Dialog International

US Mortgage Crisis Hits German Taxpayers

The collapse of the sub-prime mortgage market in the US has now made its way to Germany, as Streetinsider.com reports:

IKB Deutsche Industriebank AG (IKB.XE) has felt the impact of the crisis in the US sub-prime mortgage market, as spreads widened sharply during last week's violent fluctuations, causing massive uncertainty amongst institutional investors.

In this context, the ability of the Rhineland Funding conduit (managed by IKB) to access funding appeared to be threatened, in which case IKB would have been drawn upon liquidity facilities provided to Rhineland Funding.

Rhineland Funding - and, to a lesser extent, IKB itself - have invested in structured credit portfolios, which include exposures to US sub-prime real estate loans. Despite market discounts affecting the valuation of such assets, to date there have been few loan defaults, and only some rating downgrades affecting portfolio investments. Nevertheless, towards the end of last week IKB's creditworthiness was being questioned due to said exposures

IKB Deutsche Industriebank is a relatively small bank that specializes in making long-term loans to small-medium-size German companies (Mittelstand).  In the US, this funding requirment is covered by the public equity markets, not commercial banks.  What do IKB's problems have to do the with German taxpayers? It turns out that IKB is a quasi-government insitutiton that is 38% owned by the KfW Entwicklungsbank - a 100% German government-owned bank whose mission is to fund foreign aid projects. As reported in the Handelsblatt today in a good article, KfW has been forced to come to the aid of its minority investment and cover the losses at IKB's US conduit Rhineland Funding:

Am Wochenende wurde dann in Krisensitzungen die Entscheidung getroffen: Nicht die IKB springt ein, im Notfall tritt der mit 38 Prozent größte Anteilseigner KfW ein. Die Hoffnung: Mit einer AAA gerateten staatseigenen Bank im Rücken greifen die Investoren ohnehin eher wieder zu. Auch bei den sonstigen Risiken, die durch die forderungsbesicherten Wertpapiere in Höhe von 7 Mrd. Euro in den Büchern der IKB entstehen könnten, will die KfW einspringen. Dafür hat sie künftig das Sagen und stellt den Vorstandschef. Der 56 Jahre alte Stefan Ortseifen muss nach nicht einmal drei Jahren als Vorstandssprecher gehen.

Why did IKB use its capital to invest in the risky market for poor-quality US home mortgages, instead of funding German industry?  Why do the German taxpayers now have to pay for such a disasterous decision? Good questions. I wonder if anyone will ask them.

UPDATE: This post was linked in the (pre-Murdoch) Wall Street Journal (online edition)

Who is Udo Ulfkotte?

Spreading fear and hate can be an excellent business model today; witness the success of the Canadian journalist Mark Steyn, who has made $millions urging persecution of Muslims in North America and ridiculing Europe for becoming an Islamic stronghold (Eurabia). Likewise there are a number of "experts" in Germany who make a nice living warning citizens of a Muslim takeover of Europe. One of the most absurd has to be the journalist, would-be politician and "security expert" Udo Ulfkotte. Ulfkotte is aligned with the hate-blog Politically Incorrect, but is much more ambitious than your average blogger.  Ulfkotte has started his own association - Pax Europa - which is dedicated to stopping the Islamicization of Europe.  Recently Ulfkotte has announced that he wants to start a new political party in Germany - possibly to be called the Christlich-Ökologische Partei - which would emphasize "Christian" values over Islamic ones and reverse what he sees as "special rights" granted to the Muslim minority in Germany.

None of this is especially noteworthy; there are other "Islam-experts" such as Hans Peter Raddatz who regularly appear on television talk shows but who are not really taken seriously.  What is different about Ulfkotte is his willingness to use his wealth to take legal actions against his critics. Omar at TooMuchCookies Network discusses recent actions taken by Ulfkotte and his attorneys against Jochen Hoff, a German blogger,  for writing a critical blog post.  Then Ulfkotte's sent a threatening letter to our blogger friend and colleague Big Berta simply for linking to that post in Watchblog Islamophobie.

Ulfkotte's legal bullying is really true to form for right-wing ideologues.  The right-wing mindset has always been hostile to the idea of the free press. These people cannot win arguments in the marketplace of ideas, so they try to get satisfaction in the courts. I hope there is a Tsunami of criticism in the German blogosphere of Ulfkotte and his discredited ideas.  The German press should no longer provide a forum to someone like Ulfkotte who obviously hates the principle of free speech.

The Cult of Stauffenberg

Now that Tom Cruise is playing the role of Claus Schenck Graf von Stauffenberg in the upcoming movei Valkyrie about the failed attempt to assassinate Hitler there is renewed interest in the plot and Stauffenberg's role.  There has also been a huge controversy surrounding Cruise's membership in the Scientology cult, with a leader of Germany's protestant church comparing Cruise to Goebbel's. Many in Germany cannot stomach the idea of Cruise acting the role of an iconic hero.

