What The Hell Is Wrong With Us?

Front Page of the german Newspaper Süddeutsche...
Front Page of the german Newspaper Süddeutsche Zeitung 2009/05/20 (Photo credit: Wikipedia)

If you care – or are just curious – about what’s happening in Ireland now, economically and politically, you could do a lot worse than ask a German. Not any German of course, certainly not Angela Merkel, but one Christian Zaschke, who wrote an article for the Süddeutsche Zeitung aptly titled “Conned“. (Translated and republished here by the Irish Times.)

In it he makes a clear connection between Ireland’s erstwhile banking and future oil wealth. One has the potential to provide a solution to the problems created by the other, but it’s likely to be stolen from us just as the first was, and by the same route: Corruption. More precisely, our strange pervading acceptance of that corruption.

Is this over-simplistic? No, it’s just refreshingly direct. We may wish to say in reply that it’s more complicated. We may be deeply intellectually concerned here with the reasons behind why we are so supine in the face of corruption: colonialism, Catholicism, conformity, clientelism, Celticness, corporate capitalism – that’s just the Cs – but it really doesn’t matter what the cause is. The important thing is that we are being supine in the face of corruption. We need to stop.

The Tithes That Bind

The catholic church St. Kilian in Mulfingen in...
The catholic church St. Kilian in Mulfingen in Southern Germany. (Photo credit: Wikipedia)

We think it’s bad here, where if you don’t pay a tax your children could be kept out of university. In Germany, they’ll refuse to bury you.

For this is church tax. Yes, they have church tax in Germany. Actually this is in a lot of countries, and it’s not quite as weird as it sounds. Instead of being forced by social pressure to put money in a collection, a percentage of your income tax is funnelled to the religion you nominate. And yes, it can go to none at all.

It seems that more and more people though, while nominally Catholic, have not been paying Catholic tax. The kind the church would like us to refer to as “lapsed”, of Catholic backgrounds but who, whether due to abhorrence of its actions or simple lack of belief, no longer take any active part. Maybe going at Christmas. Maybe getting married in church to please their mothers. Maybe being buried in the family plot.

No longer. It appears things were brought to a head by a Catholic theologian who took the issue to court. Interestingly, he in no way wanted to refuse a contribution. His objection was to doing it through the taxation system. It was a church and state thing. Or if you want to take a religious point of view, a God and Mammon thing. But the upshot is that the Catholic Church in Germany has come down hard on paying your dues. In or out, no more fannying around. If you aren’t a subscribing member, you will be refused… services.

As marketing it’s a master stroke. People will value what a religion provides much more if it has a certain exclusivity. The Catholic Church – Members Only. It seems a perfectly sensible business model – for an insurance company, or a breakdown service, or a gym. I’m not sure how they’re going to make this work for a religion though. I mean, the important thing in Christianity is what you believe, isn’t it? Not what you invest. Will deathbed repentance still be good enough, or will you have to sign a cheque for your backlog of tithes before you get absolution?

Because that’s awful reminiscent of something the German Catholic Church did before once, and it didn’t work out well.

This – This – Will Fix The Economy

Estate agents insist that property prices in Dublin have stabilised. I remember the first time they said that, back in 2007. And they’ve stabilized regularly ever since.

But you can’t exactly disagree. In a way, house prices are always stable. A house is always worth… about a house. A person can eat a lot or a little food, own a hundred cars or none, but houses tend to stabilise somewhere around the level of one per every two adults. Because try as you might, you can’t live in much more than one house at a time. Logically then, housing ought to be one of the most stable commodities on the market. It’s actually the rest of the economy that has been vigorously swung around this anchor point. During the housing boom, wages may have gone up on paper, but in house-buying terms they plunged through the floor.

Which gives me an idea… We need a new currency, right? The euro, well, it’s lovely and all. I like the colours, and the handy map on the back. But the thing is, we just can’t really afford it. Using the euro is like having a currency on the gold standard when the world is desperately short of gold. You can’t have a functional economy when the standard unit of exchange is hen’s teeth.

And what do we have plenty of? Why, houses! Too many houses, not enough euro banknotes. Think about it.

Of course you can’t put houses in your wallet or bring them to the shops. There will still have to be tokens. But the base currency unit should be fixed to the value of the standard house – say the sort of small two-bedroom starter home that was produced like popcorn during the boom. Notes should be denominated in fractions of a house. That way, the price of a home can never run away from you. Save up 1,000 of the new thousandth-of-a-house notes, and you can exchange them for one standard house at your nearest branch of NAMA.

