'The Biggest Change Since 1944'

As one of Germany's leading financial services 'experts™' calls it while omitting virtually everything that actually matters

And now this happened: a leading financial engineer (sic) is ‘spilling the beans’ and ‘telling it as it is’. While the dissidents among Germany’s more courageous academics and journalists hail these ‘insights’, even their most superficial consideration reveals stunning levels of ignorance and, yes, absurdity.

What follows is an abject lesson in gaslighting, historical ignorance, and misleading statements.

Translation and emphases mine, as are the bottom lines.

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‘The world is facing the greatest upheaval since 1944’

By Carsten Korfmacher, Schwäbische Allgemeine, 14 May 2024 [source]

Netfonds chief economist Folker Hellmeyer talks about the global economy, growth, and warning signals in an interview with Schwäbische.de.

Internally, German politics seems to be characterised by intolerance and self-indulgence, and towards the global South by arrogance and double standards. This has consequences: Germany is steering haphazardly through the biggest crisis in the West since the end of the Second World War, says Folker Hellmeyer, Chief Economist at Netfonds AG [a large private capital management venture based in Hamburg].

Let's take stock: where does Germany currently stand economically?

We have to go back ten years to find out. In 2014, Germany was the showpiece of Europe in terms of economic development and structural positioning. Ten years later, we are now a worn-out horse. While the global economy is really picking up speed, Germany will only manage .2% growth in 2024 according to the latest IMF forecast. Why is that? Because we have failed to observe the basic principles of governance. We have not done our homework.

What exactly do you mean by that?

With the highest taxes in the world, we have a tax regime that discourages performance; otherwise, we are only leading in bureaucracy [whine elsewhere, look at Scandinavia; also, a good deal of this is due to the EU]. We have neglected everything else: the infrastructure is dilapidated, digitalisation is making no progress, and education policy has completely failed. In the political coordination of objectives, we have reduced incentives and expanded the entitlement society. The current growth picture is an expression of this multifaceted fundamental problem. Due to the failed policies of the CDU under Chancellor Angela Merkel and the current traffic light coalition, we have now become a burden on the EU and the global economy.

What will happen for Germany if nothing changes fundamentally? [as if ‘change’ would appear like a bolt out of an otherwise blue sky]

If we stay on the path we have chosen, then everything will be at risk: the welfare state, the green transformation, the prosperity we have built up over generations and ultimately democracy too. The warning signs are increasing. We are currently experiencing the highest net capital outflows in history, more and more companies are relocating, such as BASF to China or Miele and Bosch to Poland.

Normally, no politician can be interested in this, regardless of party affiliation. How do you explain the fact that we are still not making any progress?

The ignorance that is practised in Berlin is an expression of echo chambers from which critical minds are deliberately kept away. Red-green ideas have been carried through the institutions for decades, with a resulting shift in the axes of perception in the public sphere [that would include the notionally ‘conservative’-led Kohl and Merkel governments]. Today, conservative and liberal positions are sometimes portrayed as right-wing extremist. The suppression of other opinions and the lack of pluralism is the fundamental evil, because this ideologises politics, creates self-centredness and arrogance, and any pragmatism is lost [we all saw that during the WHO-declared, so-called ‘Pandemice™’]. And then the wrong decisions are automatically made [add: without any semblance of accountability].

Can you give an example of this?

Let’s take the Heating Act [orig. Heizungsgesetz]. It will cost citizens 1.5 trillion euros, or around 60% of Germany’s national debt, just to cut China’s CO2 emissions in a single day by 2030. That is utter madness. We could plant new forests worldwide for 100 billion euros [nevermind the fact that more CO2 means more tree growth, i.e., the ‘greening’ of Earth, according to NASA]. That would have a much more sustainable impact on the climate, and without jeopardising the prosperity of citizens. Don’t get me wrong: I’m in favour of green policies, but pragmatic ones, not esoteric ones. We know from our history that ideology has never done this country any good.

Now these home-made problems in Germany are coming up against a world that is undergoing economic and geopolitical change. What can we expect in the coming years?

