We are doing well. In fact, we're doing splendidly. The economy is booming, with 1.5 percent growth in the first quarter. We are as prosperous as we were before the crisis, which has finally been overcome. Congratulations are in order for everyone.
The banks, Deutsche Bank above all, deserve particular congratulations. In the first quarter, it earned €3.5 billion ($5.1 billion) in pretax profits in its core business, and by the end of the year the bank will likely report a record €10 billion in pretax profits, its best results ever. That number is expected to rise to €11 billion or even €12 billion in two or three years.
Less than three years after the peak of the crisis, it seems as if it never happened. That is true of the economy, but it is also true of us as economic subjects. But is that all we are?
No, we are also citizens and participants in a democratic society. As such, we have no reason to be celebrating. Instead, we ought to be sad and outraged. Democracy, after all, is not doing splendidly, or even well. It is gradually becoming a casualty of the financial crisis.
Rage Directed at Politicians
Trouble is brewing all over Europe. Young people with little hope for the future are protesting in Spain. In France, 1.4 million copies were sold of a manifesto titled "Be Outraged." Young Frenchmen and -women are devising utopias that extend well beyond civil society because they no longer expect anything from it. A deep depression has descended upon Greece, combined with a rage directed at politicians and the rest of Europe.
In Germany, this is what politicians are hearing from their citizens today: "You spent billions to rescue the banks, and now I'm supposed to be footing the bill? Forget it!" Hardly anyone is willing to put up with their politicians any more. And German leaders have lost support -- and some of their own legitimacy.
They seem helpless, unable to come to grips with the euro crisis. They meet in Brussels, and they talk, argue and adopt resolutions, and yet nothing improves. Greece isn't getting out of its hole, Ireland and Portugal are teetering on the brink, and Spain and Italy are heavily indebted to a dangerous degree. And no politician is providing leadership.
And then there were the lies. Jean-Claude Juncker, the prime minister of Luxembourg, had his spokesman deny that a meeting of European Union finance ministers on the Greek crisis was taking place, even though that meeting was in fact taking place. It wasn't the kind of lie that frequently crops up in politics: the broken campaign promise. Rather, it was more crass type of untruth: the denial of a reality. Juncker no longer had the courage to speak the truth. He was guided by fear of the financial markets. His lie was a capitulation of politics.
Things Will Have to Change
This is what is so disturbing about the current situation: the fact that politicians seem so helpless and powerless. They have been given a new master, and it's not us, the people, who tend to intervene in milder ways. Rather, it's the ruthless financial markets. The markets drive politicians even further into anxiety, weakness, incapacity and lies. Those who govern us are now being governed by the banks. That's the situation.
We could decide that we don't care because the economic figures are so good. But that would mean we are happy to play the role of the economic subject, to invest and spend money, all the while abandoning the original promise of democracy. Or we can say: We refuse to relinquish our role and political masters. But if that's our decision, things will have to change.
How has this happened? What are the consequences? And how do we extricate ourselves from this situation?
The Reasons: Greed and a Dissolute Lifestyle
Would it be erroneous to say that those who are now at the top are the ones who caused the whole disaster in the first place? That would include Deutsche Bank, whose CEO, Josef Ackermann, has just announced such magnificent financial figures. When Ackermann was asked how concrete the bank's willingness is to contribute to solving the crisis, a November article in the German financial daily Handelsblatt says he replied by saying the issue is taking a "very unfortunate turn at the moment." The markets, Ackermann added, have reacted negatively to this debate. His remarks could be seen as a threat: Those who make demands will quickly find themselves up against the banks.
At Deutsche Bank's annual meeting last Thursday, Ackermann crowed that the bank was in the process of "bringing in the harvest." But the harvest of what? And from what seed? Investment banking alone is expected to contribute €6 billion to the anticipated €10 billion in annual profits. Have we already forgotten that excessively greedy investment banking triggered the financial crisis in the first place?
