While the trope of US "short-termism" has been significantly discussed in recent months, in an attempt to explain why the capital markets no longer align with the 7-11 year duration of the business cycle, but with the duration of the elected term of the US president or of various congressional and senatorial critters, and in many cases, with the lock up period at various prominent hedge funds (nowadays as short as 1 month), little has been said about the comparison between the "political imperatives" that define Europe's economic growth dynamo: Germany. And as last week demonstrated, when it comes to the US attempting to impose its "imperatives" on Europe (read Germany) in the form of the one and only "solution" available to the US (namely print, print, print) any such venture ends in mockery, ridicule and general disparagement of TurboTax experts. So just what is it about Europe that makes the two regimes so incompatible? Well, for one thing the fact that unlike the US, Germany has already suffered through a period of hyperinflation, seen the disastrous impact of central planning in the form of a totalitarian regime and it subsequent dissolution with the fall of the Berlin Wall, and experienced an economic "miracle" or the period between 1948 and 1955, in which Germany denied central planning and unleashed a golden age predicated by free and fair capital markets, and the abolition of all rules and regulations established by the occupying powers. But that is not all: aside from the purely empirical perspective that Americans so acutely lack, Germany also has a vastly different political system which explains why the prerogatives behind the German ruling party are so vastly different than those for the US, and why Europe will almost certainly never embark upon a path comparable to that of the US. The Privateer's Bill Buckler does the perfect comparison of the "political imperatives" that shape, define and most importantly, distinguish the US from Germany, and which we believe should receive far greater attention in the mainstream media than they currently do.
From Bill Buckler's Privateer:
The most telling comparison between the “management” of the debt crises in Europe AND the US is the comparison between the political systems of both nations. In the US, a president is guaranteed four years in power unless he personally murders every citizen of a small town or gets caught burgling the political headquarters of his opponents. Only two US presidents have ever been impeached - one of whom was Bill Clinton. Both were acquitted and both served their full terms. Nixon resigned before he could be impeached but his presidency passed over to his second in command - Gerald Ford. Lower House members serve two years unless impeached and Senate members serve six years. On top of that, “coalition” governments are all but unknown in US history.
In Germany, the government in power is almost always a coalition. There are no set election dates. A sitting government can be overthrown at any time by a non-confidence vote which always leads to an election. Chancellor Merkel owes her power to a three-party coalition. Her party, the Christian Democratic Union, has lost every by-election since the start of the European sovereign debt crisis at the end of 2009. Her “junior partners” in the governing coalition are dead set against any more German taxpayer money going to subsidise the spending habits of peripheral European nations. She has been “dragging’ her feet at every stage in the bailout process because she knows that neither the German people nor her coalition partners nor the opposition parties are in favour of it.
The spectacle of US politicians and financial and political establishments everywhere exhorting Ms Merkel to “show leadership” in bailing out the European profligates is a hollow farce. Their version of “leadership” is a political potentate who totally ignores the expressed wishes of his or her electorate. By the nature of the German political system, Ms Merkel cannot do that and expect to hold her job. US politicians still think they can afford to fob their people off with sham attempts to spend within their means. European politicians can be toppled at any time their opposition can push through a nonconfidence vote. If Ms Merkel buckles, and she may, she will not last long at the helm of Germany.
Which is why, for better or worse, a functioning pseudo democracy (unlike the US kleptofascist despotism), may ultimately be the last hope for a grand reset before it is far too late and the shooting, not to mention bombing, breaks out.
And for another terrific quote from the most recent edition of The Privateer, see here. And, yes, all used with express prior permission.