Lost in the complete and utter lack of newsflow yesterday (no pun intended) were some comments from Otmar Issing, former chief economist of the ECB. Also a German. Also an advisor for Goldman Sachs. In the absence of Angela Merkel and Schauble, both of whom are still conducting privatization due diligence on Santorini, he decided to present the German view to all the recent bluster and posturing by Europe choosing beggars. What he so conveniently explained is just why "European Union" is the biggest oxymoron imaginable, and why Germany will hardly smile quietly as the rest of the continent uses history as its only leverage to shame Germany into funding the bailout of its broke neighbors. In fact, what Issing confirms, is why any hope that a Federalist union in a continent in which deep seated hatred runs deep, and will promptly overtake any of the happiness associated with the recent 30 years of fake prosperity, is doomed. Art Cashin explains.
via UBS
The Issing Remarks – While they did not have far reaching consequences, Mr. Issing's remarks reminded us all of the deep seated conflicts that underlie the issues in the Eurozone. You will recall that European leaders openly claim that the concept of the Eurozone was an attempt to restrain Germany to some degree.
With two world wars erupting in Europe in less than 100 years, they needed some way to try to bind these nations together. They chose to start with a monetary union. Now they are trying to hold it together. Here's a bit from the WSJ Blogs:
Germany’s guilt over the Second World War doesn’t oblige it to write blank checks to euro-zone countries that fail to reform their economies, said former European Central Bank executive board member Otmar Issing.
Mr. Issing served as a member of the ECB’s Executive Board from 1998 to 2006. A German, he remains an influential voice on economic and central bank matters in his home country. Since leaving his ECB post he has served as an adviser to his government on financial and economic matters.
Mr. Issing said that from a historical perspective Germany indeed is “in a special position” but 67 years after the war ended “Germany can’t be blackmailed with its past,” he said. This is especially true of aid for troubled euro zone states, “which does not solve the problems in these states.”
After the World War II, in which Nazi Germany occupied territory from the Channel Islands to near Moscow, the Federal Republic of Germany has seen peace in Europe and the world as being one of its essential tasks. This has also meant willingly giving up sovereignty to European institutions in an effort to bring European nations closer together.
Some commentators have taken this philosophy to mean that Germany should now, without protest, stand in and help struggling countries on the euro zone’s geographic periphery. The 17-nation euro zone is dealing with a sovereign-debt crisis that has seen Greece, Portugal, Ireland, Spain and Cyprus seek international funding to keep their countries or banking systems afloat. Germany has effectively been paymaster for the deals.
Talk about deep seated feelings.