Is Germany the Great Savior of Europe?

“We won’t come to grips with economies deleveraging by having governments and central banks throwing — literally — even more money at the problem.” - Wolfgang Schaeuble, German finance minister

Germany is portrayed as the Great Hope of saving or bailing out other European sovereigns and, in turn, banks. You hear it from the talking heads all the time: The Eurozone needs to do this, the Eurozone needs to do that. As soon as they “do that” — and do it big — it’s off to the races, according to these wags. It’s all code for German backstops, which begs the question: How exactly are things going for Germany? The acute problem is that the German people themselves don’t feel up to or perhaps strong enough for the task. Despite whatever spinmeisters may say, two thirds of German voters oppose these bailouts.

A different picture from the one of Germany as savior emerges when one looks at the monthly Gallup-Healthways Well-Being Index, which represents polls conducted in the U.S., UK and Germany. Germans’ sense of well being about their lives and the future is below that of Americans and Brits. Although a small minority in these countries is suffering, those that say they are struggling is 10% higher in Germany than the U.S. and UK.

As far as the so-called pristine “flight to safety” of AAA German debt, some analysts are predicting that a credit downgrade is at hand and soon – even before the implementation of the next round of EFSF, even before the nationalization of sick German banks and even before the Greek bankruptcy. Two years ago, Germany’s debt to GDP was 64%. Now, it’s 84% and moving up fast.

So far, political leaders in Germany have chosen to ignore all this and instead have passed a fresh measure to throw 211 billion euros more into the pot as Germany’s contribution to the “do that” problem. Apparently, the appeal of the EFSF issue is that it will be another AAA supranational debt guaranteed by the rest of Europe, which coincidentally has far lower than a AAA rating. The “rest,” namely France and Germany, are facing debt downgrades and have populations in deepening funks while their political will is being blown off.

In judging how this plays out from a social and political perspective, it would seem that Germany is the weak link. The U.S., with even more debt than Germany and less cohesive as a people, can also drop like a rock in a heartbeat. There is major political discontent in all these countries, but so far all the public can do is vote for a stranger and stranger revolving-door of politicians, who employ the same one-trick-pony bailout economics. It is increasingly obvious that the persistence of struggling and suffering populations combined with politicians unresponsive to their wishes, leads to protest movements such as Occupy Wall Street. But most of the serious protesting is in truly ruined countries, where much larger groups are suffering.

As the sovereign debt crisis spreads to Germany, France, the UK and the U.S., and some austerity enters the scene, at what percent of population counted as struggling and suffering does democratic protest turn into something far more dangerous (or in the end positive)?

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