Germany May Be A Bigger Threat To The European Union Than Brexit

Tyler Durden's picture

Submitted by John Mauldin via,

Two polls were recently released that call the European Union in question.

A poll in Italy reported that the Five Star Movement (a populist political party that wants to hold a referendum on whether Italy should remain in the European Union) was the most popular political party in the country ahead of local elections scheduled for next month. 

On the same day, British researchers who surveyed nine EU countries reported that 45 percent of respondents believed that their country should hold a referendum on whether to remain in the EU.

48% of Italians want to leave the EU 

Reuters tried to explain that political scandals, which have undermined public confidence in current Prime Minister Matteo Renzi’s Democratic Party, affected the poll numbers. But this is Italy we’re talking about, the same country that brought us Silvio Berlusconi. 

The country is no stranger to political scandals. A few instances of corruption would not be enough to make an anti-establishment party like the Five Star Movement as popular as it has apparently become.

The problem in Italy is economic. Unemployment in at least four of Italy’s southern provinces is over 18.8 percent, and in the other southern provinces, it is between 12 percent and 18.7 percent. And Italy hasn’t yet solved its non-performing loan problem.

Two simultaneous phenomena are occurring here. The first is disillusionment with the Italian government. What was an economic problem has become a political problem, and since Italy is a democracy, its leaders can be voted out of office. The next general election is not until 2018, but if developments continue to unfold in Italy, the situation is only going to get worse for mainstream political parties.

The second, deeper question is whether Italy wants to stay in the European Union. A Euroskeptic party is becoming the most popular political party in the eurozone’s third-largest economy. The rise of euroskepticism manifests itself in the polls, too—58 percent of Italians wanted a referendum on EU membership, and 48 percent would have voted to leave the EU. 

In France, one of the twin pillars of the EU, 55 percent of survey respondents agreed a referendum should be called, and 41 percent said they would vote to leave.

Brexit debate adds fuel to the fire

Most debates over Brexit have revolved around potential consequences for Britain—whether Scotland might push for another independence referendum and join the EU on its own terms, or whether and how much (in terms of money and jobs) the UK would lose as a result of a decision to exit.

What was less addressed, however, is how Britain’s stand against the EU and the public debate is dividing the rest of Europe. Prime Minister David Cameron negotiated a series of exceptions early this year. Even if the UK remains, it will have a new set of understandings with Brussels, and other countries may follow its lead.

If Britain leaves and doesn’t undergo an apocalyptic depression, poll numbers might begin to trend upward—and they don’t have a long way to go to become the majority in some of the EU’s most influential states.

Germany is a ticking bomb

At the center of the European Union is Germany whose export-dependent economy is gradually falling apart. (Geopolitical Futures, in partnership with Mauldin Economics, has published a detailed study of the German economy. Click here to claim your free copy). 

The German economy has thus far been able to avoid the crisis of the exporters that has affected every other major exporting country in the world - from the producers of manufactured goods like China and South Korea to commodity exporters like Russia and Saudi Arabia.

The US Treasury Department recently announced that the US would monitor China, Japan, Korea, Taiwan, and Germany for potential currency manipulation. The report noted that Germany has built up a significant bilateral trade surplus with the US, in addition to holding the second-largest current account surplus in the world, at approximately 8.3 percent of GDP.

It isn’t currency manipulation that has put Germany on this monitoring list. It is the fact that European and Chinese demand for German products has fallen. As a result, the US has become the destination for Germany’s exports in order to make up the difference. Export to the US, however, is a Band-Aid on a deeper wound.

There are a number of factors besides exports that go into Germany’s current account surplus. Germany has become a significant creditor. Its net foreign assets rose from almost zero in the 1990s to around 40 percent of GDP by the end of 2010, according to economic scholar Jörg Bibow.

Interest rates are low, and German banks are viewed as a safe haven in the European Union for stashing money. But since Germany is a creditor, many of the assets on German books are the unpaid debts of other eurozone countries. That means Germany is deeply exposed to a eurozone that still has not meaningfully recovered from the 2008 crisis.

Account surplus is usually seen as a positive. But if Germany has a surplus of 8.3 percent of GDP, why not use that surplus to stimulate domestic demand? Germany must be either unwilling or unable to use the surplus to stimulate domestic demand. This is in part because Germany is a creditor and invests abroad and in its own banks and companies. 