The world is facing the greatest upheaval since 1944, and this upheaval is affecting Germany in particular. In 1944, the Bretton Woods Agreement laid the foundation for the geopolitical framework of the post-World War II era. However, this basis, above all the anchoring of the US dollar as the world's reserve currency, is now more than ever up for discussion. ‘The West’ was powerful back then, accounting for 80% of global economic output on the basis of purchasing power parity. Since then, this share has fallen to 30%. [oh my, about 50% of the world’s wealth was in the US back then]. In other words, the global South is now responsible for more than 70% of global economic output. At the same time, the countries of the South are growing twice as fast as the industrialised nations. Whether we like it or not, a shift in the axis of power is currently taking place, a massive upheaval that is repeatedly expressed in proxy wars—such as in Libya, Syria, Gaza, or Ukraine. If the USA and Europe do not shed their arrogance, the global South will develop its own organisation chart—detached from the West. [that may or may not be true, but the big-ticket issue is: a leading financial services provider now says the quiet part out loud: that the ‘rules-based-order’ is, in fact, about power and control: call be surprised (not); moreover, let’s consider, for a moment, the ‘Western’ protestors against the atrocities in Gaza: what role are they playing?].

The BRICS countries (Brazil, Russia, India, China and South Africa) are regarded as the centre of power in the global South, and Egypt, Ethiopia, Iran, and the Emirates have now joined. However, the interests of these countries differ greatly, and some are even hostile towards each other. Can these states even speak with one voice? [a stupid question if there ever was one]

It is true that the [BRICS] states have different interests, but they have one thing in common: they are tired of being bullied by the West and its hubris [orig. Hybris; that should be hypocrisy]. And the ten ‘BRICS Plus’ states you mentioned are not the only ones; 40 others have expressed an interest in becoming members. This will not be a military or political co-operation, but a loose association that is intended to form an alternative to the Western model: free trade without moral lectures, without attacks on the national sovereignty of the member states [well, I call BS because—guess what the biggies will do with the smaller countries?]. The cultures that co-operate there, the political entities, are highly heterogeneous, but they work together nonetheless. This opens up enormous growth potential for these countries of the South.

What do you mean by the West’s bullying and hubris? [Western legacy media’s tone-deafness on display]

What I mean by that is a landlord-style composure [orig. Gutsherrenart]: the West decides and the rest has to comply. In the process, rules are laid down that the Western states themselves do not abide by. These include, e.g., the US wars of aggression that violate international law or the disregard for Russian security interests, which were a trigger for the war in Ukraine, or the US’s years-long blockade of the World Trade Organisation (WTO) judges, which has undermined the law-based global economic order. Since then, the USA has been pursuing a sanctions policy without any legal basis [we briefly note that ‘security interests’—like any state’s ‘right to exist’—similarly have no basis in international law; while Mr. Hellmayer says a few useful things, he’s either intentionally misleading the interviewer or just doesn’t understand what he’s saying].

The Global South will no longer put up with this. Europe, and Germany in particular, would do well to stop blindly following the USA and instead establish its own foreign and economic policy that serves European, not American, interests [well, that ship has sailed during WW2, isn’t it? As things stand right now, this is either wishful thinking or delusional].

What else could give Germany and Europe hope? And what do we need to do in order not to lose touch?

Germany and Europe still have enormous economic strength. The national debt is acceptable, the trade data is good. Take a look at the so-called hidden champions, the smaller, often little-known companies that are world market leaders in their sector. There are around 3,400 of them worldwide, and 1,600 of them are from Germany [this is what is meant by the un-translatable term Mittelstand; it is wrecked by multilateral arrangements, such as the EU and the WTO, and the excessive fiscal-regulatory burdens imposed by the German gov’t and these multilateral institutions]. This structure is unique in the world and creates massive competitive advantages in terms of production efficiency. However, it requires competitive energy prices and sustainable security of supply. Then there are the familiar issues: too high taxes, too much bureaucracy, and the erosion of the meritocracy.

And finally, I call for a change of course from a morality-based to a law-based, pragmatic foreign policy. We need more tolerance and must not restrict our political relations based on our own moral concepts. All values have their place, whether Christian, Islamic, or Buddhist. If all this succeeds, even if I have my doubts that politicians are ready for it, then I am confident for Germany and Europe. I am confident about the world anyway.

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Bottom Lines

This is what passes for ‘great insider knowledge’ in Germany these days. Weep with me at the proud showcasing of ignorance.

