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Sancho Panza

Germany's Ukip Threatens To Paralyse Eurozone Rescue Efforts

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'The stunning rise of Germany’s anti-euro party threatens to paralyse efforts to hold the eurozone together and may undermine any quantitative easing by the European Central Bank, Standard & Poor’s has warned.

Alternative für Deutschland (AfD) has swept through Germany like a tornado, winning 12.6pc of the vote in Brandenburg and 10.6pc in Thuringia a week ago. The party has broken into three regional assemblies, after gaining its first platform in Strasbourg with seven euro-MPs.

The rating agency said AfD’s sudden surge has become a credit headache for the whole eurozone, forcing Chancellor Angela Merkel to take a tougher line in European politics and risking an entirely new phase of the crisis. “Until recently, no openly Eurosceptic party in Germany has been able to galvanise opponents of European 'bail-outs’. But this comfortable position now appears to have come to an end,” it said.

The report warned that AfD has upset the chemistry of German politics, implying even greater resistance to any loosening of EMU fiscal rules. It raises the political bar yet further for serious QE, and therefore makes the tool less usable.

There has long been anger in Germany over the direction of EMU politics, with a near universal feeling that German taxpayers are being milked to prop up southern Europe, but dissidents were until now scattered. “AfD appears to enjoy a disciplined leadership, and is a well-funded party appealing to conservatives more broadly, beyond its europhobe core,” it said. “This shift in the partisan landscape could have implications for euro area policies by diminishing the German government’s room for manoeuvre. We will monitor any signs of Germany hardening its stance.”

Mrs Merkel has a threat akin to Ukip on her right flank, and can no longer pivot in the centre ground of German politics. AfD has almost destroyed the centre-Right Free Democrats (FDP), and is also eating into the far-Left of the Linke party.

The new movement calls for an “orderly break-up” of monetary union, either by dividing the euro into smaller blocs or by returning to national currencies. “Germany doesn’t need the euro, and the euro is hurting other countries. A return to the D-mark should not be a taboo,” it says. Club Med states should recover viability through debt restructuring, rather than rely on taxpayer bail-outs that draw out the agony. Unlike Ukip, the movement wants Germany to stay in a “strong EU”.

Party leader Bernd Lucke is a professor of economics at Hamburg University. His right-hand man is Hans-Olaf Henkel, former head of Germany’s industry federation. Attempts to discredit the party as a Right-wing fringe group have failed.

Prof Lucke had a taste of his new power in the European Parliament this week, questioning the ECB’s Mario Draghi directly on monetary policy. He attacked ECB asset purchases, insisting that there is already enough liquidity in the financial system to head off deflation. Such stimulus merely stokes asset bubbles and does little for the real economy, he argued, adding that the ECB is “saddling up the wrong horse” because it doesn’t have another one in the stable.

S&P said the rise of AfD would not matter for EMU affairs if the eurozone crisis were safely behind us. “This is unlikely to be the case. Eurozone output is still below 2007 levels and in 2014 the weak recovery has come to a near halt in much of the euro area. Public debt burdens continue to rise in all large euro area countries bar Germany,” it said.

The report warned that any sign of hardening attitudes in German politics could “diminish the confidence of financial investors in the robustness of multilateral support” for EMU crisis states, leading to a rise in bond spreads. This in turn would shift the focus back on to Club Med debt dynamics, arguably worse than ever.

S&P said a forthcoming judgment by the European Court on the ECB’s backstop plan for Italy and Spain (OMT) might further constrain the EU rescue machinery. Germany’s top court has already ruled that the OMT “manifestly violates” EU treaties and is probably ultra vires, meaning that Bundesbank may not legally take part.

The political climate in the eurozone’s two core states is now extraordinary. A D-Mark party is running at 10pc in the latest polls in Germany, while the Front National’s Marine Le Pen is in the lead in France on 26pc with calls for a return to the franc. One more shock would test EMU cohesion to its limits.'

