Germans love austerity. After World War II austerity, hard work, and self-sacrifice rebuilt their country from the ashes of the fire bombings. But then Martin Luther was a German, and he started the Protestant Reformation. To Protestants work is like a religion.

Not so in Greece. Greece is Orthodox and not Protestant at all. No wonder that constant austerity measures are not helping the country but harming it. One size does not fit all for the European Union and the Euro Zone. Yet the Troika keeps on coming and demanding more and more sacrifices of the Athenians. Who knows where it will end? In revolution? The government overthrow? Worse?

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What is the relationship of Germany to the rest of Europe? Sounds like history class. But it’s what the EU is all about. England understands this better than anybody else. They were anxious to start the EU after World War II and make Germany the head of it to keep that powerhouse of Europe busy and out of trouble.

But it’s ultimately up to the Germans themselves whether they want to take on the debts of their neighbors and help pay them either in the form of a bigger bailout fund or in the form of Euro Bonds.

Right now the Germans seem to be saying they want a bigger bailout fund. But the other shoe hasn’t dropped yet. They said yes to the bigger fund, but they want to renegotiate all the conditions.

So in this endless Greek debt crisis, Germany hasn’t finished defining itself yet

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In August a quite dramatic event occurred in Germany, and it escaped all the news cameras. No one reported on it until today. It was so quiet, but so pervasive and decisive, that no one knew about it until now.

Germans suddenly bought 3% less in the way of goods and services. The decline was sudden and dramatic.

Up until now the ECB has been raising the interest rates to prevent inflation from heating up. Now the ECB is left holding the bag. It doesn’t know what to do in its upcoming meeting. Prices have increased in the past year, but everything is recently slowing down.

The conclusion: do nothing and wait to see what the German consumers do next.

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Merkel delivered on her promise to ratify the agreement in July about the ECB. Its budget will be expanded to 440 billion euros. It will have more powers to lend to countries and banks in the EU. But Merkel’s margin on the vote wasn’t that great. 17 members of her own conservative coalition voted against her. She could afford only 19 before she would have to depend on the opposition.

But in order to get that many votes in her favor she had to agree to re-negotiate the bailout terms the next time around. More austerity measures will be imposed along with more Troika visits to Greece. Greece will rebel. Yesterday’s vote might soon become irrelevant.

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Finnish lawmakers yesterday and Germans today ratified expanding the European Bailout fund to 440 billion euros. They have agreed to let the ECB use the fund more flexibly. The ECB will be allowed to buy bonds, lend to countries before their is a full-blown crisis, and put capital into banks that need it.

Not just Germany and Finland but all the seventeen national parliaments must approve of the changes.

But it still remains to be seen if Germany will be willing to expand its leadership role in the EU to put it all together and make it work.

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Tomorrow is the vote in the German Parliament about whether they want to support the July agreement between Merkel and Sarkozi. Are they going to increase the bailout fund to 440 billion euros or not?

The United States wants it to be even larger. They also want the ECB to be ale to leverage banks. But Merkel will be lucky to have enough votes without support from the opposition. Even Wolfgang Schauble, her Finance Minister, says such a deal might jeopardize the credit rating of Germany itself.

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The ECB is caught in the middle. Most of the states in the European Union want it to be active. They are counting on it to solve the European debt crisis by rate cuts, extensive lending, and large scale asset purchases. They want the ECB to refinance European banks.

On the other hand German members of the ECB didn’t back its move to buy bonds. They complain that buying bonds blurs the line between monetary and fiscal policy. They also point out that it hasn’t worked to solve the crisis so far.

Being partly a political creation, the ECB strives to please all the member states. It started to buy bonds last year and accelerated the process this year. But lately it’s been cutting back last week. It purchased only 4 billion euros in government bonds last week, down from 10 billion the previous week. That is the lowest total since it resumed its controversial bond buying 7 weeks ago.

What it does next depends upon European politics pure and simple. Will the Wolfgang Schauble clones win out with their strict interpretation of a fiscal union or will the Trichet nuts prevail with their ideas about a United States of Europe and an ECB with the powers of the Fed?

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Germany, the Netherlands, and Finland don’t want to boost the EU Bailout Fund. Germany sees practical problems with it. The German Central Bank says the ECB would violate its charter if it contributed to the fund. It’s not allowed to loan money to member governments.

Despite this fact, the IMF, the U.S., and other members of the EU want to increase the fund.

So the war goes on. But Germany holds all the cards.

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On the 70th anniversary of Hess’s flight to Britain this past May big questions remain about the message he was conveying to the British government. Much of the flap is about a document in the Soviet Archives. It concerns a statement by Pintsch, one of Hitler’s aides. He was arrested and sent to the Eastern Front. The Soviets interrogated him. Pintsch confessed that Hitler knew about Hess’s flight and approved of it. This seems to be backed up by the memoirs of Hitler’s chief valet, Heinz Linge. Linge insists that Hitler directed Hess to go to Britain. But when the mission was unsuccessful, he disavowed all knowledge of it.

The biggest shocking fact: the British archives about this subject are still closed to the public. Why? I think that they don’t want anyone who remembered World War II to be around when the archives are made public. They fear what the reaction might be when people realize that Hitler made a serious peace overture to the British. People might then regret the loss of life in battles after Hess’s mission.

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Wolfgang Schauble and Venezelos both attended a meeting of the IMF in Washington, D.C. Wolfgang warned that Greece needed to take decisive steps. If they don’t, the second Greek bailout might not be manageable. Greece might not be able to continue with its heavy debt without a default. He also adds that though he expects Greece to get the next 8 billion euros from the first Greek bailout, the second bailout will have far different terms.

Venezelos says he’s not aware that the terms of the second Greek bailout have changed since July.

It’s obvious that Wolfgang Schauble and Venezelos don’t see eye to eye. But then neither does Greece and the rest of Europe!

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