Why Does Germany Continue to Self-Destruct?

Germany’s Left Party dissolved its faction in the German Bundestag as of December 6. In October, prominent politician and former party parliamentary co-chair Sahra Wagenknecht announced that she was founding a new party focused on working class issues, which includes repairing ties with Russia and examining whether German interests are congruous with those of Washington.

The Alternative for Germany (AfD) party overlaps with Wagenknecht on those issues while also containing strong strains of ethnonationalism and euroscepticism. The AfD has had recent strong showings in local elections and maintains its second place in national polls, consistently coming in above 20 percent.

Both the breakdown of the Left Party, which is considered a direct descendant of the Socialist Unity Party that ruled East Germany until reunification, and the rise of the AfD are the political signs of an upheaval occurring in Germany caused by  the willingness of the country’s elites to impose economic decline on the vast majority of its citizens.

Aside from Ukrainians, the German people are among the biggest losers from the ongoing war against Russia. While support for Project Ukraine slowly evaporates, the damage to the German economy will not end with the war effort. Inflation continues to be problematic, the energy outlook remains dire, the economy is stagnating, exports to China are declining and there is constant pressure from Atlanticists to self-impose a further reduction, living standards are declining, political paralysis reigns on most matters except social cuts and more military spending, and wealth inequality grows.

The German government is struggling to figure out a budget that deals with so many costly crises at the same time. A recent ruling by the country’s highest court said that the 2024 fiscal plan broke rules enshrined in the constitution by attempting to repurpose 60 billion euros left over from an emergency COVID-19 fund in order to fill budget holes. The ruling also limits the government’s ability to dip into special funds that were set up to get around the outlawing of deficit spending, and Germany simply doesn’t have the money to fund increased military spending, support for industry hammered by the loss of cheap Russian energy, and the country’s social programs. Despite Chancellor Olaf Scholz’s promise to the contrary, harsh austerity is likely coming for the German people.

The point of this piece is not to rehash all the ways the New Cold War is doing outsized harm to Germany. Instead, it is an attempt to nail down some of the why. There is a common assumption that Germany, as a vassal of the US, had to be strong-armed or tricked into supporting Project Ukraine against its own interests, but is that really the case? And if not, why did German decision makers pursue such a course of action? Why is Germany, which has already lost so much with Project Ukraine, continuing down this ruinous path? And why has it tethered itself to a US declining in relative power? Here are some possibilities (and please add any I’ve missed in comments).

One potential reasin is the US military and intelligence agencies factor. As NC reader divadab pointed out recently

Start with an army of occupation, 50,000 US troops still there iirc, almost eighty years after Nazi Germany’s defeat. Add a comprador elite, beholden to the US and its media and secret service tentacles, and you get weaklings like Scholtz, utterly without agency, insulted in public by Emperor Joe, and acting directly against the interests of his countrymen. It’s hard to believe that this supine, defeated nation, was once the terror of the world, and only the forces of the USA and its imperial vassals, and the USSR could defeat them.

On the intelligence front, NC reader JohnnyJames adds: 

…documents published by Wikileaks showed that the NSA had tapped Angela Merkel’s phone for many years. The BND [German Federal Intelligence Service] had knowledge of it, yet did not inform their own Chancellor. The BND was largely created by the CIA in the first place. The mass media even reported on it.

No doubt the US uses certain tactics to keep its “allies” in line, such as bribery and coercion. NC reader CatBurglar comments:

“Bags and bags of money” has been adduced as one reason the US can control German politicians. It wouldn’t be surprising if US surveillance has discovered things to blackmail the politicians with — it is their job!

As just one example, it would be irresponsible not to speculate about Scholz being compromised over his past entanglement with the Cum Ex affair that is constantly being dangled about, the threat of which could theoretically be used to influence his decisions on other matters.

Bribery and coercion are no doubt part of the US toolbox to maintain order much the same way organized crime networks expand their reach, but could the overarching alignment be the result of something much more insidious?  While on its face it appears like subservience or blackmail, could it not instead be that the German elite simply identify more with their American counterparts than the working class in their own country?

If it’s the case that decades of training in the WEF-style transnational capitalism mindset has finally come to fruition, it’s likely that the German elite saw their potential monetary reward for helping to bring Russia under the US-run neoliberalized and financialized global economy.

If they acknowledged the risks at all of the plan not succeeding, they likely would have realized that the brunt of the economic pain would fall on Germany (and Europe’s) working class, and does anyone really believe that the likes of Scholz, Macron, and other European figureheads care at all about the working class in their country?

German Foreign Minister Annalena Baerbock who frequently blurts out the quiet part, said as much last year in the perfect summation of the “leaders’” mindsets:

Politicians like Baerbock do not need to be persuaded to act against the interests of the majority of citizens in countries they purportedly represent.

Retired General H. Kujat and Professor Emeritus H. Funke’s report on how the chance was lost for Ukraine peace settlement showed that Germany was involved in efforts to torpedo early peace efforts in Operation Ukraine – not a wavering participant that needed to be cajoled along as Chancellor Olaf Scholz often pretended to be.  It isn’t just Russia, either, but increasingly China, Iran, Azerbaijan, and elsewhere – basically anywhere the US is targeting, the Germans are now right there beside them. Scholz has said Germany will take a more active role throughout the world alongside Washington, as has foreign minister Baerbock who pushes a “feminist” foreign policy using human rights as a justification for more aggression.

Despite all the outsized risks it posed to the German nation as a whole, the German elite apparently wanted the war. It’s a strong possibility that for them the potential payoff outweighed the negligible risks for themselves.

A brief look at the class divide and polling along those lines in Germany and Europe as a whole shows that that repercussions of the war have not reached the elite – at least so far. First, a brief summary of the extreme wealth inequality in Germany: 

Despite many years of social-democratic rule and an extensive welfare state, German wealth inequality is very high. According to SOEP survey, 39 percent of the German population has zero (or quasi zero) net financial wealth, and almost 90 percent of the population has negligible net financial wealth (reflected in the fact that monthly income received from property is less than 100 euros per person). This makes German wealth inequality (depending on the metric one uses) equal or even greater than the very high US wealth inequality.  A feeling that many large fortunes are hidden or enjoy tax shelters thanks to different European schemes and tax competition between the EU countries, adds to the feeling of unfairness.

The story is the same across the EU, with the 2010s’ austerity policies playing a major role in widening the gap. And the Ukraine war has only accelerated this process. Real minimum wages declined in nearly all of the 21 EU countries with a minimum wage since the start of the war, and real wages fell at record speed in Germany last year. There is no plan to fix this.

Let’s look at some of the most recent Europe-wide polling from the European Commission, which handily breaks down results along class lines, to see a complete divergence between the European elite and working class on economic issues and the fallout from the war against Russia.

European polls show major divergence on labor issues, such as 52 percent of the working class rating fair working conditions as the most important to the EU’s social and economic development. Only 30 percent of the upper class feels the same way. And 66 percent of the EU working class feel their quality of life is getting worse; only 38 percent of the upper class feel the same way.

On this issue of whether the war in Ukraine has serious financial consequences for you personally, 47 percent of Germans agree; 52 disagree while the remainder don’t know. 61 percent of Europeans as a whole agree.

The EU-wide division along class lines remains clear. 71 percent of the working class feel the war hurts them financially. Only 40 percent of the upper class feels the same way. 71 percent of those struggling financially say their situation has deteriorated in the past year. 26 percent of the well-off feel similarly.

More generally, the working class is more suspicious of the undemocratic institutions at the heart of the war efforts:

  • Only 35 percent of the working class trusts the European Commission 68 percent of the upper class does.
  • 33 percent of the working class trusts the European Central Bank; 67 percent of the upper class does.
  • More people who often struggle to pay bills have a negative view of the EU than positive. It’s completely flipped for those who don’t have to worry about bills.
  • A much higher percentage of the upper class wants more decisions made at the EU level.
  • The working class is much more pessimistic about the future of the EU.
  • 58 percent of those who struggle with finances distrust NATO. Only 15 percent of the “upper class” has the same misgivings.
  • When it comes to the EU spending more money on defense, once again the further you climb up the class lines, the more support there is.

For now, the European Commission seems satisfied enough with the level of disenchantment coming from the lower rungs of society. The first paragraph of its conclusion to the polling results:

The results from the Standard Eurobarometer 99 conducted in May-June 2023 show that Europeans remain satisfied with the response of the EU and their national government to the Russian invasion of Ukraine. There has been little change since January-February 2023: satisfaction levels have remained relatively stable since June-July 2022.

If this is what “satisfied” looks like, it’s abundantly clear von Der Leyen’s commission could care less about the European working class. Yet, the commission does note that, “Respondents who have difficulties paying bills at least some of the time, and those who consider they belong to a lower social class are less satisfied with the EU and national responses to the war and are more likely to report serious personal financial consequences as a result of the invasion of Ukraine. They are also less supportive of proposed defence co-operation and spending measures, and less supportive of the energy policy directions presented in the survey.”

So what’s the commission to do? It could admit the war was and is a disaster. It could try to improve the living standards of more citizens so they’re more likely to support the EU, NATO, militarization, etc. Or it could try to assume more powers and become more authoritarian.

The questions the Commission is asking give a sense of which direction it prefers:

  • Does the EU have sufficient power and tools to defend the economic interests of Europe?
  • Does the EU need to reinforce its capacity to  produce military equipment?
  • Do you agree with banning state-owned media such as Sputnik and Russia Today from broadcasting in the EU?


So while the weight of the war falls most heavily on the working class, what of the motivations of the German and European elite? What is the ideology that drives the support for war? Colonel Smithers sums up:

I think the European PMC / leadership class has its own reasons to adopt this position / policy towards Russia (and others like China and Iran). Vide Uschi von der Leyen. This deracinated elite has its own agency and does not need Uncle Sam’s direction / instruction. From experience, the financialisation of the past five decades has helped to facilitate the Atlanticist positioning and, due to the prominence of US firms in managing the wealth of that elite, bridged the Atlantic and given the impression of the US doing the bidding.

This said, and this is where your and similar questions may arise, it’s very rewarding professionally, politically and financially to do (or be seen by the US, a short hand, to be seen to do its bidding. I have observed British and EU27 politicians and officials build their retirement nest eggs by favouring US firms in government and join them at the earliest opportunity. They were already corrupt, but Uncle Sam’s money has turbo charged that process. US firms and think tanks pay very well. In addition, working with US firms and think tanks is like going out with a glamed up Hollywood star, not plain Jane next door.

To add to that, in my experience anecdotal evidence shows that PMC Europeans view the US as more “dynamic” and want their workplaces to function more like those in the US. What do they mean by dynamism? When you get down to it, it means less worker protections in exchange for potentially higher salaries for highly educated workers like themselves. Many are well acquainted with the US having studied there for at least a semester and see the US as having many more high-paying job opportunities as it’s easier in the US to get rid of the old and bring in the new. There are also higher salaries in the US – not just for CEOs but “skilled” and high-paying jobs tend to be higher than those in Europe, where collective bargaining agreements between unions and employers are often used to set salaries.

The German and European PMC want to earn more money like their American counterparts, and they resent the modest brakes that unions put on corporate power in Europe even if it provides more stability for the whole but less upside for them individually.

In essence, it is a similar mindset that leads to higher support from European elites and the professional class in war against Russia; there were potential benefits for themselves while the majority of the risk falls most heavily on the working class.

According to NC reader MD in Berlin, a major reason behind German elites’s support for regime change efforts in Moscow was the potential payoff should Russia implode from the weight of sanctions and war spending:

Do “we” need to worry about loss of cheap gas? No, we are going to “ruin Russia” (Baerbock), and it will only take a matter of months. And then we get a big share of the plunder. And our client governments in the broken-up remnants of Russia will restore our cheap gas.

No need for anyone to yank a chain. The assessment of the prospects of success may have been faulty, but the decision made on its basis was rational.