I tend to agree with Dr. Dean that the whole cult of Stauffenberg is overblown and the celebration of anti-democratic Prussian officers as THE heroes of the anti-Nazi resistance demeans the memories of other reisistance fighters. Stauffenberg was most likely motivated by a belief in a mystical "secret Germany" advocated by his early mentor, the poet Stefan George. In any event his assassination attempt came far too late to have changed the course of Hitler's debacle.  Why aren't there any blockbuster movie screenplays about Georg Elser - the Christian carpenter who came within 15 minutes of killing Hitler in 1939?  Who knows what the world wouild have been spared if this simple, brave man had been successful?

And how many Americans remember the fate of MIldred Fish Harnack, the only American woman executed (via beheading) by the Nazis? Her life and her trials under Nazi justice would make a very compelling screenplay - even for Hollywood. But because she and her husband were affiliated with the communist resistance organization - The Red Orchestra (Die Rote Kapelle) - it is unlikely that any Hollywood producer would want to face the wrath of the right-wing noise machine and make this movie. And so MIldred - a true American heroine - is forgotten, while Stauffenberg is celebrated.

I have no idea whether Valkyrie will be worthwhile project. But I strongly recommend the excellent film Sophie Scholl: The Last Days (2005) about The White Rose student resistance group.

Weimar in New York

New York City after the last terrorist attack and before the next: is it like Berlin between the wars? A group of actors and muscians in lower Manhattan think so, and they have constructed a Berlin cabaret in the Spiegeltent by the South Street Seaport. Inside the Spiegeltent they labor to (re)create the atmosphere of desperate sexual euphoria of Weimar Berlin:

"Late tonight, in a makeshift theater in a deserted neighborhood in Lower Manhattan, a male burlesque artist will doff his pants, a group of androgynous go-go dancers will twirl around the stage, and an African-American artist will perform in blackface. This weekend, in a dark club a few neighborhoods to the north, a taut, shirtless M.C. will prowl around — and on — his audience, recommending sexual adventures in song. And in the fall a traveling troupe of two dozen baroquely dressed stars will do vaudeville-era numbers as an acrobat spins overhead.

These performances share a certain louche look and feel: smudged eyeliner and torn fishnets, bared flesh and innuendo, a vaguely antique setting and a winking — or smirking — nod to the politics of today.

They are all part of an emerging downtown trend, as cabaret acts superimpose a risqué German style onto the performance art and theater scene below 14th Street."

New Yorkers do indeed have a similar sense of doom and foreboding that Berliners had as the Weimar Republic was collapsing around them. Still, in a way it's too bad that these New York artists turn to the past to find expressions of "creative resistance" rather than creating something new.  On the other hand, this darker form of entertainment is a relief from the Disney-like atsmosphere of sanatized TImes Square.

Coming on the heels of the Glitter and Doom exhibit of Weimar paintings, Neo Rauch at the Met, and Frank Wedekind on Broadway, the German domination of the Manhattan cultural scene appears complete.

Left-Wing Europe

Remember how John Kerry's presidential amibtions were thwarted when he was accused of being French? Well, it seems that this tactic is still being used by Republicans when they want to smear their Democratic opponents - even with America-lover Nicolas Sarkozy in power in France. Here is Republican candidate Mitt Romney on the campaign trail in Iowa earlier this week:

Republican presidential candidate Mitt Romney today invoked a Karl Marx reference in seeking to portray leading Democratic White House contenders as liberals eager to hatch big-government schemes. Speaking to a crowd of about 75 people at Cronk's Cafe Restaurant & Lounge in Denison just after 8 this morning, Romney suggested that Hillary Clinton is too liberal not only for Middle America, but also much of Europe. "I'm convinced her platform wouldn't allow her to get elected president of France, let alone president of the United States," Romney said.

But it isn't just France that is the problem.  All of Europe is Marxist nightmare, and that is what Democrats want to bring to America:

"(Romney) said leading Democratic presidential candidates Clinton, a U.S. senator from New York, U.S. Sen. Barack Obama, D-Ill., and former U.S. Sen. John Edwards of North Carolina, appear attracted to the course of Europe.

"In my view each one of them would take us in a sharp-left turn toward the path Europe has taken," Romney said."

Romney goes to say that America must reject this Marxist-European course and instead gear up for more wars and embrace torture:

During the Denison stop, Romney called for more military spending and said the United States should use "enhanced interrogation" ...

Is this kind of idiotic rhetoric effective with some American voters?  Evidently yes:

Dick Watson of Carroll, retired from the wholesale drug business, said Romney is well-versed on the military and family values.

"I thought it was excellent," Watson said. "I think he's on target. I like what I hear and I think he will probably be our candidate and hopefully elected."

