The eurozone rescue deal briefly outlined Friday by the German chancellor and French president hasn't gone down well with Standard & Poor's, but the "Big Bazooka" Summit? Not if Bundeskanzlerin Merkel has her way.
According to tables produced by Trading Economics, between 1991 and 2010, Germany's unemployment level averaged 9.73 per cent. During this period, the record low point was 7.3 per cent in December 1991 and the record high was in March 2005, when unemployment reached 12.1 per cent.
During a particular surge in unemployment in the mid-90s, I was talking to some German friends and was part way through an "unholy" suggestion on how the level might be eased, when I was stopped -- not unexpectedly I confess -- by the rebuttal that Germany could afford unemployment but never inflation and the lessening of the purchasing value of the mark. That went for any policy that could even threaten this happening.
Their reaction was an indication of a phobia for inflation seared into the German national psyche as a result of suffering two bouts of hyperinflation within the lives of four of my friends' grandparents, still at the time cheery and active in Germany. It was proof enough that my line of argument was a nonstarter.
To understand the reason for this dread of inflation in Germany, which is not shared by most of its neighbours and in many countries is almost a norm, one has to go back a little. The reparation clauses in the Treaty of Versailles after World War I are frequently cited as the root cause for the coming to power of the Nazis, yet reparations paid by the loser(s) was a foregone expectation and had been frequently exercised - on occasions by Germany itself - at least since the Napoleonic Wars. It was no secret and reported in the British and American press that Germany intended paying for the war by just such means. As important a cause to subsequent events was the hyperinflation in the early 1920s, which destroyed the financial system and the lives of tens of millions of Germany's citizens.
Back in 1975, I bought Adam Ferguson's "When Money Dies: The Nightmare of the Weimar Collapse." In it is quoted a passage from an article written in February 1921 by Dr Walther Rathenau, later that year appointed minister of reconstruction, to the Berliner Tageblatt titled "Delirium of Milliards.''
"They (the majority of statesmen and financiers) write down noughts, and nine noughts mean a milliard. A milliard comes easily and trippingly to the tongue, but no one can imagine a milliard.
"What is a milliard? Does a wood contain a milliard leaves? Are there a milliard blades of grass in a meadow? Who knows? If the Tiergarten were to be cleared and wheat sown upon its surface, how many stalks would grow? Two milliards?"
Walther Rathenau was assassinated on 24 July 1922 by two ultra-nationalist army officers.
If Herr Rathenau had lived until 1923, he would have experienced first-hand the mark being measured in trillions, which funnily enough in German is "billions", against other stronger currencies. If he had lived to be an old man after World War II, he would have witnessed chocolate and cigarettes being more accepted than the mark as forms of currency.
After currency and other fiscal reforms commencing in the late 1940s and continuing throughout the '50s, Germany established a strong central bank in 1957 that would soon gain the trust of politician and public alike.
In Peter Pulzer's book "German Politics 1945-1995", he very succinctly outlines the role of Germany's central bank and this new-found trust:
"The Bundesbank had been established in 1957 with a simple remit, to ensure the stability of the currency by regulating the money supply and interest rates AND TO DO SO WITHOUT FORMAL REGARD TO THE POLITICAL WISHES OF THE GOVERNMENT OF THE DAY". (My capitals).
But a little later there is a caveat:
"The Bundesbank has had, and retains, a privileged position in the ranks of German policy-makers and has increasingly become a model for other states, or unions of states, seeking to take the making of monetary policy out of the hands of politicians. ... But it cannot make treaties, like those affecting European integration, or enter into international agreements, like those that set up the European Monetary System."
For the latter, substitute "euro," and it also differs in respect from the Bank of England or U.S. Federal Reserve in that it is not a lender of last resort.
In a world that is far from perfect it would be strange to find Germany's Bundesbank always in harmony with its Bundestag (Parliament). The relationship between bank and politicians became somewhat strained after the first and second oil shocks (1973 and 1979). It was a period of inflation, relatively high unemployment and recession. An outline by Pulzer of some of the problems facing West Germany and its then-chancellor, Helmut Schmidt, has some parallels with the current situation:
"The emergence of (Germany) as the major economy of Europe, accounting for 9 per cent of total world output, meant that whatever it did affected all its trading partners. It was, therefore, under continuous pressure to act as the 'locomotive' of Western prosperity by pursuing expansionary policies. Schmidt was sensitive to these demands. ... He was aware, too, that the interdepedence of modern economies obliged all players to cooperation and reciprosity. Equally, however, he was not prepared to risk (Germany's) hard-won stability for the short-term benefit of less disciplined economies. This meant in particular more strained relations with the USA and a search for a replacement for the kind of stability that the Bretton Woods system had provided up to 1971 - a replacement that might be either global or European."
Well, well, so little has changed!
On Thursday, Kabir Chibber reminded BBC Business News readers of a speech made by Chancellor Angela Merkel to the Bundestag the previous week:
"We have started a new phase in European integration. There are no quick and easy answers. Resolving the sovereign debt crisis is a process and this process will take years."
No chance of it all being resolved last Friday then!
Merkel told the German Parliament that they (presumably Germany and France in particular) have started the process of creating a new fiscal union, which must mean new treaties, and continued:
"We need budget discipline and an effective crisis management mechanism."
And the big Panzerfaust? The new treaty will allow the EU to veto eurozone national budgets that breach the "golden rule" on deficits, exceeding 3 per cent of GDP, backed up by sanctions when budget deficits exceed that figure. Any disputes would be resolved before the European Court of Justice. Countries outside the eurozone but in the EU can sign up voluntarily.
No regard for The Economist's pleas that the European Central Bank should use its unlimited resources to fund the eurozone rescue fund (basically printing money). Germany also does not favour pooling the debts of all eurozone member states together into so-called Eurobonds - Merkel was quoted as calling this idea "extraordinarily distressing".
The German vision, then, is that the ECB, based in Frankfurt will, in due course and sooner rather than later, become very much the mirror image of the Bundesbank.
Really, there should be no surprise on that count, and if it had been so established, the euro and its zone would not be in the predicament they are in now.