I was only hit once with a leather in school. But it was worth it. Years ago, Pelé came to Ireland and trained in the grounds of our school. Four of us bunked off French to see the great man and get an autograph. What would you do: Pelé or French?
Apparently, this was a ‘mortaller’ and, for our punishment, a small, thick leather strap was produced from the drawer and a clattering was administered. But it didn’t matter because we had seen Pelé. Tragically for my throbbing hand, three days later, I went on a soccer trip with Dalkey Utd to Germany, and who was on the plane? Pelé. So I needn’t have suffered at all.
That week in Germany, I went to my first big football match to see Schalke 04. The fans were brilliant, full of colour, and Schalke at the time had the great Klaus Fischer – the master of the bicycle kick – playing up front for them. Many is the bruised arm was suffered on our road trying to emulate Fischer’s bicycle kick. Concrete isn’t the best surface for this one.
But since then, I have always had fond memories of the Bundesliga and German football. Two weeks ago, I was in Germany to watch football and got the chance to assess the great barometer of all things football and economics: the views of the local taxi driver.
When you travel to Germany and chat to the average bloke, it is surprising just how little he knows about what is going on on the periphery of Europe. Not that he should really care. The trip to Munich confirmed what we all know happens when things are going well. You take in your immediate environment and regard it as normal. After all, most of us trade with each other, buying and selling, so if all around you is going well, why worry?
The taxi driver couldn’t have been more courteous. We chatted about the upcoming game – Bayern v Chelsea – and then the state of the place. He told me that unemployment in Bavaria was less than 3 per cent, business was booming and life was good. I asked him about the rest of Europe and he shrugged his shoulders and said: “We don’t feel the crisis here.” He paused and then said: “Maybe there are a few more immigrants, but we don’t feel any problem here.”
This is the truth. Germany is booming. Unemployment is the lowest in a generation, exports to the rest of the world are booming, wages are rising, and so is property price inflation in the big cities of Hamburg, Frankfurt and Munich. In Hamburg last year, prices of apartments rose by 14 per cent and were up 12 per cent in Munich, year-on-year, in January.
In Cologne, prices of existing apartments rose 9 per cent. In the latest poll, 86 per cent of Germans said they were happy with their standard of living.
This week, that feelgood factor will have been reinforced by the news that people are now prepared to lend Germany money for nothing. The German government can now borrow at 0 per cent. This is because billions of euro are flowing right now out of the periphery, particularly from Spain to Germany, because investors and the average citizen believe there is a risk that Spain will leave the euro. In the first three months of this year, €97 billion has left the country. That is nearly 10 per cent of GDP, and that was before the crisis amplified in the past few weeks.
But interestingly, this meant that the Germans felt this in lower interest rates, allowing them to borrow more cheaply if they want to.
On this issue, my taxi driver took up the conversation and explained to me that German football, like the German economy, was better managed than any other. Unlike British teams, for example, German teams are not allowed go into debt. As we all know, football and how it is played, managed and followed tells you a lot about the culture of any country. The pair of us, like bar-room pseuds, warmed to the topic.
What he told me was fascinating.
First, all decisions of the club are taken by the members of the club, who hold 50 per cent plus 1 voting bloc. These are fans and other members of the club, not determined by the size of your wallet.
Every year, each club has to submit a set of financial documents to make sure the club is viable, is not in debt – which is banned – and is not over-spending.
Clubs must be financially accountable. A full set of documents has to be submitted each year before the licence to play is given, covering assets, receivables, cash and bank balances, liabilities and provisions, current overdraft facilities, loan commitments, projected and current profit/loss statements, and cash inflows and outflows.
These are judged by the German football league, and all clubs have to inject money into a fund to make sure that, if a club, even after all this scrutiny, does get into difficulty, it won’t go bust. No Bundesliga club has experienced an insolvency since the league’s creation in 1963 (there have been 92 in the top five divisions of English football since 1992).
