Germany and the Financial Crisis

While there have been ups and downs, in general I have liked living in Germany for the last two-and-a-half years. I’ve made some great friends and seen more of Europe than I had ever seen before. It has also been fascinating to compare my experiences living in Australia and the US, with that of living in Germany. Mostly I have been really impressed. Germany seems to be well run and well governed, the trains, roads and airports are all modern, the countryside gorgeous and driving around I am always astounded at how many futuristic wind turbines you see.

We moved over to Germany just before the global financial crisis struck and, in general, Germany seems to have fared quite well. Credit is much harder to get in Germany and nearly everyone I know either has no credit cards or is forced to pay them off monthly. There also seems to have been a much smaller housing bubble, possibly because it is just more common, and quite acceptable, to rent. The German system to deal with unemployment, Kurzarbeit, seems to have been extremely well thought out and I like the ideas underpinning the system. People work hard and take their jobs seriously, but they also have a lot of fun, at least around where I live.

So it is not surprising that the German government has not been easily influenced by the US government in terms of stimulus spending, nor particularly backwards in terms of declaring the German economic model to be a success.

However, there are a couple of flies in this particular ointment. A number of them have been discussed in the newspapers, such as whether the German model is actually transferable to other countries, and what would happen if it indeed it was attempted widely, but one that doesn’t get mentioned is the role of the German banks in facilitating property bubbles across Europe.

Ireland is one of the countries that did have a huge property bubble, and has had a correspondingly devastating economic readjustment. And while it appears that the Irish government badly managed, the state was nonetheless running a surplus and did not have a significant amount of debt. All that changed though when the newly insolvent private banks (that had financed the unsustainable property developments) had their debts guaranteed by the Irish government. Virtually overnight, the Irish people assumed the debts of failed investors and banks, as it was somehow deemed critical that investors ought not to be liable for the risks that they took in search of private profit.

Kevin O'Rourke writes about this in his Letter from Dublin at Euro Intelligence and Paul Krugman has written a lot comparing Iceland, where no such guarantees were made, with Ireland. Not surprisingly, Iceland is now doing substantially better than Ireland.

The part that caught my eye in O'Rourke’s article is how EU officials effectively told the Irish government that the owners of the Irish property debt should not be liable for their loses, and would be made whole by the people of Ireland. I actually can’t get my head around how the Irish government actually agreed to this, if indeed they had a choice. After all, it is the responsibility of the government to look after the interests of the people, not the investors that would surely not have shared their expected, private, profits. At some point in the future it will be interesting to read an inside scoop of exactly how this was all negotiated, what was threatened and what was offered.

And who exactly are the owners of the Irish property debt? If the situation in Greece is any guide, German and French banks will account for the majority of the proportion, although I have not yet seen any articles on this topic. And, as with Greece, a very obvious question that arises is what on earth were the solid, conservative German banks doing lending so much money for such shaky property deals? Did they actually do due diligence? Or where they so caught up in the frenzy for market share that by the time that they realized their actual position, that to pull back would have undermined their own financial footing?

Ultimately, what it looks like to me is that the Irish people are being forced to repay German and French banks to preserve their financial future. Now, if one or two large German and French banks collapsed due to bad debts in Greece, Ireland, Portugal or Spain, the economic results could be truly horrendous, so I can certainly see that perspective. And no doubt, a lot of policy makers and bankers in Berlin and Paris are desperately hoping that with time the property market comes back, some portion of bad debt becomes good and that the fiscal position of banks and European Governments edges back into the black. I just can’t escape the feeling that the system has gone horribly wrong if so much pain has to be inflicted on the Irish people, as well as many others – to save German and French banks.

Christmas Party

The MPI had a Christmas party this year, and for once I was not travelling and able to go. It was quite a lot of fun, at least as can be had with two cherubs in tow and some degree of responsibility to try and maintain. It was also a great chance to grab some shots of the different folks at the MPI. The photo below shows Brienna with J.

The photo below shows N on the left and D on the right, I'm not sure about the woman in the middle. Brienna has done a lot of work with N on various projects and thoroughly enjoyed the collaboration - hopefully it can continue when we head over to the UK.

