I see Germany as having four major problems that cannot be resolved or endured without major dislocations. As point five, I conclude with a speculative scenario that suggests just how insecure Germany's position actually is.
(1) Long tern trade imbalances and the accumulation of a massive foreign currency reserve tend to have the unwanted effects of lifting up the value of the home currency the reserve is booked against and suppressing domestic economic activity from what it would otherwise be. Since Germany is on the euro, the result is spread out to the entire eurozone, diminishing its economic performance.
Hardworking Germany, as the EU's moneybag, must then help offset the EU's chronically impaired economic performance by lending to financially stressed Greece, Italy, and Spain, thus helping turn the EU from a currency union into a de facto fiscal transfer union. Naturally, the German public hates this because it means paying for the shambolic and corrupt ways of Greece and other states of the EU southern tier.
This rickety contrivance of recurrent lending by Germany is essential to the EU's political survival. Now, the toll of the coronavirus pandemic may endanger the EU by generating demands for new lending that exceed Germany's willingness to pay.
(2) Like most of the EU and other developed nations, Germany's demographic decline imperils its survival as a nation. The Merkel government compounded the problem by embracing massive Muslim immigration. As the Koran teaches though, immigration by Muslims is a way to speed the conquest of infidel lands and nations. Few Muslim immigrants actually want to assimilate and become Germans.
Surveys and a wide range of practical measures show that jihadism among Germany's Muslims is growing, with little to no pushback within that community. Indeed, funded by cash-rich Qatar, Turkey openly warns of its capacity to stir trouble in Germany whenever it wants.
As Germany's Muslim population grows and the numbers of native Germans decline, a tipping point will approach. Germany will then suffer increased terrorism and will either have to resist through severe measures or install a hybrid state that elevates Islam to official recognition as the dominant state religion. Even this will be but a temporary accommodation as Muslim numbers grow and Germany is pressed to become a full Muslim state under sharia law.
(3) Germany's emerging national security strategy is to replace the US-NATO security architecture with a German-Russian alliance based on a flow of Russian natural gas that provides Germany with energy security and the profit of selling that gas to other European nations. This does nothing to remedy the Muslim issue but will tacitly give Russia a free hand to reassemble its former Soviet empire.
Ukraine, the Baltic states, Norway, Poland, the US, and Britain will not meekly accept this, which raises the potential for another European war. In that event, the natural gas pipelines that Germany expects to rely on as secure will last about three minutes. And, with Germany's army now being swiftly reduced to a notional domestic security force against Muslim terrorism, Germany's economic interests will get little consideration.
Remarkably, Germany may end up having to rely on Poland and the US for military security on her eastern flank. Or, then again, maybe Germany will be able to rely on Merkel's cozy and delusional BFF relationship with Putin as providing an enduring security partnership. At the risk of being thought unkind, I note that the Cold War KGB of Putin's formative years made deep inroads into Germany's government by sending agents to court older German secretaries and bureaucrats in positions of responsibility.
(4) Germany's current favorable economic position depends in large part on preserving the EU and the euro. Both are unlikely though to survive the end of the current decade. As they fall, Germany will lose the favorable economic position it currently enjoys.
The southern tier EU states though will benefit from regaining national currencies and control over their trade. Most of all, they will be able to alleviate their chronic unemployment by a strategy of import substitution that restores the local industries that were wiped out in favor of German industry by the EU and the euro.
(5) Who knows, but one day, as Muslims riot in German cities, an Italian-Greek army may motor to the north, seize Berlin and the Reischbank, take the transferable assets, and cancel Italian and Greek debts to Germany. So much for all the reserves and loan balances that Germany seems to believe provide it with economic and national security.
Graying and prosperous but unrealistic, Germany is like an aging pensioner who has watched his neighborhood decline but thinks he is secure because he has a fat bank balance and a large stock of cash at home, a deadbolt and a chain on the door, and a seeming friendship with the Russian tough who lives down the street.
Yet the rule of nature is that when predators make their move, they do so because their prey is isolated and vulnerable. Economically and diplomatically powerful, Germany's declining military power and security relationships make her a target.