Deutsche Bank played a key role in that process. The United States government is suing a subsidiary of Deutsche Bank, accusing it of pursuing "reckless mortgage lending practices." Yet Ackermann continues to shape policy worldwide. As one of the major players on the financial markets, he is partly responsible for determining whether and under what conditions nations can borrow money.
The rating agencies also continue to participate in world politics, seemingly unperturbed as they issue credit ratings on which the fate of entire nations hinge because they determine the interest rates for government bonds. Belgium is in danger of losing its AA+ rating, and Fitch Ratings has just revised its outlook on Belgium from "stable" to "negative." Have we already forgotten that the big rating agencies were partly responsible for the financial crisis because of their positive valuations of bundles of assets that contained toxic securities?
Blame and Brazenness
So this is what the new masters look like. They were substantially to blame for part one of the financial crisis and is being brazen in part two. They are extremely jumpy, greedy and only interested in numbers. Those numbers inform the way they control and drive politics.
But why do politicians allow themselves to be controlled and driven? Why don't they simply shake off the unforgiving dominance of the financial markets? The answer is that they can't because the political world is dependent on the banks, and it has only itself to blame. Greece would not have fallen into the maelstrom of the financial crisis if it hadn't been deeply in debt. Greece has borrowed more money than it can handle, and it constantly needs to borrow even more. It has become addicted to credit because of its own dissolute lifestyle. As a result, the country has become a pawn of rating agencies, interest rates and the calculations of men like Ackermann.
In principle, this applies to all countries in the euro zone, including Germany. Although the German finance minister can easily service all loans, he too is dependent on ratings, interest rates and Ackermann's calculations. Through the euro, Germany is entangled with Greece, Ireland and Portugal, and its own financial situation isn't spectacular enough to eliminate all concerns. The German government cannot simply do what it thinks best. It must constantly take pains to avoid being pulled into the maelstrom itself.
The Clutches of the Markets
Now, policies of immoderation -- the urge to impose as few burdens as necessary on citizens while giving them as much as possible -- is coming home to roost. Such policies gave us a high standard of living; but now, partly as a result of the euro, it has delivered us into the clutches of the financial markets.
As such, it isn't just the banks that are at fault for the current disaster. Politicians also deserve their share of the blame. But that isn't the whole story either. We, the citizens, are also culpable. Don't we expect high returns from financial institutions, and don't we expect a smaller tax burden from the government while receiving generous subsidies and social benefits?
In other words, the financial and euro crisis are a reflection of our own wishes. We play a role in the behavior of banks and politicians because they also seek to fulfill our wishes so that they can win us over as customers or voters.
Consequences: Dangers to Democracy
The public is becoming mistrustful of politicians. Citizens feel treated unfairly when politicians fulfill the banks' wishes with billions in bailouts while ignoring the wishes of citizens. Why does the German government buy up 25 percent of ailing Commerzbank, but not 25 percent of a struggling bakery around the corner or of that other cash-strapped enterprise, the family with three children? One could say that it's because Commerzbank is so large and important to the financial system -- too big to fail -- but that doesn't alleviate our discomfort with an unfair situation.
The power of the executive in Germany, the Chancellery, is increasing at the expense of the legislative, the Bundestag. Chancellor Angela Merkel pushed the first bank bailout package through the country's two houses of parliament, the Bundestag and the Bundesrat, in only five days. The chancellor is pursuing a policy she says is "without an alternative," negotiating bailout packages with the other European Union leaders that the Bundestag is expected to rubber-stamp.
But alternatives are vital to a democracy, as is discussion, correct policy and a parliament that keeps the government in check. But all of this is lost in the constant pursuit of new bailout packages.
Worse than Ever
Yet even as governments gain power relative to national parliaments, they don't have the strength to stabilize the euro. After each meeting in Brussels, the crisis takes a small break. But then it re-emerges, worse than ever before.
One could see the whole thing as a duel between politicians and the financial markets -- but if it is, the politicians aren't looking good.
The economy has all the advantages. Financial companies are not obligated to serve the general good. They are under no pressure to legitimize their actions, they operate in a secretive way, and they pursue a clear goal that they are wildly determined to achieve: high yields.
