Addicted To Debt: To Cure Economy, Credit Junkies Need A New Dose Of Shame

Op-Ed: The worldwide debt crisis means that citizens, governments and the financial world must confront a bitter reality: living on credit has to stop, and dangerous deficits should be forbidden. The transition will be painful. But it’s high time.

(Chris Devers)
(Chris Devers)
Markus Zydra

MUNICH - In the search for a solution to the debt problems in the western industrialized countries, a visit to Nuremberg, Germany, could offer some valuable inspiration. The city boasts a Debtors' Tower, an exact copy of the original rebuilt after World War II. This was the prison where, until the late Middle Ages, men who did not meet their financial obligations were locked up. Doing time in what was called the "Narrenhäuslein", or "little house of fools," was a mark of extreme shame.

Many older people can still remember the day when we only bought the things we had the money to pay for. Living on credit was frowned upon. Of course, people who bought homes took out mortgages and car buyers paid in installments, but the idea was to pay back what was owed as swiftly as possible. Even governments, in the period of reconstruction that followed World War II, strived to keep budgets balanced. Government debt was supposed to be a fallback position in the event of severe recession in the national economy.

Looking back in time just hammers home the difference in the way we think about debt now, 40 years later, when living on credit has come to be seen as almost a virtue.

The change was gradual, and if you've ever been a smoker you know how stealthily an addiction builds. At the beginning, it's just a couple of cigs a day. Then a few more. Soon enough, the self-deception – "I can stop whenever I want to" -- is clouding your vision.

Careless addiction

And then, somewhere down the line, a fear of lung cancer starts to take hold in many smokers' consciousness. When that happens, they realize they are well and truly addicted. And that's the exact point that Western industrialized countries and their money policies have now reached. And that cuts across all sectors in those societies, all of those whom let addiction creep up on them: private households, business, the government. And now comes the nasty moment of truth.

In many families, living on credit has become par for the course. Over-use of credit cards is one of the reasons for the ever-increasing number of personal bankruptcies. So is the dream of home ownership. Real estate has become an object of speculation: take out a loan, buy the house, wait for the price to go up, and then go up a rung on the property ladder by going into debt for an even more expensive property.

Large banks have driven this development. They give credit to speculators gambling on the stock market without a careful check of their credit rating, while an entrepreneur needing money to modernize his or her business will be required to put up substantial collateral.

The value system has changed for the worse. Firms that in the old commercial tradition set cash aside for a rainy day are still being pressured by shareholders to build up the debt necessary for payouts from the capital reserves. That's how the finance world reached its present condition -- wealth was supposed to magically be created from borrowed money without having to be bothered with such things as real investment in the production of goods. The global crisis is a punishment for this arrogant attempt at financial alchemy.

Governments too succumbed to the delusion. For the first time in US history, on Saturday a rating agency downgraded the world power's credit rating. The idea that America could default suddenly doesn't seem so far-fetched anymore. The same holds true for Japan and the Eurozone. After Greece, Ireland and Portugal, now Spain and Italy have issues with servicing debts.

Let's be clear about this. The financial markets are still putting as much capital at governments' disposal as governments need. They're asking for markedly higher interest, and there are a number of shady operators on the scene creating unrest on the exchanges. But at the core, it's a country's citizens that finance the government, directly by paying taxes or buying bonds, and indirectly through capital sum life insurance and pension funds. Debts that governments can't pay back decrease citizen assets.

The situation is particularly serious because Western governments have had to rescue their banks. Add to that the fact that for many decades now governments have been following a policy of running deficits, soothed by the notion that they would of course manage to ease down the debt. Eventually.

And voters bought it. We saw the rise of environmentalist parties, but nobody founded an anti-debt party. So how do we fix this mess?

A high level of economic growth is a major prerequisite, yet growth rates are tending to stagnate in the industrialized countries right now. So: over and beyond Greece, debts need to be waived. Citizens will bear the burden, but a new dogma is needed: society is robbed of its freedom when debts are carried over year after year. Dangerous deficits should be forbidden.

The transition is going to be painful. There will be a lot less prosperity for everyone. But the bitter reality of a devolving economy is upon us, and it's high time that individual citizens, the government and the financial world start to accept it.

Read the original story in German

Photo - Chris Devers

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What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel


BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.

Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

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