Germans may not like it said to them, but the US, not China, has the willingness and ability to provide Germany with a reliable security guarantee. Unwilling to listen to outsiders, Germans seem inclined to learn this lesson through history's hard discipline of painful events.
Rockingham:
"I see Germany as having four major problems that cannot be resolved or endured without major dislocations.
As point five, I conclude with a speculative scenario that suggests just how insecure Germany's position actually is." Thanks, you've presented us with a highly pessimistic and speculative worst-case scenario, one worthy possibly of Germans themselves (i.e., 1914), but one I don't find particularly convincing.
For one reason, 50 years ago I stood in the Fulda Gap, armed & ready, fully expecting divisions of Russian tanks to come clanking over the border, to which we would respond with everything we had, including nukes.
It never happened, and the lesson I took from it is: if you prepare for the worst, then you might also hope for the best.
Rockingham: "Hardworking Germany, as the EU's moneybag, must then help offset the EU's chronically impaired economic performance by lending to financially stressed Greece, Italy, and Spain, thus helping turn the EU from a currency union into a de facto fiscal transfer union.
Naturally, the German public hates this because it means paying for the shambolic and corrupt ways of Greece and other states of the EU southern tier."
Well, first of all, in my experience, Germans were anything but "hard working".
Americans are seriously hard working, Germans took endless lengthy work-breaks, holidays, paid vacations & sick leave.
So we understand: "hard working" is a relative term and relative to some other countries, no doubt, it's true.
It's also true Germans are highly technical and will use their brains to reduce muscle work whenever possible.
Second, you've now provided the first explanation of why Germany "needs" those hundreds of $billions in trade surpluses each year -- so, like good socialists, they can "spread the wealth" among their "less fortunate" (or more profligate) Southern Euro countries.
It also suggests that if, hypothetically, the US, UK & France were suddenly to insist on buying only as much German production as Germans purchase of ours (to eliminate Germany's trade surplus) the people to suffer most would not necessarily be Germans, but Southern Europeans.
Rockingham: "(2) Like most of the EU and other developed nations, Germany's demographic decline imperils its survival as a nation.
The Merkel government compounded the problem by embracing massive Muslim immigration."
Declining birthrates are a condition of every advanced country, indeed, even in countries with higher birthrates, those rates have drastically declined, so I understand.
I can't foresee where this might lead, long term.
Suppose, for example, that preventing telomere shortening could add years of healthy life?
As for "massive Muslim immigration", I'll repeat, I think there were already 4 million Turks living long-term in Germany even before the latest episode, and that added, what, a million or so?
As to when, if ever, they might become a major problem -- I doubt if Germans (unlike Americans) will ever commit national suicide in the name of "diversity".
Rockingham: "(3) Germany's emerging national security strategy is to replace the US-NATO security architecture with a German-Russian alliance based on a flow of Russian natural gas that provides Germany with energy security and the profit of selling that gas to other European nations."
So consider this: if Germany were the USA and Russia was Canada, a natural gas pipeline between the two countries would cause strategic alarm to nobody, except maybe some wacko-environmentalists.
But the concern here is that Russia is a known bad-actor and would not forever control its gangster impulses to influence other countries by threatening their gas supplies.
President Trump's response has been to offer Europeans our own LNG, but I doubt if we could ever match Russia's low prices.
If we could, that would eliminate Russian leverage and perhaps reduce the need for a strong German-Russian alliance.
Rockingham: "Remarkably, Germany may end up having to rely on Poland and the US for military security on her eastern flank."
Nothing "remarkable" about N.A.T.O., it's been around almost as long as I have.
It's purpose is to defend Western Europe, including now Poland, against military threats such as Russia.
Its problem is that most NATO countries, including Germany, contribute far less than what is considered strategically necessary.
That would change, quickly, if they began to take a potential Russian threat more seriously.
Rockingham: "(4) Germany's current favorable economic position depends in large part on preserving the EU and the euro.
Both are unlikely though to survive the end of the current decade.
As they fall, Germany will lose the favorable economic position it currently enjoys."
Maybe, maybe not -- apparently I give the Germans more credit than you do.
But then, I may not be as close to their situation as you are -- I only know that betting on worst case scenarios has not always worked in the past. ![]()