Germany could have also felt pressure to make a move, so to speak, as their economic model was faltering after years of mismanagement. According to Yanis Varoufakis:

The tables have been turned on Germany because its economic model relied on repressed wages, cheap Russian gas, and excellence in mid-tech mechanical engineering – particularly manufacturing cars with internal combustion engines. Germans are now slowly coming to terms with the demise of their economic model and are beginning to see through the multifaceted Big Lie their elites were repeating for three decades: Fiscal surpluses were not prudence in action, but rather a monumental failure, during the long years of ultra-low interest rates, to invest in clean energy, critical infrastructure, and the two crucial technologies of the future: batteries and artificial intelligence. Germany’s dependence on Russian gas and Chinese demand was never sustainable in the long term; and they are not mere bugs that can be ironed out.

Essentially Germany’s elite relied for too long on wage suppression and fell behind in the innovation race. As Irrational points out:

…after reunification real wages stagnated and under the governments led by Gerhard Schröder in the late 90s-early 00s, they declined as this chart shows. But the extent is of course far greater now – loss of 4% in real terms last year. If they were trying to preemptively head off economic decline, well, grabbing Russian and Ukrainian resources makes more sense.

The House Always Wins?

We need only look back to the European polling quoted above to show that the well-off aren’t all that worried about inflation and other economic inconveniences for themselves from the war with Russia. So what if industry is relocated to “low-cost” regions of the Balkans or the US?. So what about paying higher energy bills? This is a positive for the bourgeoisie Greens steering the ship in Germany as they’re enacting many of their environmental policies despite the damage to the working class.

There is also evidence that the German elite are using the crisis to push right-wing neoliberal ideology and strengthen its chokehold over the German economy. Michael Hudson summarizes:

The economy is to be Thatcherized – all by riding the crest of the American anti-Russian sanctions and claiming that this creates a crisis requiring dismantling of public infrastructure and its privatization and financialization.

So it goes. This is on display in German budget plans currently in disarray for 2024, which impose deep austerity everywhere except the military. It’s evident in the growth of Germany’s private equity and venture capital industry, which tripled in size from 2012-2021, and that trend is picking up steam. According to Reuters, International and U.S. law firms continue to invest in Germany, with international mergers and acquisitions, finance and private equity hires driving legal market growth in the country:

Reed Smith is the latest to add to its Munich office, roping in two partners from U.S. rival McDermott Will and Emery, including its German private equity group leader, Nikolaus von Jacobs, the firm said last week.

Other U.S. law firms have also grown in Munich, most notably Morgan, Lewis & Bockius, which opened its second German office there in March with a 19-attorney group from rival Shearman & Sterling, including its country head and M&A leader Florian Harder.

Kirkland & Ellis, McDermott, Dechert, DLA Piper, Allen & Overy, Ashurst and Dentons all added transactional partners in the Bavarian capital this year. Goodwin Procter, which launched a Munich office last year, called the city “a private equity hub.”

And from Deutsche Welle:

A study published in May by the financial research collective Finanzwende found that private equity firms bought 174 German doctors’ practices in 2022, up from 140 in 2021 and just two in 2010. And, according to research by the public broadcaster NDR, such firms now own hundreds of practices across Germany, to the extent that single chains have a monopoly in certain regions and towns.

The financialization of Germany is also showing up in how the German people are getting squeezed and are increasingly angry. From Reuters:

Some 80% said they considered the economic situation in Germany as unjust, up 32 percentage points from 2021, and 60% of Germans said they saw society as divided – principally between rich and poor – up 20 percentage points compared with May 2022, according to the More in Common research organization. …

Low and middle income households have been generally hit harder by inflation, Florian Dorn, a researcher at Ifo told Reuters. Workers in Germany, Europe’s biggest economy, lost around 4.1% of their purchase power in 2022, research by the WSI institute published in July showed.

Although higher energy import prices initially drove inflation in Europe and Germany, companies were also putting up prices beyond their cost inflation, WSI analysis showed. Companies’ profit inflation rose by 7% in 2022 compared to an only 3.3% rise in labour costs.

Living standards are expected to continue to decline as due to social programs losing out to industry aid and/or military spending. Economics minister Habeck says he wants a subsidized electricity price for industry of 6 eurocents per kilowatt-hour. Germans are currently paying about 40 eurocents for their retail electricity supply. Industries in the US or France enjoy prices as low as 4 eurocents.

The problem is Habeck’s plan is opposed by members in his own Green party who don’t want to subsidize heavy industry that uses gas and oil, and deficit hawks don’t want to spend the money. The higher energy prices for now are falling most heavily on smaller firms that cannot absorb the cost. From Deutsche Welle:

The Deputy Chairman of the powerful metalworkers’ union IG Metall, Jürgen Kerner, added that medium-sized, family-owned companies currently have “no prospects of continuing their business.” There’s great uncertainty, he said, as “aluminum smelters cease production, and foundries and forges are losing orders.” IG Metall’s local branches were increasingly reporting insolvency administrators in the companies, planning “layoffs, insolvencies, and business closures.”

The fact is Germany just doesn’t have enough money to ramp up military spending and subsidize energy costs for industry. As a result, it is becoming more like the US –  more financialization, more outsourcing, and more military spending.

Foreign policy-wise, the bumbling Scholz, the former trampoline athlete foreign minister, and the children’s book author economics minister running the show have volunteered all of Germany to lead the ongoing charge against Russia in Europe while Washington focuses on China. Simultaneously, Germany must scale back remaining economic ties with China and ramp up military spending against Russia. Like a gambler on a losing streak, the German elite is unwilling to walk away now. From German Foreign Policy:

The German government seeks to adapt and upgrade the German army for possible war with Russia, according to the New Defense Policy Guidelines presented by German Defense Minister Boris Pistorius last week. Berlin remains committed to increasing its military strength and declares “deterrence” of Moscow as the Bundeswehr’s core task. In the guidelines, there is no mention of possible negotiated solutions and de-escalation. Ignoring NATO’s war of aggression against Yugoslavia in 1999, the authors claim that Russia brought war back to Europe in early 2022. Germany must therefore become “combat-ready” as quickly as possible. The two focal points of the document – the expansion of national military capabilities and the orientation of the Bundeswehr towards war with Russia – do not represent a “Zeitenwende” in German military policy. They have been continuously promoted by German governments for years, throughout several legislative terms. On the basis of new military clout, Berlin is seeking a leading military role in Europe and a “creative power” within NATO.

In a certain light, you can see the rationale for keeping up the New Cold War with Russia. If not, people are going to start asking a lot more questions about just what Berlin gets out of the relationship with the US, how Scholz and company were so derelict in duty, what exactly happened with the Nord Streams, why their living standards have plummeted, what about the diverging fortunes of Germany and Russia (as Gilbert Doctorow writes, “Russia is transitioning to gas heating in the countryside – Europe is moving to log fireplaces in the city”).

If elections were held today in Germany it looks like they would be dominated by the center-right CDU and the AfD:

Readers, please correct me if I’mm wrong, but wouldn’t a CDU government be largely a continuation of current policies.

It remains to be seen for how long the German elite can escape the effects of the widespread anger among the citizenry and rising nationalists who want to put Germany first, but their conception of Germany often excludes the country’s roughly 19 million people who either immigrated to the country since 1950 or are the children of immigrants. The AfD is especially wary of Muslims that now make up nearly seven percent of the German population.

Another factor that contributes to Germany’s worsening predicament is just plain inertia, as Aurelian described in a recent comment here:

…After WW2, Germany was understandably a little unpopular with its immediate neighbours. The Adenauer generation recognised that the only way back to international respectability was through membership of multilateral institutions and through, effectively, giving much of its sovereignty away to others, such that it was not seen as a threat. Germany was therefore a member of the European Coal and Steel Community from 1951, and of the EEC from the start in 1958. German remilitarisation, grudgingly accepted by other European states, actually turned out to be a better solution than the original idea of a Western Treaty Organisation as a permanent military alliance against Germany. All German troops were put under NATO control, and the Bundeswehr was not allowed to have its own operational HQ, and so could not conduct national missions. This, together with the subordinate relationship to France under the 1962 Elysée Treaty, was a kind of voluntary masochism, which helped to deflect very real fears of German revanchism. (Those fears, incidentally, are a large part of the explanation of why European states were keen to continue with NATO after the end of the Cold War). This subservience produced several generations of German diplomats and military officers (and I met many of them) whose greatest concern was to be seen as “good Europeans” and “good members of NATO.” Whilst they didn’t agree with the US on everything, a German government which followed the US lead could never be criticised.

It’s changed a lot since then, of course, with the change in the balance of the Franco-German relationship and the complete transformation of the European security scene. It’s been observed especially that, on the rebound after decades of good behaviour, the Germans don’t have the diplomatic reflexes they really need, and risk getting themselves into an incredible mess. The existential problem of what Germany even is, never solved in its history, means that for many in positions of authority, the best and easiest solution is to follow the US, because that worked well in the past.

But when that habit of following the US is eventually upset, it could come quickly and unleash unforeseen consequences. For how long will Germany (and Europe) continue to become more authoritarian in effort to preserve this inertia?

All it might take would be a German government that starts pursuing policies that are in the interest of the majority of Germans, and Europe’s role as the frontline in the New Cold War could collapse like a house of cards.

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  1. Paul Art

    This is a brilliant article and answers a lot of questions that I am sure NC readers have always had. I for one had always thought that the reason Germany and most of the EU had steadily gone Neoliberal was because of the US Business School training of many EU apparatchiks. This article lays bare the real reason, plain and simple corruption via $$$ handed out by the US to subvert EU politicians. Methinks that the complete shackling of the financial sector in the US by a return to a new and more restrictive Glass-Steagall and a complete nationalization of the entire Defense sector, defenestrating SCOTUS, massive taxation of private wealth….well, considering this very long list, it is hard not to conclude that we need a revolution of sorts in the USA to fix the World because most of the diseases start here. Trump has given the idea of using the Insurrection Act to short circuit major changes but as usual, there is no one on the real Progressive Left breathing fire and brimstone who could actually win an election and do what is necessary. The one boulder against which I repeatedly come to bang my head is – you really have to seize the wealth from the Plutocrats in the US before you can do anything else. Anything else is going to end in failure.

    1. digi_owl

      It does not need to be straight money either, but a promise that once they have done their required years to collect a state pension they can then get a well paid position on some US controlled board or NGO.

    2. i just dont like the gravy

      The one boulder against which I repeatedly come to bang my head is – you really have to seize the wealth from the Plutocrats in the US before you can do anything else. Anything else is going to end in failure.

      This is the real problem. No amount of celebrity “The Squad” politicians or treehuggers will be able to bring this to pass.

      People’s lives have to get a whole lot worse before Americans will get off the couch to fight for real change. The Silicon Valley bread & circus just works too well. Unfortunately, by the time something does happen I fear it will likely bend towards fascism as opposed to any meaningful change that benefits everybody.

      What comes after America is the more interesting question. This country is unreformable. But the phoenix borne in its ashes may signal hope… who am I kidding, we’re headed for the Third Reich.

    3. Old Ghost

      “The one boulder against which I repeatedly come to bang my head is – you really have to seize the wealth from the Plutocrats in the US before you can do anything else. Anything else is going to end in failure.”

      I think Paul Art is on to something here. The bottom 95% in the USA seems to have no political representation at all.

  2. Jams O'Donnell

    “All it might take would be a German government that starts pursuing policies that are in the interest of the majority of Germans, and Europe’s role as the frontline in the New Cold War could collapse like a house of cards.”, and:

    All it might take would be a US government that starts pursuing policies that are in the interest of the majority of US citizens, and the US’s role as leader in the New Cold War could collapse like a house of cards, too.

    But what are the chances? What would it take for this to happen? What sort of timescale?

    Of course the upcoming defeat in the Ukraine will be a heavy blow, but probably not enough.

    There are many other factors to take into account. How long will it take for de-dollarisation to really hurt? Will there be armed force used by either side over Taiwan? etc. etc.

