to allocate the capital it collected up north into productive uses. Instead, well, we got golf courses in the semi-desert of Andalusia and ships flagged-out to Liberia.

You might not be surprised to find that Gabriel’s remarks were part of a coordinated push. Here’s the piece the German, Swedish, and UK opposition leaders pushed out later in the day. The key points are that austerity everywhere isn’t helping, that something needs to be done about banks, that the politicians have lost legitimacy and authority, and that we need the surplus states to reflate and enjoy some sunshine, already.

It’s high time there’s an opposition program in Europe. This could be better, but it’s a start.

Meanwhile, of all people, Marine Le Pen is going to Occupy Wall Street. That’s what narrative power sounds like.

This entry was posted in A Fistful Of Euros, Economics: Currencies by Alex Harrowell. Bookmark the permalink.

About Alex Harrowell

Alex Harrowell is a research analyst for a really large consulting firm on AI and semiconductors. His age is immaterial, especially as he can't be bothered to update this bio regularly. He's from Yorkshire, now an economic migrant in London. His specialist subjects are military history, Germany, the telecommunications industry, and networks of all kinds. He would like to point out that it's nothing personal. Writes the Yorkshire Ranter.

10 thoughts on “Occupy the space to the left of the European Council. There’s a lot of it

  1. Pingback: Links 2 November 2011 | Depth Dynamics

  2. Right or Left? This is most unlikely a one-dimensional issue. More important today is the EUropean question. Or are you saying that an internationalist leftist position is no longer possible?

  3. The Greek plan is indeed mad.

    His solutions are bad.

    Taxing the banks so that a centralised organisation can make investments across Europe won’t solve anything. If financial services allocated capital poorly, what makes him believe government will do any better?

    I can see the attraction though: It will make governments look good with a flurry of headlines saying that unemployment is falling and jobs are being created.

    Then he claims that citizens are entitled to ask who is ruling them – governments or the markets. Evidently he’s a centralising statist. The people aren’t ruled, by they do – in theory – consent to government.

  4. Thanks goodness some sense is finally coming through. It astonishes me that the parties of the left in Europe have remained part of the pro-EU consensus at all. The austerity programs which the EU is enforcing on its weaker member states are the antithesis of everything the left stands for — they’re devastating the working class by driving up unemployment, and wrecking social safety nets that took decades to build.

    Hoping for a big “no” from Greece in December to really underscore the point.

  5. In some sense, the solution to the problem would be: a substantial wage rise to all German workers!

    I think that “wage rise to German workers” is a better selling slogan than “punish virtuous northern savers”.

  6. Germans are carnivorous sheep. Emphasis is on sheep. No other nation will allow for all this Lohnzurueckhaltung and put all their wealth into Sparbuecher.

  7. “Brüning’s cutbacks contributed to a rise in support for the Nazi Party, which grabbed power in 1933.”

    Yes, unemployment in the 1930s, not inflation in the 1920s, was the enabler. The NSDAP went from 32 seats in 1924, to 12 seats in 1928, 107 in 1930, and 230 in 1932.

    I’m glad somebody in Europe is saying this aloud.

  8. Is this the same Sigmar Gabriel who wants to block a small tax reduction for lower and middle incomes? Who justifies this with the claim that Germany has to reduce the budget deficit?


  9. The countries in question have lost access to the debt capital markets and can no longer roll over their maturing debt, let alone finance deficits. The idea that austerity is some sort of policy choice under such circumstances of penury is ludicrous.
    And here’s a newsflash for northern Europeans: market-imposed austerity is coming your way, at least if you live in France or Austria.

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