Evidence for Germany: Falling profit rates, shrinking markets and a criminal scandal

Published 12.11.2014 00:45
Updated 12.11.2014 11:36

I have been dwelling on Germany and writing articles about the country for a long time. In my Daily Sabah columns as well, I frequently express a variety of hypotheses about the economic and political inclinations of Merkel's Germany based on current news. Needless to say, newspaper columns are information platforms that are not the preferred reading of many academics largely because if you write about a conclusion that you reached as a result of a long-term study, an article will not allow you explain your point in full due to space restrictions and, as such, it may not be understood well.

In last week's column, I wrote that Germany is questing to form a new Reich in order to overcome its current economic and political crisis. For me, this thesis is a formulation of the strategy that has been in the making since it reunified with East Germany in 1990. Mankind, beyond any doubt, will never allow an atrocity like Nazi oppression to re-emerge ever again. To clarify, I do not mean that Germany's new inclination will be to construct a neo-Nazi (Fourth Reich) regime. On the contrary, my thesis that Germany is tending toward a "Fourth Reich" stems from my observation that, just like before World War II, Germany once again faces difficulty in reaching energy fields and new markets. German industry, which has already lost its quality and brand superiority in the conventional machine industry to Japan, has deteriorated further as Asian economies have gained strength in a number of fields, particularly the automotive industry. And still, Germany fails to make up for this disadvantageous position by rapidly switching to information technologies and creating brands in this field only to be outdone by Asian countries who are outcompeting Germany in this field as well. Apart from this, Russia, Germany's secret partner in energy, is breaking away from the West and leaning toward its western and southern neighbors. Moreover, the Southern Gas Corridor, which will carry Caspian and Middle Eastern gas to Europe through Turkey, emerges as an alternative to all pipelines developed by Germany and Russia carrying energy to Europe from the north. In this regard, Germany loses its advantageous position, which undermines the dominance that it exercises upon eastern and southern European countries through energy and finance.

In short, just like the aftermath of the 1929 crisis, Germany has faced difficulties reaching energy fields and entering markets. As known to anyone, before World War II, Germany's financial capital obviated this problem with fascism. However, Germany now pursues quite a different path due to current global conditions. This path is about stirring instability and fragmentation similar to Balkanization. After West Germany reunified with East Germany in 1990, its industrial profit rates rose rapidly. This shows that German conventional industry has overcome the crisis only by using the low-cost labor force of its neighboring countries. The only way to do this is by disintegrating these countries by destabilizing them. To this end, Germany took the lead in the disintegration of Yugoslavia. The graph below shows Germany's growth and average industrial profit rates since 1950. The continuous decline in industrial profitability recovered only when Germany started using a cheap labor force that emerged as a result of Balkanization, which peaked in Eastern Europe with East Germany's reintegration and Yugoslavia's disintegration. In this period, German industry's profits relatively increased.

The data shows us that Germany has no alternative other than provoking instability and Balkanization in Eastern Europe, Turkey and the Middle East. This policy is a contemporary version of Nazi Germany's occupation of the European geography during World War II. A crucially important element that financially complements Germany's Balkanization policy is European financial capital, which gradually evolves into a German-centric criminal structure. The recent tax evasion scandal that took place in Luxembourg, which was led by the incumbent President of the European Commission, Jean-Claude Juncker, who is strongly supported by Germany, is a good example that offers credence to my thesis.

The International Consortium of Investigative Journalists (ICIJ) obtained the confidential documents of almost 28,000 pages that reveal Luxemburg's tax authorities granted hundreds of secret tax rulings, and therefore, expose one of the biggest tax frauds of recent history. This scandal has multiple aspects; the first is that when Luxemburg was a tax haven, Juncker was the prime minister of Luxemburg. The documents obtained by the ICIJ relates to 340 international companies. Between 2002 and 2010, the Luxemburg government allowed various corporations to reduce their tax rates, often to less than 1 percent, so that millions of euros of tax obligations could be evaded. Allegedly, these companies continued their operations after 2010 as well. According to the ICIJ, the world renowned auditing company PricewaterhouseCoopers was leading the negotiations between Luxemburg's tax authorities and companies like IKEA, PepsiCo, FedEx, Amazon, FIAT, Volkswagen, Deutsche Bank, JP Morgan Chase and Procter & Gamble. Germany is hosting 68 companies out of the listed 340. The most interesting aspect here is the "number one guy" behind all of this is the Germany-backed Jean-Claude Juncker.

These 340 companies are among the most important global brands but they have been transformed into a criminal mafia structure by two countries: Germany and Germany's financial garbage man, Luxemburg. This incident shows us that Germany and countries like Luxemburg, which are bolstered by Germany, pose systemic risk to the globe.

This is what the "Fourth Reich" exactly is. It is a financial crime syndicate that instigates civil war in neighboring countries through a Balkanization strategy. It is also a secret cooperation with Russia, which gives clandestine support to terror organizations in the Middle East. Do you need more evidence to prove Germany's propensity toward the "Fourth Reich?"

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