And this gets at the root of the entire problem. Germany exports almost half of its GDP. Germany imposed austerity on the EU after 2008, which has resulted in stratospherically high unemployment rates in southern Europe. 

Demand has not returned to pre-financial crisis levels. Germany has been able to skirt the crisis while most of Europe is either still suffering or is in the doldrums. There are limits to US demand and its tolerance of German exports. 

All of this offers different unique prisms through which to see how the European Union’s connective tissue is fraying as the bloc’s economic logic becomes increasingly illogical.

Germany is the powerhouse of the EU and the fourth-largest economy in the world. But the truth is, the Germans are facing a profound crisis - and there's no way they can prevent it.

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mosfet's picture

Italy don't let the door hit you on the way out - and please take your clown Draghi with you.  Germany on the other hand is a moot point - there'd be no more EU without them.

Multi's picture

If Britain leaves the EU, there is still EU.  If Germany leaves in the other hand...

Troy Ounce's picture



How does a German open a mussel?

Manthong's picture

They German Bankers will be up Sh*t Creek when the Frexit and Italexit factions take over and stiff them.

It's a shame that the spirit of Leonidas did not inspire a Grexit with the Greeks early on (but it will happen eventually).

Haus-Targaryen's picture

Nothing will change until the entire system collapses.  Mark my words.


First collapse, then BREXIT/FREXIT/CREXIT, then chaos, then our overlords try and solve the problem with a world government.  


We should embrace the collapse, embrace the demise of the EU, the chaos is necessary to knock sense back into people, but we have to fight with everything we have against the incoming one world government.  


Pick your battels.  

Ghordius's picture

nothing is ever explained about that thing "the EU..." "...garble garble..." "... one world government"

it's an article of... faith. dogma. like "the collapse" (huge balls of fire, WWIII, whatever). some out of 5% of the world population believe in it, period

explanations are not required. rant end

John Kich's picture

This is Donald Trump's most shocking statement yet,

However the mainstream media isn't saying a word about it!

What are they really trying to cover up?

0b1knob's picture

So those southern states (Italy and Greece) want to seceed from the (European) Union?   Bring it on!

This is nothing that can't be solved by a 5 years civil war with a million or so casualties.  

Forward Soviet!

Tall Tom's picture






Do you have faith that they will have their Basel II reserve requirements at the June 30 close of business?

Troy Ounce's picture




Another one for my German friends:

What is the title of the smallest book in the world?

Troy Ounce's picture



1000 years German humor

OverTheHedge's picture

If we're being all anti-European, can I offer so.e of my favourite jokes.....

New World Chaos's picture

Maybe everyone will secede, and all the bureaucrats, bankers and migrants will be herded into Brussels.  There they can play out the inevitable final act of their collectivist nightmares.  Turn it into Reality TV.  Then nuke the site from orbit.


OK, I know this won't happen.  It will be civil war or civilizational death.

Amun's picture

"On the eve of the EU referendum, British media has even revealed an important fact concerning the EU's past which explains a lot about its present: the process of EU integration, from the outset, was coordinated by the CIA to create an anti-Russian geopolitical bloc in Europe. 

But the CIA did not build the European Union from scratch. The most important contributions were made earlier by the Nazis. From a geopolitical point of view, the Third Reich, with its occupied countries of Europe and satellite states, represented a version of "united Europe." Many Nazi achievements were later used by the Americans, which determined the aggressive anti-national and anti-Russian character of the modern European Union. 

German historians have repeatedly published the Nazis' documents containing plans for European integration. Gerhardt Haas and Wolfgang Schumann's collection of documents was released in 1972 in East Berlin, titled The Anatomy of Aggression: New documents concerning the military goals of German imperialism during the Second World War. This book primarily cited evidence of large-scale plans for the economic integration of Europe under the Nazi leadership in the interest of European financial capital. In particular, such plans were hatched in the Reich Ministry of Economics, the Reich Industrial Group, and the Reich Ministry of Foreign Affairs. Another German collection of documents on the relationship between the Third Reich and the process of European integration was released in West Germany in Munich in 1987. It was called Europe and the Third Reich and was composed by Hans Werner Neulen. It paid special attention to the political plans of the Nazi leadership to unify Europe. In 1985, Michael Zalewski, published the first volume of Documents the history of European integration, titled Plans for a Continental European Union: 1939-1945. It is not difficult to guess what kind of integration was at stake. "