Politics, by contrast, particularly on the European level, is cumbersome. National leaders must legitimize their actions and reconcile conflicting interests and goals, and they must do so under the watchful eye of the public. They grapple doggedly over the euro, and sometimes things get ugly. But they are almost never successful.
Besides, democracy is based on the word. Without free speech and the open exchange of views and ideas, democracy is impossible. Secrecy is the domain of authoritarian states. But at the moment, European politicians cannot speak openly about one of their most important issues, the euro. All it takes is a few words uttered by a finance minister for the banks to react with the extreme sensitivity. They immediately shift billions in assets, often to the detriment of entire nations. Words have become expensive, and that makes them dangerous.
Seeking Refuge in Lies
As a result, politicians are watching what they say. Pretty much everyone recognizes that it would be fair to involve the banks in the rehabilitation of Greece. But hardly any politicians dare to pursue such a course with any consistency.
The banks and investment firms now play the role once held by the gods. Hardly anyone dares to criticize them, and fear of their wrath guides the behavior of politicians. Many are reluctant to speak frankly, while others seek refuge in lies.
Under such conditions, democracy has lost its dignity. And that is dangerous. The foundation of any dictatorship is the tacit or open threat of violence against citizens. Their fear supports the system. The basis of democracy is respect among citizens. Their approval supports the system. If this approval disappears, democracy crumbles.
Solutions: Humility and Dignity
The task now is that of regaining the primacy of politics -- a job for everyone.
The banks have no reason to be boastful. They were saved, and they owe their survival to politicians. If politicians had not acted in 2008, possibly even more banks would have collapsed. Now the financial industry must do its part to rescue endangered nations. A lender is partly responsible for a borrower being too heavily in debt. If a debt haircut becomes necessary, decency demands that the banks relinquish a portion of their claims without complaint. Their role is that of participants, not of supervisors and criminal judges. Humility is required.
Politicians should impose tougher rules on the banks so that the worst excesses of investment banking are no longer possible. Something has already been done, but it isn't enough. The best solution would be an international transaction tax.
Politicians should also liberate themselves from the embrace of the banks. This is only possible if the practice of taking on massive debt finally comes to an end. Only a largely debt-free nation is a sovereign nation. The debt brake is a good instrument, but it would be even better if it were supplemented by a general awareness that high government debt is inappropriate -- because it undermines democracy and shifts the economic burden to future generations.
As far as the euro is concerned, a two-pronged strategy is needed. European governments should do what it takes to rescue the euro. They should show solidarity with Greece and the other countries that are now struggling. This costs money, and it requires a smarter, better-coordinated and smoother approach than in the past.
How Do We See Ourselves?
At the same time, it's important to make it clear that Europe is more than the euro. If Greece doesn't manage to stay in the euro zone, it will not be the end of the European Union. The project is bigger than money. It's also a political and cultural project, but unfortunately it had an economic bias from the start. It's time for politicians to fix that.
Which brings us to the citizens, to ourselves. How do we see ourselves? Is it the image that the banks have: that our biggest concern is achieving high returns on our investments? Is it the image of the Free Democratic Party (FDP): that we want to pay as little tax as possible? Is it the image of the Christian Democratic Union (CDU), the Social Democratic Party (SPD), the Greens and the Left Party: that we are happy with the greatest possible distribution of wealth? All of these images portray the citizen as Homo oeconomicus, as economic creatures first and foremost. Can this be true? Is that who we are? If we were merely driven by money, we could just as well live in an authoritarian state, as long as we were productive, a state that guarantees our prosperity, like Singapore, the United Arab Emirates or China.
Democracy was originally a project of the somewhat affluent who wanted political influence so that they could shape their own lives. That's why they made themselves into the sovereign power. This idea is still seductive today. It removed people from the role of the economic subject that strives for things and is productive, but has no say in the way things are run. It was only when humankind took responsibility for the whole that dignity and sovereignty were obtained. And to remain sovereign -- or to become sovereign again -- we must consider our responsibility for the whole when taking action and making demands.