Photo Gallery: Occupying Frankfurt

Foto: dapd

The Banker and the Protesters A Meeting of Minds on Germany's 'Occupy' Movement

The "Occupy" movement has garnered support from all parts of the world, including Germany, where protestors have set up camp in front of the European Central Bank in Frankfurt. In an interview, SPIEGEL talks to Axel Fialka and Alexander Sack from the movement, and to Commerzbank CEO Martin Blessing.

The "Occupy" movement began in earnest in New York, where a group of activists formed under the name " Occupy Wall Street " in mid-September to protest against the sheer power of the financial markets. Since then it has grown to become a global movement, with tens of thousands of participants gathering each week for protests, including several thousand in Frankfurt, the center of "Occupy Germany" activities. Occupy supporters in the German financial center have taken over a small park located directly in front of the European Central Bank (ECB).

Around 100 tents have been pitched in front of the banking city's glass-and-steel skyscrapers. "You occupy the money, we occupy the world," one protest sign reads. During the daytime, working groups discuss capitalism, education and culture. During the afternoons and evenings, an "Asamblea" takes place, a gathering held in an outdoor public space during which speaking time is granted to anyone who wants it and democratic decision-making is made at the grass-roots level. The movement is organized via Facebook and Twitter, and an Occupy website  provides information for its supporters. So far, those supporters have been overwhelmingly male, and female visitors to the protest camps are relatively scarce. But few could complain about a lack of support. The media is reporting on Occupy, politicians including Chancellor Angela Merkel have expressed their sympathies, and new people interested in what is happening drop by the ECB campsite each day, with some simultaneously raising their own tents.

Each evening, local bakeries deliver leftover rolls and cakes to the camp's mess tent, where warm meals are cooked and served twice each day. The Occupy protesters have made a point of welcoming their neighbors, including homeless people known to drop by. If you're seeking to create a more just society, they argue, you've got to start at home.

Despite all the media and political attention, it still remains unclear precisely what the movement, which is determining its goals through grass-roots democracy, actually stands for. Alexander Sack, a 22-year-old who is training to be an IT systems engineer and recently spent his vacation at the camp, Axel Fialka, a 31-year-old student of cultural anthropology and ethnology and trained retail salesman, and Martin Blessing, the 48-year-old CEO of Commerzbank, a major German bank, sat down with SPIEGEL to debate the aims of the Occupy movement.

SPIEGEL: Mr. Fialka and Mr. Sacks, why did you join the Occupy movement? What motivates you?

Fialka: When I read about the movement on the Internet, it immediately struck a chord with me because I've never been happy with the conditions and the unjust distribution of wealth around the world. I've always asked myself, "How can the world be organized so that as many people as possible are doing well?"

Sack: I've long been interested in what is happening with the financial markets, and I simply don't agree with what's going on.

SPIEGEL: Mr. Blessing, as a banker, how do you view the movement?

Blessing: Of course, I became aware of it through the media when people first started taking to the streets in New York. In Frankfurt, I can look onto the tent city from the Commerzbank tower. A week ago Sunday, I went there myself to see what was going on.

SPIEGEL: What did you see?

Blessing: I saw that there is a great deal of emotional dissatisfaction. But I'm not sure I really understood what the common theme was. I get the impression that the protesters have many different goals.

SPIEGEL: Mr. Fialka and Mr. Sack, who are you protesting against?

Blessing: Or what for? You don't always have to be against everything. You can also be for something.

SPIEGEL: Are you against bankers like Mr. Blessing, against politicians, or against the system, capitalism?

Fialka: It's difficult to answer questions about objectives and demands. There's no point in plucking a fish out of a school and asking where it's swimming. But the entire school agrees that it wants to evade the predator fish and live in a more friendly environment. Many people are extremely dissatisfied with banks that get huge cash injections so they can keep on doing what they've always done, only this time with taxpayers' money, and with our politicians, who aren't prepared to change anything, and with Mr. Ackermann ...

