Germany’s constitutional court has begun its hearing over the legality of the European Central Bank’s bond buying program today. The German high court is not the political football we have for a judiciary in the USA. They are rather independent. The head of the court said the success of the program wouldn’t be relevant for “Otherwise, the end would justify the means.”
We are looking at a potential political power struggle between Germany and the euro zone. Germany still is fighting the hyperinflation of the 1920s and sees always deflation as the answer. The United States is still fighting the Great Depression and see stimulation as the answer.
Lost with both has been this failure to grasp that you cannot have it both ways. You cannot borrow year after year with no intention of paying anything back and expect the world not to notice or the economy to suffer. Germany has to learn the lesson that for all its efficiency, its taxes are too high and they have one of the lowest entrepreneurial rates in the world. People look at the taxes and regulations and find it easier to either leave or work for one of the big companies. Germany must come to grips with the youth crisis. They are laying the seed for widespread civil unrest. You cannot defend the bondholders at the expense of the people. This historically has been the source of every revolution. This was even the crisis that led to the civil war in Rome and to this day the propaganda of the bankers has misdirected history to cover-up their corruption.
The failure of economic growth in Europe has been called Les misérables by the Economist. These politicians have no clue about the future. They only see the old ideas and this is leading to massive confusion. This is why we are in a HUGE bull market for volatility. The markets are going to swing in both directions as the majority are forever torn between old concepts (deflation and inflation) while trying to apply them to a world that has not even been clearly defined economically.