Ghordius's picture

ah, the perspective of "80% of history is made out of WWII"

did you ever reflect on why the Nazis talked about the "Third Reich"? Or why so many europeans liked the sound of it?

it's a history of... eagles

specifically, the Roman Eagle, which flew for 1'000 years in western europe. and flew again, "gold with a sable eagle", when Charlemain founded the next empire, to last another 1'000 years

it's the same eagle that flies again... over Russia, double-headed, in that case. or Austria. and many other countries. Napoleon's empire sported it too

it's the same eagle that the US Founding Fathers adopted, and is sported on the Great Seal of the US, and various other places

history is slightly more then WWII, and Nazis, and yes, even the CIA

Ghordius's picture

"the aggressive anti-national and anti-Russian character of the modern European Union"

rubbish. evidence: Poland. strongly pro-national and strongly anti-Russian. further evidence: NATO. the Baltic Countries. Sweden, Norway and Finland

at the end, you can't have a club of countries that is strongly pro-Russian if some members are strongly anti-Russian

Germany, btw, is building a pipeline under the Baltic Sea with Russia... and Poland is strongly against it

if most of your "history book" is about WWII, you are both blind to all history before that and blind to the present situation

OverTheHedge's picture

So, to recap; the EU is not, and never has been, Nazi. Are we all clear on that?

Nor communist, for that matter.IIt is completely and utterly democratic, in every way.

Ok team? Got that?

Good. Carry on.

BarkingCat's picture

Poland is against that pipeline because it bypasses Poland.

They are also strongly anti Russian due to history and being under the USSR.

This is also the position of the current government.  However they were not elected because of their anti Russian position but rather anti EU.

The anti EU sentiment has a lot to do with history as well. Germany in particular.

The act of Germany importing a bunch of non Europeans into the EU was enough for this government to come to power, despite being bombarded by pro EU propaganda for a couple of decades.

Ghordius's picture

yes. and what did Poland do? it just said no to Germany and no to any immigrants not of their choice. they prefer Ukrainians. and have some million of them, all strictly strongly anti-Russian

meanwhile, Polish schoolchildren get mandatory lessons on "how the EU is set up" and , recently "Poland and Nato: why it's important"

the first was from the pro-EU previous Polish gov and the second from the new pro-NATO Polish gov

detached.amusement's picture

poland is nato's bitch and does what it is told, despite a minor misgiving or two

doctor10's picture

reality is "regional" ;


Large centrally controlled geography's are all to 19th century. All the brutallityof the 20th was an attempt to prevent the inevitably regional world tat is now on the doorstep.


If nothing else, the remarkbale financial deficits of the 19th-20th century legacy governments are the hallmark of their lack of fundamental utility to humanity.

Matteo S.'s picture

What's becoming obvious is that there will soon be no more EU because of Germany's pathological need to accumulate enormous trade excedents year after year by constricting its inner demand.

Billybullshit's picture

bastards bombed the local boozer in 1940. fuck em

Amun's picture


The EU was HITLER'S idea and it proves Germany WON the Second World War"


css1971's picture

The EU is the dream of all corporatists. No? A single market, a single currency, mountains of rules and regulations to smother competition.

Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power”

Americans call it crony capitalism.

Or the warm fuzzy name your own representative uses for it: Public Private Partnership

shovelhead's picture


Like that's a big revelation.

Matteo S.'s picture

The US economy is an other kind of crony capitalism. There still are robber barons.

And by the way the EU is as much an american as an european idea. The US demanded european integration in exchange for economic aid just after world war 2.

Freddie's picture

I like Italy - do not like Draghi.  Merkel and anyone in Germany who supports her should be facing the gallows along with any other open borders politician.

