The AFD and no more bail outs

I met a senior member of the German AFD yesterday in London. He was optimistic about his party’s prospects, anticipating they will win seats in the Euro elections next year. He explained that his party is now on 6% in the national polls, which would give them representation in the next Parliament if there has to be an early re-run of the election.

Their main policy is to insist on no more bail outs within the Euro zone. They are not calling for the immediate exit of certain countries from the zone, nor are they in favour of an early break up of the whole single currency. They think several countries will be unable or unwilling to accept the continuing discipline of the Euro, and will seek financial help from other member states. At that point those countries should be invited to leave rather than receiving money from the stronger countries.

The AFD see the damage the current level of the Euro is doing to some members, and the way high unemployment and little or no growth is stalking much of the zone. They think freeely floating currencies and monetary independence worked better in the past and would work better in the future.

They support the various legal challenges to the German government, made in an a effort to stop the use of German money prop up other parts of the zone. They see the difficulty Mrs Merkel is having in forming a new coalition government, and would like to see new elections. They point out that the substantial votes for Free Democrats and the AFD has not be translated into any seats in the Parliament, limiting their scope to influence the Parliamentary process.

It is still quite likely Mrs Merkel will do an eventual deal with the SPD. Such a government will be less wedded to policies which promote freedom and enterprise, and more inclined to support further EU integration and the transfer of subsidies. However, many of the German public agreee with the AFD’s central point, that there should be no more bail outs.

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42 Comments

  1. Peter van Leeuwen
    Posted November 20, 2013 at 6:44 am | Permalink

    The largest Dutch government party (VVD) has already proposed future enabling member countries to leave the Euro some time ago, so these AFD policies aren’t all that extreme. That said, this isn’t really an issue for the UK but for the Eurozone.

    • Denis Cooper
      Posted November 20, 2013 at 9:50 am | Permalink

      Yes, at one time, before Merkel lent on him, the Dutch Prime Minister Rutte said that the EU treaties should be changed so that a country could leave the euro but still stay in the EU, a proposal which was greeted with stony silence from the UK government. Like the proposal from the Tories’ allies in the Czech Republic that their country should be relieved of the legal obligation to eventually join the euro which it had to accept as part of its treaty of accession to the EU, which proposal was also greeted with stony silence by those leading the Tory party.

      • Peter van Leeuwen
        Posted November 20, 2013 at 10:24 pm | Permalink

        @Denis Cooper: even if true, it is still in the VVD election manifesto (to enable countries to leave or be pushed out of the euro). Things don’t happen overnight, and will only happen if the majority of the EZ can be convinced of course.

        • Denis Cooper
          Posted November 21, 2013 at 8:01 pm | Permalink

          It would need EU treaty changes agreed by all EU member states.

  2. lifelogic
    Posted November 20, 2013 at 6:45 am | Permalink

    “less wedded to policies which promote freedom and enterprise, and more inclined to support further EU integration and the transfer of subsidies”.

    Sounds like another country being controlled by politicians using a compass that is 180 degrees out. Less enterprise, freedom and doubtless more parasitic government, more regulation, more expensive religious energy and more taxes.

    • lifelogic
      Posted November 20, 2013 at 8:51 am | Permalink

      I have not heard David Cameron nor William Hague say anything on the Spanish war Ship’s invasion into Gibralta waters, are they intending to or do they want to encourage more such actions?

      • Bob
        Posted November 20, 2013 at 9:35 am | Permalink

        @lifelogic

        I have not heard David Cameron nor William Hague say anything on the Spanish war Ship’s invasion into Gibralta waters, are they intending to or do they want to encourage more such actions?

        They’re rather too busy emasculating our armed services at the moment.

        The bonfire of the quangos however seems to have been dropped.

        • Hope
          Posted November 20, 2013 at 10:02 am | Permalink

          It would go against building by stealth the EU defence force. You cannot fight among your own. Have no doubt Cameron is on board when he signed the accord with the French. There was no need we have NATOa and the Berlin Wall fell. I suggest the erosion of the armed forces is part of that plan. It is not logical to keep committing to unnecessary wars and erode your capability to fight in those wars.

        • Leslie Singleton
          Posted November 20, 2013 at 11:42 am | Permalink

          Bob–Had to laugh at Hammond’s comment that the latest Tory rebels might “damage the military”–It is of course our Government that is doing that.

