Germany's Virtuous Circle Takeover Of Europe

Tyler Durden's picture

German finance minister Schaeuble just explained, in a seeming effort to assuage rising fears that the one core nation left in Europe will choose the game-theoretically optimal first-defection wins strategy, that "Germany benefits from the Euro more than others." Indeed it does; as German firms are buying up strong competitors, clients or suppliers at a time when those companies are struggling to stay afloat through years of recession in their home markets and as shaky banks restrict access to credit. It appears that the slow-and-steady bloodless invasion of Europe can be summed up by the following virtuous circle of Germany's hidden strategy. Of course, as Schaeuble explained later in his missive, "it is nonsense" that Germany wants a German Europe and that the Euro exchange rates is "Okay" for Germany.



As Reuters notes,



Strong companies are attracting interest among the "Mittelstand", medium-sized and often family-owned manufacturing firms to which Germany owes much of its exporting prowess.


That is in large part due to the economic and labour market reforms bailout countries have been forced to implement - making it easier to hire and fire and reducing wage costs - which less stricken countries such as France have been slower to embrace.


"For financially strong German Mittelstand firms, the crisis is turning out to be an opportunity. They are increasingly active with acquisitions in Spain,"




German firms are buying up strong competitors, clients or suppliers at a time when those companies are struggling to stay afloat through years of recession in their home markets and as shaky banks restrict access to credit.




What makes southern Europe alluring is the benefits from tough austerity measures and reforms that euro zone policymakers, led by Germany, have pushed for in return for financial bailouts.




"The reforms Germany is pushing for there will massively strengthen these countries' competitiveness compared to Germany. It's not a surprise German companies say Europe is interesting."




"More often than not the companies have known one another for a long time, and the southern European ones want to be bought. They are the ones taking the initiative because they need money."

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zorba THE GREEK's picture

I hear the Germans are building camps for the poor and homeless Europeans.


Doubleguns's picture

Those camps have large ovens for cooking many loves of "bread". 

Rustysilver's picture

From my childhood, I can tell you that the camps are already there in Central Europe.  Currently, they're designated as museums. but the railroad tracks and roads are there.

fx's picture

WTF, you know even less than nothing. The real camps, working ones! run by uncle sam, are right here in guantanamo, certain eastern european countries and africa.

McMolotov's picture

Arbeit macht frei, Eurobitchez.

bank guy in Brussels's picture

Germany itself is apparently evading and defaulting on its own heavy debt obligations, while pompously saying 'debts must be paid' by Southern Europe

Seems the Germans are absolute hypocrites about debt and repayment, and are in fact serial debt evaders and defaulters

Legal challenges underway by Greeks and others regarding Germany's debts on which it has schemed, evaded, and finally refused to pay

After World War II, under US pressure, other European countries postponed the heavy war debts of Germany so Germany could rebuild in the 1950s ... although Germany promised to pay after Germany was re-unified

The argument was that forcing German to pay its debts would stifle growth in Germany and Europe

Then after the fall of the Berlin Wall and the 1990 German re-unification, the Germans refused to honour their legal duty to call a conference about arranging repayment, because they had so many re-unification expenses, and the debt with interest from World War II was so huge

Same argument again, paying German debts would stifle growth in Germany and Europe

But it seems that, legally, Germany still owes debt and reparations from World War II, that they have not paid

For example, a big debt to the Greeks and the Greek government, who were massively robbed by the Nazis, stolen gold and much more

Now Germany says its own unpaid debts are 'ancient history' and should be forgotten, but they want Southern Europe to totally pay up right now to German bankers ...


From John Ward's article on this:

« ... after the second world war the Americans imposed the London debt agreement of 1953 on their allies, an exercise in debt forgiveness to Germany on the most generous terms. West Germany’s economic miracle, the stability of the deutschmark and the favourable state of its public finances were all owed to this massive haircut. But it put Germany’s creditors at a disadvantage, leaving it to them to cope with the financial aftermath of the German occupation.’