  3. timbers

    For years, I just KNEW Germany would break with the US and turn towards Russian and China in the form of greater economic cooperation. It was just too obviously the correct course to take. Of course the opposite happened, and now seeing the master stroke of stupidity by the Germans in freezing off Russian economic cooperation, the added blunder of starting to do the same with China is a logical continuation of making matters even worse for Germany.

    1. NotTimothyGeithner

      I think German elites have determined an EU aligned Russia would reduce the power of German elites even though it’s good for Germany as it would benefit Spanish, Macedonia, etc elites by providing competition in the EU.

      Even the rabid anti-Russian, US cargo cultists would make deals with Moscow or force Berlin into better deals, public or private. The article notes the German elite expected Moscow to simply implode. They didn’t quite grasp how useful gas stations with nukes actually are.

      1. digi_owl

        I swear, it is as if everyone thing the world has been at a standstill for the last 20 odd years. As if when Afghanistan ended they could just pick up Europe etc where they left off 20 years ago.

        There is more and more clearly a massive social divide between the working class and the PMC, and the politicians are these days part of the latter and completely swallowed by the social media echo chamber. Their idea that Russia would implode in months likely came from their class contacts in Russia, mostly from the techies in St. Petersburg etc. The very same that stuffed their laptops in their bags and hopped over the border when the collapse didn’t happen.

  4. Qufuness

    Thanks for this good rundown, Conor. Your coverage is always informative and fills in significant news gaps.

    Regarding German willingness to go along with US/Nato policies, there are some similarities between the position of Germany and that of Japan, where I live. A large number of Japanese are critical of the policies and actions of the US and NATO, but cannot imagine Japan allying with China and/or Russia, countries they associate with repression and lack of freedom. As salaries in Japan have not risen for decades, young people (and their parents and grandparents) hope they can become part of the well-paid global elites, whom they perceive to be rooted in the G7 countries. Probably the biggest cause is a lack of imagination and a corresponding inertia. At least for now the present system is tolerable, even good for many citizens, so why rock the boat? Unlike Germany, Japan is essentially a one-party state, so even though PM Kishida has drawn fire by doubling “defense” spending in the wake of the Ukraine war, the Liberal Democratic Party he leads is not likely to lose power. It’s not a sustainable situation, but nobody is ready to bell the cats of entrenched interests.

  5. Colonel Smithers

    Thank you, Conor, including for the shout out.

    With regard to the US law firms setting up in Germany, this is partly a consequence of Brexit. These firms and their clients, investors in Germany, are pushing for more aggressive commercial practice / strategy, whether sales to clients at banks that are on the edge of legality or cost cutting in all sectors. Executive appointments are also being influenced, e.g. at Commerzbank.

    The likes of CDU leader Friedrich Merz and the US educated woman and former employee of BlackRock, advising the Green leadership on economics, whose name escapes me, are driving the Atlanticist approach. Some younger German business leaders, including the favourite to succeed Christian Sewing as CEO of Deutsche Bank, have long wanted to loosen these Atlanticist moorings, but are keeping their heads down, especially since the Russian invasion of Ukraine began and the war began to drag on. By long, I mean well before even Brexit. These views are not new.

    1. Colonel Smithers

      I should have added that much of the German elite looks west and has done so for decades, if not more. There many Bismarck and Moltke scions at private schools in the UK, working in London (media, law and banking) and studying at Oxford. For those less well off, Hurstpierpoint and Clifton College, are particularly favoured at senior school level.

      Uschi von der Leyen’s English ancestors came from the south midlands and made their money in wool before migration to the southern colonies, emulating the Washingtons. The Spencers, including the Churchill branch, and Washingtons and Ladson ancestors have much in common, including origins of wealth and fighting for the royalist side in the civil war.

  6. schmoe

    The article did not seem to discuss changes to German MSM.

    Much has been written about journalists being forced to acknowledge that Germany’s proper geostrategic position is in NATO and, as for the Middle East, Israel Uber Alles. I have read elsewhere that Der Spiegel is nothing like what it used to be in terms of geopolitical content, and this probably does not help matters: https://www.axelspringer.com/en/ax-press-release/axel-springer-enters-into-investor-agreement-with-kkr-to-support-long-term-growth-strategy Sweden has a similar issue with one virulent anti-Russian investor owing a large media outlet.

    As for this comment: ” . . .almost 90 percent of the population has negligible net financial wealth (reflected in the fact that monthly income received from property is less than 100 euros per person)”, Germans presumably have less need to have a healthy amount of savings to pay for co-pays on medical issues or a “rainy day” fund in case of unemployment due to more generous unemployment benefits.

    1. Mikel

      “Germans presumably have less need to have a healthy amount of savings to pay for co-pays on medical issues or a “rainy day” fund in case of unemployment due to more generous unemployment benefits…”

      The trend of neoliberalism is still in effect.
      With private equity making moves into their healthcare system and the new militarism, the safety nets are being chipped away.
      And, like everywhere else in the self-described western “garden” a faux populism has been put in front of people that at the end of the day will be about economic austerity for the non-wealthy.

      That’s the economics on offer from “the right” and “the left” these days: austerity for the non-wealthy. Different ways to get there and different reasoning, but it adds up to austerity.

    2. Yves Smith

      They also have low home ownership rates, the biggest source of household wealth in the West, because tenants have extremely strong rights and comparatively low housing costs (to preserve labor competitiveness internationally) and don’t need to own. This is like NYC with rent stabilization (for instance, a lease renewal cannot be denied if the tenant is current on payments) but more so.

      1. Lord-Admiral of the Pyrenees

        This is an important, under discussed point. I think housing is an area that the Germans have very badly screwed up and while there is a lot of discussion about Germany’s foolish energy policies, the housing problems are an underappreciated Achilles Heel.

        You are right that there continue to be strong tenant protections in Germany but the days of low housing costs are long gone. If you look at overall statistics the numbers look OK perhaps but that’s just because the available housing supply is largely in undesirable or middle-of-nowhere locations. If you need to be in or around an urban centre of basically any kind in Germany now housing has become extremely difficult to find and many families now need to fork over 40%+ of their income to a landlord.

        You are right having low cost housing is important to preserve labor competitiveness – workers aren’t going to be clamoring much for big raises if their housing costs are moderate. Germany completely dropped the ball on this in the 2010s through a combination of increased financialization of housing, anti-construction NIMBYism, and general low investment.

        Keeping housing costs down should be been a top priority for German governments, and frankly the powerful industrial families who are very keen to lobby for all sorts of things should have been pushing on this too.

  7. upstater

    The SPD has a colorful history of collaboration to say the least… we can leave out ancient history of approving WW1 credits, suppression of workers post WW1 and refusing a common front against nazism in the early 30s. SPD’s recent history is the softer touch of neoliberalism and the Hartz Reforns, shredding worker protections. From Wiki:

    The Hartz concept, also known as Hartz reforms or the Hartz plan, is a set of recommendations submitted by a committee on reforms to the German labour market in 2002. Named after the head of the committee, Peter Hartz, these recommendations went on to become part of the German government’s Agenda 2010 series of reforms, known as Hartz I – Hartz IV. The committee devised thirteen “innovation modules”, which recommended changes to the German labour market system. These were then gradually put into practice: The measures of Hartz I – III were undertaken between 1 January 2003, and 2004, while Hartz IV was implemented on 1 January 2005.

    The “Hartz Committee” was founded on 22 February 2002, by the federal government of Germany led then by Gerhard Schröder. Its official name was Kommission für moderne Dienstleistungen am Arbeitsmarkt (Committee for Modern Services in the Labour Market). The 15-member committee was chaired by Peter Hartz, then Volkswagen’s personnel director.

    In present times, there is nothing like establishing the Precariate as a class, flooding the country with immigrants and control by billionaire MSM and big tech to trash class solidarity. This playbook is used in all the golden billion states. The wheels will fall off that model and i fear will morph into 21st century version of outright fascism.

  8. Michael Fiorillo

    “The assessment of the prospects of success may have been faulty, but the decision made on its basis was rational.” (From MD in Berlin)

    Rational, perhaps, but mad all the same…

    1. NotTimothyGeithner

      I wonder if the drive for “orginality” in higher education has created conditions where no one knows anything and suppositions are simply always wrong. Like the recent slew of stories in the msm about the inability to simply make artillery shells, this isn’t a surprise to people paying attention to the US, but if you suppose the top of a gdp pyramid is more important than the bottom…profit.

      1. Kouros

        Lack of knowledge and ultimately lack of actual, real life “professionalism”. This is why I think that it is a misnomer to call it the PMC, the Professional Managerial Class. There seems to be absolutely nothing professional about it.

        ANd the Managerial aspect seems to be headed for a two fold qualification: slave-drivers combined with faith based psychology control of the masses…

  9. panurge

    Thanks Conor. Very interesting reading.
    Next to the German Elite being bought like many others in the golden billion countries, maybe they are scared due to the Nazi legacy. Once, I read that beneath the UN charter is buried a clause stating that WW2 winners are allowed to nuke Germany if she doesn’t behave.
    Despite my digging I have never found anything to back it up, so probably it is fake, but Aurelien’s quote of Adenauer trading sovereignity for some trust, reminded it to me.

  10. The Rev Kev

    This is really great – if depressing – coverage of the situation in Germany right now. Years ago when in Europe, I often thought that I could easily live in a country like Germany and fit in. But this is no longer the same country. As an example, the Greens back then were all for getting rid of nukes, especially with Reagan as President. And now? A coupla days ago a major ex-leader of the Greens was saying how great it would be if Germany got their own nukes. The neocons are saying that Germany should be stood up to defend Europe against NATO but through decades of neoliberal “reforms” and the loss of their cheap energy, they no longer have the wherewithal. The German elites have betrayed that country and have sold it out and you do wonder if there will be a surge of support for the AfD and the new left under Sahra Wagenknecht in the next election. But the present leadership is so corrupt and even crazy that they might seek to make both illegal before the next election.

    1. Felix_47

      Your comment that one of the Greens was wanting their own nukes is interesting. Not mentioned is that a major factor in the industrial and energy problem in Germany is that all of the nuclear power plants are history. They were talking about reactivating the last one last spring but Habeck shut it down. That was the Green ideology in action. Apparently Baerbock’s parents were anti nuclear activists that took their little daughter to protests. The Green voters are largely PMC increasingly making their living in the Asylindustrie which means social work, dentistry, medicine, psychiatry, real estate and law usw. which are doing very well with the massive influx of migrants.

    2. Schopenhauer

      Exactly, Rev Kev, the german political & cultural “elite” (actually most of them are morons allergic to literature, music or philosophy) is going to double down on everything that looks like true opposition to the suicidal political and economical course which they follow since the late nineties (beginning with the red-green coalition under Schröder & Fischer): the destruction of the educational system, the destruction of the energy system, neoliberal financialisation through deregulation and privatisation and the dismantling of the welfare state).
      Scholz (easily the worst german chancellor since 1945) said a couple of months ago to his party followers that they should not worry about the good polling AfD; I think that behind the scenery the “deep state” is working on either to forbid the AfD and to exclude the party from the next elections in the easterns provinces or to undermine the elections itself. One of the most senior security service stooges, a mediocre guy named Thomas Haldenwang (head of the “Verfassungsschutz”), is going directly after AfD, letting his bureaucrats preparing reports that declare regional branches of AfD as “secured right-extremist”. When Wagenknecht will come up with her new party in spring 2024 it will get the same sort ocf undermining treatment from the executive and its security apparatus.

  11. voislav

    A couple of things to keep in mind. Germany just passed new electoral law, which is facing a constitutional challenge from CDU. The law is aimed at allocating constituency seats based on the popular vote, which will hurt CSU/CDU as in the past their share of constituency seats exceeded what they would have gotten based on the popular vote. Also, in the last election CSU/CDU was polling in the 30’s as well, but only got 24% of the vote. So it is possible that German polling models overestimate their vote share.