The photo below shows D with her husband F and their cute little girl. They are from Mexico and I had an interesting, if sad conversation with F about the "War on Drugs" and its effects on their country. Sadly, I can't really see how the situation in Mexico can really improve until this absurd "war" ends, which at the present time is nowhere in sight.

And of course, no Christmas party would be complete with a visit from der Weihnachtsmann, in this case, D. D, and his wife I, have been a really great addition to the social scene, organizing a bunch of fun gatherings at their place, including a Halloween party where D had the most amazing tiger costume. I think it took Aralyn at least five to minutes to really understand that it was D underneath the stripes, whiskers and tail. This time she wasn't so easily taken in.

Boehner Tears

So the incoming US Speaker of the House, John Boehner (R-OH), cried on a recent interview on 60 Minutes. Gail Collins at the NYT, among others, make all the obvious points and give the guy a well deserved shellacking, all of which I heartily agree with. But the point that really intrigues me is whether or not he really means it, and if so, how on earth does he square it with what his actual voting record. I think to some extent this is the core of my fascination with American politics: how do people say one thing, yet vote in ways that run utterly counter to their stated interests and goals?

When asked why he choked up on election night, Boehner replied:

"Talking, trying to talk about the fact that I've been chasing the American dream my whole career," Boehner said.

"Some things, there are some things that are very difficult to talk about. Family, kids -- I can't go to a school anymore, I used to go to a lot of schools. You see all these little kids running around, can't talk about it," Boehner said. "Making sure that these kids have a shot at the American dream, like I did, is important."

Given that his twenty-year voting record appears to be largely devoid of sympathy for working class Americans, you would think that he would be suffering from some degree of cognitive dissonance at the very least.

But perhaps this is just the nature of the US political machine: vicious competition, enormous power and privilege for the victor, and an almost requisite sublimation of your originals goals in order to succeed. Certainly it wouldn't pay to think too hard outside the bubble of accepted thought or to let your mind ponder whether the general Republican orthodoxy was actually achieving what you "know" it is, out there in the real world.

Pretend Helicopter

Caeden is coming along in literal leaps and bounds. He's getting bigger and stronger, and after two and a half years in Germany, moves seamlessly between German and English. I honestly think that he is equally at home in both languages which has me quite green with envy.

His art projects have also gone up a notch in terms of complexity. His Pretend Helicopter painting below features a handsome red fire engine, with the pretend helicopter invisible, but according to him, very clearly present, in the sky above.

Freundin

Watching your child making a good friend is just a great experience as a parent. Aralyn is a little shy and because so much of her play is imaginative, featuring detailed stories and characters, it seems that she doesn't always easily connect with other children. She has definitely bonded with I though, another little girl from the same class at school, and it is simply great to watch them play and grow together. Having to tear her away from this sweet little friendship is going to be one of the worst parts of moving to England.

School Girl

One of the more exciting and wonderful things to have happened this year was Aralyn starting school. In Germany, starting school is regarded as a big milestone for a child, and there are some really sweet traditions to mark the occasion.

One thing that I particularly liked was the welcome ceremony, conducted on the weekend before the first day of school. All the pupils' families were invited, and in front of the crowd the principal individually welcomed each student to the school. The children also got to see their classrooms and meet their teachers, and there were some productions put on by the older children for the throng. It just felt really good to see everyone so excited about their children starting school, to see such an enthusiasm for education.

Having a child start school also gave me an almost tangible feeling of community. A number of our neighbors and friends gave Aralyn little packets of sweets or presents to mark the event. There is just something very solid and good and right about traditions like this, honoring the importance of learning.

On Monday, the very first day, Aralyn and I walked down the street to school together. Aralyn was carrying her Schultüte, a cone shaped basket carrying school supplies, sweets and other little things that Brienna had bought for her. You can see it in the picture below taken on her first day of school.

Overall, her first half-year at the Jenaplan school has been excellent. She has made some great friends, the teachers are loving, attentive and amazingly organized, the classrooms and facilities are virtually brand new, and there are even two Australian lizards as class fauna. The class has also gone on lots of field trips and excursions, and being Germans, they've also gone on some fairly long walks and get lots of exercise, at least in good weather.

