Friday’s front-page headline on Handelsblatt, one of Germany’s most respected business newspapers, trumpeted: “Das Titanic Szenario.” Inside, German Chancellor Angela Merkel was pictured, arms outstretched, on the bow of the sinking ship, with French President Nicolas Sarkozy in the Leonardo di Caprio role embracing her from behind. Days earlier Jacques Delors, a former president of the European Commission, had said the eurozone was “on the brink of the abyss.”
There was similar doom--mongering in Der Spiegel.
“The euro can’t survive in its current form,” said Hans-Joachim Voth, an eminent economics history professor from the Universitat Pompeu Fabra in Barcelona, Spain.
Some countries were going to have to leave “if [the EU] wants to become anything more than just a transfer union,” he said, adding that “it would be simpler to have the stronger countries veer off.” And which of the 17 eurozone nations did he have in mind? Deutschland.
However, could Germany seriously leave the euro? Is the common currency on the verge of collapse?
“It’s not looking good,” said Jane Dill, a 20-year-old logistics student on a college outing to the Money Museum of the Bundesbank, Germany’s National Bank, in Frankfurt. “How much longer can things go on like this? First Greece asks for help, then Portugal, Ireland, maybe Spain and Italy. What are we going to do when the next countries fail? You can’t just keep chucking money at them. And what if Germany needs help? Who will come to our aid?”
“Even the rouble’s more reliable,” said her classmate, Edward Krieger, a 24-year-old with an even gloomier weltanschauung (world view). “I honestly believe the euro has no future. It’s going to crash and a whole new currency is going to have to be brought in. Maybe money as we know it will be abolished. I think in 20 years’ time there will be one currency used by everyone in the world.”
In the gift shop at the foot of the European Central Bank (ECB) tower, Gebhard Klotz was more optimistic.
“Will the euro collapse? No!” the 64-year-old shop assistant said as he tidied the display of chocolate money. “The euro will survive. Of course it will. Unity costs money, that’s all. It’s just the way it is.”
In his office 34 floors up, ECB President Jean-Claude Trichet shared this optimism.
“Weaknesses need to be corrected,” he said in an interview with Il Sole 24 Ore last week. However, the single currency was “credible” and “over the past 12 years has kept its value in terms of price stability in a remarkable way in comparison with the previous national currencies in the past 50 years.”
Much has been written about German nostalgia for the deutschemark; in December last year, some stalls at the Christmas market in Berlin’s Gendarmenmarkt let punters pay with the old currency in what proved to be a very popular marketing gimmick. Around the same time, a survey by Cologne’s YouGov Institute found that 49 percent of Germans want the “D-mark” back.
However, if Klotz’s customers are anything to go by, the longing is not widespread in Frankfurt. His shop sells two ranges of mugs, one plastered with euro notes, another, also priced at 6.90 euros, depicting the deutschemark.
“The euro is much more popular,” said Klotz’s colleague, a 23-year-old coin enthusiast called Florian Koch. “We sell 30 or 40 of them every day.”
Both men were adamant they would not soon be made redundant or the shop reborn as a shrine to what once was.
“Yes, the euro is sick,” said Koch, a business student at Frankfurt University, “but it’s healthier than many other currencies. It’s limping at the moment, but it’s not going to go kaput.”
This week is a big one for the euro in Germany. Today, the constitutional court in Karlsruhe, Germany, will deliver its much anticipated verdict in three cases brought by five euroskeptic academics and a renegade member of parliament (MP) from the Christian Socialist Union, the Bavarian sister party to Merkel’s Christian Democratic Union. The plaintiffs say that last year’s bail-out of Greece, Ireland and Portugal was illegal because it was not debated in the Bundestag, Germany’s parliament.
Tomorrow, Merkel must quell a threatened revolt in her own parliamentary bloc when the Bundestag begins debating the controversial expansion of the rescue fund, which increases Germany’s share of guarantees to up to 211 billion euros (US$296.3 billion) from a previous 123 billion euros — about two-thirds of the annual federal budget. MPs will vote on the changes on Sept 29. And Friday is the deadline for private-sector participation in a second Greek rescue package, Merkel having asked the commercial world to voluntarily chip in after resolutely failing in a bid to force them to do so. News that Greece is set to miss its latest financial targets will not have bolstered confidence.
As Europe’s largest economy, Germany foots more than a quarter of the bill for eurozone bailouts. Much of that money stems from Frankfurt am Rhein, the birthplace of Goethe, a surprisingly small city affectionately referred to as a “village of skyscrapers.” Despite only being Germany’s fifth-largest metropolis, with a population of just over 688,000, Frankfurt is the financial capital of not just Germany, but also the eurozone.
Frankfurt’s stock exchange, the Deutsche Borse, is more of a tourist attraction than a trading hall in these unromantic days when all you need to trade is a powerful computer and a strong disposition. However, the neo-Renaissance sandstone building remains at the heart of the financial district.
Every Friday at lunchtime, suited and booted bankers ring in the weekend with a glass of local wine at the weekly farmers’ market that sets up outside the exchange by the famous Bear and Bull sculpture, which is a metaphor for the rise and fall of the DAX blue-chip stock index.
It did not feel pessimistic last week. Harald Feick had lined up three glasses of wine.
“Two friends are coming! They are not all for me!” he said, and explained why he has no fear for Europe’s common currency.
Describing himself as “ein bank-mensch,” he said the crisis was “not about the euro; it’s about financial mismanagement in certain European governments. The Greeks would be in the same trouble if they still had the drachma.”
The German media was too pessimistic, he said.
“You hear all the gloom, but a lot less about the fact that, despite the crisis, we have decreasing unemployment and an economy which is growing, albeit slowly,” he said.
Quarterly economic growth slowed to 0.1 percent in April-June, Germany’s statistics office said on Thursday.
Robert Hung, a blond banking lawyer in a crisp white shirt and dark suit, said the tabloid media — in particular the 3 million-selling Bild — was partly to blame for a feeling of discontent among the general population, spreading the overly simplistic idea that money earned by hard-working, prudent Germans was being frittered away by profligate Mediterraneans.
Hung, 36, and his heavily pregnant wife, Fabienne, said they had been on holiday to Greece this summer and were “embarrassed” at the reputation Germans had on Crete.
“When the receptionist saw our passports, he said: ‘Please, when you go home, tell everyone that not all Greeks are lazy. Tell them that many of us work very hard,’” Fabienne said. “It was embarrassing.”
Hung said he was having a good crisis — he has been inundated with cases from banks defending themselves from crash-related lawsuits — but not everyone is a winner.
“We can’t rescue everyone,” said Barbara Schiml, enjoying a wine in the sunshine with her husband, Udo. “The government needs to set boundaries. We can’t keep bailing out other countries for ever.”
The couple agreed it should be harder for other countries to join the common currency in the future.
Antonia Gugel and her friend Elisabeth Brandl, both in their eighties, are typical of a generation that grew up treasuring the deutschemark. They are, to put it mildly, disapproving of the current mess.
“When we started work after the war, there was nothing. Germany was in ruins. We had to build up everything ourselves,” Gugel said. “We worked Monday to Saturday, had 12 days’ holiday a year and didn’t spend what we didn’t have. Young people today have grown up in prosperity. If they want something, they put it on their credit cards. They have never had to learn the value of money. That’s at the root of all these problems.”
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