Ticket prices are kept low, at around €10 a game. The fans feel real ownership, which was evident with the Bayern fans we met. The Bundesliga is the best attended of the big football leagues in Germany, with an average attendance of 45,726 in 2010/11 – 10,000 more than the Premiership.
This, he told me, was the secret to German success: good management and an aversion to debt. Not like the free-spending, profligate Chelsea.
He had a point, but only if German clubs want to play only against themselves. Without the free-spending, debt-financed English clubs or Spanish giants like Real Madrid or Barcelona, Bayern would have no one to play against. There would be no Champions League final in Munich and I wouldn’t be in his cab. Without the mental spending of the likes of Real, the Germans would have no competition to play in and no big names to play against.
Similarly, without the periphery buying their goods, the Germans would have no one to play economics with. Every creditor needs a debtor, every budget surplus needs a deficit to finance, every current account surplus needs a current account deficit. Similarly, every Bayern Munich needs a Chelsea, otherwise they can content themselves with trips to Leverkusen and Dortmund.
Similarly, if the Germans are not prepared to budge in Europe and think they can, in their own words, “do as much as necessary” (but actually do “as little as possible”) to save the system, then the system will crash.
Economics is not about morality lessons, but about trade and commerce. The creditor needs the debtor in the same way Bayern needs Chelsea, and Germany needs the rest of Europe. This demands flexibility in the way the euro crisis is now tackled. Otherwise the euro will collapse in chaos and Germany will have no one to play with.
Come to a state-of-the-nation debate entitled, “Is Ireland now a province of Germany?”, chaired with Teutonic efficiency by Barry Murphy (aka Gunter) at www.dalkeybookfestival.org on June 16.
The article has been amusing. 1. Of course the Germans are oblivious to what is going on, in the periphery. In 2005 Irish people were completely oblivious to the modesty then existing in Germany. This was when we had soccer stars selling apartments in Portugal. And when mna na hEireann were finding cheap clothes in Manhattan (probably the most expensive real estate location on the planet). People who are content with their lot get oblivious to anything that might dampen the mood a bit. 2. German real estate is bubbling. So is real estate in Scandinavia. Soon it will be… Read more »
Ireland haven’t got a snowball’s chance in hell.
Kevin Doyle is a unique striker in world football insofar as he has no clue how to score goals. An utter donkey.
Now Cyprus needs a bailout.
http://www.telegraph.co.uk/finance/financialcrisis/9309588/Spanish-rescue-draws-closer-as-Cyprus-buckles.html
And Spain is making signals that it will gladly accept one, if it is provided. (despite all the pretension that it did not need one in the first place)…
1. You can be certain that a lot of Germans are aware of the situation in the periphery of Europe. 2. You shouldnt trust all the governmentally faked statistics about employment, rising wages etc. in Germany. There are huge amounts of people that cannot make a living from their daily work anymore. 3. Sure, every creditor needs a debtor, but it is in the creditors interest that the debtor can pay back his debts. It is the debtors fault if he doesnt understand the game of trade and commerce and sells himself whatever he can to earn the money to… Read more »
Actually it’d be great if our Euro-American zombie banks were like English football clubs, cos at least they don’t get a blank govt cheque when they go bust.
Right on David,
Am curious how you think trade with China, and how a slow-down or even reversal of Chinese middle-class growth will change things for the Germans.
Most people in Germany have very little sense of the real situation in place like Ireland, and this is the case right across society. As Deco says, people see what’s right in front of them, little else. Most people think things are fine for Germany, and see no threat from the collapse of Ireland or Greece, only countries with the begging bowl out.