Sebul's picture

domestic demand was never priority for decades and that fkn big mistake will switch off the lights one time. cant count the thousand of economy analysts who told its fkn dangerous and stupid to put everything on exports. especially when you get forced competing with China and all that minimum labor cost countries.   and again, so obvious, politicians... why should i care today about what can kill me next year... idiots

Ghordius's picture

nah, I wasn't expecting John Mauldin to write a comprehensive article here, but this one is below par compared to his other ones

" the bloc’s economic logic becomes increasingly illogical"

what is "illogical" about an economic bloc, exactly? ask Putin, he will say that an economic bloc (headed by Moscow) from Lisbon to Vladivostock makes a lot of sense, hence his proposal for an EurAsian Union

at a certain point, dear reader and ZH-collegue you might want to reflect about some little things regarding reality

China and India are economic blocs in the billion range. the US is one that contains 25% of the world's GDP and 330 million people... and it has NAFTA to top it

now, ask yourself: are we out of the danger of trade wars? the answer is no, we are not. best example is the current glut in steel, where China would have no qualms in just swamping the whole world with their produce

now ask yourself: does it makes sense for you that the whole world production of steel goes to China? if you answer yes, you are all in for globalization, meaning that you consider the whole world as one market, to be serviced by whoever gains market dominance

but how is this market dominance achieved? often through subsidies. meaning that the steelmaker's jobs in your country go elsewhere... because some other country spends more fiat credit and state subisidies to capture them

of course all this is lost on the low-info types that understand "the EU" as something that has to do with external immigration (it isn't, and no, even borders are something about a different club, the 26-strong "Schengen")

the UK is different, in this context. it's economy is more "FIRE" based then any other in Europe. indeed, from that perspective leaving the EU makes some sense

but for the others? nah. if they would exit the EU, they would face the full effects of globalization, and possibly the full brunt of trade wars. the EU capabilities of retaliation to trade wars is one of the things that do contain this threat

yes. sorry to have to explain this to you, but all in all the EU as a custom/trade bloc is still a mildly protectionistic affair. it holds low quality product of dubious manufacture out of the EU, and so some jobs in

so no. if you are one of those who thinks that the EU it's about "globalism"... you have been had. it's still about globalization

in other words, it's not about a "one world government", it's about a "one world market". note that the UK is generally speaking for the latter. as last seen in the recent steel spat with China

meanwhile, too much hay is made out of some "euro-skeptic" continental political movements and parties. too little info, too garbled. Mauldin here does not help. he does not note what kind of "euroskepticism" is exactly exposed by them, how much, or how the political setup reflects that. quite typical, to be frank. european continental politics seems to be on a different planet for most English-speaking commentators

Glasnost's picture

The logic the author is referring to I believe is mainly a reference to the EU's belief that it can manage the economies of separate countries and have no consequences in doing so.

Germany et al. screamed for austerity austerity in the PIIGS.  They got their austerity.  In return, they got reduced demand for their exports, which will remain reduced until the PIIGS climb out of their debt hole (hint: this probably won't be done through austerity; default rather).

Ghordius's picture

excellent comment, even though I disagree with you. yes, a number of countries, including Germany, agreed to have this "austerity"

except that I prefer to call that "balanced budgets", or "having the state living within it's means"

interestingly, it has little to do with the EU itself. it's an agreement among EUR-using countries, the "eurozone" 19

see , note which countries do not partake to that

of course whoever is used to believe in "budgets don't matter" is against both balanced budgets and "debt brakes"

Glasnost's picture

I'm aware of the conditions related to utilizing the Euro.

My question is then, where is the option for these countries to use their own currency but remain a part of the EU for all other purposes?  I have a very hard time believing this would ever be an option, even though it's likely one of the more sensible ones.  Likely this is not offered as an option because it would result in a 'soft default' when those countries' currencies found their true value and assets previously denominated in EUR were accordingly re-valued.

'Living within ones means' is a cultural concept, closer to the beliefs and culture of northern europeans.  Believing that all European countries would always follow this principle was idealistic at best, and ethnocentric at worst (even if they did sit at the table and help in the drafting of these rules).