While Mr. Hellmeyer says a few obvious things, he is entirely oblivious to a few basic facts, including (but not limited to) the following:

The Bretton Woods régime lasted until summer of 1972 when the US declared a de facto state bankruptcy and switched from a gold-convertible US$ to a fiat currency system. It is either gross negligence on part of that ‘chief economist’ of the financial services (sic) group Netfonds or incredible stupidity. Let’s add, for good measure, that mentioning this apparently did not occur to the interviewer.

That fiat currency system is the one that has been operational for (by now) 52 years, and I consider it highly unlikely to continue much longer in its present form. Why? Because of the swift, sudden, and massive increase in the money supply (e.g., +40% in the US) everywhere in ‘the West’ since the advent of the WHO-declared, so-called ‘Pandemic™’.

This also means something else, which I consider even more problematic: all the economists, politicians, and ‘journos’—as well as virtually everyone else older than 52—grew up in this post-gold standard fiscal-financial paradigm. For them (us), this seemingly endless creation of ‘money’ out of nothing (fiat) is ‘normal’.

The worst part of the above interview, however, is this: there may still be some 1,600 or so very innovative businesses left in Germany, but they—like everyone else—is about to be expropriated both in terms of intellectual property as US-based ‘international’ conglomerates use ‘dollars’ to acquire them. As regards everyone’s physical assets, well, the same applies. It’s (virtual) US$ for everything that can be moved.

As an aside, ‘dissidents’ on German social media hype Mr. Hellmeyer’s comments as ‘profound’ and ‘important’. That they are, but not in the sense of the term, as I have argued.

We note, as an afterthought, that neither the capitulation of the Wehrmacht in May 1945 nor the founding of the Federal Republic of Germany nor the creation of the ‘European’ institutions from 1957 onwards are apparently that important.

To close this commentary out, we need to look no further than the epilogue of Milton Mayer’s magisterial They Thought They Were Free: The Germans, 1933-45. Originally published in the 1950s, I am quoting from pp. 339-40 of the reprinted edition (Chicago UP, 2017; emphases mine):

The Europa Union movement, in Germany as elsewhere, is widespread among, and only among, nongovernmental intellectuals, and especially among the young. At the University of Munich 88 per cent of the students, in a random sampling, favored ‘the unification of Europe’ over ‘German sovereignty’. But ‘the unification of Europe’ means different things to different men—to some peace, to others war. And it is an ideal much more nebulous, and much more limited, than democracy. In the context of the world struggle, European Union means, first, military union of non-Communist Europe; second, economic union (presently supported by both the young idealists and the old cartelists); and last, if ever, political union. And any union that left Germany divided would take place only on paper, if there.

There may be a possibility that the relief of the Germans would interest the Russians, who, after all, invented Russian roulette. As the Germans now are, the Russians are afraid of them, and with good reason. ‘It is now clear’, said the London Times in 1954, ‘that neither Russia nor the West can agree to German unification on terms compatible with their national interests. The linch-pin of Western defense—West German cooperation—remains the hard core of Russian fears. And the main Western anxiety—Russian armies in the heart of Europe—is, in the Russian view, the indispensable condition of Soviet security. In the state of the world today, neither fear can be discounted as mere propaganda.’

‘We’ have, indeed, learned nothing, and the above interview merely showcases that kind of ignorance. German ‘unification’ in 1990 occurred in a moment of Russian weakness and in accordance to ‘Western’ interests. It had nothing to do whatsoever with the desires, hopes, and dreams of the German people(s).

The spectre of German-Russian arrangements—a new ‘Rapallo Treaty’ (1922), if you like—continues to haunt Transatlanticist circles. I am not claiming that this Anglo-American fear and loathing of ‘Europe’, led by the Berlin-Moscow (or Moscow-Berlin) ‘axis’, explains everything we can observe since at least May 1945; I am arguing, however, that it is a, if not the, real geostrategic nightmare of the City of London and Wall Street. Further evidence, apart from the ‘world island’ hypothesis’, comes via Stratfor chief George Friedman’s 2015 speech:

Why? Well, Russia and Germany have much more in common with each other than either has with China or the Anglo-American ‘West’, respectively. Germany has, arguably, also more in common with France.

If the above interview is what passes for ‘outside the box thinking’, the sun will definitely set on (Continental) Europe before too long.