Greece won the Euro’s because they were managed by a German, Otto Rehhagel. (Oops, eh, maybe we should let them manage lots of other stuff too …)
“Without the free-spending, debt-financed English clubs or Spanish giants like Real Madrid or Barcelona, Bayern would have no one to play against. There would be no Champions League final in Munich and I wouldn’t be in his cab. Without the mental spending of the likes of Real, the Germans would have no competition to play in and no big names to play against”. Ah no David, they’d just pay the players less and live with in their means. The champions league doesn’t have some sort of stipulation in its rules that forces the huge spending & debt upon English &… Read more »
David, I’m surprised you didn’t mention the new stadium where the match took place – named after an insurance group. It cost €340m to build, it is symmetrical and good looking and holds 70,000, so it is clearly functional. Did it not remind you of another recently built stadium, built in the heart of D4, named after another insurance group? It cost €410m to build, it is absurdly assymmetrical, to such an extent it is difficult for rugby place kickers to make out the goal posts from the surrounding steelwork supporting the roof. It is lob sided, so is not… Read more »
In the present Airtricity League of Ireland aka that ALL Airtricity League of Ireland clubs from Athlone Town to Wexford Youths MUST have their financial accounts approved by Irish revenue and tax and audited BEFORE the season kicks off to avoid a club going out of business during the football season.This is the only common denominator with German football.UEFA wants to bring the German system into play across the various leagues in Europe but the UK,Italian,Spanish,French are against such proposal as may see many of the “leading european clubs” AC,MiLAN,Barcelona,Real Madrid,PSG,Man Utd,Man City,Chelsea being unable to compete if the new… Read more »
Germany’s exports into the Eurozone have gone DOWN, not up since the inception of the Euro.
This fact is conveniently ignored by nearly everyone in these discussions.
So how is the Euro so great for Germany then?
China needs the EU 27, its biggest trading partner and it can only hope for the the best. Germany is the key player in Europe; it can do several things but it cannot itself create sustainable growth in countries such as Spain, Greece or Ireland. It takes two to tango. The growth crisis is not new. It was masked by property and related credit booms but pre-2008 is not coming back. The unemployment rate in Spain is the highest in the Eurozone at 24.3%; the record was 24.5% in 1994. It was 21% in 1997 and 8% in 2007 after… Read more »
David only got the leather once; he must have been a goody two shoes; I received “six of the best” on several occasion with a far harsher instrument of torture that of the leather. The bamboo cane was cheaper to buy and replace when in split or in some cases when it was stolen from the unchristian brothers, I guess I can own up to that now. I lived in the fiscal periphery of Dublin and I think the leather was beyond the means of my school or could it be that my schools budget was equal to that of… Read more »
I don’t have the bus fare to get to Dalkey as I live in a periphery within a periphery.
I would have to borrow at high interest rates to be able to afford the transport costs to Dalkey and that would put me further into debt and as has been said it’s a snowball effect.
The snowball smashing starts here and with Teutonic efficacy so if Dalkey is Germany, I am Ireland
The euro system is under attack by City of London.
The financier oligopolists running their currency wars out of the Anglo / American axis used weapons of mass destruction CDS’s to undermine the euro.
The Germans got on with building an economy the old way, the real way the unit of energy labour for unit of productivity way.
Long live the euro and down with the City of London and the lunatics that are running things there presently in an age of casino banking bonuses and narcissism and lazy arses.
All about the Germans isn’t it? I have to say, I disagree with the observation that the German people do not understand what is going on in peripheral; Europe….desperate stuff. But hey…what would I know..I’ve only been working in Germany/for German companies for the last 25 years. No doubt, in contrast, the very informed Irish people will be flocking in droves to no. 37 Merrion Square to get a signed copy of ‘Contemporary German-Irish Cultural relations in a European Perspectve, Exploring Issues in Culrural Policy and Practice’. This will be launched in ca. 2 weeks’ time and provides the perfect… Read more »
David, Why are we talking about soccer and peripheral events. why are we not discussing the central event. Why are we not discussing the real result of the adoption of the policy of the European Stabilization fund. What has Ireland voted for and what have the European nations already agreed to. Simply put, all countries have agreed to have their financial affairs run by the European central bank. All the countries have given away their sovereignty to a group of faceless bureaucrats. The ECB can now demand that a so called sovereign county MUST loan more money to the fund.… Read more »
http://republicbroadcasting.org/index.php?cmd=news.article&articleID=3590
If the people express their preference by the ballot box will the authorities resort to violence to maintain the status quo. Is this the same as getting the strap?