SPIEGEL: ... the chairman of Deutsche Bank ...

Fialka: ... and other advisers from the banking sector, which basically drafts legislation itself.

Sack: Many of us say that the system can't remain the way it is. I believe there is a good chance that far-reaching reforms can achieve the necessary changes without us having to throw the entire system out the window. But it is very hard to formulate such demands for the entire movement.

Blessing: When I visited the camp, I saw four main groups: The first -- which you embody -- is very idealistic, and I mean that in a positive way. They want to change the world. The second group is more interested in staging a cool event. The third would like to disseminate its own agenda with this movement. The fourth is a group of people more my age group, who have brought with them their issues from the environmental movement of 25 years ago.

SPIEGEL: But all of these groups were brought together by unease with financial capitalism, which has led the world into the most serious crisis since World War II. Don't you have the feeling that something is going fundamentally wrong?

Blessing: We have a few fundamental problems, for instance, the fact that Western countries have taken on far too much debt. The level of indebtedness of countries, of banks, of companies and of private individuals has continued to rise in comparison to gross domestic product. Everyone has contributed to this. That means we've bought part of our current prosperity on credit. And we can't continue like that any longer.

Fialka: In my view, this is all a systemic crisis that is only marginally related to the financial markets. In the end, it's always the people who repay the debts. Interest that companies pay is tacked onto their prices, while the interest that countries pay is tacked onto their taxes. Both our politicians and the private sector pass everything on to the citizens, and this is what is driving people out into the streets.

Blessing: But the state does do something with the money it takes in. For example, it builds roads and pays for social services -- that benefits at least part of the population. The question is whether some of the money that the state is now handing out goes to those who will have to pay back the debts in the future.

Fialka: The main problem for me is not that the state is spending too much, but that it has too little income because the taxes on capital income are too low. These were already cut drastically by the previous center-left "red-green" coalition (comprising the Social Democrats and the Green Party, which jointly governed Germany between 1998 and 2005), and are now losing the state tens of billions in revenues every year. The state is about €2.5 trillion ($3.4 trillion) in debt although we have privately held wealth worth almost €5 trillion. So the money's there, and you could simply siphon it off those who were given tax breaks by the government in recent years.

Blessing: It's true that we have an uneven distribution of wealth here in Germany, although it's far less uneven than in the United States, for example. If the inequality is too great, it is up to the government to step in and correct it through taxes.

SPIEGEL: Is this distribution of wealth the result of financial capitalism, which constantly invents new financial products that can make more and more money, thereby making the rich even richer?

Blessing: I think it's more the case that the uneven distribution of wealth in the US is the result of the tax rates. Capital income is taxed at an extremely low rate in the US. The compound interest effect also leads to wealth growing more rapidly. And at the same time we have the problem -- especially in the States -- that real wages are falling.

Fialka: I see the inflated financial markets as the logical consequence of capital that accumulates and no longer circulates. Falling real wage levels have also led to shrinking domestic demand in Germany over the last 10 years. That's also why investing in the real economy doesn't appear to be very lucrative. People are therefore looking for other ways to invest their equity. One consequence of this is that investors are speculating in foodstuffs , loan derivatives and other dubious financial products that no longer have anything to do with the real economy.

Blessing: It's true that there's far too much liquidity overall at present and therefore lots of investment capital. We have to see how we can gradually decrease the market's liquidity again. Secondly, there are products on the financial market that make you ask, "Is this really necessary?" And there are products that make sense, but which -- just like medicines -- depend on the dosage.

SPIEGEL: For instance?

Blessing: Take credit default swaps. A CDS is simply insurance against an inability by creditors to repay their loans. It's like with homes: If you buy a house, you make sure you insure it against fire. But of course you can't insure it twice so you get paid double if your house burns down. If you could, people would have an incentive to set their own homes on fire. And what one certainly can't do is insure one's neighbor's house because one might be tempted to set fire to it.