The London debt agreement deferred settlement of the reparations question to a conference to be held after a future German reunification..which most people thought would never happen. But ever since it did happen in 1990, the Germans have steadfastly refused to honour the settlement.

In 1990, the Germans argued that any plausible deal would exceed the country’s resources, and that continued financial co-operation in Europe instead would be infinitely preferable. Waydergo: wouldn’t it be just peachy if the Germans now returned that favour in relation to Greek debt? Would a little smidgen of Berlin forgiveness and cooperation in relation to ClubMed be appropriate here? »

Joe A's picture

A secret Greek government report on Greek claims on German WWII reparation recently 'leaked'. And the Greek government wants to persue this matter. Mutti is not amused. Now, why would the Greek want to bite the hand that feeds? The Greek for sure got a raw deal when it comes to WWII reparations, as many other countries.

Germany went from being the sick man of Europe to the one calling the shots and buying up the competition. Was that conspiracy theory of German industry's goal right after WWII to create and dominate the European economy true after all?

seneg's picture

Páthei máthos amerikanós. Your time to join us is close, we are ready for you... ;-)

Joe A's picture

They are called Camp Spain, Camp Greece, Camp Ireland, Camp Portugal and Camp Cyprus. Soon to be followed by Camp Italy.

TheGardener's picture

Reuters depicts Germans as the new Jews. How they took advantage of this and that, straight out of Nazi propaganda.


The German Mittelstand is about as cornered as it gets.

And driven out, assets seized or "Europeanized",
taxed to death, foreign accounts seized by opportunistic
gnomes as last time, and two generations worth of wealth
wiped out once again.

fx's picture

Exactly. As everywhere else, it is not "germany" that benefits. It is the large banks and multinational corporations, along with the totally corrupt and often outright clueless 'political elite'. The lower and middle stratas odf society pay the bills - everywhere. Putting 'nations# against each otheris the oldest trick in the book! Your major enemy almost always sits in your own country!

ParkAveFlasher's picture

Failing that virtuous circle, tanks.

Jack Napier's picture

Virtuous circles and vicious circles are the same thing. It's a matter of perspective. Self perpetuating, until it isn't.

MythicalFish's picture

The right arrow from the blue box does not make any economic sense whatsoever. But who cares, it sells newspapers.

Mercury's picture

"More often than not the companies have known one another for a long time, and the southern European ones want to be bought. They are the ones taking the initiative because they need money."


The profligate become poor and are forced to sell themselves to the productive and the prudent.

 Pass the smelling salts, I feel weak with outrage at the social injustice of it all.

Dr. Engali's picture

Somewhere in the 9th plain of hell Hitler is asking himself "Now why didn't I think of that?"

ParkAveFlasher's picture

Hitler's war machine was tooled by these very means, before Hitler ascended completely.

prains's picture

and Cheney on the 10th plane is laughing at him going, "hahahah, I did, hahahahah"

centerline's picture

Globalization is a bitch, ain't it.  Natural differences between regions, resources, people, religions, etc. all taboo subjects.

Doubleguns's picture

German language to become EU's offical language next.

yogibear's picture

It's been dying. One way to revive it is to take over all the countries and force it on them. 

Hitler needed a Merkel.

TheGardener's picture

Rather official Denglish.

One more reason to call this experiment off.

Kirk2NCC1701's picture

Vot!?  Chermans are akting like Free-Market Kapitalists!?  Schweinhund!  Who zoo zey sink zey are?  Goldmann Sachse?

Aegelis's picture

Looks like capitalism to me.  Are we now getting upset because we're not winning? 

harami's picture

You get what you ask for.

Although no doubt the Free Market Army will stampede through any moment and exclaim "THIS AIN'T REAL CAPITALISM (because I'm not winning)!"

TheGardener's picture

Interesting comment : "THIS AIN'T REAL CAPITALISM (because I'm not winning)!"

Just like for the real revolutionist only the NEXT revolution is the REAL revolution .

Go Tribe's picture

Yep. What I'm wondering is why our companies aren't buying up those cheap assets?

orangegeek's picture

Buying companies that are good value.


