by DoDo
Tue May 20th, 2008 at 05:14:59 AM EST
As Fran reported in the Salon, Horst Köhler, Germany's figurehead President, gave a much-noted interview to weekly magazine Stern, in which he attacked financial capitalism head-on, speaking some quite sharp words:
| stern-Interview: Köhler nennt Finanzmärkte 'Monster' | | stern-Interview: Koehler calls financial markets 'Monster' |
| Bundespräsident Horst Köhler hat die Banker dazu aufgefordert, sich zur Schuld an der Finanzkrise zu bekennen. Er vermisse noch immer "ein klar vernehmbares mea culpa", sagte Köhler im Interview mit dem stern. "Jetzt muss jedem verantwortlich Denkenden in der Branche selbst klar geworden sein, dass sich die internationalen Finanzmärkte zu einem Monster entwickelt haben, das in die Schranken gewiesen werden muss." | | Federal [representative] President Horst Köhler has called upon bankers to confess their guilt for the financial crisis. He is still missing "a clearly audible mea culpa", Koehler said in an interview with stern. "By now, it must have dawned on everyone who thinks responsibly in the industry that international financial markets have developed into a monster, which must be contained." |
On your knees, bosses! But wait, it gets better - he names some of the insanities of the Anglo Disease we discuss on ET:
| Die Branche habe "kaum noch Bezug zur Realwirtschaft. Dazu gehören auch bizarr hohe Vergütungen für einzelne Finanzmanager." Die Finanzwelt habe sich "mächtig blamiert". | | The industry has "barely any relationship to the real economy remaining. Part of this are also bizarrely high compensations for individual financial managers." The financial world has "disgraced itself mightily." |
Let's have a closer look at what this was all about.
Köhler continued by, gasp, demanding regulation.
| Zur Kontrolle der Weltfinanzmärkte forderte der Bundespräsident, der früher Geschäftsführender Direktor des Internationalen Währungsfonds (IWF) und Präsident des Deutschen Sparkassen- und Giroverbandes gewesen war, eine "strengere und effizientere Regulierung". Der Bundespräsident forderte zugleich eine strategische Überprüfung des deutschen Finanzsektors. "Die meisten Landesbanken haben offensichtlich kein tragfähiges Geschäftsmodell", sagte Köhler. Er habe daher schon vor seiner Zeit als Bundespräsident für die beste Lösung gehalten, dass die sieben beherrschenden Landesbanken zu einer Zentralbank der Sparkassen fusioniert würden. | | To rein in the world financial markets, the Federal President, who used to be executive director of the International Monetary Fund (IMF), as well as president of the Association of German Savings Banks, demanded a "stricter and more efficient regulation". The Federal President also called for a strategic review of the German financial sector. "It's obvious that most state banks [German states have their own banks] have no viable business model," said Koehler. Therefore, already before his time as Federal Presiden, he thought the best solution would be if the seven dominant state banks wold be merged into a central bank for savings banks. |
The second half of this is not about private banks, and Martin ask me to emphasize that the savings banks whose association he headed earlier are vehemently anti-privatisation, but it must be noted that some of these banks played rather fast and loose with money, and burned away a lot on US financial markets.
In the full (paper) version of the interiew, Köhler also says that there was a real danger of global financial meltdown, and proposes that the IMF be given the power to regulate global financial markets.
Now, of course, the captains of financial capitalism and their propagandists were none too pleased. You already read some of it in the latest FT editorial deconstructed by Jérôme. In Germany, none less than Deutsche Bank's Swiss boss, Josef Ackermann weighed in with a reply. With full denial.
| Finanzmärkte ein ,,Monster"?: Ackermann widerspricht Köhler | | Financial markets a "monster"?: Ackermann contradicts Köhler |
| ,,Es wäre schädlich für unser künftiges Wirtschaftswachstum und unseren Wohlstand, Finanzinnovationen generell zu dämonisieren", sagte Deutsche-Bank-Chef Josef Ackermann der Frankfurter Allgemeinen Sonntagszeitung: ,,Nur ein kleiner Teil des Finanzsystems hat den Markttest nicht bestanden", fügte Ackermann hinzu. | | "It would be detrimental to our future economic growth and our prosperity, would financial innovations be demonised in general", Deutsche Bank chief Josef Ackermann said to the Frankfurter Allgemeine Sonntagszeitung newspaper: "Only a small part of the financial system failed to pass the market test", added Ackermann. |
Just the markets in action, nothing to see, move on! As for Köhler's demands for a mea culpa:
| ,,Ich fühle mich da nicht angesprochen", sagte Ackermann: ,,Schon im vergangenen Sommer habe ich gesagt, dass die Banken Fehler gemacht haben - inklusive wir selbst." Ackermann bestreitet zudem die Aussage Köhlers, im Verlauf der Krise habe die Gefahr des Zusammenbruchs der Weltfinanzmärkte bestanden: ,,Davon kann keine Rede sein." Und er ergänzte: ,,Ich sehe keine Anzeichen für eine neue Weltwirtschaftskrise." Die Auswirkungen der Krise auf die Realwirtschaft nannte er ,,erträglich". | | "I don't feel addressed by it", Ackermann said: "I said last summer already that the banks made mistakes - including ourselves." Ackermann also denies Köhler's claim that during the crisis, there was a [real] risk of the collapse of world financial markets: "That's out of the question."And he added: "I see no signs of a new global economic crisis." He named the impact of the crisis on the real economy "bearable". |
Just a hiccup.