SPIEGEL: You're describing the reality of the financial markets.

Blessing: This is why you have to consider whether the CDS market should be organized like an insurance market. In other words, I can only insure what I have. There really is a need for action in this area.

SPIEGEL: Where else?

Blessing: We have to put strict regulations in place to get rid of the excesses in our system, which undoubtedly exist. First, securitizing trade activity with more capital leads to less trading. Secondly, derivatives should be processed through clearing houses. That creates transparency. We must also prevent business that is currently regulated from moving off into unregulated areas, the so-called "shadow banking system."

'Nothing Should Be Taboo'

SPIEGEL: Mr. Sack, what do you want the banks to do?

Sack: If I put my money in a bank, I want to know what they do with it. For instance, I don't want them to speculate on foodstuffs that many people then can't afford anymore. That's mass murder as far as I'm concerned. Transparency is therefore very important. We need an overarching supervisory body that checks whether the money really flows into renewable energies, for example, if that is what is promised.

Fialka: I don't think that goes far enough. We've seen that debt and private wealth have grown exponentially in recent years. And at the moment the debts are only being tackled by taking on even more debt. How can we get out of this vicious cycle, if not through currency reform and a debt haircut?

Blessing: Aside from currency reform and debt haircuts -- in other words, the harsh methods -- there are also softer solutions: Saving, faster growth and inflation. In the latter case, citizens pay off the national debt through a devaluation of their currency. We are all part of the state, so we must all pay off its debts.

Fialka: It would be nice if this feeling of everyone being the state were shared by the rich and by corporations and if they did their part. The state must make sure that those people who are able are held accountable.

SPIEGEL: Does your movement demand the nationalization of banks?

Fialka: We must consider all the options. Nothing should be taboo. I would welcome moves that ensured that the creation and distribution of money were under real democratic control.

Blessing: Well, over 50 percent of the banks in Germany are still state owned.

Fialka: Funnily enough, those are not the primary ones that need bailouts.

Blessing: I'm sorry, the only state-owned banks in Germany are the savings banks and the regional Landesbanken, and the most German money has been put into the Landesbanken.

SPIEGEL: Your bank, Commerzbank, was also rescued.

Blessing: We have since paid back the majority of our federal assistance: €14.3 billion of the €18.2 billion we were given. In addition, the federal government has received more than €1 billion from us this year.

SPIEGEL: You have announced that you will not seek any more federal money, even after the most recent euro bailout decisions. What's so bad about taking government money?

Blessing: What's bad is that then you always refer to the bank as being partly nationalized. That doesn't sound like it was really meant as being appreciative. What is more, if I had wanted to work for a politically managed bank, I would have applied at a Landesbank.

SPIEGEL: Mr. Blessing currently earns €500,000 year, although that is far less than the salaries of other bankers. Do you think salaries in this ballpark are justifiable?

Sack: If you are willing to take enormous responsibility, you should be paid for it. But you can't possibly work enough to justify earning half a million euros. That's incomprehensible for me.

Fialka: For me, it's more an issue of whether people who earn a lot of money are actually creating additional value for society. The players on the financial markets sometimes create income through speculation without adding value. Often enough, this even harms society while those responsible are making a fortune. That's why there is this underlying sense that something is wrong in our society.

Blessing: The question is how you define speculation, and where mere trading starts that does not add any value. Is it OK for me to make dollars available today to a customer who wants to buy a machine in the US in three months' time? Or what if I buy dollars for the bank or its customers because I think that the value is going to continue to rise? Is that speculation, too?

Fialka: If it isn't individual customers but major banks who drive rates up and down on a single day with gigantic transactions, this has an adverse effect on the real economy and is extremely risky for honest individual investors.

Blessing: There are very many things -- also in trading by banks -- that are of great economic benefit. And if we stop doing them, we will simply go back to bartering.

Fialka: What's wrong with that? For me, money is a bartering tool.

