Even for people coming from neighboring countries, moving to Germany involves making some cultural adjustments, and one of the main ones involves name-titles: Germans love them! They include them in their passports, for example; they even include them in raised-letters on their credit cards. Put another way: if your German counterpart has earned one (e.g. Prof., Dr.) you better be darned sure that you use it when addressing that person orally or in writing (until you get close enough to address him/her with “Du,” if ever) – and in writing, for the case of the particularly active academic, you are expected to keep track of them all (e.g. “Dear Herr Prof. Dr. Dr. Schmidt!”).

However, there are inklings that things might be about to change:

EXKLUSIV: „Dr.“ nicht mehr im Pass: Grüne starten Angriff auf Deutschlands Elite http://t.co/w8lctH7wI1

March 4, 2013 6:31 am via twitterfeedReplyRetweetFavorite

@handelsblatt

Handelsblatt Online

What this is about is that Germany’s Green Party has submitted to the Bundestag a proposed law that would would ban the “Dr.” title from official documents such as the passport and ID card.

Why this now? Well, the “Dr.” title has lost a bit of its luster in Germany lately due to a widely-publicized string of plagiarism scandals. First there was Karl-Theodor zu Guttenberg, a politician of Angela Merkel’s coalition partner, the CSU, and at one time German Economics Minister (2009) and then Defense Minister (2009-2011). But then someone discovered that he had committed widespread plagiarism in writing his doctoral thesis, and soon he was out of government.

(Hey, this guy’s full name is Karl-Theodor Maria Nikolaus Johann Jacob Philipp Franz Joseph Sylvester Freiherr von und zu Guttenberg – the “zu” alone tells you he comes from a noble family. So why did he feel he needed to insist upon adding to all that with a “Dr.” in the first place?!)

That was swiftly followed by more cases of plagiarism in high places. These involved two MEPs from Germany’s Free Democratic (FDP) Party, Jorgo Chatzimarkakis (yes, of Greek descent) and Esther Silvana Koch-Mehrin. Both had their doctorates withdrawn; both, however, remain MEPs. When the same plague arrived last year at the doorstep of no less than the Federal Education Minister(!), Annette Schavan, she did – eventually – resign her position.

You could say, then, that “Dr.” is not really all that it used to be, even in Germany. Thus the Green Party initiative, but the article goes on to point out that no less an Establishment figure than current Finance Minister Wolfgang Schäuble suggested the same thing back in 2007, to no success.

Don’t look now, but another EU sovereign debt crisis is creeping up. This can be seen in the effective interest rates currently paid for the obligations of the usual problematic countries – Greece, of course, along with Portugal and Ireland, but also Italy and Spain. The last-named had hoped that it had made it out of the woods – mainly by means of various public-spending austerity measures – and so Spanish financial experts are particularly aggrieved now that it seems the country’s painful fiscal virtue is threatening to be all for naught. One such, C. Pérez of the Spanish newspaper El País, knows who is to blame and issues his accusation today: Berlin sows doubts about debt and the contagion reaches Spain and Italy.

It’s almost like what happened back when the EU sovereign debt crisis first broke in January, after the new Greek government took office and felt obligated to announce that the country’s debt and fiscal situation was much worse than the previous regime had led everyone to believe. Then, Germany for a long time resisted coming to Athens’ assistance, and thereby succeeded in little more than spreading doubts about their fiscal probity to Portugal, Ireland, and Spain as well, before finally in May rallying Eurozone countries to set up a huge and unprecedented EU sovereign debt support fund.

This time the story is slightly different, although the Germans are still the villains of the piece. It has to do with the proposal Finance Minister Wolfgang Schäuble recently unveiled for the establishment of a mechanism to deal with future sovereign debt crises: first, a program of intensified fiscal austerity for the deadbeat country, accompanied by a mandatory lengthening of their debt’s maturity date; then (if that does not work to calm investor fears of a default) intervention with EU funds, but with required provisions for the lenders to get back less than they are otherwise due, i.e. to take a loss on their investment. Schäuble: “The EU was not created to enrich financial investors.”

All that seems reasonable in itself, but in the first place the Germans here are explicitly raising the prospect again of sovereign defaults. That’s supposed to be unmentionable, and when it is mentioned it tends to make investors sit up in alarm and take notice. More importantly, though, the German proposals also amount to a change of the rules of the game for lending money to Eurozone countries; for one thing, before this investors weren’t expected to have to take a loss if the EU and/or IMF had to come in to cover the debts (and the later maturity date is not something designed to thrill them either).

Given that this is the proposal being pushed by Germany, the EU’s paymaster, these investors are naturally adjusting their expectations for such a near-future development now: the Greek, Portuguese, Irish, Spanish and even Italian debt they are holding no longer seems quite so attractive in the light of this likely rules-change, and so we see the effective rates on those debts lately rising up dangerously to levels potentially high enough to ensure that, in effect, they never can be repaid by those countries themselves.

The result: in trying to address the problem of how to handle sovereign debt crises in the future, the EU has come close to bringing about such a crisis in the here-and-now, and has plunged countries which had thought themselves at least on the margins – namely Spain and Italy – squarely back into the danger-zone. It’s no wonder they’re not happy about it. Unfortunately, there’s a limit to how much of substance can be accomplished by secret consultations among the EU member-states. Such a crisis was probably inevitable, given that top EU leaders refused to simply stick their heads in the sand and pretend that such serious international financial trouble could never come around again.

