Raymond J. Learsy Headshot

German History, the Financial Crisis and Democracy in Danger

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The tenor of the times is such that one needs to pay attention, close attention, to those who can shed some light on the financial crisis that is veering toward existential dimensions. And largely for worse, the Germans can provide us with a frightening cautionary example of where we might be headed.

They have been there, they have done that, and it wasn't pretty.

This week past Germany's chancellor (talk of a freighted title) the stalwart Angela Merkel sternly warned, "You should not underestimate the huge feeling of injustice among the people about what is happening, and it will only get worse."

The chairman of the Bundestag's parliamentary committee that oversees the government's bank rescue program, Albert Rupprecht, put it ever so bluntly, "If we cannot explain why the crisis took place, confidence in the economic system, the market, even democracy could collapse", (FT "Merkel Ally Warns Of Threat to Democracy" 3.25.09). These comments being generated by rising concern over the potential political impact are caused by the steepest downturn in the German economy since the 1920s/30s. I don't think a history lesson is needed here to know where that led.

This weekend thousands will be taking to the streets in Germany carrying banners emblazoned with "WE WONT PAY FOR YOUR CRISIS". Rupprecht meanwhile is calling for an inquiry to determine the causes of the crisis to be modeled on our 9/11 Commission. He wisely understands the investigation should not be handled by politicians in that they, like bankers and regulators, would be among those sitting in the dock. The commission would have subpoena powers and its findings should find their way into civil and/or criminal actions before the courts.

"We do not need a witch hunt nor an inquisition tribunal, but we need to identify who or what was responsible for the crisis. We should not leave it to the populists". And that comment, coming from the mists of German history, speaks volumes.