Germany declares (economic) war on UK

Discussion in 'Economics' started by Blogg, Sep 23, 2009.

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  1. Well at least in the view of Ambrose Evans-Pritchard. However, remember that the Germans and the French have been trying to curtail the activities of the UK Financial services industry for many, many years past.

    And we have now effectively ceded control to an EU super regulator that will dance to the tune of Euro politicians. Wonderful.

    "If there are any German readers of this blog, I would like to know what they think of the latest breath-taking provocations of German finance minister Peer Steinbrück.

    Remember that Herr Steinbrück is not a journalist, pundit, or back-bench maverick. He speaks officially for the German government and for the German nation on the international stage.

    Every assertion that he made about Britain in his interview with Stern is either factually wrong, or such a serious distortion of events that it amounts to a smear. Furthermore, it was quite threatening.

    What he said, in effect, is that Germany will marshal its forces to ensure that a chunk of the British economy is shut down - whatever the social consequences. This is the closest thing I have seen to a declaration of economic warfare in Western Europe in my lifetime.

    “There is clearly a lobby in London that wants to defend its competitive advantage tooth and nail.”

    Stern said that he sees “dark powers at work” in Britain. He accused the UK government of “doing its best” to sabotage stricter financial regulation at the G20 in Pittsburgh.

    This resistance will be crushed. “We WILL effectively change the rules on the financial markets. Politics is sometimes like a locomotive which comes slowly up to full speed.”

    “The British financial industry gains 15 per cent of the gross domestic product, in Germany is it six per cent.”

    Britain is out of step with the rest of Europe in trying to keep this “advantage going.” It must “share the burden” of the financial crisis in the form of a tax on exchanges.

    “The central question is who pays the bill? It cannot be that the citizens of Europe should carry the whole cost.”

    Britain was having “an especially hard time, to put it politely”, agreeing to tougher regulation of hedge funds.

    Now, I understand that this Westphalian bully is fighting an election on Sunday, and may well be forced out of government. But let me state a few points.

    1. Britain is not blocking the G20 deal on bonus caps for bankers. It broadly supports the idea. It backs the push for greater transparency.

    2. Hedge funds had almost nothing to do with crisis as agreed by the Turner Report and the EU’s Larosiere Report. They are already well regulated by the FSA in London (unlike New York, where they are not regulated). The FSA’s hedge fund code is generally viewed as a model for others.

    3. UK financial services are 7.8pc of GDP, not 15pc.

    4. German Landesbanken and mortgage lenders got into trouble on their global ventures because they tried to extract extra profit and were badly regulated by BaFin, the Bundesbank, and Mr Steinbrück himself. Their use of Irish SIVs, etc, to conduct off-balance-sheet speculation is the direct result of bad rules (Basel etc) drawn up after earlier crisis - a perfect example of how knee-jerk regulation by ignorant populists backfires.

    5. Mr Steinbrück is the arch-cover-up artist himself. He has been resisting - “tooth and nail” - a transparent stress test of the German banks. This comes despite a string of criticisms from the IMF, OECD, and European Commission. It is blindingly obvious that he has swept the problems under the rug until after the election.

    6. Britain is in considerable trouble right now - entirely of our own making, and caused by a decade of inept government, fiscal incontinence, and excess debt. Is that a moment to kick us in the teeth? One reason why the budget deficit has exploded to 13pc of GDP is that the collapse of City profits has cut a huge hole in government revenues. There is already a brutal adjustment underway. What is the benefit of further contracting credit in the middle of severe downturn. The man is mad.

    7. In terms of morality, I don’t see much to choose between Germany’s car industry (with its stress on high-powered engines that consume scarce resources, and pollute) and the City of London. They are both core national industries, pillars of our respective economies.

    8. Angela Merkel shares the British view that “binding powers” for the EU’s new trio of super-regulators is a step too far, and a breach of Germany’s constitution.

    If a British Chancellor gave an interview on behalf of the British nation saying the German car industry should be shrunk massively, it would be viewed as a gross and gratuitous attack on Germany.

    Need I add, yet again, that the banks did not cause this global crisis. Governments around the world caused the crisis by forcing down the price of credit (Greenspan, Bank of Japan, and ECB on short rates: China et al on long rates, by flooding the global bond market) far too low for many years, encouraging debt. Banks were the instruments, not the cause. That is an elementary point that many people - including Mr Steinbrück, obviously - still fail to understand.

    The Westphalian bully likes taunting Britain. He made waves earlier this year mocking the “crass Keynesianism” of Gordon Brown at the most dangerous moment of the crisis. This prompted a formal protest by the British ambassdor in Berlin.

    Mr Steinbrück subsequently engaged in a great deal of crass Keynesianism himself, as well as outright protectionism through the Deutschland Fund. If he remains in office, he will soon have to deal with the second leg of the German banking crisis that he has so artfully dodged until now .

    We must resist Schadenfreude when that moment comes."
  2. Welcome to the 4th EU Reich.
  3. Biped

    Biped LE Book Reviewer

    We shall fight them in the beer halls, we shall fight them in the exchanges . . . .
  4. Prescott getting into the spirit of things!


    I for one bow to our new German overlords, and look forward to the Trains running on time.
  5. Ambrose Evans-Pritchard is a nutter. If anything he said 8 months ago had any link to reality, we and most of Europe would be eating tree bark by now. I'd take anything he takes with enough salt to grit the Antarctic.
  6. Ah a use for the trident before it binned I new just new the dear leader had a cunning plan
  7. Ah, so Steinbrück never gave such an interview and Stern just made it all up then?
  8. I'm sure he did, but Pritchard has used selective quotes, shite WW2 innuendo ("This resistance will be crushed") and framed the whole thing to point to the idea that fritz is trying to destroy us.
  9. To be fair, our financial regulation system is not exactly the gold standard!

    (clearly I am a fifth columnist :twisted: )
  10. Well between them and The French, the EU seems an efficient way for them to undermine a powerful competitor.

    The mask is beginning to slip, exposing the true project beneath the smiling facade.

    What they failed to achieve militarily, they seek to achive through stealth and deceit.
  11. Ah Jaysus IVV, now you're taking the piss 8O ,the UK would have add more influence then the French in the EU if you wanted it, lot's of countries shared the economic philosophy of the UK, the political ideals ect, especially, us, the Dutch, Danes and alot of the Central Europeans (BTW Poland and the Czech republic hate it if you call them East Europeans :( )
    But you don't, the UK sit's on the sidelines and complains, and then wonders why it moves on without them.
  12. He's a politician playing to the gallery. He knows damn fine that the bloke in the street blames the financial sector for his economic woes and anything that restricts their power to fuck it up again will go down well.

    As to Britain's FSA being a model for others? A self-licking lollipop always finds itself rather sweet.
  13. Off topic, but where The_Coming_Man, he'd usually be here for this sort of topic, or the EU referendum one.