Ghordius's picture

Glasnost, we are talking about sovereigns, here. They either make their options... or they don't

the UK ought to be evidence enough, with it's referendum and pre-referendum "quick rebargaining" by Cameron

I think this is one of the hardest things to understand for many, considering all the comments here

it's a club. of armed, old sovereigns. the treaties are there to either be respected... or not. or to be rediscussed

instead, we read a lot of talk here about "where is the option, where is the article in the treaty?". that is the kind of talk that is common among individuals, which are subject to laws. sovereigns make laws, make rules

default, yes. you need a national decision for that, which implies a political will. for some reason we always talk here as if the devaluation "soft default" is kind of the only possibility... and then we talk about gold and gold standards at the same time as if default would be the same then

"'Living within ones means' is a cultural concept, closer to the beliefs and culture of northern europeans"

ok. truly, too many here believe that to dismiss it. then let me ask this: are you saying that both the US and the UK exited the "northern european" fold?

how long would southern europeans have to have balanced budgets to have this belief changed? 50 years? 100 years?

look, it's not that long ago that all european countries had a gold standard... and had to somewhat balance their budgets because of that

Multi's picture

..."'Living within ones means' is a cultural concept"...

It's rather a nature's constraint.

Ghostbusters's picture

Firstly, the welfare state is austere by design.  It is a demoralized culture of limited advancement sold to the ignorant and programmed into the masses from birth as virtuous.  The ideology is bankrupt and contradictory in reality.  Under the Western democratic style of government, which promotes the welfare state, the rich get richer.  Please explain that?  

The system removes incentives for advancement, penalises ambition and entrepreneurship, and rewards sloth.  Dependence breeds dependence.  This system is incapable of building up society.  It is only capable of tearing it down based on the limits imposed.  Government jobs and working for your corporate masters as a 9-to-5 paper pusher are considered ambitious or prosperous.  Service jobs are the average person's safe haven.  The welfare state always fights for centralization and what seems economically obtuse policy.  Of course it is all by design.

Now, so-called European austerity, which goes for balanced budgets, has certainly not happened as Debt-to-GDP ratios are measured.  There has been the fabled deceleration of government borrowing or a decrease in the rate of indebtedness, but they have not 'cut' or 'balanced' any budgets.  Here on Zerohedge, it ias been dubbed fauxsterity Mr. Glasnost and Ghordius respectively, as government spending has increased over the last decade in the wake of the contraction in consumer borrowing to fight deflation.  Government is not getting any smaller.  Big business is getting bigger and of course big government mandates big business and destroys small business by its very nature as 'progressives' support their own demise for some magical politically correct speech and a feel-good mentality devoid of all reality.  Freedom is the only ideology.  Equality doesn't exist in nature but non-violence does exist and to violate the non-violence principle is to violate another's freedom to be secure in their person.  

Austerity exists by design but it has not been brought about in the last ten years by Brussels or European bureaucrats and therefore it is better termed fauxsterity.  The poor are still poor and voting left of centre, the rich are getting richer and voting for bigger government that gives greater benefits to shareholders of big businesses, and all the while the middle class, whose ideal is freedom, gets crushed and pays for all of it in their ignorance.  There is dissonance but it is best cognitive and therefore its effects are sparingly felt in society as people are too indoctrinated to know where to direct their anger.       

Multi's picture

Ghostbusters <<< Hat's off

I wish I could up vote you more than once.

Ghordius's picture

"Firstly, the welfare state is austere by design" are you re-defining "austerity"?

either you balance the budget or not. increases of government debt imply government deficits

the truly important question would be "how much". funny how a financial blog like ZH has so often comments where "how much" is not relevant

Ghostbusters's picture

Ghordius, it´s polite to answer the previous question before answering with a question.  I am not redefining austerity as I prefer its harsher or stricter interpretations more recently trending towards extreme simplicity.  What I am attempting to do is help you find the way back to reality from austere financial policies, not present in Europe, and literal austerity that exists as a result of government intervention.  

Liberalism and voluntary transactions, devoid of .gov intervention, lifted people out of poverty and created the global phenomenon known as the middle class in contrast to austerity.  I don´t like the class system but we can generally agree that the middle class is a good thing.  Now, the idea is that there has been nothing harsh, nor strict, nor extremely simplistic about the balancing of Euro-zone budgets as measured by Debt-to-GDP ratios aka no financial austerity.  