    Both these factors may make it difficult for CSU/CDU to form the government, forcing them into a coalition with SDP and Greens (so called traffic light coalition). Last time the grand coalition was formed it hurt CSU/CDU in the next election, so I suspect that there would be a lot of resistance internally to doing this. A coalition with AfD would be more palatable to their base. It could also provide cover to reverse energy policies on Russian gas which are unpopular with their main supporters, West German industrialists and business interests.

    1. caucus99percenter

      Correction: a CDU/CSU, SPD, and Green coalition would be called a Kenya coalition, because black, red, and green are the colors on Kenya’s flag.

      A traffic-light coalition is what Germany has right now: SPD, FDP, and Greens (corresponding to a traffic signal’s colors of red, yellow, and green).

  12. Rip Van Winkle

    Turn back the clock about 200 years –

    1. Germans who immigrated to U.S. starting around that time and continued for 90 years. When WWI started there were more people in the U.S. of Germanic origin than any other.
    2. Germans who died in all the wars from Napoleonic to WWII.
    3. What’s left in Germany today.

    No surprise to me – Bismarck to Baerboch. A ‘180 degree change’ as a beginner geometry student may say.

    1. digi_owl

      Gets me thinking of a map i saw recently, regarding what ethnicity Americans considered themselves. At first i figured all the black regions, in particular inland, meant people considered themselves American only. But then i took a closer look at the key, and discovered that they were all considering themselves German.

    2. eg

      I came to the conclusion some time ago that Kaiser Wilhelm II’s dismissal of Bismarck was a grievous error — one that Germans have been paying dearly for ever since.

  13. vao

    Please take these further points as complements to Gallagher’s post.

    A) Regarding the possible blackmail of Olaf Scholz.

    Apart from his involvement in the Cum Ex scandal around Warburg bank, Scholz has other corpses in his cellar.

    The most recent issue touches the businesses of recently bankrupt Austrian construction tycoon René Benko. In Hamburg, evidence is emerging that Scholz cleared the way (in cooperation with his Austrian social-democratic colleague Alfred Gusenbauer) for Benko to get the contract for a variety of projects, especially the prestigious Elbtower development (which is now in jeopardy). In addition, Olaf Scholz, as member of the advisory board of the RAG-Stiftung (dealing with assets and relics of the coal industry) had this foundation invest in the subsidiaries of Signa, the firm of René Benko.

    Questions about his role in the Wirecard scandal are also hanging: his government had been keeping the German finance control authority (BaFin) on a tight leash, precisely during the time when the BaFin was reluctant to take warnings of fraud seriously. What exactly was Scholz’s cabinet instructing the BaFin regarding increasingly disturbing rumours about Wirecard?

    B) Investments and wages in Germany.

    One should always keep in mind the fact that wage suppression and investment backlog have been in place for quite some time in Germany.

    Wage freezes and an austerity programme for working classes started under the green+social-democratic government of Gerhard Schröder in the late 1990s.

    This policy was augmented with the “debt brake” in 2009. Overall, the Merkel years — with or without the SPD — were a period of stagnation: investments in the public sector (schools, swimming pools, roads, railways, hospitals) was reduced or deferred, all because of the strict rule imposed by the “Schuldenbremse” (which also applied to Länder and municipalities). On the other hand, private investment in new manufacturing plants was relocated to foreign countries — while in Germany existing facilities were just maintained.

    This implies that there are few new projects, and therefore career paths are largely blocked, while wages are frozen. The result has been a substantial emigration of Germans — engineers, physicians, software developers, even professionals such as plumbers, all in all, middle-class workers — to Austria and Switzerland. Meanwhile, German business wails about a lack of a skilled workforce.

    C) Symptoms of competence deliquescence.

    Financialization seems to be invariably accompanied by a surprising loss of competence when it comes to implementing concrete projects (and other symptoms like outsourcing and PPP). For the past 20 years, Germany appears to have been infected by this pernicious malady. The most blatant examples:

    C.1) International airport Berlin Brandenburg.

    Designed for a capacity of 34M passengers/year in the first phase, and to be expanded to 58M, the project was launched in 2006, to be completed in 2011, at a cost of €2.4G.

    It ended up costing €7.3G, was completed only in 2020, and its viability is in doubt. By the way: most of its jet fuel is produced in Schwedt, by that refinery that precisely had so much trouble delivering such products earlier this year.

    C.2) Stuttgart 21.

    An ambitious project comprising new railways (including high-speed and underground lines), new railway stations, and new housing development, lauched in 2010, to be completed in 2019, at a cost of €4.1G. It will probably not be finished before 2026, and will cost at least €11G.

    C.3) Elbphilharmonie.

    A brand-new concert centre designed by famous architect bureau Herzog & de Meuron, this was to be a landmark of… Hamburg under Olaf Scholz. Launched in 2007, to be completed in 2010 for €77M, the building was not finished until end 2016 for a cost of €866M.

    C.4) Berlin schools.

    Because of the population increase and the investment backlog, in 2016 Berlin decided to overhaul its entire schooling infrastructure. 120 schools are to be renovated or built anew. Budget: €5.5G, deadline 2026.

    The project was to be carried out by various partners. The school administration and the various Berlin boroughs have already built capacity for 33000 students; for 25000 of such places the final cost is known: €907.7M (i.e. 36300/place).

    40 schools are to be built by a consortium led by Howoge, a private building society set up by the city of Berlin — and supposedly able to work more efficiently than the city administration, courtesy of not having those political approval procedures, being free to draw on the best and most affordable service providers, and unconstrained by the “budget brake” since it can borrow on the finance market. The results are dismal.

    Howoge has not yet completed a single of the 28000 student places it is entrusted to build. Its budget has ballooned from €1G to… €11.7G. The framework is a maze of contracts between many private parties, whose negotiation took years. Meanwhile, interest rates rose up, which made financing that much more expensive. In the end (if everything goes well, 2029 or 2031, depending on whether the building is new or renovated), school districts will have to lease back the schools during 25 to 37 years at a horrendous price/square meter — the lease alone requiring some 160 contracts for the 40 planned schools.

    Needless to say, many are raising doubts as to the entire scheme of outsourcing the project when the administration could do it much cheaper, with less bureaucracy, and much more rapidly. Unfortunately, cancelling the contract with Howege would entail massive penalties.

    These are the best-known (and admittedly, ambitious) projects. More recented endeavours — such as the new LNG terminals, or the renovation of the railway network — will possibly exhibit similar pathological traits.

    So yes, perhaps Germany is becoming more like the USA.

    1. Ignacio

      Thank you vao. We might need to submerge also in the hydrogen stunt. IMO, lots of juice to squeeze there.

      I also remember you once asked me for news in a project i was starting on agrivoltaic. This is going nowhere thanks to the greed and influence of big utility companies that also own distribution grids that only give access to their own projects. They also act like the proverbial dog in the manger, which doesn’t eat and doesn’t let others eat, and do not want to develop sensible agrivoltaic projects.

      In fact I consulted a German company which has developed agrivoltaic fences though to tell the truth their designs are too expensive for Spanish fields and somehow over-engineered IMO, resulting in too much metal per km of fence.

      1. vao

        Ah yes, the “green hydrogen” economy — which goes along similar projects on “green ammonia”. The issue here is that, apart from the technical hurdles, such projects have difficulties ensuring the profitability of every necessary partner. One such ambitious project already collapsed precisely because of this problem.

        But there are others I did not mention, for instance

        C.5) Signals intelligence and reconnaissance ships.

        In 2021, the replacements for three old reconnaissance vessels of the Germany navy were budgeted at €2.1G, more precisely, the expense was initially budgeted without a corresponding funding. After a budgetary supplement, SPD politicians lobbied to award the contract to a specific German shipyard located in their constituency.

        The contract, heftily criticized by the federal audit court, did not provide a requirements specification. In fact, the definition of what is to be built was to take place after the contract is signed. The outcome is unsurprising: the contract is in force, and already in 2023, an increase of €1.2G has become necessary.

        There is also the new digital radio-system (abbreviation D-LBO) for the Bundeswehr. A nifty system that was developed, tested, and delivered by German firm Rohde & Schwarz — which got the contract directly, without the normally required EU-wide call for tender, to the great displeasure of the French competitor Thales.

        There is nothing wrong with the new radio system — except that the Bundeswehr forgot to impose specifications as to the mounting of the devices in the wide variety of stations and vehicles used by the military. Since they cannot be installed, the expensive devices are stored in the Bundeswehr arsenals, unused.

        Incompetence and sleaze everywhere.

        It is a pity that the project on agrivoltaic fences could not take off. It is a location for solar panels I would never have thought about (won’t cows damage them?), and it looks much more reasonable than the titanic, environmentally insane projects that are being promoted nowadays. For example in Switzerland, they want to pave mountains with large solar farms…

    2. digi_owl

      “Meanwhile, German business wails about a lack of a skilled workforce.”

      Likely a nice excuse for pulling in lower paid foreigners.

      1. Lord-Admiral of the Pyrenees

        Yes it’s total bullshit. The salaries offered are pretty poor and do not reflect any kind of real labour shortage.

        1. Trees&Trunks

          I have friends and relatives in the Caucasus that were thinking about moving to Germany and were excited about the special immigration programs for areas such as healthcare, programming etc. I had to warn them that they attract immigrants because they pay too low for the locals to be of interest and then you would live from pay-check to pay-check. I told them about German private hospital chains preferring to go to Mexico to recruit rather than pay Germans and the current workers a fair wage.
          Not exactly what they expected to hear about Germany.

          1. Lord-Admiral of the Pyrenees

            Yes the German model requires low wages. Too much economic activity (~50% of GDP) is based on exports and hence totally decoupled from whether domestic demand is robust or not.
            A lot of experienced engineers and software developers earn like €60-70K Pretax, given what housing costs and taxes a single person on that salary could live a very modest life (no car, used or ikea furniture, groceries from Lidl or Aldi, substandard apartment in an undesirable neighbourhood ) in most mid tier German cities with this salary and manage to have some savings (not living pay cheque to pay cheque) but many entry level engineering jobs start at like €45K or even €35K which means you’re going to be living paycheque to paycheque with like 2-3 roommates even in a middle sized German city.

            In Germany you need to be management level it make an actual “good” salary they would allow you to live a middle class life. Anyone non-management whether a scientist or engineer it doesn’t matter they’re generally treated and paid as a basic worker. In the US by contrast there are plenty of very well paying non-management jobs.

            Now of course the argument is always “well Germany has a much better welfare and social system than the US”. But that is exactly why you pay high income taxes in Germany, it is not a valid explanation as to why the gross salaries are also so low.

  14. Joseph Dillard

    I don’t see Germany outgrowing its vassal status until the US can no longer bribe German elites with money, access, and sinecures, combined with genuine threats of loss of income if they don’t play ball.

    1. Lord-Admiral of the Pyrenees

      She’s nothing, unfortunately. Her platform is based on the delusion that the 2010s can be brought back. Running an export oriented economy AND having high pay for workers is contradictory.

  15. Ignacio

    Thanks a lot Conor Gallagher for this dissection of the motivations and actions of German and, by extension, other EU elites to ruin the prospects of the rest of their “co-citizens” in the so-called garden. This has very good explanatory power for previous and current developments not detailed here I guess not to make it too long. For instance how all those past claims on ruling over tax heavens went nowhere, why they keep insisting on expanding the EU for geopolitical reasons, and how EU policy on competence was transformed in policy of mergers and acquisitions to mention a few. In another instance the affair of the EC with Pfizer-BioNtech is, again very telling: never miss a business opportunity when you find it. Nice contributions there by other NC readers.

    Shall we open our eyes and collectively react to this nonsense? With the aid of analysis like this may be one day.

  16. ciroc

    Wasn’t the real goal of the US the destruction of the EU, not Russia? It is the Western Europeans, not the Russians or the Chinese, who are fighting for a piece of the pie at the same table as the US.

