PJ Media

'Don’t Waste the Crisis!' German President Says

Die Krise nicht verschwenden!” — “Don’t Waste the Crisis!” This is the title of the speech given by German President Horst Köhler to the Munich Economic Summit last week. The speech appears under this title both on the website of the summit, an annual affair sponsored by the BMW Herbert Quant Foundation, and on the homepage of the German presidency. The speech is notable, above all, for the severity of its attack on international financial markets and the radicalism of the solutions it proposes for “subduing” the latter.

This is by no means the first time that the German president has “excoriated financial capitalism,” as the headline of a report in Germany’s Süddeutsche Zeitung put it. In a May 2008 interview with the German weekly Stern, Köhler described financial markets as a “monster.” In an October 2009 speech to the German Trade Union Association, Köhler again used the expression, insisting that the markets were a “monster” that needs “taming.” The title of the speech on the presidential website was “The Untamed Monster.” (See my Pajamas Media report here.)

Köhler is a longtime member of Germany’s ostensibly “conservative” Christian Democratic Union (CDU). (Technically, his membership is suspended during his term as president.) German Finance Minister Wolfgang Schäuble, also of the CDU, recently said that all German parties were in agreement that the crisis had to be “used” to regulate the financial sector.

In his latest speech, Köhler added to his rhetorical array by describing certain financial instruments as “weapons of mass destruction.” In the written text of the speech, moreover, Köhler repeatedly places the expression “finance industry” in scare quotes, as if to emphasize the non-productive character of financial firms. While the usage undoubtedly has Marxist precedents as well, the vehemence of Köhler’s “anti-finance” rhetoric brings it dangerously close to Gottfried Feder’s distinction between “productive” [schaffendes] and “rapacious” [raffendes] capital. Feder was the chief economic “theoretician” of National Socialism and an early inspiration for Hitler. He was the author of, among other volumes, Kampf gegen die Hochfinanz: “The Struggle against Big Finance.” In Nazi usage, of course, “rapacious” financial capital was also identified as “Jewish” capital.

As it so happens, two days after Köhler’s speech, on May 1, the neo-Nazi National Democratic Party of Germany (NPD) held a rally in the eastern Germany city of Erfurt. In his speech at the NPD rally, party chair Udo Voigts likewise excoriated what he called the “speculative abuse of capital.”  As against the “inhumanity” of economic “globalization,” Voigts advocated a “re-nationalized” economy freed of the influence of “alien [raumfremden] speculative capital.”

The term Voigts used for “alien,” raumfremd, literally means “alien to a given geographical space.” The term is most closely associated with the Nazi political theorist Carl Schmitt. In Schmitt’s usage, however, the geographical space in question was not Germany, but rather the European continent. (See, for instance, Schmitt’s 1939 treatise Völkerrechtliche Großraumordnung mit Interventionsverbot für raumfremde Mächte: roughly, “The Large Spatial Order in International Law, with a Prohibition on Interference by Alien Powers.”)

As it also so happens, one of the intellectual authorities positively cited by Köhler in his speech to the Munich Economic Summit is the Social Democrat Ernst-Wolfgang Böckenförde, a former judge on Germany’s Constitutional Court. The Schmitt biographer Reinhard Mehring has identified Böckenförde as one of Carl Schmitt’s “closest and most important students.”

(It might be recalled that in April 2004, the Boston College political science professor Alan Wolfe managed to conclude that Schmitt was somehow or another the inspiration for “today’s Republican party” — even while admitting that it was “unlikely” that any Republican leader had ever heard of Schmitt! Wolfe’s bizarre screed was published in the Chronicle of Higher Education. One wonders what the likes of Wolfe would have to say about the German president’s open citation of one of Schmitt’s “closest students” or of the fact that this “close student” is a Social Democrat.)

Another point of note in Köhler’s speech is his call for the creation of a “European ratings agency,” by which he presumably means a publicly-controlled European agency. The role of the “alien” private ratings agencies has recently come in for harsh criticism in the European media, especially since Standard & Poor’s downgraded Greek debt to “junk” status. The Standard & Poor’s announcement was made two days before Köhler’s speech.

What follows are some selected translated excerpts from Horst Köhler’s April 29th speech to the Munich Economic Summit.


By virtue of so-called financial innovations, the international “finance industry” drove its own profits to dizzying heights and posed no questions about the risks involved. It thus set off a crisis, which would have led to a collapse of the global financial system were it not for public bail-out measures.


The G20 summit of the heads of state and government in Pittsburgh established some important and correct foundations. … But what has come of them? The international “finance industry” and its lobbyists are evidently trying everything possible in order to water down the measures agreed upon. At the same time, the betting continues; new financial bubbles are already being formed; and while states and citizens are still struggling with the consequences of the crisis, parts of the finance branch are already giving themselves gigantic bonuses again.


The practice of the finance capitalism that is today dominant cannot be a model for us in any case. It is self-sufficient. It operates, above all, through bets and debts. It increases its own yields without any concern for whether this is useful for the well-being of nations. The current crisis displays a pattern that is unacceptable — profits have been made by a few, while the losses are borne by all.


[Financial markets] should serve as a trustworthy mediator between savers and investors, instead of putting everything in danger. It is this service role that provides the actual justification for the existence of financial markets, and to keep them to this must be the central goal of the reordering of financial markets.


Politics must regain its primacy over the financial markets. … This requires simple and hard rules for the “finance industry.” Limits must be set to it, so that freedom does not destroy itself.


No bank and no financial actor may be permitted anymore to be too big to fail. This urgently demands special bankruptcy rules for internationally active financial institutions, including the possibility of temporarily bringing a financial institution under public control by force.


The heads of state and government of the G20 should insist that the “finance industry” make a “fair and substantial contribution” to covering the cost of the crisis, as was said in Pittsburgh. Personally, it seems to me that a tax on international financial transactions is still the best way of achieving this.


[After praising the Obama administration’s financial reform initiative:] But even if reform advances in the USA, Europe should not wait. I believe that the Euro-Group would do well to present its own powerful suggestions for a new [financial] order. In doing so, it should not hesitate simply to prohibit certain types of deals and asset classes: for example, uncovered short sales or enormously leveraged over-the-counter transactions. For these sorts of “weapons of mass destruction” too, we need disarmament. And Europe needs an efficient central oversight authority for institutions that are internationally active and a European ratings-agency. Hard rules for the financial markets would also correspond to the logic of our commitment to the stability of the value of the euro.


If politics subdues [bändigt] the financial markets, if we in Germany transform our social market economy in an ecological way, if we orient our social state toward investment [in the individual] and reinforce the social community — then we will have not wasted the crisis, but used it to bring about a new start [Aufbruch].