The pound is tumbling against the Euro and, while Britain adopts a spendthrift policy out of the crisis, here in Germany there are no sub-prime mortgages, indeed, less than half the people have any sort of mortgage at all and a 30% down payment is the least you can expect to pay before buying a flat or house. Moreover, cash is still king with, at most, 6% of the population using credit cards. The Germans generally don’t spend money that they don’t have, few people hold shares and many of those who did got rid of them as they saw the crisis approaching.
With a foot in both Germany and the United Kingdom the differences can be seen all around me and, while I have friends and relatives in ‘Blightly’ having 125% mortgages thrown at them and money to burn in Germany it is all a case of thinking twice before you buy that laptop with money you don’t have. The Anglo-Saxon, let the devil take tomorrow, spend, spend, spend culture has reached here with ‘Media Markt’ and others offering 0% interest on installment payments annually. There are relatively few takers! Generally, people do not spend what they don’t have. On the other hand, they will not be prevented from buying something for 44.90€s instead of 44.10€s which is what the VAT cuts in the UK mean, cuts that are only going to add significantly to national debt, a debt that it will take a generation to pay off. Moreover, in Germany they will pay high taxes and health and social security contributions because they believe that a good infrastructure needs this money.
Nevertheless, the economy in Germany is contracting, although not quite as quickly and by not quite as much as in the United Kingdom however, while ‘Blighty’ hopes to spend its way out of the crisis, belts here are being tightened. The deficit spending that began in the UK under Reagan and Thatcher and culminated in the mess we are in needs a radical cure, the addicts need some cold turkey to break the habit of the “easy money” drug or should I be telling my sister who is sitting on thousands of pounds of debt, just to borrow more money? This is, in fact, the solution that is being offered by the Anglo-Saxons.
The problem of course is that financial markets have to be regulated globally and one fears that the Anglo-Saxons have no choice but to pursue the course that they are taking. Their governments have no money of their own anyway and no resources to underwrite their national debts. Debts that have been accumulated to some extent by pursuing silly wars, while neglecting infrastructure at home. Moreover, the only way that they can continue, at least in the short to medium term, to dominate the financial markets is to try to drag the rest of the world into their swamp. However, in a Euro zone that will, despite some resistance, increasingly follow the German ethic, and in China and Japan that won’t happen. The rest of the world will cope with contraction, it has the spine, the ethics and the wherewithal to do so, 2008 is not 1923 and it is not even 1997. The Anglo-Saxon empire, which is based on three things, control of the world’s financial system, global oil resources and military hegemony, is crumbling and it is not a final fix that the addict needs.
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