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Friday, May 11, 2012

German inflation backlash alert (it took about 12 hours)

Well, it didn't take long. You may have thought that yesterday's comments from people allegedly close to Bundesbank President Jens Weidmann to the effect that Germany could live with the shocking inflation rate of 2-3% were in any way a sign that Germany was about to cave in on its resistance to anything that resembles high inflation. Well the front page of Bild Zeitung - the gold standard of European tabloids (pun intended) - says it all:

The “Bundesbank is going soft on the euro”, adding that:
“Over the next few years prices in Germany will rise much faster than before. Our venerable Bundesbank, the sacred guardian of price stability, will do nothing about this since it considers it to be ‘manageable’”.
And in case the 13 million or so Bild readers didn't get the message, page 2 features a giant picture of a one trillion DM banknote from the Weimar era:

An op-ed by the paper's chief editor Nikolas Blome argues that:
“[inflation] will above all hit workers, employees and pensioners. Precisely those who kept a cool head and ploughed on through the crisis. This is unfair. It gnaws at our trust in money and our major institutions, in politics and central banks… since Germans have bitterly experienced it themselves they know that high inflation ultimately breaks down every society”. 
It wasn't only Bild though. The man himself, Weidmann, moved swiftly to deny the reports, claiming in an interview with Süddeutsche that this was an “absurd discussion”. He clarified that keeping inflation below 2% in the eurozone as a whole meant that “in some cases” German inflation would be higher, but that “we will ensure [in the ECB’s governing council] that inflation in Germany will not run out of control. Citizens can rely on the vigilance of the Bundesbank”.

This is one national core belief you don't mess with.


Anonymous said...

It's either billions to euros 'going south' literaly or inflation.

Anonymous said...

Funny, how the only instances when I read the Bild is here, on Open Europe Blog. Sad, somehow.

Anyways, the banknote pictured is actually a trillion DM banknote, as the English "billion" translates to "only" a "Milliarde" in German, a Milliarde being a thousand millions. Therefore one may read "1000 Milliarden" on the lower right-hand side of the banknote.

Sad, how this blog even makes mistakes similar to what I would expect from the Bild. May you should stop reading it that often.

Open Europe blog team said...

Thanks Anonymous- you right about the translation. Our apologies.

We appreciate that you seem to have a beef with Bild - and the paper is certainly not in everyone's taste - but we don’t quite follow you on the "sad" part. You seem to imply that if we were to ignore various barometers of national psyches and sentiments, they may not exist. The strong reaction is indicative of the obstacles to allowing higher inflation in the Eurozone, and is therefore of massive importance. Incidentally, we monitor a range of German papers on a daily basis – from FAZ to Suddeutsche – and cite them frequently. Self-censorship is hardly the way to engage with the huge number of factors impacting on the debate about the euro – in Germany and elsewhere.

Daniel said...

Of course that's true. Sorry for the direct language.

Bild is not only a barometre, it is also a "baromaker". It creates realities. The more one takes it seriously the more serious it gets. I turn to this blog, because I think it usually is a great blog, which is whenever it comes up with its own original interpretations and valued opinions.

Thank you for that, by the way!

Rik said...

Fully agree with Daniel, Bild is a very important newspaper. It is also in my personal opinion a pile of rubbish only equalled by Murdoch's but that is simply another issue.

The problem many Europhiles have with papers like Bild is that they simply ban them out of their concept of reality and act like they are totally irrelevant. But as Daniel remarks wisely it doesnot matter if we think personally that Bild is rubbish. It is simply a baromaker in Germany.

As nowadays you want something done in the EU you need Germany and if you want something done in Germany where the public opinion plays a major role Bild behind you is a huge plus.

It is btw, seen the way the Europhiles act towards Bild, not surprising that they are not really pro-EU.
The EU-bunch simply forgets that it probably desperately will need its support to let them continue their business.

For the existence of the EU it is probably of the utmost importance that Germany keeps supporting the European project. If they would stop it would most likely become a club of cripples as it simply needs money and at the end of the day the Germans simply are the only ones with money. And (simply again) you need longer term support by the German population to have that. Democracty and that kind of things. With all impopular measures they otherwise most likely will pull their (the German) plug out and that is the only one holding back the water and prevent them from drowning.