I’m glad to see David pointing out that every debtor has it’s creditor because analysing our creditor/debtor relationship can lead to the source of the debt crisis. When you think about it every Government, every business and every household all have bank accounts and all our money is in the banks, apart from the little bit of cash in the economy which currently stands at around 3% of the total of all out bank balances. And yet, the same Governments, same businesses and same households are all in debt to the banks. The entire money supply is already in the… Read more »
The more things change, the more they stay the same (plus ça change, plus c’est la même chose) A proverb making the observation that, turbulent changes do not affect reality on a deeper level other than to cement the status quo. The proverb is of French origin and was used by the French novelist Alphonse Karr (1808-90). It also appears in George Bernard Shaw’s ‘Revolutionist’s Handbook’ (1903). “Nama, the NTMA and the Central Bank — guardians of Ireland’s finances — are bastions of secrecy, hiding activities from their ultimate owners. The state-owned banks, Anglo Irish, AIB and Irish Life &… Read more »
I think there is no point in Ireland starting to point the finger at Germany and blaming them for the state that this country is in, now that we appear to have moved on from pointing the finger at the bloody Lehman Brothers (ala Bertie). I am also getting tired of hearing that Spoofer Gilmore telling us all about how “market confidence will be restored” and how we will be able to borrow from the markets in 214 as he likes to abbreviate it. I have spent most of my working life dealing with the same markets and I can… Read more »
While some are heading the ball in bankster stadiums, how about a little mental exercise? Spain Careens Toward Squillion Euro Bailout June 4 (LPAC)–The following multiple choice question is submitted to loyal readers to test their attention to detail: QUESTION: The amount of bad debt on the books of Spanish banks, which has to be bailed out to avoid formal bankruptcy, is: A) 300 billion euros B) 375 billlion euros C) 475 billion euros D) 10 squillion euros E) All of the above The correct answer is letter E). Last Friday, Nomura said it was 300 billion; on Saturday, UBS… Read more »
As well as the “firepower” FAZ and Handelsblatt, @Dorothy, here is the most important from Die Welt : Germany’s Exit Could Save the Euro, Economists Say June 4–An article in the German daily {Die Welt} with the headline, “Return to the D-Mark, Germany’s Exit from Euro: Seductive, But…” reported Clyde Prestowitz, president of the U.S. Economic Strategy Institute, and Jon Prout, former financial department head of the Crédit Commercial de France bank, as saying that the Eurozone cannot and will not recover, as long as Germany stays in. A German exit from the Eurozone would help, though, they say. The… Read more »
There will be a slowdown in Germany but it will not resemble the car crash that was allowed to manifest itself in this country.The Germans are good managers in Govt.They micromanage everything. Fair play to them. The Irish civil service have no exposure to proper management.Theres no proper training. They do all the degrees but they have no experience in the real world.Germany has a first class second level training and school program. The second level system in this country is run by people who went into teaching from college and never worked in a company or gained much experience… Read more »
David, Slightly off topic and more related to your previous article but this needs to be addressed. The importance of Ireland’s Diaspora is highlighted by you and Mr Kenny as very important. Why then are we prevented from voting on decisions that have forced us to leave? Especially as we are part of Europe and one of our Masters France has this privilege for its Diaspora. Considering the small turnout I would say 500,000 frustrated people would have had something to say? The Economist (@TheEconomist) 03/06/2012 12:29 Around a dozen countries, like France, give non-resident citizens their own advocates in… Read more »
There has being a lot of comment about the Germans and what they do. It is of course very relevant. But what do we do. We only follow only follow others agendas. We cannot set our own. We will do cut and slash budgets and austerity because the troika set that agends. We cannot restructure our governemnt or civil service because no external party is setting that agends. We fight to maintain the 12.5% corporation tax and refuse to countenance a financial services tax because large business interests are setting that agenda. But we allow domestic small businesses to die… Read more »