Today is the day EU heads-of-government convene in Brussels for yet another summit. There will be an elephant in the room, a problem that needs to be handled – Greece, of course – but which some (mainly, but not only, Germany) don’t want to handle just now. So, bizarrely, the summit meeting itself will not have Greece on its agenda; rather, there will be a meeting called of all Eurozone heads of government (16 of them) just prior to the main summit event to address the Greek problem.

I learn this from the preparatory blogpost to the summit provided by the Economist’s “Charlegmagne” correspondent, and I have to admit that, here, that source (in English, of course) is the best provider of information and analysis that I have been able to find. Among other things, his main insight (as embodied in his column’s title, “Why Greece is not suffering enough yet”) that Greece will only be bailed out after it has been forced to suffer considerable economic pain – namely to set an example to other potential fiscal miscreants – is spot-on. And he also reports (although indirectly, from FT sources) the very valuable information of what Germany is demanding to help Greece: 1) Greece must first exhaust all other sources of finance from the markets; 2) It must then get as much as it can from the IMF; and 3) Then Germany will help, but will at the same time demand “tough new rules on debts and deficits that will impose more budgetary discipline than before, even if that involves changing the treaties.” (more…)

The financial travails of the Greek government go on, and will do so for some time even in the best of scenarios. So at least one thing is fixed: simple arithmetic quite clearly shows a noticeable imbalance in that country’s public financial resources and the amounts it customarily spends. Unfortunately, all other considerations surrounding that predicament and how best to address it seem to be stuck in a kaleidoscope-like flux.

Take for example the blogpost found on this site a couple weeks ago: there, resort to the IMF to assist Greece out of its bind was unthinkable, and the proposed solution – suggested by no lesser figure than the current German Finance Minister Wolfgang Schäuble – was instead to set up some sort of Monetary Fund within the institutions of the European Union. You can scratch that now; according to no less than Bundeskanzlerin Angela Merkel (who of course outranks Schäuble), IMF involvement would be perfectly OK and, if there is to be some sort of within-the-EU Monetary Fund, then it certainly won’t be able to appear in time to have anything to do with solving the Greek case. Oh, and another point I made was that the preferred technique so far of EU heads-of-government for dealing with the Greek situation was simply to issue declarations of support without actually doing anything to back them up, and that is also no longer completely true. Mind you, it’s not that the EU leaders now are trying to back them up; it’s that some, such as Bundeskanzlerin Merkel, don’t even want to talk about it any more, including shutting Greece’s problems off of the agenda for another EU summit meeting scheduled to be held next week.

But it gets even worse, as we see in an article in today’s issue of the Dutch business newspaper Het Financiële Dagblad. Merkel now is willing to countenance IMF involvement, but Nicolas Sarkozy still insists publicly that that is out of the question. Furthermore, the French President (together with Jose Manuel Barroso, Chairman of the European Commission) does want to talk about Greece at next week’s summit, at least to the extent of issuing another ringing declaration that the country will not be let down by its EU brother-states – thereby accomplishing a lowering of its borrowing costs, at least for a while.

Unfortunately, it seems that an IMF team has already been called in to take a look at the Greek situation, according to this HFD piece. Plus, the suspicion remains (although it is mentioned elsewhere, not here) that Sarkozy mainly wants to shut out the IMF in order to deny credit/glory to that organization’s head, Frenchman Dominique Strauss-Kahn, who might well run in 2012 to replace Sarkozy as French president. But this now-open disagreement on fundamental aspects of how to deal with the situation between the heads of the EU’s two leading states can only worsen investor confidence in Greece’s finances, and thereby the situation as a whole.

Greece has been having its well-known fiscal problems, but there’s no way that it should resort to going to the International Monetary Fund for money to help out. Quite apart from some technical problems with that approach (e.g. the IMF generally tells you what to do with your monetary policy, in exchange for getting its money; as a member of the Eurozone, Greece has no control over its monetary policy), that would simply be an intolerable political gesture showing the world that the European Union is incapable of cleaning up its own financial problems.

But then what is the EU to do in light of continuing Greek fiscal weakness? Why, set up its own version of the IMF! Call it, for now, the EWF (Europäische Währungsfonds) – yes, using the German term, since it was German Finance Minister Wolfgang Schäuble who got the whole idea started with remarks he made this past weekend. But the idea was further endorsed (at least in a vague way) yesterday by the EU’s man-on-the-spot Olli Rehn, the new EU Commissioner for Economic and Monetary Affairs. For now, it is still nothing but an idea, but that also means it can go in any of a number of directions, something pointed out in the very title of an analysis in the German commentary newspaper Die Zeit: The Fund can be a savior or a bankruptcy-administrator. (more…)

Germany was the odd-man-out at the recent defense summit between the German and French presidents and Belgian and Luxembourgian premiers: Chancellor Schröder’s government has been the one trying the hardest for a rapprochement with the American administration after the divisions caused by the War in Iraq. Indeed, as Anke Bryson notes in the Frankfurter Algemeine Zeitung Weekly, both Schröder and his foreign minister Joschka Fischer wanted to keep this “mini-summit” a low-profile affair, out of respect for the sensibilities of the Bush Administration – “but the publicity damage had already been done.”

We’ve seen how elements of the French press took this meeting seriously, while the Belgian press was more cynical, doubting that anything would ever come of this summit taking place on its own soil. Whatever the sotto voce protestations of German officials, they did accept the invitation to attend the Brussels meeting and did show up there. It’s time to check the German press’ reactions. (more…)