  3. Mike Stallard
    Posted November 20, 2013 at 7:07 am | Permalink

    Thank you for passing on this important summary of the aims of the AfD.
    Much appreciated.
    They sound like the voice of common sense to me. Shame they were not elected even with the German PR system.

    • Leslie Singleton
      Posted November 20, 2013 at 11:44 am | Permalink

      Mike–But note that in true European style they want another election

  4. Julian
    Posted November 20, 2013 at 7:09 am | Permalink

    “many of the German public agree … that there should be no more bail outs.”

    That is true but those same Germans mostly seem to agree that the euro is a good thing and want to keep it. The idea that a currency union requires a political union and financial transfers doesn’t seem to get much of an airing in Germany. They want the benefits the euro brings to Germany but none of the responsibilities.

    • petermartin2001
      Posted November 20, 2013 at 8:57 am | Permalink

      Yes it seems obvious now (doesn’t it?) that an economic union would also require a political union for it to work. It still wouldn’t be easy. That can be seen from the problems the poorer US states have, but no-one tells Mississippi or Arizona, or whoever, they have to balance their books or leave the Union. There is a mechanism for a transfer of a surplus from the richer states to the poorer. Just like there is within Germany itself of course , between the regions.

      And yet, when the Euro was first being discussed that never seemed to occur to the advocates of the idea. More than a slight oversight , I would say!

      • Brian Tomkinson
        Posted November 20, 2013 at 9:25 am | Permalink

        Peter,
        I am sure it did occur to the advocates of the Euro, they just didn’t want it discussed in public as this was their next step towards forcing political union onto those member states.

      • Denis Cooper
        Posted November 20, 2013 at 9:57 am | Permalink

        Kohl was strongly advised that Italy, and also the Iberian countries, should not be allowed into the euro until they had sorted themselves out. He chose to reject that advice, and moreover allowing even the inadequate admission rules to be bent in those cases set the precedent for Greece to be allowed in a little later.

        The Germans should be aware of this, as some of the details were published in Spiegel eighteen months ago:

        http://www.spiegel.de/international/europe/euro-struggles-can-be-traced-to-origins-of-common-currency-a-831842.html

        • M Davis
          Posted November 20, 2013 at 10:54 am | Permalink

          Helmut Kohl; Angela Merkels’ former mentor.

    • Lindsay McDougall
      Posted November 21, 2013 at 7:14 pm | Permalink

      Germany believes that the Euro’s problems will disappear if all the other Member States behave like them, at least in the matter of fiscal responsibility. While that may be true, I doubt that such behaviour will be forthcoming. It still looks like the ECB and Germany will sooner or later be on a collision course. Both of them know that the ECB buying bonds of weak Member States would sooner or later lead to a weak Euro.

  5. Richard1
    Posted November 20, 2013 at 8:30 am | Permalink

    The main policies of the EU have become sustaining the Euro and enforcing expensive energy in the belief it will curb global warming. Defenders of the Euro must accept that its inevitable requirement is pooled sovereignty over fiscal and monetary policy, bail-outs and substantial transfers from richer to poorer areas within the Eurozone. For us in the UK, the pro-EU side will need to show how we can insulate ourselves from these failing policies, as well as negotiate a return of powers in those areas where UK voters do not support EU control. Otherwise the Outs will win.

    • lifelogic
      Posted November 20, 2013 at 9:00 am | Permalink

      “pooled sovereignty” sounds a bit like being slightly pregnant, you either are sovereign/pregnant or you are not.

      When you pool sovereignty some court adjudicates, who decided which court and who decided on what basis? Who controls the defense forces? Sooner or later it becomes very clear which one is sovereign – and that the other is clearly not.

      • Richard1
        Posted November 20, 2013 at 10:16 am | Permalink

        Any international agreement involves pooled sovereignty – membership of NATO for example, or acceptance of BIS rules for banks. The question is in what areas do we want it and how much.

        • lifelogic
          Posted November 20, 2013 at 6:08 pm | Permalink

          The point is who can later decide to leave Nato and join an alternative, or leave the BIS rules for banks or indeed the EURO/EU should they prove to be highly undesirable at any stage.

          • Richard1
            Posted November 22, 2013 at 8:52 am | Permalink

            I agree with that. The EU looks like a very irreversible piece of sovereignty pooling.

    • Brian Tomkinson
      Posted November 20, 2013 at 9:31 am | Permalink

      Richard1,
      ” For us in the UK, the pro-EU side will need to show how we can insulate ourselves from these failing policies, as well as negotiate a return of powers in those areas where UK voters do not support EU control.”
      Mission impossible; the EU is determined to take more control not less and to replace the member states with itself viz. a centralised anti-democratic organisation.

