Sunday, December 12, 2010

The Freiburg Gipfel

Without comment
Ouff, the Franco-German Gipfel (summit) in Freiburg between Nicolas Sarkozy and Angela Merkel is history. Last Friday the town came to a stand still. From 8h30 to 17h30 no streetcars in the city. Bag-pack loving Freiburgers passing through had their Rucksacks checked several times by security forces.

A hundred-strong police unit kept some demonstrators disguised as clowns encircled. As they were polluting the air with some terrible sounds one officer confiscated a small drum but being a perfect German official he handed out a receipt to the drummer.

When a bystander criticized the expense for such summits I answered: One day in Afghanistan costs more than ten Gipfels. Let Angela and Nicolas guided by the Archbishop in person visit the Münster church, let them sign Freiburg's Golden book with our Lord Mayor watching from behind and let them eat a free lunch? specially composed by the one star cook in town; all this doesn't disturb me if it helps French-German friendship. However it annoys me when those two leaders pretend to protect the euro.

Spraying Sarkozy. A French guy splashes his President with a water gun.
The clustered security force reacted much too late but arrested the man.
Addressing the demand of Luxemburg, Italy, Spain, and Greece for issuing euro bonds Merkel said: We cannot allow to mutualize the (financial) risks and Nicolas paid her lip-service in adding: I don't see in how far Germany would be selfish. Germany is the biggest (financial) contributor in the European Union.

It is true that Greece and Ireland for years lived on credit striving beyond their financial possibilities. They now must pay more for bonds on the international market than Germany to re-finance their debts. But since we have a common currency the old German proverb holds: Mitgefangen, mitgehangen (Captured together, hung together).

In fact, Euro bonds will be only a small remedy curing the imbalance between the rich and the poor European countries. For Germany these bonds present a lesser evil than a Länderfinanzausgleich (a balancing out the budgets between different countries). The latter is practiced in the Federal Republic between various States. From time to time this compensation creates a fury in those Länder that always have to pay to the States that according to the givers don't do their financial homework correctly. I agree such a system in Europe will require a more united community than countries just bound together by a common currency.

In stirring up public opinion in Germany against the issue of euro bonds the opponents deprive the man in the street of higher interest rates for his money. With those he could somewhat compensate inflation. In the meantime people without confidence in neither the euro nor the dollar buy gold, that has become so expensive that some have started to change to and into Swiss francs.

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