Be interested if anyone can shed any light on how well these guys have done,away from the hyperbole.

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All them voters must be wrong...... I mean democracy? What next..

Work camp construction will begin shortly....

Arbeit Mach Frie..

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Just a couple of points.

The FDP (business-friendly liberals) were already on the way out before AfD (anti-euro) came on the scene; the FDP's vote has largely been absorbed by the CDU (Merkel's centre right) and their fall has little to do with the AfD.

The AfD wins have all been in the east of Germany, with most of their votes coming from the CDU, die Linke (ex-communist hard left) and far-right nationalist parties. I doubt that they'll do anywhere near as well in the western states, but it'll be interesting to see. WIth such a heterogenous supporter base, another question is whether the party can hold itself together in the long term.

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I think the whole EU project needs a serious rethink at best.

My main beef with it is the "mission creep". It started off as a trading bloc (EEC). Then came the political union (EU). Then a currency union (Euro). What next? While EU supporters deny it, the trend was clearly, up until recently, a kind of US of E.

Plus, as more and more decisions become centralized in an ever-more powerful body, it makes lobbying by corporations and special interest groups easier. Want to get your unique brand of genetically modified seeds that self destruct after a year into the European food supply? Forget having to lobby 20+ different countries, just sponsor a Directive!

For me, that is the real danger of the EU project.

It is precisely why Corporations are so powerful in the USA. They really only have to lobby ONE government to change Federal law, and the states usually fall in line.

"Ever closer union" really translates into "ever greater centralization of power".

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I think the whole EU project needs a serious rethink at best.

My main beef with it is the "mission creep".

There was no mission creep. The mission was to achieve what they have now (and more in the future).

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I wander if Germany would accept a merger with the UK. I'd rather they ran our economy than the Westminster lot.

I would have preferred it since 1943 actually.

As an aside, of course the verb is wonder, which ironically is from the German from the same genus.

Anyway, as you were...

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There is no party in Germany equivalent to UKIP in the sense of wanting to withdraw from the European Union.

Count 'em, none.

As pointed out above, AfD wants Germany to withdraw from the monetary union. Not the EU.

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There is no party in Germany equivalent to UKIP in the sense of wanting to withdraw from the European Union.

Count 'em, none.

As pointed out above, AfD wants Germany to withdraw from the monetary union. Not the EU.

Thanks for the clarification.

It seems strange though that they're attracting far left voters.Why would that be?

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Thanks for the clarification.

It seems strange though that they're attracting far left voters.Why would that be?

Many, if not most, of the far left voters who support AfD are in the old East Germany, which is still on average considerably poorer than the former West Germany. No doubt in line with the saying "charity begins at home", voters in the east of the country consider that the German state is paying too much to support countries in southern Europe, and should instead be helping their disadvantaged areas.

Edited for clarity

Edited by Snugglybear

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There is no party in Germany equivalent to UKIP in the sense of wanting to withdraw from the European Union.

Count 'em, none.

As pointed out above, AfD wants Germany to withdraw from the monetary union. Not the EU.

Politics is about moving the norm, if germany moves to a normalised position of wanting to leave the EU then the politics will move. There will be many politicians who want germany to leave europe but they will be keeping there poweder dry.

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There was no mission creep. The mission was to achieve what they have now (and more in the future).

So then, when Nick Clegg denied (in the debate between him and Farage) that the aim was basically a federalized Europe, he was lying.

Figures.

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So then, when Nick Clegg denied (in the debate between him and Farage) that the aim was basically a federalized Europe, he was lying.

Figures.

no, that was the aim of the progressive end.

actually they want to rebuild holy roman empire 2.0 where all policy is dictated by the pope/emperor.

some people in germany don't want to go down that route, even though the pope wants germany as the military head of it.

there are still a few "Reformers" left in germany..who remember that it was actually the "men in black" who were responsible for millions of dead germans in ww2..much the same way as they were in the 30 years war which polished off 1/3 of the population.

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