Understanding German Politics

Inquiring minds in the US note the upcoming German election and may be wondering about the platforms of the major political parties. Reader Bernd from Germany explains.

Die Linke (The Left): Die Linke is made up of the former SED/PDS (The East German Communist Ruling Party), some former West German Communist and Socialist Parties and a “rebel group” of the SPD. They all have merged and are now called “Die Linke”. By and large they have a communist/socialist platform, albeit not Stalinist. Their main requests are: dissolve NATO and replace it with a new organization to include Russia in it, end all wars, control or nationalize all relevant banks and some crucial industries, increase support for the poor, raise taxes for the rich (above income of 60k Euros gradually go to 75%), introduce a stiff wealth and inheritance  tax. They are pro Euro and want the introduction of Eurobonds immediately. To alleviate the economic crisis in Europe they advocate some serious deficit spending for social and work programs. They have voted against ESM; EFSF and Cyprus deal in Parliament.

SPD (Social Democrats): SPD is the grand old Social Democratic Party, with a wonderful and long tradition. SPD originated from the worker’s movement. Its first party program is from 1869. It the only party that tried to stop Hitler’s power grab by opposing the emergency laws in 1933. Many went to concentration camps for opposing Hitler. In post-World War II Germany SPD provided three Chancellors, Willy Brandt, Helmut Schmidt and Gerhard Schröder. All three Chancellors were major reformers in Germany for one or the other topic.  SPD lost its original power base in the wake of Schröder’s reforms in the early 2000s. SPD is a staunch pro Euro party. They also want Eurobonds immediately, as well as a common fiscal policy, a bank union and a quick unification of Europe.

Die Grünen (The Green Party): Die Grünen started as a mix of 1968 communists/socialists and anti-nuclear energy activists in West Germany. The second part is made up of some left over former East German anti SED “rebels” who helped to bring down East Germany.  Today this is the party for so the so-called “politically correct”. In Germany we call them the Latte Macchiato Moms/Dads. The typical party member is a well-paid Government official or teacher with a work week of 36 hours. They believe firmly in manmade climate change and want to tax and spend their way to eliminate the CO-2 footprint. No amount of money is too much for preventing climate change. They are staunch pro Euro advocates similar to the SPD.

Freie Demokratische Partei FDP (Free Democratic Party): originated from a mix of former liberal parties during the Weimar Republic with an originally clear idea on liberalism. The FDP once strongly supported human rights, civil liberties, and international openness, but has shifted from the center to the center-right over time. Today’s main goal is to get at least 5% of the popular vote, otherwise they will have no representation in parliament. They are a coalition partner to Merkel’s CDU party but most of them would be hard pressed to state why. FDP may not pass the 5% threshold in the next election. FDP states that they wish Europe to return to the “No-Bail out Clause” and the Maastricht Agreement, however, in Parliament they voted for a massive breach of both agreements, following Merkel’s position.

CDU (Christian Democratic Union): CDU is a center-right, typically Catholic, typically pragmatic popular party. It is the party of most Chancellors now including Angela Merkel. I call it the “yes Chancellor Club”. Merkel calls herself pragmatic, some German people call her “Mutti”. Mutti in German means a cunning, but one minded pragmatist, who will reprimand/control her husband for coming home late from a bar. CDU is pro-euro but against Eurobonds. Under Merkel CDU has lost its profile and has made some erratic shifts in position, which is a major turnoff for many supporters. Notably Merkel’s agreement to the breach of all EU-Agreements and her shift to a so called “green energy” has alienated many voters.

CSU (Christian Social Union): CSU is the Bavarian sister to the CDU. Whereas CDU operates in 15 States, CSU is in Bavaria only, where it traditionally gets 50 plus percent of popular votes, thus catapulting it above 5% on federal level. Voter participation in Bavaria is traditionally above 75%. CSU follows Merkel, but tensions are rising. Many CSU members are far from convinced that Merkel is right. Most of legal obstacles against Merkel’s Euro policies in front of the Federal Constitution Court come from members of the CSU. Due to its high degree of organization and its firm foundation in the center of Bavarian populace, CSU is rather influential in German Federal Politics.

Alternative für Deutschland) AfD (Alternative for Germany): AfD is a liberal-conservative party supported by many German economists. More than two-thirds of its initial supporters hold doctorates. Its main position is a return of the EU to the original meaning of the Maastricht agreement, alternatively a return to national currencies. The second major topic is the strengthening of German Democracy, advocating a Swiss – like model. In April 2013, the party held its first convention in Berlin, which was attended by about 1500 supporters. The convention elected the party leadership and adopted the party platform. The three elected speakers are economist Bernd Lucke, the entrepreneur Frauke Petry, and the publicist Konrad Adam. The key demand of AfD is to provide a mechanism for countries to exit the Eurozone. In old Germany, “liberal” was in regards to Civil Rights, not free-flowing money or other policies those in the US may associate with the word. Liberal for AfD is a bit different than for the current FDP

Mish Note:

Reader Bernd is not (not Bernd Lucke, the economist and AfD elected speaker). I will have election predictions next week from Reader Bernd.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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Understanding German Politics

Understanding the high cost of saying goodbye

Janet Dean wasn’t supposed to spend her final days like this.

“She must have had 40 lbs. of fluid. Her face was all swollen. She had the breathing tube in there that was taped to her face,” says Richard Dean, Janet’s husband.

Gone was his sweetheart — the bathing beauty he met as a lifeguard back at Orchard Beach in 1964. This 44-year marriage between the daughter of a New York City cab driver and the son of a New York City bus driver was nearly over.

“At the end, she wasn’t the woman I loved. She wasn’t the Janet that I lived with. She was this organism that was struggling on the table,” he says.