    1. Ignacio

      May be the real goal is to destroy both, the US and Europe. If you think US elites are acting on behalf of the rest of US citizens think twice.

    2. digi_owl

      Likely breaking up Russia is the primary, but if that does not work out then bringing EU to heel will be a nice secondary outcome.

      1. Polar Socialist

        You really think the current masterminds are capable of such cunning plans? To succeed it would require no-one, absolutely no-one, in EU to go “wait, if this fails, we’re [family blog]ed”.

        1. digi_owl

          Oh there is likely plenty that has had that thought, but likely they have already set up a hideaway in Florida or New York. Maybe even already promised a cushy desk job in some NGO or similar, possibly even the UN.

  17. Carolinian

    Great report and thank you. The reliance on this blog’s comment section shows why Yves calls this place a “brain trust.” Sounds like the problem is grifters in Gulfstreams which they use to go to those international conferences designed to point fingers in other directions.

    However it was my impression that German workers, at least until recently, were well protected by their strong unions. And in fact back in the day the CIA seemed to worry constantly about Europe in general going Commie rather than going Davos. You have to wonder whether the defeat of the Soviet Union allowed, as in America, the resurgence of the plutocrats who have always wanted to shove socialism back in its box. While the Euro working class is suffering now is it not likely that their elites, like ours, are cruising toward a comeuppance? The elites’ beloved hegemon is wheezing.

        1. digi_owl

          I’m aware. I just had the image of gulfsteams descending on a destination like a flock of hungry gulls.

    1. Feral Finster

      The fear of communism was the driver behind Social Europe. The bosses had to offer the masses a better deal.
      The Americans turned a blind eye, because communists.

      Now that communism no longer scares the bosses, those benefits are being steadily taken back.

      1. digi_owl

        And also the Atlantic and Pacific moats, and Pax Americana, meant the threat was academic at best. Still had the whole red scare and McCarthyism though.

      2. vao

        I already disagreed with that interpretation. The sharp turn towards neoliberalism and the “taking away of benefits” had started well before the end of the USSR (Thatcher 1979, Reagan 1981, Mitterand/Delors 1983 — arguably Giscard d’Estaing/Barre 1976, etc).

        While the 20 years before the fall of the USSR was marked by a big communist scare (successes in the Third World, euromissiles crisis, strength of communist parties in Italy and France, left-wing terrorism, etc) something happened that emboldened the “bosses” to start dismantling the Social Europe resolutely.

        1. Carolinian

          Maybe it’s what didn’t happen and the natural tendency of societies is to become more unequal unless a Depression or revolution or WW2 comes along to disrupt upper class dominance. Some of us would contend that traditional liberal idea of continuous social progress doesn’t account for built in features of human behavior. Perhaps cycles of reform and then reaction are just the way of things with perhaps a slight nudge forward each time.

          Of course I only know about what happened here in the US and I believe the New Deal and the like were indeed a matter of “things have to change so they can stay the same” (from The Leopard) and an answer to the threat of true socialism hanging in the background. Some might argue that most of the 20th century was about the Russian Revolution.

        2. TheMog

          Agreed. I remember Norbert Blüm (Kohl’s Labor Minister) talking about the need to cut state pension back in the 80s with the same arguments about unaffordablity that we all still hear today. Austerity isn’t that new, but we probably didn’t see it coming back then.

  18. Lefty Godot

    Readers, please correct me if I’m wrong, but wouldn’t a CDU government be largely a continuation of current policies?

    Just as the inevitable Republican government we get in 2025 will be largely a continuation of current policies in the US. Very clever how they set things up so that the “credible opposition” is always on the same page about the fundamental issues; it just plays the part of one team in the culture war sideshow of woke madness versus evangelical madness. Germany at least has the opportunity for two newer parties to shake things up, but we seem to have too many structural barriers to alternatives like that in the US.

    1. digi_owl

      Same as how the religious far right groups need each other to continue to exist, in order to have an “other” to direct their rage at.

      There was a documentary on chimps i watched ages ago, that talked about how each “clan” would see their young males form raiding parties and go of to harass nearby “clans”.

  19. KD

    At the end of the day, security trumps economy. Germany especially, and Europe in general, is completely dependent on the US for security. It is possible to imagine an alternative path heading forward, but without NATO, the US, and Article V, Europe currently could be pretty readily overrun by the Russians. [Not intending to imply that this is the Kremlin’s intention at this time, or that they have the capability now while at war with Ukraine, but Europe would have close to zero in bargaining power with Russia, because they could always be threatened with Russia invading them.]

    If Europe attempted to form some kind of European joint forces agreement, who would sell them the weapons? America is not going to give up control, Russia is not going to sell Europe weapons to use against Russians, maybe China but what would be the political impact? How long would it take Europe to build up its defense industrial base on its own? They promised Ukraine 1.0 million ammunition rounds, and only could supply 300,000, and that was based on cannibalization of their own stockpiles primarily. Maybe my facts are incorrect, but its not clear that Europe has the means of production or a good alternative to American arm supplies. It would certainly blow the budgets.

    There is a practical feasibility issue with respect to Europe standing alone, not even considering the impacts of the basing of US forces on European soil, and the integration of US Nat Sec establishment/spying/black mail of allies. De Gaulle was trying to fight this fight back before things became inevitable, at least for France, but the battle was lost. Security dependence on America has been locked in since the 70’s, and certainly after 1991, Europe dramatically gutted its armed forces. If AfD came to power with the best intentions, at best they would end up a thorn in the side of NATO, maybe another Hungary, but it is hard to see how Germany could provide for its own security even if its leadership was resolute. A thorn, yes, but there would be limits on that thorn before Germany suffered regime change or nasty blow back. Look at the way Washington is gunning for Orban. It certainly would probably require decades for Europe to achieve any real sovereignty.

    Germany and Europe in general is going to have hard time of managing political discontent in the masses as the impacts of de-industrialization hollows out Germany, and the EU is either going to fall apart or radically revise itself. It is hard to see how this discontent actually translates into an actual change in European security assets, unless the US collapses or faces some kind of catastrophe, and in this case, change would come from necessity, not from political force.

    Not trying to throw water on the fantasy of a sovereign Europe out of malice, just struggling to see any alternative to the current framework that is politically, economically, and strategically feasible. Perhaps it would be more noble for Europe to elect death by hanging over a protracted death by a thousand paper cuts, but the second option will be more comfortable and lucrative for European politicians. Further, Trump, Schmump, even if Trump were serious about disbanding NATO, the powers-that-be in DC would prevent it.

    1. digi_owl

      Why though? Why this constant blabbering about Russia invading Europe?

      If anything it is Europe that has constantly invaded Russia.

      1. JonnyJames

        I hear Ridley Scott has a new movie out: Napoleon. I haven’t seen it yet, but I’m curious how the invasion of Russia is treated in the film.

        1. vao

          The few reviews I have read about that movie agree that it is worth a detour — a wide one.

          If you want to see an interesting and cinematographically spectacular movie about Napoleon’s invasion of Russia, go see “War and Peace” by Bondarchuk. I believe you can even view it with subtitles, for free, on the Mosfilm YouTube channel.

      2. KD

        Putting Russia aside, if America gets out, how are France and Germany going to work out some kind of joint forces arrangement in the long-term? I would think that Germany would have to worry about France, although you could point out that it is Germany that constantly invaded France.

        1. vao

          The Poles in the early 17th century.

          The European knights under the leadership of the Order of Brothers of the German House of Saint Mary in Jerusalem (aka Teutonic knights) in the Middle Ages.

          The French, British, Ottomans, and Sardinians during the Crimean war.

          An assortment of German, French, British, Czech, Polish, Japanese, North American, and other troops in the period 1918-1925 (the so-called allied intervention).

          1. Polar Socialist

            Finns, too, did their own “interventions” between 1918-22. Which was one of the main cause to both lack of trust between Finland and Soviet Union leading to Winter War, and also for Karelians being a minority in Karelia since early 20s (some were killed in the fighting, many escaped to Finland and later many were “purged” by Stalin [see lack of trust]).

            In late 2010s Finland had a defense minister who thinks all that was “a good thing”. Historian by training, a hysterical Russophobe by profession.

            1. vao

              The interesting thing is that the outcome of all those campaigns ranged from “unglorified, costly mess” (Crimean war, Poland), through “undeniable fiasco” (Allied intervention, Teutonic knights), to “utter existential disaster” (Charles XII, Napoleon, Hitler).

              Leading to Montgomery’s rule of war nr.1 — never attack Russia.

      1. eg

        This presumes no return to the old habits of internal dynastic/imperial squabbling among the Europeans themselves.

        1. Polar Socialist

          It’s a actually post-dynastic/post-imperial squabbling. The WW1 collapsed four European empires – German, Russian, Austro-Hungarian and Ottoman – and what was left (dozens of newly independent countries) are still trying to sort themselves out.

          A lot of the problems were of course not created by collapse of those empires, but often supranational entities are relatively good at either suppressing or mediating national/ethnic/identity clashes – their existence more or less depends on it. The collapses merely allowed all the conflicts to surface.

          The return of supranational entities during the Cold War pushed all these conflicts and issues out of sight, but did not do much to resolve them. As Aurelien likes to point out, one of the main reasons for retaining NATO after 1990 was to contain this “inherent need” of the Eastern Europe to continue to resolve all these issues in one way or the other.

          Too bad that both EU and NATO seem to often see these issues as something to exploit rather than something to resolve.

    2. Lord-Admiral of the Pyrenees

      The problem is Germany depends on the US for it’s ECONOMY too! As touched upon in the piece, the German economic model is too heavily based on exports to provide demand and an important ingrediant in its strategy is wage repression, yes many firms there are leaders in their fields but wage repression is needed to keep up the big trade surplus.

      What sense would it make for Germany to make up with Russia and go along with Russia and China against the US? These are all countries that conduct mercantalist policies and need an external partner to provide the demand – which is largely the USA. China was a big growth story for Germany in the past, back in the 2010s but if you look into the statistics that hasn’t been true for a while, well before the current diplomatic problems. China is just not going to be interested in playing the role of soaking up Germany’s chronic overproduction. This is also why Wagenknecht is not going to be anyones saviour, she just thinks Germany can somehow go back to the 2010s.

      The big problem is YES salaries/wages ARE WAY too low in Germany, the big German unions don’t fight for significant salary increases and perfer to fight for more time off with the mentality of “work less, work all”. Since so many big German companies are export oriented they need to maintain low real wages to stay competitive, whereas if Germany had a more consumer oriented economy raising wages would mean more demand and a healthier economy. The fact is, if Germany manages to get its Russian gas back, it STILL needs someone to sell its products to and that really is ultimately the USA. Germany’s unbalanced economy means it has no authority at all in foreign affairs even if it wants to.

      Germany’s austerity policies contribute to low investment and hence low domestic demand meaning there is little real labour market pressure for strong wage increases. Years of low investment in housing particularly in cities means the housing/rental market is a complete bonanza for landlords as well.

      The other important aspect that should be mentioned about the German elite is that German wealth inequality is at essentially US levels but German wealth is to a large degree inherited. Taxes on income are very high, taxes on wealth are low in Germany. Much wealth is also inherited in the US but the US top 10% or 1% are actually a more dynamic group with people/families falling in and out of those brackets over a few generations. In Germany it is far more static, the wealth retain their wealth and control of their businesses over many generations, on the other side it is extremely difficult for someone from the working or middle class to build up any kind of wealth of their own. Therefore when you think of the German elite you need to be thinking of people who have largely inherited everything they have.

      1. Yves Smith

        Uh, no. Germany’s exports are primarily to the rest of Europe. That has created big stresses in the Eurozone (lending to the so-called PIIGS which Germany has bitched and moaned about making).

        If Germany were exporting a lot to the US. you’d see Germany as a major Treasury buyer/holder.