Blessing: A store of value and a bartering tool.

Fialka: It's doubtful it will preserve its value because currencies are no longer backed by gold or other real goods.

Blessing: Money is a question of trust and belief. A €50 note is only worth something because you believe that you can use it to buy something tomorrow that is of equal value. If this trust is gone, the banknote is worthless.

Fialka: Exactly. And those who have the monopoly over the monetary supply can simply create money.

Blessing: Central banks have a monopoly on the ability to create money.

Fialka: But big business profits from this liquidity. And, in any case, it's not certain what the euro will be worth in 10 years' time if the pool of money simply inflates in this way. It seems to me that there is a big plan to save crisis-ridden countries from recession in a procyclical way, while at the same time pumping so much money into the market that Greece and other European countries can be privatized at bargain prices for the benefit of investors and to the detriment of the people themselves.

Blessing: It appears that there is limited enthusiasm to invest in Greece at present, and the central banks have mainly pumped so much money into the market because they are worried about deflation. That's far more dangerous than inflation.

Fialka: Right, because the money doesn't simply circulate, but is concentrated around the fortunate few, while the money is missing elsewhere and the purchasing power of the masses dwindles. And one reason for this is the system of interest and compound interest, which creates incentives to hold onto your money and achieve non-performing income.

Blessing: Interest is necessary. Imagine you have some excess money and you want to save it. You can then either put it in a piggybank at home or take it to the bank. You only go to the bank because you get interest on your money. And only because you put your money in the bank can the bank hand out loans, for which it naturally charges interest. And the bank uses this money to pay you interest on your savings. Without interest there would be no loans for building houses or for entrepreneurs investing in growth and therefore creating jobs. That's why we are far better off economically.

Fialka: But that doesn't mean you shouldn't think about how the economy could be better organized. After all, there are other solutions; so-called "negative interest," for instance, in other words a fee for simply parking your money. This would create incentives to reinvest money rather than withholding it. I would also be in favor of interest-free loans, primarily for those with lower incomes, so that the pay gap doesn't widen even further. That's why people have taken to the streets. They are wondering whether the world has to be like it is, or whether it could perhaps be better.

Blessing: If young people never thought about how things could be better than they are, we wouldn't be where we are today. We will always have to reflect on how we can make the world a better place. But I suspect we will have to do so step-by-step because most efforts to achieve sudden changes have failed.

SPIEGEL: The Occupy movement has many friends in Germany. The chancellor, the finance minister and the chairman of the Social Democratic Party have all expressed great sympathy. What do you think about that?

Fialka: Politicians are hanging their flags in the wind because they can see that we have the backing of the majority of the population.

SPIEGEL: What about you, Mr. Blessing?

Blessing: You might have a point there.

SPIEGEL: There have been numerous movements that have achieved a great deal, such as the anti-nuclear movement. Do you believe the Occupy movement can have a similar effect?

Blessing: I can't say. The anti-nuclear movement arose in the 1970s, when I was in school. It had a clear objective that many people could rally behind. If the new movement says, "We don't know what we are for or against," it won't have sufficient drive. Unless it can develop an objective, it will merely be a flash in the pan.

Fialka: I think we have an historic opportunity. First, our movement has the advantage of digital networking: It can inform and organize on a global scale. The contradictions of the system are coming to a head to such an extent that more and more people have become aware of them, even many of those who are relatively well off. And they are starting to understand that they really can bring about change.

SPIEGEL: Mr. Sack, you are responsible for organizing the demonstrations in Frankfurt. Do you think that you can rally people in the long run without a clear objective?

Sack: We are working on precisely this goal, and not just the small circle of us in Frankfurt, but people around the globe.

SPIEGEL: Mr. Blessing, Mr. Fialka, Mr. Sack, we thank you for speaking with us.

Interview conducted by Armin Mahler and Anne Seith. Translated from the German by Jan Liebelt.
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