      • Richard1
        Posted November 20, 2013 at 10:17 am | Permalink

        If that’s the case, and they want to stick with the Euro as it is now and with the current energy and green policies, we might be better with a customs union only, like Switzerland.

  6. Gary
    Posted November 20, 2013 at 8:33 am | Permalink

    Meanwhile we continue to bail out the banks. A bit rich criticizing Europe for bailouts.

    • Denis Cooper
      Posted November 20, 2013 at 9:59 am | Permalink

      Notionally the bailouts are of governments, not banks.

  7. James Matthews
    Posted November 20, 2013 at 8:58 am | Permalink

    “He explained that his party is now on 6% in the national polls, which would give them representation in the next Parliament if there has to be an early re-run of the election.”

    How fortunate for him (and shameful for us) that the German electoral system is so much fairer than ours.

  8. Brian Tomkinson
    Posted November 20, 2013 at 9:47 am | Permalink

    JR: “He was optimistic about his party’s prospects, anticipating they will win seats in the Euro elections next year.”
    I don’t suppose you confided in him that you are pessimistic about your party’s prospects, anticipating that they will lose seats in the Euro elections next year. Predictable, isn’t it, that you are prepared to give so much credence to a party in Germany which currently polls 6% and has no representation and yet you take every opportunity to belittle UKIP in this country which has a minimum of 12% in the polls.

    Reply I reported what I heard. I have no need to report UKIPs’s views of how well they will do next time, as they write in to this site to tell us themselves.

  9. Denis Cooper
    Posted November 20, 2013 at 10:00 am | Permalink

    I wouldn’t hold out too much hope that the German people will do anything significant about this, or for that matter the German constitutional court.

    • Leslie Singleton
      Posted November 20, 2013 at 12:23 pm | Permalink

      Denis–Whilst I agree that the Germans are unlikely to do anything specifically about the wrongheaded birth of the Euro I believe that they will increasingly take the view that , first, it is becoming time for them to start discarding their guilt, secondly, they hate French Socialism, and, thirdly, they don’t like Italians (and vice versa). When that all comes to the boil is when something might happen.

  10. Neil Craig
    Posted November 20, 2013 at 11:27 am | Permalink

    You imply, probably correctly, that Merkel would rather have the option of a new election and coalition with the AFD, than have coalition with the SPD.

    How different from the home life of our own dear PM who would obviously much rather have a pro-EU Labour government than a coalition of Tories and UKIP.

  11. Acorn
    Posted November 20, 2013 at 12:20 pm | Permalink

    Did you know that Germans are still using about 13 billion Deutsche Marks to do their shopping. There is no time limit on cashing in Deutsche Marks and a bank will still give you € 0.51 for them, the original peg rate.

    The Germans have done well using the Eurozone to keep the value of the Euro down so they can run a 6% BoP current account surplus. Naturally, they won’t want to give that up in a hurry, or give any of the proceeds to the likes of Spain or Greece. German households are not seeing a lot of those proceeds as wages, the 1% are getting most of it, same as UK and the US. Hence they are not buying more stuff from the periphery states, to help them out. Germans are not into any sort transfer payments to be frank.

    Eurozone banks are said to have around a €1000 billion of dodgy assets (loans) on there balance sheets, a lot of them are in Germany. One of them is said to now be the proud owner of a fleet of foreclosed marine tankers that they can’t give away.

    The creation of the Single Supervisory Mechanism within the ECB, which will monitor around 130 of the euro zone’s largest banks from next year, won’t do German banks any favours and the latter will not be wanting to pony up for the Single Resolution Mechanism (bank bail-out fund) or the European Stability Mechanism (bail-out fund for the other bail-out funds).

    But the Germans are insisting on “bail-ins” from now on, like Cyprus. Shareholders; senior and junior debt holders, get wiped out first, governments (i.e. German),last. Expect a uniquely EU style “fudge of fudges” on this one.

    • forthurst
      Posted November 20, 2013 at 7:09 pm | Permalink

      “But the Germans are insisting on “bail-ins” from now on, like Cyprus.”

      It will be interesting to see how well that works in practice without highrolling Russians to take the strain. Prof Lucke of AfD is quite sanguine about having an appreciating DM, pointing out that imports will be cheaper, which presumably would include Club Med holidays. Luckily for Germany, they have many products with unique selling points for which there is a ready market outside the Eurozone.