The next chapter… rising from the ashes…collateral damage Ireland has voted would be a undeserving statement for this ridiculous event of a referendum where barely 50% of voters turned up. Ireland failed to exercise solidarity would be a better description but this is history now. The split of Europe is the next chapter and collateral damage can be expected and is calculated. The recent Bilderberg meeting where Minister Noonan was seen, well it is the usual food for speculation. What is not speculation however are the next steps in this tragedy. The very people who steer Europe since 2007 now… Read more »
I have to give credit where it is due, an excellent article this week, that them spawned some excellent commentary. Keep it up! It is good to have this treaty nonsense out of the way. All it served was to heighten passions on a trivial document that will be modified in the next EU treaty document; Eurobonds coupled with closer integration. That will be the real battle. It has to be said all the main economic powers are using the devalue and export model in an attempt to kick start their respective economies. The Chinese manipulating their currency, the US… Read more »
Problem is, there is a long way to go before Irish people get involved. I helped to canvass Skerries for No vote, people just did not care. Watching a few English lads playing soccer on the telly had more meaning to the people I spoke to. Things will get very bad before getting any better, how bad, I don’t know. Lead in the air?, starvation?, I just don’t know. Cyprus is now going down (up to 157Billion). Spain crumbling. Any “good” government would be planning for the worst, and that’s how to feed 4.4 million people. Kenny sent crying after… Read more »
Anybody who did the Beer Kellers in the 80s in Munich etc will know that they serviced many a young man’s pocket with money for the summer through college and beyond.Oh and remember the scramble to load your pockets with 5p pieces on the trip over so you could flood the vending machines with something that was worth half the value of the corresponding German coin.Ten to a room, sleeping on the floor.The only thing that has changed from the 80s is the 5p coin in the vending machine but I reckon this could be coming to vending machine near… Read more »
A great read. I like it when you talk football and economics Everything you said is lucid but there is one point I don’t understand. You imply that Chelsea et al play in the champions league just because they have money. If English clubs were sane and run like German clubs there would still be a champions league. Football people love to test themselves against the best and have been doing so for 56 years of European competition Jimmy Johnstone, the little guy who tormented and embarassed Franco’s team in the Bernabau in 1967 with long meandering dribbles would have… Read more »
Another bailout ?
http://www.telegraph.co.uk/finance/financialcrisis/9312326/Spain-makes-plea-for-EU-aid-for-troubled-banks.html
And now we see that Facebook has lost almost half it’s value, compared to it’s IPO price. Zuckerburg could do no wrong – until he got out onto the open market. The sheer media hype has exploded.
Ultimate denial is being on the dole and spending the weekend at your girlfriends house in the sticks and joking with pals back home that you like to visit your summer house of a week end
Eternal Optimism is hoping that your pals will always like you and want to hear your stories no matter how true or imagined
SPAIN: It’s A Bank Run
An emergency phone conference took place today. Confirmed to have taken place by one, Jim Flaherty, Minister Finance Canada.
Participants: Central Banks and Finance Minister from
USA, Canada, UK, Germany, France and Italy.
Germany holds 140 billion and France 110 bn in Spanish debts.
“Spain calls on EU for help as bond markets close in”
irish times
Have a read of this:
http://yanisvaroufakis.eu/2012/06/03/why-europe-should-fear-fina-gail-like-reasonableness-much-much-more-than-it-fears-syriza/?year=2012&monthnum=06&day=03&like=1&_wpnonce=5de5edde44&wpl_rand=416a7a486a
Added to David’s recent articles, it makes you wonder when this madness is going to end!!!!
David’s comment above gives an inkling that it won’t be long.
Test
Regardless of the pros and cons of an austerity policy for the EMU, a lot of people rallying against austerity seem to ignore the harsh reality that in the absence of finding an affordable lender austerity is not a policy choice but a fact of arithmetic.
the end is nigh!