        The US individually is the Germany’s biggest export destination, only at 10%. China is 6.8%. Other EU countries in total way bigger. Just France, the Netherlands, Poland, Italy. Austria together are 31.4%, and there are many others.

        See: https://tradingeconomics.com/germany/exports-by-country

        1. Karl

          Europe’s economy as a whole depends considerably on the U.S., and therefore implicitly so does Germany. Europe has a very high positive net export trade with the U.S. (about $250B/yr according to UN Comtrade stats). Germany’s net positive trade balance with the U.S. is also significant. If you want to be uncharitable, Germany “launders” cheap Russian raw materials/chemicals/energy via intermediate and finished goods to Europe and thence to the U.S. and our NAFTA partners. So I think Mr. Pyrenees’ point remains pretty valid.

          1. Lord-Admiral of the Pyrenees

            Yes, I do not think it is sufficient to look at bilateral trade. The EU as a whole depends on foreign demand when a sustainable EU economy would be one in which countries like German provided demand rather than subtracting it.
            Even when Germany exports a machine for use in a Chinese factory that is going to manufacture goods for export to the USA that process is still being set into motion by US consumer demand.
            I don’t think a country like Germany that’s gotten itself so utterly dependent on foreign demand can have a strong, independent foreign policy.

            1. Yves Smith

              Please look at data. The EU has had an overall trade deficit for the last 18 months and turned to surplus only 2Q 2023, and that due to imports falling faster than exports.


              And the top reason for the period of surplus before that way suppressing demand via austerity:

              The European Union has moved from a trade deficit for goods during the period from 2004 until the end of the Great Recession (2008-2010), to a substantial trade surplus over the later 2010s and early 2020s. The EU had been running a trade deficit as consumption was high during the economic boom which led up to the recession and Eurozone crisis (2010-2012), while the Euro had been appreciating against other currencies during this time, making exports less attractive for trading partners and imports less expensive in Eurozone countries.

              With the dampening of global demand during the recession, Europe’s deficit contracted, with the dramatic reduction in imports outweighing the reduction in exports to the rest of the world. Later, during the 2010s, the EU began to run a trade surplus due to the suppressed demand for imports in the EU via economic policies which favored austerity and lower consumption, a depreciating Euro after 2014 which made EU exports cheaper for trading partners, and structural policies of EU member states, such as Germany, who have prioritized the competitiveness of their export sectors.


              1. Karl

                Thanks Yves for that clarification. The Stats I used ended in 2021, and were for Europe-U.S. trade, not Europe-global. With U.S. sanctions, the terms of trade have worsened for the EU in the last 18 months!

    3. Roland

      France and UK have nuclear weapons. Europe does not need American help to deter Russia. That is a simple matter of physical fact.

      Russia’s armed forces are too small to meaningfully attack central Europe. The Russians could kill a lot of Europeans with their own nuclear weapons, but they cannot possibly invade and occupy Europe. That, too, is a matter of physical fact.

      The Russian military has its hands full trying to defend Russia’s own vital interests. Dominating Europe is completely out of the question. The army that spent months inching around a place like Bakhmut isn’t exactly going to overrun Berlin.

      Another thing: Trump has never wanted to “disband NATO.” Trump wanted to strengthen NATO by enouraging its member countries to each contribute 2% of their GDP to their own militaries. Trump’s policy was simple, sensible, and well-precedented: maintain strength through alliance, and avoid starting wars. How hard is that to understand?

      1. Yves Smith

        Mark Sleboda, who like many in Russia loves to be critic of the Russian military, disagrees. He says with increasing increases in the size of the Russian military, the combat experience it has accumulated, and the way its weapons systems are further widening the gap between Russia and the Collective West, Russia really will pose a threat to Europe when Russia is done with whatever it will to do Ukraine. Sleboda stresses the Europeans should be damned grateful a moderate like Putin is in charge and not a hothead or a hard liner.

        1. JBird4049

          I see Russia and Europe militarily in the same way I see Israel and Europe. The former can destroy the latter at anytime, but to conquer and rule is another thing. Then there is really nothing to prevent others to ship arms to Europe as well just as they were shipped to the Hamas in the besieged Gaza.

          I also think Israel could possibly conquer Gaza, but only at the cost of its entire economy, with the opprobrium of the world; even coldhearted real politick style proponents tend to not like mass slaughter. This means raw power is key, but morality has its own say, regardless.

  20. ChrisFromGA

    After what they did to Greece, I have little sympathy for the Germans.

    Eat a pipin’ hot bowl of austerity.

    1. tegnost

      That’s painting with a broad brush as this post makes it clear that what germans want is of little concern to the globalist elite.

      1. ChrisFromGA

        I suppose that it is. The global elites made me do it rings hollow as does the softer angle that the average German has no agency to do anything, so just lie back and think of England.
        Maybe they should have paid attention to the way the Greeks were made subordinate to Blackrock and thought, “gee, that could happen to us someday?”

        1. Roland

          As a Canadian, I ask myself, who can I vote for? It’s compradores and quislings, all the way down the ballot.

          So I guess I’m supposed to overthrow the entire regime? Or maybe set myself on fire, like a South Vietnamese monk in 1963, or like Bouazizi the Tunisian in 2011?

          History is mostly a story of people getting caught up in things that are a lot bigger than they are. By that measure, I’ve never felt so much involved in history!

    2. Yves Smith

      This a big exaggeration. We wrote about the 2015 Greece bailout negotiations in 2015 in GORY detail.

      First, is was all over in February when Greece signed a memorandum with the IMF in February to get an interim bailout. Greece agreed to an IMF program THEN. It had no bargaining leverage. This is a critical point the press kept omitting.

      Second, the US was actually supporting Greece v. the EU for a bit with the idea that Syriza as the outsiders could implement badly needed tax reforms, as in address the near-complete non-collection (pretty much the only people who paid taxes were government employees). The obvious place to start were oligarchs who owned broadcasting licenses. You could cancel their licenses if they refused to pay what they owed. But Syriza would not go there because it depended on media support.

      Third, Merkel was very supportive of Alex Tsipras, met him many times, tried to advise him. Admittedly she was checked by Wolfgang Schauble, the finance minister. But Germany was far from alone in its hardline position. The northern bloc countries such as the Netherlands, were just as non-negotiable.

      Fourth, the biggest heavy here was the ECB. The ECB had massive loans to the Greek banks using a program meant for only for short-term stabilziation, IIRC called the Emergency Use Authorization. Had to be reapproved every 2 weeks. Again as I recall it was a French member of the ECB, and not any German, who was the hardest hardliner. It was the ECB that dropped the hammer on Greece when the negotiations fell apart.

      Fifth, of the private lenders (there was a pernicious support of Eurozone country lending by banks in country buying government bonds), it was French, not Geman, banks that were most exposed to a Greek restructuring.

      Sixth, as we again recounted, Greece managed to achieve the difficult task of uniting the entire 27 member EU against it.

  21. Felix_47

    Great review Conor. I wonder how the massive Muslim immigration will play out. The borders are essentially open. To get a sense of the population imbalance there are 4.6 million single fighting age Muslim men in Germany and only 2 million German women under age 20. Very few of these men can read and speak German. Very few can or do work on the books. The sexual assault and rape frequency is pretty high although interestingly none of it is directed to Muslim women which is understandable given the men’s origin in countries with Sharia law. There is some violence in the schools against the Christian students which I saw with my kid. Some girls wear a Hijab as a defense on public transport. The PMC sends their kids to private schools and the higher ranks of the PMC send them to English boarding schools or US boarding schools.

    1. AW

      “To get a sense of the population imbalance there are 4.6 million single fighting age Muslim men in Germany and only 2 million German women under age 20.”

      This is a curious comparison. A fighting-age man can be anywhere between 18 and 60, yet this is compared to single women under 20 (presumably not girls. What? 18 to 20?)

  22. JonnyJames

    Great article and discussion. Many reasons for Germany to act against the interests of the majority: Bags of bribe money, blackmail, financialization, anti-labor neoliberal ideology, converging interests of domestic and US elites, etc… US military presence, US domination of NATO etc. and I would add the subservience of the German intelligence services (BND) to their US mentors (CIA, NSA).

    As in other western “democracies”, the traditional pro-labor parties (like SPD) have transformed into right-wing authoritarian parties. The working-class has nowhere to turn, so other flavors of right-wing authoritarians gain favor. In Nederland, Geert Wilders’ PVV recent success is yet another example.

    A CDU govt. in Germany would do little to alter the status quo, we have seen this before.

    Looking back on this, I recall prof. Hudson predicting the financialization, right-wing creep of political parties, neoliberal ideology, de-industrialization and huge increases in energy prices, with further dependence on the US. There may have been others to predict this, but Hudson, as he usually does, hit this one out the ball park early on. He also told us that the US proxy war on Russia was about making Europe more dependent on the US

    Also of note: thanks to Julian Assange/Wikileaks and Ed Snowden, we know that the NSA had tapped former Chancellor Angela Merkel’s phones for years. The BND knew about it, yet did not inform their own Chancellor. It seems the BND is a subsidiary of US intelligence, and serves the US, not Germany. To me, this speaks volumes.

    (Sadly, Assange is still being held on BS charges at HMP Belmarsh, awaiting extradition to the US)

  23. Maxwell Johnston

    Excellent analysis, thanks for posting. Of all the surprises I’ve had since 24/2/22, one of the biggest is watching Germany’s self-destructive behavior with respect to its long-standing ties with Russia. During my 20+ years doing business in Russia, I encountered German companies everywhere. And they were tough competitors, combining Teutonic thoroughness (while strictly adhering to oft-confusing Russian law, and with most managers making a serious effort to learn the local language) with a surprising flair and flexibility in dealing with the Russian mentality (perhaps an advantage gained from East German elites who had long experience dealing with Russians). And Germany’s involvement in Russia made good geopolitical sense, whether looking to the past of Ostpolitik or to the future of the presumed Eurasian century. And now they’re tossing it all away in a fit of Atlanticist pique? Wow.

    However, the structural flaws in the German economy are no secret and have been brewing for a long time, as this article from 2013 spells out concisely (yeah, it’s National Review, but it’s a good quick summary):


    Take away the advantage of cheap Russian energy, and discourage consumers from buying German ICE cars, and it’s no surprise that the wheels are falling off of the Germany economy.

  24. AG

    As an addition to the already quoted historic backdrop (e.g. as by Aurelian):

    After 1945 besides allegiance to the US the second trope was of course staunch anti-Communism.

    This anti-Communist sentiment among European elites went and still goes back to 1917. Well before Pax Americana.

    This is important in so far as a “Third Path” could have been well chosen by the FRG and Europe without openly risking ties with the US and causing some major chaos.

    This third path of the EU was one hope, among others, by people like Noam Chomsky in the late 1980s and early 90s.

    These possibilities however were rejected by the Adenauer government and more or less every other successor when suggestions of decreasing tensions by Russians / Eastern Europeans were made:

    Neither de-nuclearization plans in the the late 1950s, coming from the East and the anti-war in Western Europe, nor the unification plans by the late Stalin 1952 were ever taken seriously. Adenauer mocked Stalin´s Notes.

    As reminder: Stalin offered unification for Germany in return for German military neutrality.
    (One could argue the GDR was the Ukraine of the 1950s.)

    This was not taken seriously as was not Molotov´s admission request by the USSR to join NATO – a gem we owe historian Geoffrey Roberts.

    However on the other side, as far as my very limited knowledge on EU internals goes, there used to be strong nationalistic groups in the EU apparatus that would prefer a more independent path.

    May be someone knows about this for real, unlike me. What happened to those?

    As of course Germany now had little alternative to its current handling but it first had to create such a cul-de-sac.

    1. Polar Socialist

      As reminder: Stalin offered unification for Germany in return for German military neutrality.

      So, basically a return to the original plan agreed on in Yalta and Potsdam? No wonder The West didn’t take the offer after successfully backstabbing Soviet Union and by creating West Germany making sure no comprehensive European security arrangement was possible.