Call me crazy, but I think they call that capitalism.

Joe A's picture

Buying up the competiton leads to monopolies and the forming of cartels and Adam Smith already said that that is dangerous to free market capitalism.

Go Tribe's picture

obama's your man, then. He'll tell us all just how big we can get before we're a monopoly. Those poor Greeks and Spaniards, we must allow their status quo for the good of justice.

Haager's picture

Sorry guys, I hate to repeat it, but now the meaning of "You didn't build that" becomes clear.

EclecticParrot's picture

Holy Christ, what a load of crap.  First they hack AP's Twitter account then, apparently, MSNBC steals the Tylers' passwords.

Guess it's back to getting our reality from The Onion ...

falak pema's picture

Pax Germania and the Euro myth. I hope I am wrong but this is what the "virtuous circle" points to.

It was not the mission statement of Europe. The mission statement of Europe was :

1° increase common market and trade, to avoid recurrent wars over centuries thru competitive devaluations by creating interdependence.

2° Reinforce integration by creating common money where the stronger and the weaker were partners, the stronger creating conditions to bring up to par the weaker ones thanks to the Euro. Thats solidarity. All for one one for all. 

3° Schroeder proposed more economic unity to France in 1999; but they, the other pillar of Eurozone, refused. It created the break : two seperate business models that have caused the north-south divide hidden under the common rug. Potential dynamite. 

Now post 2008, in this crisis of capitalism, the dynamite exploded and its every man for himself; the strong feed off the weak. No solidarity in Merkel doctrine of 2009 : nein, nein, nein! 

Virtuous circle has become vicious circle.

Its time either to go back to solidarity and eurobonding to get ECB to lend DIRECTLY to sovereigns  at low rates or its time to shelve the Euro; now not life saver but more slave chain.

The future comes back to the core two : Germany and France. Its make or break time. Solidarity or Ciao! 

Treason Season's picture

 falak pema = bankster shill

Cliff Mclane's picture

This pretty circle shown above fails to mention that no one must buy German products. Neiter Star-fleet nor "Q" will vapour you if you buy in France, Italy etc. Could it be (with Ludwig von Mises) that people have individual goals and values when deciding what to buy? In 2005 Germany was the ill man of Europe because wages were too high, products too expensive. Then the unions accepted lower wages and longer working days - German companies sold cheaper products. Nothing magical about that.

Oh no, I forgot: German tanks stood at the outskirts of Rome and Paris and Madrid and were ready to open fire. Remember Legion Condor? Some knowledge about recent economic history should be required before creating such nonsense.

Ourrulersknowbest's picture

Simple.ive said it before.STOP BUYING GERMAN PRODUCTS!
Lets see how that works out for them.there is a slow insidious creep to achieve what they couldn't before twice.the stubborn belief that they are the TRUE soul of Europe.joyless bastards.
And before anyone tells me that they are fiscally prudent and a shining light to the rest of I say BOLLOCKS to that.those pious fuckers broke every rule in the Maastricht treaty a long time ago.

epwpixieq-1's picture

"strong competitors, clients or suppliers at a time when those companies are struggling to stay afloat through years of recession in their home markets" - a nice marketing touch.

The truth is though, that there is nothing like a strong competitor that struggles, it is a weak competitor.

I am wondering, why these "strong" struggling competitors do not sell as much as  the German companies.

Everyone who is from Europe, knows that a product of one's home state/country is preferable ( an in many cases cheaper ) than that of a German competitor. With this knowledge, how come, people are choosing to by the German ( mostly, if not solely, engineering manufactured ) products, one has to wonder healthfully.

I am not saying that the German industry is a saint, I am far away from this thought, but to blame the success of the German engineering and manufacturing discipline on some kind of conspiracy, that is quite a stretch of the imagination.

As any business though, ones opportunity is presented, it will be used in the best way, and in this particular cases, taking over the weak/inefficient or imprudent competitors.

Rustysilver's picture

Did West Germany do a M&A thing with East Germany a while back.  So much less money and you don't need diesel for the Panzer.