    • Denis Cooper
      Posted November 21, 2013 at 8:45 am | Permalink

      Well, the Germans have already ponied up their initial contribution to the ESM and have promised to pony up much more if necessary; but one of the ongoing arguments is whether to allow the ESM to be used for directly re-capitalising commercial banks, and:

      http://uk.reuters.com/article/2013/11/20/uk-italy-france-eurozone-idUKBRE9AJ0XX20131120

      “Germany, loath to share liability for rescuing other countries’ banks, has been resisting this move, which it says would require a change in its national legislation.”

  12. forthurst
    Posted November 20, 2013 at 12:40 pm | Permalink

    Professor Bernd Lucke was interviewed on RT.com before the elections in which he claimed that AfD was necessary to provide Germans with a ‘Eurosceptic’ alternative, for which they as with the British, do not currently have representation in their Bundestag. AfD does not propose UKIP policies, although it does appear to attract the same kind of (people ed) Actually there is little to choose between the stated current Conservative position of not wanting to join, and AfD wanting out of the Eurozone unless it can be made to work without bailouts after a Club Med’s exit.

    “‘German-dominated EU undemocratic’ – Alternative for Germany founder”

  13. Tad Davison
    Posted November 20, 2013 at 12:50 pm | Permalink

    It’s an interesting exercise with Fiat currencies that magically conjure money out of fresh air, to try to find where that bailout money actually goes.

    Even more interesting to see why it was deemed necessary in the first place.

    Perpetual debt seems to be the catch phrase.

    Would it be improper of me to suggest it’s all part of a global con?

    And at the time of writing, the BBC’s Andrew Neil has just made an important point to the Tory Chairman, Grant Shapps, on the Daily Politics Show. He reminded Mr Shapps that his government gave Hedge funds a massive tax break earlier this year. What was that about sunlight being the best disinfectant?

    Tad Davison

    Cambridge

  14. margaret brandreth-j
    Posted November 20, 2013 at 2:40 pm | Permalink

    Perhaps Julian would explain the benefits of being in the Euro.
    Independent leverage and negotiation is always a better method for an independent country and that is what the EU is comprised of, independent countries , but how can you do this when someone holds the purse strings ?

    • yulwaymartyn
      Posted November 20, 2013 at 8:14 pm | Permalink

      margaret – For German the euro has been a good thing in that it devalued the German mark and provided cheaper prices for their exports. We in the UK just went for a straightforward devaluation of 20 per cent following the crash. Worringly our exports have not risen as much as had been hoped by having a cheaper pound. Even more worringly the euro can now devalue as a whole via virtual zero interest rates. Its a race to the bottom.

  15. uanime5
    Posted November 20, 2013 at 5:12 pm | Permalink

    Even if the AFD get some seats there’s no guarantee that Merkel will have to make a deal with them. Especially if she can reach a deal with one of the other, larger parties.

  16. Bert Young
    Posted November 20, 2013 at 5:16 pm | Permalink

    The time that has elapsed since the German election and their failure so far to form a Government , is an indication of the problem Angela Merkel faces in creating a cohesive political front . The key issue is , of course , Europe and the extent to which the German economy will prop up a bankrupted European market . The course she steers has to embrace the increasingly sceptical German people and the extent to which German leadership will diminish if she bends towards a more independent line . I don’t believe she will succumb and it may push her towards another Party ; if it turns out to be the SPD it will not auger well for the sort of deal David Cameron wishes to pull off ; if that proves to be the case , UKIP will be handed a splendid opportunity next year .

  17. Narrow shoulders
    Posted November 20, 2013 at 6:21 pm | Permalink

    The AFD may well be polling at 6% but when the German voters were asked the question at their election concerns about the EU registered way down theslist and 5% was not achieved.

    UKIP and Tory eurosceptics should take note. The EU will not swing an election (24 hours to save the pound).

    Either the EUsceptic message needs to be refined to strike a meaningful chord with the masses such that people will actually vote driven by a party’s position on Europe or the single issue party needs to spread its issues.

    Our Prime Minister and Chancellor are consummate politicians, they understand this and until the EU becomes a priority for more voters it will not be addressed by more than lip service. Enough to prevent flight to the single issue party not enough to rock the boat. Mrs Merkle also understands this which is why she increased her share of the vote and AFD like UKIP has no representation nationally.

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