Did the Germans fly oer here da? Aye right above ye son. Fuckin heck! A wee poem to pass the time. I love Tuesdays. They are so predicatable. I draw my dole and David publishes another masterpiece. Simple pleasures are the best of fun. You can’t beat playing with words or sitting with a pencil. (a ‘pincil’ my faither use to call it) I never asked for much in this bloody life just to keep it free fae trouble and strife a simple life and mebbeye a nice wee wife I found a nice wee wife and she is nice… Read more »
Have the Irish brithers ever thought of letting cheeses into their lives?
Here is an excellent interview between Max Keiser and Hugo Salinas Price about the reintroduction of a 3gram silver drachma back into the monetary system in Greece. As hugo says the monetary system of unbacked paper currencies is coming to it’s inevitable conclusion which is a complete breakdown. In the interview Hugo outlines how this coin could be introduced into the Greek monetary system and indeed any monetary system. This is the only way to protect ordinary peole from the oncoming massive currency debasement that is on the way. The interview starts at 13 mins if you want to get… Read more »
To me, the Bundesliga is successful for several reasons. Watching their equivalent of Match of the Day, you notice a few things: full stadiums, great atmosphere with a huge amount of crowd interaction with the PA announcer, if a player scores, for example, the PA says his first name and in response, the crowd bellow his surname, everyone’s drinking beer & all the best German players play in Germany. The German clubs do not exist in some sort of fan-controlled socialist nirvana and their rules limiting outside investors to 49% ownership of the clubs are not unique, supporter ownership exists… Read more »
There is a ongoing problem I find with a lot of economists. They confuse correlation with cause. Because we have a correlation of firemen with fires, we cannot say the the firemen caused the fires. And so it is with the correlation between Germany’s current wealth (and China’s) and the Ireland’s and PIGS in general’s demise. The cause is wrongly construed by our host and many of the economists and I think it is unhelpful and misleading and it creates conflict and we start slagging off Germany calvinistic attitudes versus the fickle nature of the Paddies etc. All is about… Read more »
Economics is a science, an organised body of knowledge, built up in logical steps which enables us to predict what results may come from given circumstances. As soon as it starts to become philosophical or political it is Political Economy. Because economics is a Social Science it will never have the exactitude of a physical science, people are involved and thus we end up with the different “schools” of “economics”. Anyway, I’m probably about to be told by WordPress that I’ve already said this, happening to anyone else?
David’s article is very similar to the one I wrote 11/11/11 and which can be found here: http://www.tff-onlinetrading.com/market-analysis/2011/12/22/germanys-love-of-the-euro/
“Ticking away the moments that make up a dull day You fritter and waste the hours in an offhand way. Kicking around on a piece of ground in your home town Waiting for someone or something to show you the way.” ^ From Time by Pink Floyd. John Taylor Gatto has some interesting takes on compulsory schooling: “All of us are to be made perfectly and dependably manageable, using every trick of psychology, social pressure, or brute force known to history. Also, to make us more dependably predictable, in the interests of an economy of very big business, a tightly… Read more »
EMMETTOR, you, I am assuming are not Irish or are you calling yourself names? Do you believe that greed makes a society including Irish or Greek greed or do you work for German industrial advertisement agency? I am Irish and I am certainly not fecal mater, I do not know any that are nor am self loathing of my culture. I do not subscribe to the German advertisements found here on this Blog; you only need to look at the recent history Germany to see how that society is constantly on a course of self destruction and the demolition of… Read more »
The Ballyhea Theses – nailed to the door of the ECB in Frankfurt at midnight Following the example of Martin Luther and his 95 Theses which he once pinned to the door of the castle church in Wittenberg in Germany, the Ballyhea Bondwatch protest made its way to Frankfurt yesterday and pinned its own theses about the failures and unfairness of the bondholder payouts to the door of the ECB, the bankers’ own cathedral Journalist Diarmuid O Flynn, of bondwatchirealnd was denied access to the ECB press conference at the last minute (despite being granted accreditation) because he had been… Read more »