Sauerkraut-Opinion's picture

cit.: "Germany benefits from the Euro more than others"

For many Germans the biggest joke ever: Why do (...beside the usual, manageable elitist group of German & international industrials/entrepreneurs, bankers and major shareholders....) average employees profite when exporting wealth against junk bonds and never-pay-back-target-demands - subsequently socialized by the German folk? When giving away the DM (...without any national referendum - the persons in authority knew why...) against this weaker Ponzi-Euro, - loosing buying power and awaiting hyperinflation? Between 2000 -2008 almost two thirds of the German savings left Germany - a big part towards countries in process of debt funded growth, new Euro-tax havens and alleged interest paradises. The consequence were 7-8 years stagnation in Germany, declining real-wages and pensions (...until today), slowdown of consumption and finally this unbeloved reforms called "Agenda 2010" and "Hartz-IV". Did German employees complain in Athen, Rom, Madrid, Lisbon, Nikosia, Dublin or Ljubljana? Did we ask for communitarisation of government- or bank-debts? It didn't happen even when Lehmann crashed.

But one thing is true: The Euro was precondition for long term, ongoing wage dumping and cuts in social services in Germany. Obviously this Ponzi-Euro carries to faces: One for average employees, one for industrials, bankers, hedgefonds and major shareholders (...worldwide).

When southern Europe started the biggest credit-party ever due to previously unthinkable low interest-rates, higher baorrowing capacity & credit ratings (...courtesy of the new currency-backbone called 'German Economy' in combination with "too big to fail" ensured by the new backstopper & scapegoat called 'German taxpayer'...) and a stronger currency at hand, some governments (e. g. Athen) blew up the number of government-employees, frequently granting excessive remunerations and absurd premiums to Community staff, e. g. ( Greece expenditures for the public sector exploded between 2000-2008 more then 150%...), blewing up the Army, early retirement for almost 600 different profession branches. At the same time no working tax offices, fakelaki mentality, corruption, shipowners reveling tax-exemption status, islands of allegedly blind people encashing pensions and a six-figure number of goast retirees etc...etc.... Delivering wrong numbers they forced themselves into the Euro - until the middle of the 90th inflation up to 20% was standard.
In many Mediterrean countries annual inflationary adjustments plus extra payments for pensions, broad subsidies for home-builders (e. g. Spain: 83% ownershiprate compared with 43% in Germany) - even when the real estate bubble was obviously, quirky accountancy and rating rules, salaries growing much faster than economy (only 10% of credits were invested in direct investments., rest consumption), e. g. in Spain privat debts almost 3-4 times higher than in Germany.

E. G. Greece received until today aids and guaranties at a hight of around 500 Billion Euros - for a country with 11 Million people producing olives and goat cheese, avoiding taxes.. April the 23th of 2010 Giorgos Papandreou requested on-camera for EU-money - in a beach dress during his visit on a holiday-Island.

The same politicians demand now - without international treaties - 160 Billion Euro for war reparation from a country stepping into the breach for half Europe. Apart from that Germany has settled it's debt on many occasions. The now active population in Germany was involved in WW-II as much as the today' active generation in Greece: Namely zero. It would be the same if Mahmud Ahmadinedschad were requesting Athen for war-reparation out of the epoch Alexander the Great. How non-chalantly must politicians in Athen be?

Last not least: What about Italy leading the Greek intervention in 1941?

It never can be a justification or even an attempt for plundering, killing and persecution of Balkan Jews anyway - but allow following short remark just to remember a little bit the previous history of the Balkan war: German troups came - more reluctantly because launching their brutal campaign to Moskau - to support Italian troups struggeling on their way to Athen. The quite likely alternative for Greece would have been an occupation by Russian troups.
Greece took part in war when offering airfields to British troups to facilitate attacks against Italian cities and oil-fields in Romania. Greece also suffered damages due to an intern civil war after initially expelled British troups came back respectively German troups left. War is cruel anyway.

GoldIsMoney's picture

It's astonishing how less you know about Germany. Well maybe it's planet US for you?