The only frustrating thing about the Jenaplan system so far is that I am not sure that the mentoring system works exactly as it is supposed. The older children are meant to mentor the younger children and help them with their mathematics. However, I get the sense that if I hadn't regularly focused Aralyn on completing a section of her maths book a day, as well as explaining and going over the techniques, that she wouldn't have progressed nearly as far as she has. On the other hand, this could also just be her dreaminess, a trait she inherited from her father.

We got there in the end, and Aralyn has just finished her first maths book, shown below for posterity. And fundamentally, something must be going right - Aralyn was very proud to have finished the first one, and super excited seeing me pick up the next workbook.

We have also spent a lot of time at home focusing on reading English, as Aralyn's instruction at school is in German, and uses the learning-to-read by writing method. Even though Aralyn loves stories and has an amazingly vivid and rich creative world, she initially balked at reading. Basically, we just had to keep at it, day-after-day, working through the different learn-to-read series that we'd purchased before we moved from the States.

Given that Aralyn has finished all 64 pages of Green Eggs and Ham, it feels like we've made solid progress. And of course, Dr Seuss is a genius, his books being full of surreal whimsy. There's nothing better than sitting on a couch with your kids, laughing together at the craziness in a book, and hopefully, getting them excited to read another one.

Saturday Night Massacre

We had some fun this weekend making some G-People. At least until one of them went berserk. The results weren't pretty...

Ozeaneum

The Stralsund Ozeaneum is a really great museum, although given that I haven't visited that many aquariums, I may not be the best judge. We have visited as a family twice, and when Brienna was in the US for a recent conference, Aralyn and I visited again.

Like Rostock, Stralsund is an old Hanseatic trading city, with gorgeous old buildings and tall churches. However, we've really only visited the Ozeaneum and driven through the city on the way to Rügen.

Ironically for an aquarium, I most love the hall containing life-size models of whales, with no water in sight. It was put together in conjunction with Greenpeace and features a blue whale, the largest animal to have ever existed on the planet, a humpback and sperm whale as well as an orca. To add to the atmosphere, the hall is somewhat darkened and the roof has water imagery projected onto it to give the illusion that you are under water. The best way to take it all in is to use the recliners on the floor so you can relax, gaze up and just wonder at the size and beauty of these creatures. After all, you are never going to get this close or have this kind of view of a real blue whale.

Christmas

Christmas is rapidly approaching, and I really need to get cracking and buy a bunch of presents for friends and family. I am never particularly good at doing this, one of my (somewhat embarrassingly long list of) minor faults and personality quirks. And however much Christmas brings out my inner misanthrope, it is ultimately hard not to get caught up in the seasonal merriment and general cheer, and of course, the wine does help.

A strong practicing Christian I am definitely not, but the choral music and carols can also be a delightful part of the whole Christmas season, especially if you can get to a snow-covered, historical church with a talented choir. The Christmas carols, choral music and religious celebrations are part of my cultural background, even if I happen to be an atheist.

So although the War on Christmas is mostly a trope, it seems misguided to ban the singing of Christmas carols in schools, as happened recently in the US and a while ago in the UK. I understand that some children in these schools may not be Christian, and may be Jewish, Muslim or non-religious, but carols are part of Western cultural history, and serve a purpose beyond the religious. Wouldn't a simple "opt-out" be sufficient if some children didn't want to sing one or more particular song? Another simple approach would be to incorporate celebrations, music or festivals from other faiths, in addition to the traditionally Christian ones.

Although I am not a conservative and not particularly fond of tradition for its own sake, this approach to dealing with a diversity of opinion and tradition just seems wrong. In the West right now you are likely to meet and interact with people from different backgrounds so we might as well learn something about other cultures and religions, while still celebrating our own heritage.

Dopey Thought Award

I don't really have any problems with the local food push, vegans or vegetarians, and given the choice, would probably choose the free-range animal product if I noticed it in the supermarket. However, given that there are too many people living in appalling circumstances, it just doesn't capture my attention, although I am glad that there are activists out there.

