Herr Nein The Bull in the Euro Zone's China Shop

German Central Bank head Jens Weidmann has developed a reputation in Europe for saying no to everything. He is skeptical of efforts to save the euro and isn't shy about saying so. But is he right?



In Jens Weidmann's world, the cup is almost always half-empty. As much as he doesn't like hearing about it, he is a man who can even find fault with a rare moment of winter sun shining through his office window in Frankfurt.

"Big windows are nice," Weidmann says, referring to the view, "but the sun heats up the room very quickly." The president of Germany's central bank, the Bundesbank, then shuts the blinds. His office on the building's 12th floor becomes as dark as though it were in the basement.

His large desk is covered with piles of binders and folders containing urgent European Central Bank business, reports produced by his staff and personnel issues. Weidmann points to the stacks when asked how he plans to spend the rest of his day. His facial expressions betray neither displeasure nor pleasure -- just the constant and comfortably friendly vibe he seems to perpetually exude. "That should keep me busy until the evening," he says, offering more of a statement of fact than any kind of hidden message.

A Fierce Advocate

Weidmann is a man of duty. He's Europe's fiercest advocate of price stability and of a rock hard common currency. And who knows? It's possible he may be the last one.

Since the people of Europe began to express doubts about the European project, since their governments began to seem incapable of producing anything more than wishy-washy compromises, the power of the money men -- the heads of central banks in the euro zone and European Central Bank board members -- has increased. Those following press conferences with ECB President Mario Draghi in recent months could be forgiven for believing that the gathered journalists were asking questions of the Continent's true president, the only one who seems to have the power necessary to make decisions for Europe.

Indeed, by merely uttering a single sentence, Draghi can move markets to the tune of billions of euros, drive prices, change interest rates, bring down entire countries, topple governments -- irrespective of whether the statement is erroneous or deliberate. The power of the ECB and its president, a man who doesn't have to answer to parliaments, governments or voters, has increased massively during the euro crisis. That has also put Jens Weidmann, as president of the ECB's largest member bank, in the uncomfortable position of being a constant watchdog.

Skepticism of the ECB's Power

At times when others are proposing solutions, Weidmann seems to be busy sowing doubts. He is the man who says "no" when the majority have already agreed on an issue. To put it mildly, he views the ECB's new role and political power skeptically. Over the course of the last two years, he has also steered himself into the extreme minority. Sometimes, he is the only member of the ECB's Governing Council in the minority. In theory, that could of course mean that Weidmann is the only one who has been correct about things all along. In truth, though, it often looks like a kamikaze who still believes he's the only one who knows the correct path.

It's a characterization he rejects. Weidmann says he's in no way a know-it-all -- and neither is he a troublemaker. He blames the media for many of what he says are false impressions of him. "As soon as I go anywhere," he says, "I am taken very seriously because of the importance of the Bundesbank. But I'm not some kind of ringleader." That was the commentary he offered in his Frankfurt office after the ECB Governing Council decided to lower the key interest rate from 0.5 to 0.25 percent in November, a move he opposed.

This time he wasn't alone in his decision. It was six against 17 -- and Weidmann had asked that the option of waiting, and delaying the lowering of the interest rate by at least a month, be discussed. ECB President Draghi listened, thanked his colleague Jens for his remarks and then just pushed ahead with the vote. It was 17:6 against Weidmann.

Business papers like the Financial Times and the Wall Street Journal made a big fuss over the vote, describing it as a major divide on the ECB Governing Council, a showdown between Draghi and Weidmann. Once again, the council's German member had revolted. The idea that, this time, the Italian ECB president may have been responsible for the division, and that Draghi would only have had to wait four weeks for a unanimous decision, didn't occur to any of the editorialists. And that's very dangerous for Weidmann.

Has Weidmann Gone too Far?

He is now living with the risk of being regarded solely as Germany's Herr Nein -- a person who is no longer taken seriously because the only thing he seems to be capable of saying is "no". Finance ministers from Germany's neighboring countries -- who just a few years ago nervously followed Weidmann's every word -- are openly dismissive today. With five years left to go in his term as head of the Bundesbank, it's possible he's already gone too far.

Weidmann openly admits in interviews that he's thought about this question, but he denies there's any truth to it. He says his influence hasn't diminished in any way, that people still listen to his positions. After all, he insists, they're well-founded and argued logically. He describes reports to the contrary as "perturbing and anything but helpful." Besides, he adds, "It would be problematic if we all had the same opinions when it came to difficult decisions taken under a high degree of uncertainty. Europe has to live with the fact that we're struggling to find the right path."

Accompanying Weidmann, observing the way he operates on grand stages in Washington or during appointments in Berlin and Mainz, watching him during longer working sessions in Frankfurt, or even sitting down with him for a cup of coffee in Paris -- none of that really helps to get closer to him as a person. The Weidmann you meet the first time is precisely the same person you encounter the tenth time. He comes across like a man without moods, with a stable temper to match -- the same kind of stability he would like to see for the euro. It would be difficult to imagine him getting angry, much less losing his composure.

One time in October, Weidmann found himself sitting across from German Finance Minister Wolfgang Schäuble in Washington in a basement lounge of the Park Hyatt hotel. The global monetary policy circus had landed in the US capital city for the fall meeting of the World Bank and the International Monetary Fund. The events were largely drowned out by rain and the deafening ruckus surrounding the US budget battle. Weidmann was smack in the middle of everything.

After a long day of meetings, Schäuble and Weidmann hosted a reception for about three dozen financial journalists at which sausages and other German foods were served. They spoke in the enigmatic language of the monetary policy world, with clever insinuations and coded expressions of power. Compared to Schäuble, a veteran of German politics, Weidmann seemed like some kind of brittle assistant professor. A visibly exhausted Schäuble managed to speak freely and amusingly to the gathered journalists, but the Bundesbank president came with a canned script and stuck to it.

Chewing on a sausage as he spoke, Schäuble grunted that the role of central banks was overrated and advised them to once again remember the "purpose they were intended for." At that point, Weidmann really ought to have responded with some kind of humorous comeback. Instead he just offered an embarrassed smile. It's not always easy being Jens Weidmann. His constant friendliness, his soft voice and his smooth face seem to just beg people to underestimate the man.


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broremann 01/24/2014
1. banks
this was an excellent article about banks and the people who runs them
commuted 01/25/2014
2. Interesting, dangerous
Countries that grow are falling over themselves to lower their currency. Japan has intervened since at least the 1980s to strengthen the US dollar. China pegs the currency. When it comes to trade, one side gets jobs, factories, infrastructure, know-how and bales of money, and --the other side gets the stuff they pay for. Who comes out ahead?
DoAskDoTell 01/26/2014
3. Central Banking 101
No country on this planet in history has ever paid off its debts, it either default or has roll-over credit line. Economy is capitalism is energy-waste system. Bankers' wealth is gone from gambling for too many decades. Delusion (fiat, gold, credit) crash with reality (mother nature). Please turn off the tv and think slowly while you tend to your plants. Let's hope we will get more bees...
presk eel pundit 01/26/2014
4. Germany's Gold
When the Bundesbank asked the United States to return all of Germany's gold last year, the US told Weidmann he'd have to wait until 2020. He should have said NO then.
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