      1. AG


        However German SPD untill the election defeats of the late 1950s was clearly open to such plans. At least in theory.

        If you look into the parliamentary discussions in the German Bundestag of those years before the Godesberger program would create the NEW SPD in 1959 – openly anti-Socialist & pro-market-economy –
        you can see how much SPD was dragging its feet on the NATO issue. They woud have never really dared to demand leaving that club.

        German SoD Franz-Josef Strauß (anti-RU of course) in fact and correctly was mocking them publicly for putting out demands but not acting accordingly.

        The Brandt successes of the 1970s were unthinkabe without the right-turn of the SPD in the following years.
        Brandt accepted the separation which enshrined the Iron Wall and buried all hopes for a genuinly independent EU.

        To understand where we are today it is very important to understand how crucial the late 1940s early 1950s were. They set the agenda.

        And it is no coincidence that those were the very years of rampant Red Scare in the US and Western Europe. The Red Scare helped push through the separation and thus subjugation of Europe. I guess the US was much more afraid of a neutral united Europe than Stalin ever was.

        “History repeating itself. First as tragedy, then as farce.”

  25. Feral Finster

    Interesting analysis, but underestimates the fundamentally slavish nature of the european political class.

    The United States blows up Nordstream, in doing so, committing an act of war against Germany, everyone knows it, and what happens? Scholz scurries to Master Biden to get the story straight like a pathetic little [female dog]. Europeans stare at their proverbial shoes and hope the awkward situation just goes away.

    Now, the thing that would make europeans stand on their hind legs is the election of Trump. Suddenly American hegemony would be less of an article of faith, were America led by someone so gauche. Europeans are all about appearances and The Done Thing.

    The CIA memo from.2008 recommending the election of Obama as a way shore up european support for America’s wars is most instructive.

    1. AG

      Would you possibly have a link or source to the CIA memo?

      p.s. Of course living in this country I am confronted with German incompetence on a daily basis. However ask yourself: What other choice – in their bubble of limited governing space – did Scholz & friends have?

      Assuming they wanted to secure the pipeline after the February Biden threat. How do you protect Nordstream against the US?

      And concerning the internal Berlin plans:

      As a chancellor and secretary of whatever ministry you only want to hear suggestions by your aides that you can actually realize and put to use.

      Criticism, warnings, outlandish alternative plans (breaking with Washington) won´t be even brought forward to you because you couldn´t follow them anyway. So why waste time with discussions over a situation you cannot change. That´s not practical.

      Eventually you had people running around in government saying out aloud things they privately would most likely know not to be true.

      1. Feral Finster

        I’d have to look for the CIA memo.

        Even taking your analysis as correct – It speaks volumes that the United States knows that its european lackeys are so impotent, have so little authority in their own house, lack even the self-respect that one commonly sees in crack-addicted streetwalkers, that the United States can do this to them and their only response is that they are bad slaves who deserve to be beaten as they suck up to Master.

      2. Yves Smith

        Scholz stood right at Biden’s side when Biden bragged the US had the means to and would end Nordstream if Russia invaded Ukraine. Scholz said not a peep.

        The Baltic Sea is a NATO lake. With all the surveillance it is impossible to have planted charges at the dangerous diving depth (requires a decompression chamber) for four sites on the pipeline w/o at a minimum US acquiescence.

  26. Pookah Harvey

    With the current energy crisis in Europe Robert Mundell’s plan has finally come to fruition. Mundell was a Nobel Prize winning economist that laid the groundwork for supply-side economics and was known as “father” of the euro. Journalist Greg Palast was an acquaintance and wrote an article about him 11 years ago.
    According to Palast:

    Mundell explained to me that, in fact, the euro is of a piece with Reaganomics:

    “Monetary discipline forces fiscal discipline on the politicians as well.”

    And when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain.

    Due to the asymmetry of economies in Europe some southern countries have already experienced crises. The energy crisis due to America’s Ukraine project has done the same for all of Europe .

  27. Tom67

    Jus one little squibble about this good article: yes unequality in Germany is great and notionally Germans are “poorer” in proberty than let´s say Italians. But a lot of Germany´s wealth is “common” wealth. Let us take rents. 50% of Germans rent their living space. But the system is incredibly finetuned. Renter associations and owner associsations codetermine the allowed rises per year. It is not like New York where old rent controlled contracts will allow you to live for “peanuts” nor the usual state in the US where they can bolt you out if you cannot afford a rise which is up to the whim of the owner. This German system is being destroyed now. It would be to complicated to explain the intricacies. Suffice to say it is being plundered by big institutional investors who don´t honor their side of the bargain: that they have modest rises but in turn pay for the upkeep. Yes, Germany is being plundered with the connivance of her governing elites. Resistance is growing and so is repression to a degree that I have never seen in my lfetime in Germany.

  28. Kouros

    The US has been trying since the end of WWII to export its plutocratic political model all over the world. Had a lot of practice in Latin America prior to that and the Caribbeans and Phillippines.

    Creating a compradror elite as much linked with the US as possible. And the only think they fear the most is polities with very strong central authority and control. This is why the screams of fury and outrage when President Xi of China started an anti-corruption campaign that continues to date. This is why the screams of fury and outrage when President Putin stopped the gravy train and claw back all the “progress” made by the CIA/Wall Street Boys during Yieltsin times. This is why Iran is so dreaded and hated (the semi-socialist aspect of it is a negative as well). The time for Gulf and Arab Monarchies to be savagely criticized will come soon.

    This “Three Body Problem”, of the pull between Oligachy, Tyranny, and Democracy, with Oligarchy considered the more stable will continue unabated. But maybe I am an idealist, or maybe I have read too much on Graeber’s “The Dawn of Everything”, to think that some massive bottleneck that humanity will be facing in the short and medium term (up to four generations), a Polycrisis so to speak, with a massive drop in the population levels (who wants to have kids in such a world, eh?!), things will clarify a bit more…

  29. Karl

    Excellent analysis.

    I’d like to suggest a different angle for understanding this seemingly inexplicable phenomenon of Germany’s seeming acquiescence to its slow suicide by de-industrialization.

    Another perspective is this: the U.S. has given Germany and Europe a free ride with very advantageous terms of trade ever since the Ostpolitik of the ’70’s. Cheap Russian stuff (oil, gas, fertilizer, etc.) is partly responsible for Europe having a net positive export balance with the U.S. of ~$250 billion per year (plus another $50 billion/yr via Mexico and Canada). In short, the U.S. has been importing cheap Russian resources via European, Canadian and Mexican finished goods, and the U.S. never stopped reminding them of this. As a result, the U.S. has had considerable influence and leverage over Europe. The U.S. didn’t give a rip about its own workers being disadvantaged by this resource arbitrage with Russia as long as Russia played “nice”.

    So, as Connor says, corruption and cravenness within Germany may have played its part. But Europe was arguably playing a difficult 3-way chess game with the U.S. and Russia. Then, in 2008, a momentous change occurred in the strategic balance: the U.S. moved its queen to the center of the board, which was the invitation to Ukraine and Georgia to join NATO. My guess is, Bush-Cheney decided: “what the hell, if we’re paying so much for Russian stuff via trade with Europe, then let’s get some geopolitical benefit. Either way we win– we get former USSR Republics into NATO, or we end the Europe-Russia gravy train (at U.S. expense) altogether.”

    Russia invaded Georgia, but that was an election year (summer of 2008) so the U.S. blinked. Then Russia invaded Ukraine, and the jig was really up this time. All of Europe’s leaders understood the implications when that happened. Just to drive the point home very pointedly, we sabotaged Nordstream, and Europe did nothing but shrug.

    Now half of all of Europe’s LNG come from the U.S. Europe’s trade balance with the U.S. is destined to keep contracting until the sanctions end–which they probably will, when Ukraine inks a peace deal with Russia. This assumes the U.S. (under Biden) wants to avoid the far-right replacing Europe’s leadership class. Under Trump or Haley, all bets are off. Under “America First” they may be perfectly happy to keep profiting off Europe’s despair, as the U.S. has done countless times in the last century.

    This means Biden has a brief window of time to help Europe out of this mess which the U.S. got Europe into. Will Europe’s leadership class be able to wake Biden up in time to help save Europe from fascism (a deal with Russia, and lifting of sanctions). Would doing this be enough? We’ll see.

  30. Schopenhauer

    Congratulations, Conor, for this excellent article on the german conundrum (you won`t get an essay with this analytical depth and illustrating detail from the german mainstream press).
    To one point I want to make a short remark: You write that “higher energy bills” are “a positive for the bourgeoisie Greens steering the ship in Germany as they’re enacting many of their environmental policies despite the damage to the working class”. That is completely right. One reason for the support of this (in the long run even self-) destructive policy is a sort of sectarian strain in the german postmaterialist eco-bourgoisie: Even if they were able to understand that they are not only destroying the livelihood of the working class but in the middle or long run undermine their very own existence, most of the members of the “outer party” (as Aurelien put it in some of his essays) would say that they are willing to pay the price for saving the planet. A illuminating example for this kind of zealous thinking is the journalist Ulrike Herrmann who is very popular in ecobourgeois circles and sermonises in books, speeches and tv discussions that the only way to save the planet is to shrink the economy drastically via a kind of draconian war economy (she wants to close down car manufacturing, airports, banks and insurances, marketing & design and a lot more). What is really disturbing is that Herrmann earns standing ovations from her audiences while advocating to make life miserable for most of the german people. It is some kind of a sect, a delicate mixture of the “Wiedertäufer” (a german protestant sect from the 16th century), the Khmer Rouge and Jim Jones” “Peoples Temple”.
    It is easy to see that this will not end well.

  31. Altandmain

    Germany is governed by a group of politicians that are captured by the upper middle class and by the US. They’ve betrayed their own working class and indeed, their own long-term national interests.

    They waged class warfare at home and tried to wage a proxy war abroad to do what the Third Reich failed to do, steal the resources of Russia.

    It has all backfired. The Germans and the US both underestimated the resilience of the Russian economy and its industrial production. Now a Ukrainian collapse is approaching. This will ultimately leave Germany as a much poorer nation and quite possible bring an economic crisis in the whole EU with it. Either that or they break up with the US and form a rapprochement with Russia and China.

    German’s post-WW2 prosperity was heavily based on Ostpolitik and also was reliant on the natural resources that came from the USSR and later Russia. German manufacturing at one point was world leading and highly regraded. Other contributing factors include the Euro, that made German currency weaker than had they kept the Deutsche Mark. Yet another of these is the exports to China and how the Germans were able to ride the wave with a rising China. There was also wage suppression within Germany, especially after end of the Cold War, but I don’t consider that a “good” thing.

    The parts that were favorable to Germany are gone. Chinese manufacturing is now advancing in quality and looks like it is already surpassing the Germans in many regards, at much lower prices. Soon, China will not be importing as many German capital goods, and that’s assuming the Germans aren’t dumb enough to fall in line with the US sanctions. Cheap energy is now gone, as the conflict with Russia and their desire to steal Russia’s natural resources has burned bridges there. It will need another new round of rapprochement on the scale of the Ostpolitik.

    With that comes a collapse in living standards. Political legitimacy comes with a high standard of living and as that inevitably falls, this will create a much bigger crisis for the existing Berlin regime.

    Ultimately, I see only one way out. A fading US hegemony and a 1991 moment that broke the USSR up, only this time breaking up the US and across the EU. By then, a much poorer and humbled Europe will be pleading desperately for mercy from the Russians and Chinese. It will mean rejoining the Chinese Belt and Road, although now Europe will be an economic backwater.

    Only then, with a new government that actually represents the majority of the German people, can the nation recover.

  32. .Tom

    This is very good. I have spent a lot of time wondering and talking to people about why Euro and especially German pols snapped to attention saluting Biden at the start of the war.