Moving on, literal austerity exists under the welfare state by design and it did not come about as a result of policy from Brussels; it existed long beforehand under so-called Western democracies.  Today, it is just commonly acceptable for unelected supranational bodies to deepen the welfare state and further erode the foundations of free peoples.  For Europe to talk about austerity in the context of balanced budgets is insincere as government spending can and will only increase.  It is but a soundbite that you fell for, like so many other soundbites.  What a pity!  The conclusion I am leading you to is that government intervention is synonymous with literal austerity aka strict family budgets(paycheck to paycheck), harsh living conditions(rental prices, homelessness, howe ownership rates), and extreme simplicity(the simpletons and their zombifying gadgets).  Freedom liberates the people while austerity is created through the burgeoning intervention of the state that coerces and restricts violently in order to reward in-groups.  I am not in favor of that.  Who is?  Many people it seems...e.g. conservative governments aren´t conservative at all.  

As for quantity, well it is generally relative to the size of the market but in nominal terms you lose too as record levels and frequency of intervention have accompanied this new bail-out age (TARP, car manufacturers, Cash-for-i$hit, QE, ECB, BOJ, BOE, etc.) What politician advocates balancing the budget?  Earth to Ghordius: stop playing with your knot and look around.  The government is not there to help people.  The jump in income inequality is accompanied by the growth of the welfare state in a startling correlation that any objective empiricist will be unable to miss.  

Amun's picture

"Some 95 percent of the 220 billion euros disbursed to Greece since the start of the financial crisis as loans from the bailout mechanism has been directed toward saving the European banks."

Old Europe's picture

Any protection against trade wars is secondary and useless when the same organisations that pretend to protect you allow and promote your extincion by mass immigration.

The EU refuses to secure it´s outer borders consequently and by this creates a Europe free of Europeans. They are cponducting or at least enabling a genocide of the European people.

Ghordius's picture

"...when the same organisations that pretend to protect you allow and promote your extincion by mass immigration"

"The EU refuses to secure it´s outer borders..."

low info bordering to dis-info. what is a "EU outer border"? according to the Schengen Agreement (which is a separate "borders" club of 26, to which for example the UK is not part), it's a national border, where a country takes care of that border. for example the Greek national borders to Turkey

are you asking for a EU superstate to take care of that? note that for opponents of a EU superstate it's not that funny that the EU is now beefing up that "FRONTEX" stuff for the purpose of helping Greece, for example

so tell me: are you in favour of a big EU border force and departement? a kind of "like the US Coastguard"? are you asking for that?

Old Europe's picture

At the moment the first steps for the EU should be:


1) Frontex returning boats to their countries of origin in the Mediterrarian Sea.

2) Stop making so called "mobility partnerships" like they did with Morocco and like they are planning now for another 9 African countries.

3) Support Schengen-countries securing their borders (with money, equipment, training) instead of threatening them for trying to secure their borders.

4) Allow national border-control as long as securing the outer borders doesn´t work properly. Don´s care about "Shengen" until then since Schengen has been suspended by Merkel anyway.

5) Make it clear that the EU unrecallably respects, protects and permanently accepts the existance of the indegenous European peoples and that they will limit immigration to an extent that doesn´t make Europeans minorities in their own countries.


# 1-5 are pure fiction of course since the EU is a juggernaut designed to do the opposite. 

Ghordius's picture

again, dis-info: "the EU is a juggernaut designed to do the opposite"

it's neither designed to do all that nor is it doing much. you are avoiding my question: do you support a strong, vast Frontex? do you support the EU being in charge of national outer borders?

in any case, you would have to talk about the current national decisions around immigration, starting with the German national decisions from that gov

again: if you support Frontex, you support the EU as an entity taking the care over national things like borders

at the moment Frontex is supporting the Greek border forces. but your very call is a call for more then that, isn't it?

Old Europe's picture

I´m always supporting "more Europe" IF and only IF it´s in the interest of the peoples of Europe. When the EU carries out plans that they got elaborated by NGOs, NATO or globalist organisations this condition is violated.

IF the EU abides to a strict policy like the one I outlined above under 5) they can be in charge of border control. As long as they refuse to commit to any guarantees to secure the existence of the European peoples they can under no circumstances be in charge of controlling European borders.

Sandmann's picture

The US has its forces on EU borders in Poland, Lithuania and Romania and Bulgaria and Spain and Italy and Greece - it should be guarding those borders instead of flooding them with invaders from Syria, Libya, Iraq, Turkey

Amun's picture


" the largest and the most expensive foreign military base built by the US in Europe, since the Vietnam War.

 Mafia State and Camp Bondsteel

Heroin Transport Corridor"