How German History Shapes Obama-Merkel Rift

By: Brian Montopoli
Topics: Inflation

(AP Photo/Gero Breloer)

Despite the president's claim at a joint appearance this afternoon that "I like Chancellor Merkel a lot," President Barack Obama and Germany's Angela Merkel are widely believed to have a somewhat frosty relationship. The biggest perceived rift between the two? How best to respond to the global financial crisis.

Mr. Obama, of course, has pushed through a massive stimulus package and pressed for greater government spending worldwide to end the recession. Merkel, who helms the largest economy in Europe, has resisted such spending; her government has passed only a pair of small stimulus packages in response to the economic crisis.

One reason for the two leaders' different philosophies is ideological: Merkel is a center-right politician who has argued against bank bailouts in Europe. But German history is also a factor. Under the German parliamentary governmental system known as the Weimar Republic, Germans faced hyperinflation in the 1920s that destroyed savings and drove many people into poverty. Here's one (fictionalized) account of what it was like:

The price increases began to be dizzying. Menus in cafes could not be revised quickly enough. A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He had two cups. When the bill came, it was for 14,000 Marks. "If you want to save money," he was told, "and you want two cups of coffee, you should order them both at the same time."

The Weimar Republic stayed in power in Germany for another decade, but the period of hyperinflation is considered a significant factor in the emergence of the National Socialist German Workers' Party – the Nazis.

Germans are thus particularly attuned to the dangers of inflation – and particularly wary of fiscal policy that they fear could bring it about.

"We learned from the worldwide economic crisis of the 1920s that an economic crisis can result in an incredible threat for all of society," Interior Minister Wolfgang Schaeuble told Der Spiegel magazine, as the Washington Post reported last year. "The consequences of that depression was Adolf Hitler and, indirectly, World War II and Auschwitz."

Brian Montopoli
Brian Montopoli is the senior political reporter at CBSNews.com.
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by ibsteve2u July 2, 2009 4:45 PM EDT: "...but the period of hyperinflation is considered a significant factor in the emergence of the National Socialist German Workers? Party ? the Nazis. Germans are thus particularly attuned to the dangers of inflation ? and particularly wary of fiscal policy that they fear could bring it about."

Net-net, however, method doesn't matter: Fanaticism takes root when the masses see no future in their current form of government.

I submit that the greed of the Republicans poses as big a threat to democracy in America as the Weimar Republic faced as a consequence of their own policies.

The Republicans attempted to satiate their greed with their policies of "trickle-down" economics, inequitable free trade, and an energy policy that reflected the protection of Big Oil's profits rather than the national interest - all of which served to divert masses of dollars into either their own holdings or out of the country.

The functional result has been three decades of attacks on America's working poor and middle class, the consequences of which can easily seen in our inequality curve's movement back to the same shape it held in 1929.

Democracies are susceptible to excessive greed on the part of the few because that greed brings inequality and the slipping away of the hope for a better future; that is an oft repeated lesson throughout human history. Sadly, another lesson of history is that it is the masses who inevitably "enjoy" the bulk of the consequences of that greed.

That is what I hope of Obama - that he do his best to shield America's masses from the consequences of the greed of the few - that few who control the Republican Party.

Oh, how I despise the right for what they have done to my country, for they have placed it at risk. Democracies are born through common agreement - but they die from common disappointment.; Reply to this comment


by thomas.wingenfeld--2008 July 2, 2009 3:52 PM EDT: There might be another point: Merkel grew up in the Eastern part of Germany, the German Democratic Republic which had to surrender to the Western Republic of Germany because of bankruptcy. All Germans still pay the bill for this history and don't want to add another huge deficit on top of it. It needed and still needs a lot of time and money to work yourself out of a situation where 18 million people without earnings, without any funds, with old fashioned infrastructure etc. need to be integrated almost immediatelly.; Reply to this comment