Now, though he attacked high manager compensations before, Köhler is anything but an anti-capitalist. His previous office was head of the IMF.
Even before taking office, Köhler broke the unofficial rule to not take part in daily politics - and ever since, he is an on-the-loose advocate of "reforms". He thinks Schröder's Agenda 2010 reform package (of which the Harz IV labour law is most well-known; and which was partially undone recently) didn't go far enough. Just a month ago, the sub-title of a Stern profile of Köhler quoted him calling for "reforms, reforms, reforms". Even in the interview, he calls for the abolition of EU (and US) agrarian subventions "to alleviate world hunger" (huh? no hunger because South American agrobusiness can sell on European markets?...).
It must also be said that the media had great success in establishing his image as an outsider and contrarian; and then in spinning his popularity as one earned by his "reform" advocacy -though, no doubt, his popularity owes not just a little to his youthful appearance.
So, what's this sudden activism? It's election time.
Köhler stands for re-election in just about a year. German Federal Presidents are elected by a joint session of the Bundestag and delegates of the regional parliaments. Köhler is again the candidate of Chancellor Merkel's Christian Democrats (CDU) and their Bavarian sister party the Christian Socialists (CSU; the two together are called "Union"), but that's not enough for a victory. So the Union was lobbying hard for the support of its Grand Coalition partner, the Social Democrats (SPD).
And now Köhler himself. Indeed he voiced another SPD-firendly opinion in his interview: he supports the German exit from nuclear energy, citing final storage and safety concerns (though he thinks the transition from nuclear+coal to regeneratives will take longer than "we wish today", thus giving a positive signal to his CDU backers too).
Indeed the Union soon used the interview to put pressure on the SPD, whose left wing openly criticised Köhler's activism. Enter Günther Beckstein, Bavaria's arch-conservative PM (also see "Immigrant youth crime"...), in a SPIEGEL interview:
"Incommensurate", hahaha!!! And then comes the not so subtle suggestion:
| "Frank-Walter Steinmeier und Kurt Beck müssen jetzt zeigen, dass sie noch die Kraft haben, eine peinliche und unsinnige innerparteiliche Diskussion um den Bundespräsidenten zu beenden, indem sie sich frühzeitig für eine weitere Amtszeit von Horst Köhler aussprechen", sagte Beckstein. | | "[Vice-chancellor & foreign minister] Frank-Walter Steinmeier and [party chairman] Kurt Beck must show now that they still have the power to end an embarrassing and senseless intra-party discussion on the Federal President, by speaking out early for a second term of Horst Köhler", Beckstein said. |
So fuck intra-party democracy, and the measure of power is... not sending anyone into the race and support the candidate of another party?... Note this comes from a PM whose party's projected losses in the next state elections ( -10-15%, albeit reducing an astronomical 60.7%) could cost the conservatives their majority among the President electors.
These comments might in fact have been counter-productive. For, in the following days, the mostly Köhler-friendly SPD leadership bucked to pressure from within the party, and secretly met the party's 2004 candidate - according to leaks, to ask her if, eventually, she would be willing to stand for election again - and she seemed willing. Publicly, the SPD says they will decide once Köhler himself declares his intentions.
The candidate who could collect the leftist votes, unless the defeatists of the SPD choose to endorse Köhler in the end: Gesine Schwan, head of the Europe University Viadrina in Frankfurt on the Oder (on the Polish border), and a political scientist and a SPD member of long standing. She is a conservative within the SPD, didn't get too high in politics because of a conflict with Willy Brant over her anti-communism, so Left Party votes can't be assumed automatically (though she got it last time).
The CDU reacted to this news with ever more growling in Beckstein's fashion.
:: :: :: :: ::
But let's go back from political positioning to bigger issues. Whatever the background, the rhetoric used is clear evidence of one thing: the shift of the Overton Window. However often the SPD manages to undercut itself, the German Left Swing we discuss for two years now goes on.
Two other recent topics evidencing this:
- There is debate within the Union parties about using the good budget situation for some loosening, which didn't cease even after Merkel said no. In the CDU, it's the employee and middle-class wing that found its voice. But the real push comes from the CSU.
The CSU's recently elected chairman, Erwin Huber, is a well-known market-liberal. But with elections in Bavaria nearing, he rediscovered the Socialist in Christian Socialist: he presented an €28 billion tax cut plan, which would raise the tax-free income limit for families, reduce the lowest tax bracket, and keep the highest (but, and there is always a but, also raise the lower income limit for the second-highest). (The WSJ's reaction to this was the subject of Jérôme's Head explodes? WSJ against tax cuts in Germany?! diary.)
- Labour minister Olaf Scholz (SPD) will present the latest poverty report this week. According to an advance interivew, it shows that despite(?) the economic upturn, the poor - as defined by income less that 60% of the median - rose to 13% of the population, with another 13% kept above only by social benefits. Beyond the well-known group of long-term jobless, the report notes especially the high exposure of single parents, and the growing phenomenon of the working poor (who can't rise up despite having a job).
While the minister announced the report with the header "the social state is effective" (meaning the second 13%) The SPD used the occasion to again warm up a theme they pursue on and off ever since the coalition talks (one running counter of Schröder's heritage): the demand for the introduction of the minimum wage in Germany.