    There might be a lesson here from Obama. He was elected in a landslide to fix Bush’s financial crisis, discipline the banks and unwind the War on Terror and related legal changes. Why did he do the exact opposite? Because he identified more with the ruling elite (bankers, DC elite, CEOs) than with voters. They were the kind of people he aspired to be like and to impress and be among.Thomas Frank described it in class terms.

    1. chris

      From my trip to France last summer, and discussions with European colleagues this year, I think it’s all about control. The people who are currently in control cannot maintain their positions without this order and these enemies. What other enemy is there that can support the existence of NATO if not Russia? They can’t be against “Africa”. They can’t really sanction China or India. So it has to be Russia. Because the US is their friend. If Russia didn’t exist, they’d have to invent it. They almost have invented it because the version of Russia described in western media today is a creation of western propaganda.

      Also, my understanding is that the righteous EU is the narrative that eurocrats feed themselves whenever they’re reminded that the French don’t like the Germans. And the Germans don’t like the Italians. And the Baltics show you that Naughtzis abound in more than just Ukraine. The EU is the conceit that centuries of history and millenia of culture can be overcome by a few decades of law. The people who are pro-EU seem to believe more in the reality of homo economicus than humanity.

      1. AG

        Yet, what still puzzles me is that the attitude you describe, so smoothly is adopted and spread by MSM.

        And MSM is no just a word. Those are thousands of reporters and journalists with private lives, convictions, families, friends, an education, critical thinking even (?) – I know a few of them. They are not all idiots. But the closer they get to reporting about power the less smart they turn out to be.

        Despite knowing my Chomsky well I do wonder how this could happen. I mean what we have been witnessing for 2 years was and is insane.

        1. .Tom

          This comes back to class interest. The ruling elite has a minion class and all of the MSM (CNN, NPR, Fox News, all of it*) is staffed by that minion class. Getting a job in there as a young independent thinker will lead to alienation, cognitive dysphoria, or adaptation. I have heard testimony from young journalists on the Blocked and Reported podcast describing this anguish and fear.

          * You can tell if an organization is inside or outside by its behavior on enforcement of doctrine, e.g. the excommunication of heretics.

          1. Karl

            I believe in Hanlon’s Razor, which says “Never explain a phenomenon by assuming malice when stupidity is sufficient.”

            I’m not sure the insanity we see in Germany can be explained by “interests.” Surely the PMC and wealthy classes can see what’s going on and are appalled by the implications for the future of Germany.

            I think we are on stronger ground considering psychological factors. This may have more to do with collective unconscious bias. Barbara Tuchman describes this well in her book from the ’70’s “March of Folly”. Eric Fromm describes how smart societies can do stupid things (e.g. march to the drumbeat of a nuclear arms race) in “The Sane Society” (I believe from the ’60’s).

            Dysfunctional biases can become catastrophic when one segment of society, and one viewpoint, has undue influence. For example, I think it’s clear that most “boomers” in the U.S. leadership class are still very much in thrall to the Cold War mindset of the ’80’s. This mindset is further distilled in the main institutions of academia and the military that breed “experts” on foreign affairs. Perhaps this is what Connor is getting at in his discussion of the EU leadership class, but it’s not about shared class interests as opposed to deep-seated biases. I’m not a European, but I wonder if most of Europe’s leaders–again, an older demographic– are just plain stuck in the post-WW II “Russians are barbarians, Americans are friends” trance. Of course these biases are admittedly rewarded by lucrative promotions but I think this is just how bias is self-selecting and self-amplifying. The bias comes first, then the rewards.

            This would argue that, in a world of rapid change, older leaders with obsolete generational filters/biases can lead us all on a suicidal March of Folly. It’s happenned so many times before in history.

            The biases Tuchman and Fromm depended mostly on the perceptual distortions created by existential fear. The Catholic Church’s response to the Reformation and the U.S.’s response to Vietnam are two of Tuchman’s examples. The Nuclear arms race is Fromm’s.

            Our leaders are focused on the wrong existential fear. They should be focused on Climate Change. That requires a world that can cooperate, not wage wars. The latter delays and worsens the former.

            1. Karl

              I’ll provide one more example from recent news: Biden saying we need to keep funding the war in Ukraine because otherwise Russia will march on into the Baltic States and Poland. Is this a reasoned assessment, or just an article of faith, a faith formed in the ’60’s during the Vietnam war, namely the “Domino Theory”? A theory that subsequent history proved false…. A theory that the current MSM is naively accepting as “obviously true” again.

              When someone says (as Biden is) something is “obviously true” they are disclosing an article of faith, i.e. a bias. Like all faith propositions, it tends to be very deep in the gut. It’s the sort of faith that leaders will send young soldiers to die for.

              Another example is when a leader says “we believe in a rule based order.” He’s not necessarily lying. Many articles of faith are not examined.

              Not all such professions of faith are sincere, of course. Biden always professed a deep, faith-based, opposition to abortion until he ran for President early in 2019. Suddenly, his 40-years of public pronouncements of his “deep” Catholic faith went out the window. He changed his mind. And he got away with it.

            2. AG

              Both phenomena I believe share in on the situation: conviction and political/economic interest.

              Some in fact believe Putin is evil etc. Others know that it´s an orchestrated manipulation, not least because they are part of that process.

              If NATO launched its Strategic Communications unit “Strategic Communication
              Centre of Excellence” (StratCom COE) in Riga in 2014 focusing mainly on RU and ISIS that could not take place without understanding what is really happening.

              After all you have to know that you are about to manipulate the truth before enacting the manipulation.

              Naturally you will need actors aka politicians who will sell the message in public. And some of them have to believe the lies in order to be able to sell, others can do without that (Stoltenberg lies knowingly e.g. but with some deficencies in his performance. Biden believes his nonsense mostly as you correctly point out. Albeit he “once” knew the truth but forgot many decades ago.)

              Which type is worse remains for everyone to decide.

              But to pathologize this on the structural level as Fromm does makes it in effect un-political. Which is one reason why Fromm´s writings by genuine Marxist groups in Germany would not be regarded as the “real” thing in the 1970s.

              You don´t go to war without some really vested economic interests. In how far this is applicable to Germany too now is of course more complicated.

              p.s. important point you´re making with bringing up Domino-Theory-Think. Should be expanded on I think.

  33. ChrisRUEcon

    Thanks for this article. I guess the “bag men” (and women) are no longer just a sub-Saharan African thing, eh? I do hope the parlance of geopolitical reporting will change accordingly – well besides @gathara (via X/Twitter).

    It’s been a long winding road to falling from grace for poor Deutschland. But that’s what corrupt neoliberal leadership will get you. I’m going to bring back this banger from 2012 to bear testament to the “class divide” being a thing of some tenure now:

    The dark side of Germany’s jobs miracle (via Reuters)

    The money quote:

    The number of full-time workers on low wages – sometimes defined as less than two thirds of middle income – rose by 13.5 percent to 4.3 million between 2005 and 2010, three times faster than other employment, according to the Labour Office.
    Jobs at temporary work agencies reached a record high in 2011 of 910,000 — triple the number from 2002 when Berlin started deregulating the temp sector.
    Economists say it was Schroeder’s intention to bring about a rapid expansion of these sectors in order to get the poorly-qualified and long-term unemployed back into the workforce.
    In 2005, Schroeder’s last year as chancellor, he boasted at the World Economic Forum in Davos: “We have built up one of the best low wage sectors in Europe.”
    Seven years later, employers praise the reforms that led to the growth of mini-jobs and temping.

    America applying the coup de grâce is really the last of the veils being lifted. Davos Man has been running the show for a long time now

    1. AG

      On wealth structure in Germany as reported by German state TV ZDF, today:

      “(…)At the beginning of the 1990s, the average wealth of the richest ten percent was 50 times higher than that of the poorer half; now it is 100 times higher. According to estimates, the rich own more than half of the wealth. The share of the poorer half of the population, on the other hand, has hardly grown at all in the last 30 years. If pension entitlements are excluded, they account for between one and three percent of total wealth in Germany, depending on the calculation method.(…)”

      The reason for the report was the news that apparently Germany´s 237 billionaires probably own 500bn Euros more than was known.

      see report:
      “New data on billion-dollar assets:Germany’s super-rich even richer”

      p.s. And the same MSM as ZDF is capable of reporting over several days about an alleged state crisis due to 60 bn. Euros missing? Schizophrenic.

  34. VietnamVet

    This is excellent, shedding light on a dark subject. What North America and Europe have in common is Plutocrats, who have not changed one wit in the last thousand years. They are not willing to give up the power to subjugate Greece without a Wehrmacht invasion. Except that in Libya, Syria, and Ukraine, during the Biden/Obama Administration, pure greed took over. Russia has cheap energy. Better that Western corporations control Eurasia’s resources than Russian oligarchs. The prodding of the Russian Bear commenced WW3. There are many parallels between now and WWI. The main similarity is the arrogant incompetents in charge just several generations removed from the last bunch. “They learned nothing and forgot nothing.”

    Russia, China and Iran broke free.

    At best, the world signs an armistice, ends globalization, and turns back to the multi-polar 1970s with energy shortages, sovereign nations, and guarded DMZs. North America and Europe will descend into Dystopia if democratic republics are not restored. The current divide and conquer, Neo-colonial system will expand the targeting the women and children across the world to increase profits (and spin out of control) unless Peace is given a chance.

  35. AG

    And since this is a new item from German daily BERLINER ZEITUNG:


    “German ambassador surprises in Moscow: U-turn towards Russia?
    Count Lambsdorff says in Moscow that there must be a peaceful solution in Ukraine. Russia is responding to a possible rapprochement with a dual strategy.”


    The article says that the usually extremely hawkish Lambsdorff suggested better relations again.

    In how far this is beyond antics I have no clue. But if there is anything to it, it´s of course about energy for Germany (and perhaps a Gaza deal via Moscow?)

    Possibly using the election year of the US, which could offer more space for the Scholz administration.

    p.s. the article contains a telling passage revealing the state of German media propaganda:

    note the last sentence:

    “(…)Russia began its war of aggression against Ukraine in February 2022, which has since claimed tens of thousands of victims, including many civilians. However, Moscow blames the West for the war. In Russian propaganda, the main reason for the many victims is not its own attack, but rather the Western arms deliveries to the invaded Ukraine.” The mention of the Russian position is a novelty in dpa reporting. (…)”.

    dpa being the biggest German news agency and at the heart of German biased media madness.

  36. Uwe Ohse

    While i do concur with many of your points, i don’t share your opinion wrt CDU:

    Readers, please correct me if I’mm wrong, but wouldn’t a CDU government be largely a continuation of current policies.

    It wouldn’t. Any CDU government, right now, would be led be Merz, and it seems he hasn’t learned anything in the last 30 years. Every bit of policy he announced amounts to a doubling down of past mistakes, most of the time with the visible goal of rolling back the few (i mean it) successful policies of the Merkel and Scholz governments.

    Besides all that: i can’t even remotely imagine that any party would want a new election right now. So we are stuck with the current misery for a long time.

    The prognosis map shown in the article looks impressive, but it’s a europe parliament prognosis. It doesn’t reflect what would happen in a german election.
    There is a german word i don’t know how to translate: “protestwahl”. It means voting for someone or some party in an election knowing that this vote has no meaning, to show your regular voted parted that you could vote different. European parliament votes are often used for that.
    I suspect that’s what is going on right now.

  37. AntonioB

    I read the article here after I found it elsewhere.
    So, yes, this is well known: german elites are americanized since long, since reunification. But also anti-russian hatred is a staple of germanic mind. Dutchs, Germans, Scandinavians, Anglo-Saxons have a strong anti-Russian tropism. Germany doesn´t need USA impetus in order to want to kill Russia, it tries to do it since the 13th century. The other way around Yankee elites are very similar to Nazists.
    These people are a disappearing specie but their hyperbolic arrogance makes them blind.
    Anything pale skinned blondinish is going down the shithole of History, included the author of this article.
    The worsts are maybe the Eton educated United Kunts of England and etc.
    Yes well…

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