by keystonebull June 28, 2009 4:54 PM EDT: I thought that Obama was very popular in Europe. I really felt that way until I talked to some people from England that traveled Europe. They have been visiting relatives in Pittsburgh and they said Obama was a laughing stock in Europe, that the people in general just made fun of him. Knowing these people, I believe that to be true.; Reply to this comment


by keystonebull June 28, 2009 4:53 PM EDT: I thought that Obama was very popular in Europe. I really felt that way until I talked to some people from England that traveled Europe. They have been visiting relatives in Pittsburgh and they said Obama was a laughing stock in Europe, that the people in general just made fun of him. Knowing these people, I believe that to be true.; Reply to this comment


by Aldymac June 27, 2009 5:35 PM EDT: Ever wonder why those who got their mortgages bailed out never got the deed to their homes? I believe it is because the govt. wants to get payed for the bailout by the homeowners plus get payed back by taxing the same thing. Then, get payed back by the banks, great idea, ain't it? Three for the price of one, wow, what an economic plan.
The Germans aren't allowing the muslims to have power in their government, they've already had national socialism, whenever there is a muslim takeover they revert to national socialism to organise, then they go to islamic law. So,,, what stage are we at under BHO?; Reply to this comment


by uswarrior June 27, 2009 1:31 PM EDT: Ms Merkel and crew have it right. If you want to know what to do, study history. Why the heck have we rewarded CEO's who have run their businesses into the ground either through criminal behaviour, incompetence, or, at best, inability to compete? What future is there in artificially extending the life of corporations that have not been able to survive on their own? None. Billions of tax dollars that should have gone into rebuilding roads, bridges and schools have instead went into the pockets of vampiric business leaders and corrupt politicians. Bail-out money should have went to individuals for re-training for new careers. It should have been allocated to retirement funds and unemployment insurance accounts that faltered. We could have employed millions by letting-out contracts to rebuild our transportation infrastructure. How many of you know of a road that needs to be resurfaced or widened? Why didn't the bail-out money go towards empowering new companies who want to build way-too-needed mass transit systems? Our National leaders in business and politics need to be fired. Let banks, markets and corporations who can't survive on their own efforts die. New growth will replace them and flourish. Its happened before and the new industries that popped-up brought our Nation greatly increased prosperity.; Reply to this comment


by retirevet June 27, 2009 4:15 AM EDT: When you idiots on the right go away, 7 mos ago we came close to not having a country, now someone is suppose to listen to you fools. You idiots just need shut up and go and hang out with that idiot president you had for the last 8 years. And we will never forget what that fool tried to do this great country, and things we are still trying to fix. Do you remember the last idiot BUSH who screw thing up, well a dem had to fix that. So go away and shut up d7767w.; Reply to this comment


by burneb June 27, 2009 2:50 AM EDT: How about a comment that actually relates to the topic of this article?

We should expect Germany to take a less aggressive approach to battling the global recession. Merkel inherited a huge trade SURPLUS and serious banking and credit crisis. Obama inherited a gargantuan trade DEFICIT and nearly overwhelming banking and credit crisis.

Germany already has a well-established and respected national health care system, and a reasonably up-to-date national infrastructure. We are some 2-3 trillion dollars behind in maintenance and upgrades on roads, dams, levees, landfills, and other civil engineering projects. Their needs and incentives for related stimulus spending are much less.

Still, the hyperinflation of the Weimar era is highly unlikely for either Germany or the U.S., and Merkel's political conservatism may earn them a "lost decade" like Japan's. Remember when Japan seemed to be doing so much better than the U.S.?; Reply to this comment


by krotec54 June 27, 2009 1:01 AM EDT: 0bama is living in a bubble and must learn to accept and embrace people who are "different" from him if he is to make headway in politics on the global scale.
Not only do I dislike him intensely, but also I do believe that he does not have the knowledge to be an effective leader...just another (empty) talking head.; Reply to this comment