It won’t stop people charging more than the standard house price of course, for bigger residences in better locations. But the existence of a perfectly adequate house at a fixed price – well, a price that money is fixed to – should act as a powerful stabilising influence. You’ll be able to look at a property ad and say “Well it’s a good house. But is it really worth two houses?”

Diary Of A Slightly-Madman

Ahascaragh, east Galway, which has little if anything to do with the rest of the post

I wonder just how much more of this I can take.

Since I arrived back from Germany I’ve been house-minding out in the country, with only one of those things for company. You know, hairy things. Eat animals. Don’t talk much. Cats, that’s it. My language skills are slipping away here. When your only interlocutor doesn’t care whether you’re saying “You’re a kitty aren’t you yes you are!” or “Bacon bacon bacon bacon sandwich, going to make a sandwich of you now”, your language patterns become increasingly random.

Ahascaragh water garden. Still very little to do with the article

Comfortable lemon.

Cats make peculiar companions, but they are warm and furry so it’s easy to forget this. Until you find yourself, out shopping, having to choose between something that comes in a clumping and a non-clumping form. Little good comes in a choice between clumping and non-clumping.

But lord knows how disconnected I would have gotten without having the cat to take care of. It needs to be feed regularly even if I don’t. I’m already living like one of those cognitive science lab experiments. The weather has been pretty crap but it’s not at all cold, so on days when I don’t leave the house I entirely eschew clothing. There’s nothing wrong with that, and it feels great. As long as I don’t pass a mirror. This isn’t nudism any more than walking around with nothing on under your clothes is. (Though I do like to refer to that practice as “cryptonudism”.) Effectively I am wearing a house. I like it, it’s very roomy in the crotch. And everywhere else.

My sleeping too has grown unconventional, drifting from the usual eight hours at a time to two separate “watches” of four hours, leading me to suspect that this is actually more natural. At least, for abnormal people. What I mean is, it’s quite natural for a significant proportion of the population to pass the night… differently. Would it not make sense, for humans or human ancestors sleeping in vulnerable groups, to have an innate variation in their sleeping patterns so that they’re never all asleep at once?

So if you ever ask again what I’m doing awake in the middle of the night, I’ll be forced to tell the truth. I’m protecting you, you ungrateful bastard. From leopards.

The Frankfurt Mission 2 – Sausage City


The Ballyhea group was on telly today – TV3’s Morning Show. That’s as close to media glamour as I’ve got in a while. Not that I was on myself – I’d be useless at that kind of thing, cameras tickle. They had the eloquent, informed ones: Diarmuid and Cath and Vicky. Between them they covered the enormous cost of the bank bailout to each and every one of us (€60,000 for the average household if you spread it evenly), how it affects ordinary people, and how the current response to it will be as disastrous for us as similar ‘medicine’ was for the Developing World – a pretty comprehensive encapsulation of the issue. You can watch it here.

Back to our adventures in Germany then. I’ll skip over the details of organising tickets for the bus into town, the tram to the hotel, and the rooms – except to say that Cath did them all, and found the cheapest way to do them all. One of those people every expedition needs.

Settled in, we next needed to reconnoitre. Having dinner seemed like a good way to do that, so we headed in to the older and more attractive part of Frankfurt. It has to be said, it’s not very big. For a major global hub of wealth and power, Frankfurt is surprisingly unimpressive. It has its expensive suburbs of course, but the historical city centre is not much to look at. And while I’m being rude about our hosts, German sounds like English with a wheel missing.

You feel bad about thinking this when you remember that the reason there’s so little left of historical Frankfurt is that it was obliterated in World War II, first by bombing and then by ground combat. Before then, it actually had the largest mediaeval city centre in the world. So we had our dinner in the ruins, essentially. But first we took the photo-opportunity of a statue representing justice to make our point.

After checking out the ECB building and finding it a lot less like Forty Knox than our mental image, we had dinner at the outdoor restaurant you see behind us there – mainly sausages and sauerkraut of course. I am pleased and relieved to be able to report that the frankfurters were the nicest. After, we fell to singing songs – mainly Cork ones like the Banks and Thady Quill. We weren’t drunk or anything, it just seemed appropriate. Eventually though a woman resident brusquely told us we were too loud, the implication being that this was far too classy a neighbourhood for that sort of thing.

To show solidarity with us, a drunk German man at the next table started off a chorus of Molly Malone. Politics was on!

Champing At The Bit

Passengers leaving Ryanair jet
“But… But this is where we left from!”

This is weird. I’m going to sunny Germany tomorrow, but I’m sitting here with nothing to do. For once I packed well in advance. This is as unlike me as it is possible to imagine, and must basically have happened by accident.

