The most important anchor of stability in Europe is Germany – the new Federal Chancellor Olaf Scholz must also campaign for this.
(Photo: dpa)
Almost 400 MPs have elected Olaf Scholz as the ninth Chancellor of the Federal Republic. After Willy Brandt, Helmut Schmidt and Gerhard Schröder, the Hanseatic League is the fourth social democratic head of government. World economist Helmut Schmidt and the bosses’ comrade, Gerhard Schröder, were economic chancellors. That was also due to the challenges. Schmidt had to master the oil crisis and stagflation. Schröder launched Agenda 2010 to combat record unemployment.
Olaf Scholz will also have to be an economic chancellor, a world economic chancellor. The pandemic is still hiding the major challenges. But later the economic issues will be all the more pressing.
There is rampant inflation, for example. Economists still do not agree on whether it is a temporary phenomenon or whether the inflation is permanent. In the US, the Fed chief and the Treasury Secretary have already deleted the word “temporarily”. The European Central Bank is still uncertain about that. But the voices of the monetary policy doves in the Euro Tower are getting quieter and those of the hawks are slowly becoming more audible.
The expectations of Olaf Scholz are huge. For example, when Scholz took office, ECB President Christine Lagarde put European integration with the capital markets union and banking union on his agenda. She is absolutely right about that. But that must not be at the expense of Germany. Germany already has a sophisticated system of deposit insurance.
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The most important anchor of stability in Europe is Germany – the new Federal Chancellor Olaf Scholz must also campaign for this. Confidence in the euro stands and falls with the previous culture of stability. Scholz will still be happy that he has Christian Lindner as Federal Minister of Finance.
An FDP finance minister will not be able to prevent everything in terms of debt
Because the desires at home and abroad to incur even more debts or even to strive for a so-called debt union through a communitisation of liabilities will increase. A finance minister from the FDP will not be able to prevent everything, but he will oppose excesses. That is correct in view of the unclear situation with regard to inflation. Even a seasoned Keynesian like the former US Treasury Secretary Larry Summers warned early on of the immense expenses of the Biden administration.
Also read about the formation of a government:
Scholz finds an international economic situation in which the countries are becoming decoupled. Some experts are already afraid of the formation of a block. China is trying to emancipate itself economically from the USA. Even if US President Joe Biden is looking for a partnership with Europe, he is definitely continuing the “America first” strategy of his predecessor Donald Trump. Germany and Europe must be careful not to get crushed between these two blocks.
Angela Merkel has relied heavily on China. Scholz will not be able to continue this to the same extent. China hasn’t made life easier for companies in recent years. This applies to their own such as Alibaba, but also to large German corporations such as Siemens or VW.
For Scholz, there will be no continuation of the situation with Angela Merkel. The new German Chancellor must fully rely on the European map. But he also has to live up to his motto on the Brussels stage: if you order a tour from me, you will get it.
More: Jörg Kukies becomes the super advisor to Chancellor Olaf Scholz.