As Draghi scratches at the Spanish flea, the German flea looks East

Merkel heads to Beijing in search of options

Mario Draghi sits anxiously in Frankfurt watching for any signs of crumbling bank foundations in Spain. Reggie Middleton over at Zero Hedge (superb analysis this) agrees with me that the biggest euro-danger at the moment is a bank-run, not a sovereign default…he thinks France might beat Spain to it. But in Berlin, all is calm. For unsere geliebte Känzlerin is leaving on a jet plane bound for Beijing.

The small gentlemen of the Chinese politburo see Angela Merkel as more likely to make sense of the eurozone mess than anyone else (it is a long way from Athens to Beijing) but all things are relative. The word is that they still retain a 0% interest in coughing up hard-earned currency to help an ESM that Merkel’s own Constitutional Court may soon declare illegal under German Law.

In truth, this is a meeting about trade, not debt. And to understand its significance, we need to remind ourselves of Geli’s principal interest in life: power.

Soviet power, EU power, American power, Chinese power: it makes little difference to the German Chancellor: as the horses become more or less powerful, so – like any self-respecting flea – she leaps onto the next winner. Angela Merkel doesn’t care what she’s Queen of, just so long as it’s big and powerful.

To the Chinese, she is a hugely important trading partner in both the import and export senses. Germany is China’s top trade partner in the EU – almost 50% of EU exports to China come from Germany. Meanwhile, Germany buys nearly 25% of China’s imports to Europe. It’s a case of BMWs for the Chinese aspirants, and beads for the eurozone’s blue-collars.

Merkel doesn’t really need the EU. She could team up with Russia and China tomorrow and probably get bigger volumes with little loss of margin…except for the fact that Berlin is severally responsible for the Clubmed debts. For the moment, this – and German banking exposure to Spain – is what keeps her in the euro – not any love for This Great European Project of Ours.

But she’s confident that Mario Draghi has his big guns ready, and so is unworried about the Iberian issue for the moment. “Germany’s technology has a dominant position, but it needs a market – and China is a big market,” said Germany expert Gu Junli, citing energy, environmental protection and manufacturing as possible areas of cooperation.

It’s all part of the German leader’s alles klar strategy: the blank banknotes, emergency Deutschmarks, Dollar swap deals, and ex-EU trading partners are all lined up. Should she stay or should she go? It matters not either way, for the full horizon is as yet out of sight.

If the EU strengthens around Wolfpack und Geli, she’ll stay to run that. If it collapses, she’ll head East. And if recession plus social unrest tear China apart, she’ll be on the next plane to lick Barack all over. But come what may, Angela must have her world role.


26 thoughts on “As Draghi scratches at the Spanish flea, the German flea looks East

  1. Why would there be a bank run in France? Not sure there will be any movement of such until after the Karlsruhe roll over, and that will give Geli the go ahead to do as she pleases. There will be the necessary sticking plasters and can kicking until then methinks.


  2. Assuming that this pantomime somehow manages to stagger on into next year, how likely is die Fuhrerin to win the next German general election destined for Autumn 2013?

    Given that the heroically limpet-like Bersconi was summarily dismissed from office with an imperial flick of the EU’s wrist, Frau Merkel need not assume that she is immune. For the greater good of the European ideal of course (as Don Corleone was heard to remark, “It’s just business, nothing personal..”)


  3. A question for those with a knowledge of economic history:

    If the euro collapses will it set a record for the shortest lived major currency ever?


  4. I rather liked the name “Bersconi”.

    Interesting comment that EU could influence even German election. Wheels within wheels.


  5. So, Angela Merkel wants to continue running her country, and has few ideological bags to drag around. How does that make her different from Cameron, Obama, Hollande, Rajoy, Samaras etc etc? She might even think she can do it better and cause less damage than any potential rivals (she might be right) and enjoys doing it. How does that make different from C, O, H, R, and S

    Of course, if you believe that all top pols are by definition anti-democratic, they your point is proved. But it undermines the credibility of justified critique from the Slog and elsewhere if it is based on simplistic assertions that her upbringing in undemocratic East Germany and her current opportunism make her into a dictator. or “Führerin” – even though you will find plenty of Bild Zeitung readers who agree with you. It doesn’t need that sort of personal abuse to point up the contradictions – and there are plenty – in German economic policy and short-sighted approach to international relations. and I don’t discount the claims that she was far more involved with the GDR powers-that-were in her teens and early adult life.

    By all means disagree with Merkel’s posturing and continue deconstructing her Eurozone bollocks (she has more than most of her male counterparts). Yes, she may be a flea with influence and an instinct for seeing where to position herself and Germany to enjoy sucking and sucking up to power. Yes, the political forces she has perceived herself to be constrained by in failing to sort out the Eurzone may have worsened the debt plight of southern Europe. Yes, she’s an adept politician in worsting her rivals and their ambitions to replace her.

    And, yes, she has attracted the bile of a self-publicising Lauren Bacall look-alike who vastly lucrative media PR and media advisory role was launched on the back of being a Helmut Kohl intimate, who for years milked her tenured position as a double-dipping civil servant-professor to make money while ignoring for many years her students and university obligations to make money in the private sector.

    Germany, like most EU countries, is a deeply flawed democracy (probably less flawed than other EU countries). Take a look at the 30+ years since Helmut Kohl became Cahncellor through a parliamentary coup to be succeeded by Gerhard Schröder (who defends his friend Putin as a “flawless democrat”), in turn succeeded by Ossi Merkel. Seems to me she fits well into pattern of democracy as experienced in. Europe and most of the “democratic” world.

    If the fairly democratic electoral system removes her from power next year (about a 50-50 chance right now), her CDU will dump her for a probably less competent and even less democratic wannabe Chancellor. A scientist background – like Mrs. T’s – may mean she prioritises


  6. Laurence – yes the song could be about many sloggers’ view of Frau Merkel. This is what wiki has to say about the unexplained mysteries of the lyric:
    This expanded to her living in a dream world of lovers, inspired by the songs on her radio. When a “neighbor boy with evil on his mind” tries to enter her room to take advantage of the girl, he is instead drawn into her reality, with weird and unexpected consequences. The intent was to show that the Angie character had more power than he or the listener expected; she shrank him down into her radio, where he remained as her slave whenever she desired him to come out.
    As for the secret lover, could be any of irate, spurned euro-kraut-bashers commenting above and below your post


  7. In other words it ain’t over until the Fat Lady swings her way down the Unter den Linden in Autumn 2013, with her wrecking ball slung over her shoulder. And the Green Pirate Socialists, currently winging their way from Mars, take over the Chancellery.

    At she has one ball – the rest couldn’t muster a dried pea between themselves.


  8. But if we cut to the chase, what you are saying is that ‘Ok, she ain’t much to look at, but neither are any of the other world leaders.’

    As has been said many times by others, Merkel is not made ‘better’ because all the ‘others’ are just as bad.

    In my view.


  9. Pingback: DEBT CRISIS DISINFORMATION: Isn’t it time to be more beastly to Berlin? | A diary of deception and distortion

  10. @ITG fair comment.

    Whilst deeply suspicious of the woman I’ll admit our lot could do with some of her ruthless tenacity- on behalf of our country- at the moment.


  11. Pingback: El verdadero objetivo de Merkel en China, no es salvar el euro | FinancialRed

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