James McWilliams, an Associate Professor of history at Texas State University, is clearly one such activist passionate about animal welfare. His article in the Atlantic Monthly attempts to work through the issues here, but boiled down I'd summarize it as:

1. Factory farms are bad
2. Free-range farms are better
3. Either way, we eat the animal
4. Factory farms and free-range are therefore merely gradations on a scale of cruelty

Seriously, that's about the extent of it. To use an analogy, I guess McWilliams wouldn't support palliative care for someone with a terminal illness, after all, they are going to die anyway. McWilliams also doesn't address the implication of his logic, which is that any farming - and eating - of animals is morally unacceptable.

To quote one of McWilliams best passages:

Farm animals have a sense of individual identity within time and space. They are beings with potential. To kill them is to erase that potential. It is to deny them a future of attempting to seek pleasure. It is to erase all the natural preconditions for happiness that a free-range farm works so hard to approximate. It is, in essence, to do them the gravest harm.

He is correct that eating an animal does indeed do it the gravest of harm. It's fundamentally hard to escape that one, at least until the entire human population turns vegetarian. But until that happy day arrives, I'd suggest that free-range farming is a far better way to grow cows, pigs and other animals and is worth separating out from factory farming.

Winter

It is Winter again, and we've had a good serving of snow. The trees and parks look stunning, which more than makes up for the nip in the air. There's something romantic about walking around mist swirled forests, crunching fresh snow underfoot. And given that the roads and footpaths can be icy and treacherous, we do spend more time walking and looking around, and less time hurrying and zipping around on bicycles.

The photo above is of the park near us, just outside the old city walls. The photo below shows Caeden bundled up with my gym gear, camera case and, of course, his various security blankets, all shoehorned into our kid Croozer. It's the fastest, easiest and safest way to get around an icy city right now. It can also be a lot of fun, walking through the streets, counting to a hundred in English with the munch-kins, although we do get an odd look sometimes.

Weihnachtsmarkt

Advent started a bit over a week ago, so the local Weihnachtsmarkt is in full swing. The Weihnachtsmarkt in Rostock runs through Kröpeliner Straße, from the old Kröpeliner Tor on one side to Neuer Markt and Steintor at the other end. As with many of the festivals in Rostock, the center of gravity downtown is in the square in front of the beautiful old Rostock University.

My favorite part is the Historischer Weihnachtsmarkt, which features stalls owned by folks with an interest in handmade arts and crafts. There's something wonderful about strolling around this part of the market, nestled up against the medieval Rostock city walls, especially at night with a hot, steaming mug of Glühwein warming your hands.

Walking through the market today I started thinking about about all the myriad, complicated arrangements that go into making the Rostock Weihnachtsmarkt happen. Within one to two days, some eighty or ninety different stalls, really small sheds or booths, are delivered and decorated, before being loaded with all sorts of goods, some made locally and many made on the other side of the world. Each item of decoration, each item for sale has passed through many hands from its original design, creation or manufacture before finally being individually set out for display here, in a small town in North Germany, on the Baltic Coast.

In the scheme of things, the Rostock Weihnachtsmarkt is a very small event. Yet, given all the sour political and economic news at present, it is reassuring to watch thousands of people come together to produce such a complex production, involving so many different and unconnected groups, and to have it go off relatively smoothly. To have it appear, and in a few more weeks, disappear overnight, like clockwork.

It is also reassuring to think about all the hundreds of thousands of transactions that must have gone into producing the market, from hotels rooms booked and meals and drinks ordered, to the purchasing of the wine to make the Glühwein in my hands. Almost all of these transactions would have been done in good faith, and while conducted profitably, would have been of mutual benefit and just part of normal day-to-day life, utterly unremarkable.

Of course, in this sense the whole German economy and society is like the Rostock Weihnachtsmarkt, just immensely larger and more complex and taking place every day of the year. While I love reading newspapers and the sour news of the day, these countless, unremarkable and invariably good-faith interactions don't make news, even though they are far more real and immediate than anything that I've read in a newspaper in a long time.