So tomorrow we’re driving to Knock, which should take about an hour, flying with Ryanair to Frankfurt, which should take two hours, and then getting from there to where Frankfurt actually is, which will be the longest leg of the whole trip. You know the usual way.

English: Night view of the euro monument (euro...
Oh look, it’s breaking up!

Hahn airport – “Frankfurt-Hahn“, as Ryanair have the nads to call it – is actually nearer Luxembourg. The tickets were fantastically cheap though, it must be said. We are going to Frankfurt basically because we can afford to. Oh, there will be some research and meetings and stuff. This is the home of the European Central Bank, the institution that is handling our currency in such a profoundly wrong-headed way, so there is much to learn. Perhaps we will even have a little protest. I plan to stand opposite the ECB with my arms folded, frowning really hard.

I’ve been planning this trip for a few weeks though, you think I found time to refresh my German? Did I hell. But then, do I need to now? My phone can speak German for me. Even the free Google Translate is very good – though bear in mind that to use an online translation service you have to pay for data at roaming rates. Right now I’m just getting it to say things like “How many cars may I eat?”, “This shop sells millions of ducklings in a box”, and let’s not forget that old favourite, “My wombat is constipated”.

George Soros: Blame Merkel

DAVOS/SWITZERLAND, 27JAN10 - George Soros, Cha...

George Soros knows money. A student of the great philosopher Karl Popper, he has become one of the most vocal critics of modern economics and capitalism. But he doesn’t just talk about the failings of the financial markets. He uses his insight to make a quite seriously incredible amount of cash from them. Out of this, he gives billions to worthy causes. A guy with an opinion worth hearing then.

So when, speaking at the Economics Festival in Trento, he lays responsibility for the Eurozone crisis squarely at Chancellor Merkel‘s feet, you sit up and take notice.

In a nutshell:

The first step was taken by Germany when, after the bankruptcy of Lehman Brothers, Angela Merkel declared that the virtual guarantee extended to other financial institutions should come from each country acting separately, not by Europe acting jointly. […] It took some time for the financial markets to discover that government bonds which had been considered riskless are subject to speculative attack and may actually default; but when they did, risk premiums rose dramatically. This rendered commercial banks whose balance sheets were loaded with those bonds potentially insolvent. And that constituted the two main components of the problem confronting us today: a sovereign debt crisis and a banking crisis which are closely interlinked.

In other words, people lent cheaply to Eurozone banks and governments because they believed that there was zero risk of a Eurozone country being allowed to default. But after Lehman, Merkel – unilaterally – declared that Eurozone countries would have to support their own banks. Markets eventually realised this implied that Eurozone countries might have to default, and so lending costs to them shot up – just when we needed to borrow in order to support our banks! It was a single, immensely short-sighted decision of Merkel’s administration that precipitated our current situation.

And their continuing failure to respond adequately is turning a crisis into a disaster for the EU:

Just as in the 1980’s [Third World debt crisis] all the blame and burden is falling on the “periphery” and the responsibility of the “center” has never been properly acknowledged.  Yet in the euro crisis the responsibility of the center is even greater than it was in 1982. The “center” is responsible for designing a flawed system, enacting flawed treaties, pursuing flawed policies and always doing too little too late. In the 1980’s Latin America suffered a lost decade; a similar fate now awaits Europe.

He does more than just lay blame of course. The power to save the situation, he argues, is also in the hands of the creditor nations. But it won’t be easy:

The German public cannot understand why a policy of structural reforms and fiscal austerity that worked for Germany a decade ago will not work Europe today. Germany then could enjoy an export led recovery but the eurozone today is caught in a deflationary debt trap. The German public does not see any deflation at home; on the contrary, wages are rising and there are vacancies for skilled jobs which are eagerly snapped up by immigrants from other European countries. Reluctance to invest abroad and the influx of flight capital are fueling a real estate boom. Exports may be slowing but employment is still rising. In these circumstances it would require an extraordinary effort by the German government to convince the German public to embrace the extraordinary measures that would be necessary to reverse the current trend. And they have only a three months’ window in which to do it.

We need to do whatever we can to convince Germany to show leadership and preserve the European Union as the fantastic object that it used to be. The future of Europe depends on it.

Three months, to get the EU back on the track of being a positive, voluntary association of nations. If we can’t do that, then the choice we’re faced with is basically between effective German control of an impoverished continent, or the sudden and messy disintegration of the Euro. So… We’d better find a solution to this thing. Stat.

I urge everyone to read the speech in its entirety, though if you’re in a rush The Journal.ie has a good summary.