This wasn’t the plan. Doctors had told Janet in the spring of 2009 the pain in her stomach was actually stage-four ovarian cancer. She and her husband quickly — easily — made a pact. The pact lots of us make when we think about death. Richard remembers his wife’s words.

“Don’t extend this more than it needs to be. If I don’t have a good chance at life, I’ll happily accept my death,” says Dean.

So how did they end up here — where the desire for a quiet, unplugged death unravels and a loving husband breaks a final promise? Dean says he sees it now — as his wife lay there in the ICU — she was dying. But he couldn’t see it then.

“I think what happens is when you are in the midst of a medical crisis. You actually don’t know where you are. You don’t have any sense of, ‘Am I a day away from dying? Is recovery possible?’” says Dean. “We actually don’t know that.”

Dean had promised his wife he wouldn’t pull out all the stops to keep her alive. That she would die at home surrounded by her family, not like this — in an ICU hooked up to machines.  

“I was her caregiver. That I would be there. That I knew her wishes. That wasn’t the way she wanted to be. And that wasn’t the way she wanted to leave,” he says.
 
Again, he did what many people do when hope starts running out — he looked to Janet’s team of doctors and nurses — counting on modern medicine to rescue them both.

“Medical people find it hard to deal with that. They’ve got to do something. We can do this, we can do this, we can do this,” he says.

It was a Hail Mary, a super rare antibiotic. So exceptional that Dean says one course of the drug cost $ 20,000.

“The doctors said if we do this, it would give her a chance to get back to where she was, which was maybe a 3-5 percent chance of recovery,” he says.

Yes, a 3 percent to 5 percent chance. The very definition of an extraordinary  measure where the doctors, the hospital, the patient, the insurers together take a flier on a crazy expensive attempt to help one person live a little bit longer… maybe. From a policy perspective it’s madness. But if it’s your mother or your son, or the wife you promised would die in her own bed surrounded by family, then it’s different. Right?

Doctors administered the first shot. It didn’t work.

“I looked into her eyes and she looked into my eyes and we connected. And I told her I loved her. I got her best effort at a smile,” says Dean. “And I knew.”

To this day, three years later, Dean regrets his decisions. The rounds and rounds of chemo, the slippery slope to the ICU, and especially the shot. He thinks about wasted resources, whether some other person could have actually used those antibiotics. But mostly, he blames himself for letting the situation spin out of control — for losing sight of what his wife wanted most.

“I needed to have done more, done better. It was a traumatic time for me. That image stays with me,” says Dean. “The rational side of me understands that I did the best I could, but feel like I could have done better.”

The way Janet died cost her husband. And it cost us. The biggest chunk of health care spending takes place in the last year of life — $ 270 billion. People are at their sickest and emotion drives cost more than medicine. Some health care people believe we’re not too far from a time when the health care system will do a better job letting us know when it’s time to let go.

For Dean — in his final days he’s going to look his doctors in the eye and demand to know when it’s his time. At least, he says, that’s his plan.

Richard Dean is a member of the Patient and Family Advisory Council at Johns Hopkins Hospital.

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Understanding the high cost of saying goodbye

Things That Make You Go Hmmm... Such As Not Understanding The Bull Case Right Now

The relativity relationship that Grant Williams discusses in his latest ‘Things That Make You Go Hmmm’ newsletter is far simpler to understand than that proposed by Einstein (and far, far less likely to win him any prizes of a scientific nature, but we can live with that). Ladies and gentlemen, we are proud to unveil to you, for the first time:

‘Williams’s Theory of Disconnectivity’

 

After long and painstaking research, I have distilled my theory down to the following equation:

 

OS+ps²?R

 

where OS is ‘official statistics’, ps² is ‘political spin’ (squared) and R is ‘reality’.

We must be missing something because, try as we might, we are having a hard time understanding the bull case right now. It seems to be predicated largely on the thesis that we should buy things ‘because they are going up’. (Japan is the poster child for this curious strategy, as those terrible results from Sony demonstrated a few weeks ago. Despite them, Sony stock is back to where it was before the company laid out, in no uncertain terms, just how poorly it was doing. In every single division.)

Yes, we understand that, in nominal terms, money printing is good for stocks ‘just because’; but sooner or later, reality is going to reassert itself (painfully, we might add). The projected growth in profits that is being forecast for 2013 doesn’t tally with the projected growth (or lack of it) in GDP over the same period, and so something has got to give — a fact pointed out beautifully by Rick Santelli and his guest this past week in this video.

Although the examples we could use to illustrate this discrepancy are approximately infinite right now, we will confine my selections to a few areas where the evidence is just too overwhelming to really leave anybody in any doubt…

Let’s finish by applying some real-world values to our variables, with Cyprus as the example:

OS: €5.8bn will be stolen (yes, stolen) from savers in Cypriot banks.

 

+

 

ps²: (WSJ, March 1, 2013): Cyprus’ newly appointed Finance Minister Michalis Sarris Friday rejected talk of depositors taking losses as part of the country’s bailout as he took control of the country’s purse strings following Sunday’s presidential elections.

 

“There is nothing more foolish than talking about a deposits haircut,” Mr. Sarris told journalists

 

(Bloomberg): When asked if a deposit assessment could be ruled out for future rescues, [Olli] Rehn said in an interview: “It can and there is no concrete case where it should be considered.”

 

?

 

R: This will not be the last time depositors are screwed, and it will lead to additional capital flight elsewhere in the EU. The Europeans have not only not solved their problems, they are well along in the process of painting themselves into a corner where ‘whatever it takes’ and ‘everything we are capable of’ are at last proven to be two completely different things.

But that’s an equation for another day…

 

Full Things That Make You Go Hmmm note below…

TTMYGH 3.18

Zero Hedge

Things That Make You Go Hmmm... Such As Not Understanding The Bull Case Right Now