God bless America.

Boerne, Texas

In the middle of the 19th century a group of affluent, politically liberal Germans - the forty-eighters - made their way to the United States.  They embraced the principles of the American Revolution that are enshrined in the Declaration of Independence, but which they had failed to achieve in their native Germany. Not surprisingly, most of these forty-eighters rejected Confederate slavery in their adopted country, and distinguished themselves in fighting for the Union cause in the American Civil War.  One group settled in the Texas hill country, and named their new community after a champion of freedom in Germany: Ludwig Börne.

Today Boerne, Texas is a rather sleepy town of 6000 residents.  Recently, Scott Horton of Harper's Magazine visited the town, and could not find one citizen who had a clue about the how the town got its name. For Horton, this amnesia has a double meaning. On the one hand, it is an example of the pervasive historical ignorance of Americans concerning their own history. On the other, there is the symbolic meaning of the decline of journalism in America. Börne was the Michael Moore of his time, a fearless investigative reporter who spoke truth to power, even though that was more than dangerous in Germany during that time.

"Börne was a practitioner of the highest form of the journalistic art, and today one reads his Letters from Paris not as newspaper contributions, but rather as works of high literature. They continue to inspire. His command of language; his ability to mobilize facts and thoughts to a certain end is amazing. Börne’s vibrant style was unlike anything that had been seen before. He shows us that a journalist can be both a careful observer and a person passionately engaged in the world around him. He was, to be clear, an opinion-journalist. He worked to inform and persuade. And to expose—especially to expose injustice."

Today that impulse has all but vanished in American journalism.  The "smart crowd" of Beltway pundits and journalists are stenographers of the powerful in Washington.  They parrot what the powerful tell them, and are terrified that they might offend the powerful and then be denied "access".  The Michael Moores and Seymour Hershes are banished, while the Robert Novacks and Bob Woodwards are celebrated for their "access" to the corridors of power.

Unfortunately, Ludwig Börne's legacy has also been lost in Germany.  Last month the neoconservative journalist Henryk Broder - a vocal supporter of the war in Iraq and a reliable advocate for the persecution of Muslims in Germany - was awarded a prestigious prize for journalism: the Ludwig-Börne Prize.

Christ or Buddha?

Here are the results of an interesting poll: more Germans are inspired by the Dalai Lama than by Pope Benedict XVI, and more Germans consider Buddhism to be a "more peaceful" religion than either Christianity or Islam.

"Eine Umfrage, die der SPIEGEL in Auftrag gegeben hatte, ergab, dass 44 Prozent der Bundesbürger den tibetischen Gottkönig als Vorbild betrachten. Nur 42 Prozent entschieden sich für den Papst. Besonders bei jüngeren und gut ausgebildeten Deutschen steht der Dalai Lama hoch im Kurs.Die Hälfte aller Befragten glaubt, dass der buddhistische Führer auch "Ratschläge fürs Leben bereithalten könnte". Der Buddhismus scheint den Deutschen generell sympathischer zu sein als das Christentum oder der Islam. Auf die Frage nach der "friedlichsten Religion" führt er mit 43 Prozent zu 41 Prozent vor dem Christentum. Der Islam gilt den Deutschen dagegen offenbar als kriegerisch:

I can understand the preference for the Dalai Lama over Pope Benedict.  Benedict, for all of his brilliance, projects an authoritarian persona that is anathema to many. And catholic dogma is the opposite of the Buddhist way, which doesn't insist on just one path to enlightenment. Last week Pope Benedict authorized the release of an "official edict" that Jesus only established one church - the Roman Catholic Church.  The Orthodox churches are therefore deemed "defective" and all other Christian denominations are not true churches. As for which religion is the most peaceful, it is understandable that Christianity would not fare so well when the "Christian" president of the United States invokes Jesus as a justification to wage wars.

But does one need to choose between Christ or Buddha? I have always been intrigued the idea of Christ AND Buddha. To me there are parallels between the teachings of Jesus and Zen Buddhism. The parables of the Gospels are similar in so many ways to a Zen kōan.  It was the great Roman Catholic mystic Thomas Merton who went further than perhaps any other Christian thinker in establishing a dialogue with eastern religion, after he had a mystical experience standing in front of a statue of Buddha.  Unfortunately Merton died tragically in Bangkok just as he was making progress in bringing both traditions together. Who can finish what Thomas Merton started?

UPDATE: Ex-Roman Catholic Priest James Carroll on Pope Benedict's Mistake.

Schäuble's Politics of Fear

The New York Times has a front-page article today about how the fear of terrorism in Germany is leading to a slow but inexorable erosion of civil liberties.  The article is sympathetic to German Interior Minister Wolfgang Schäuble's vigilence with respect to terrorist activities in Germany and Europe, but it also cites those who feel he is overreaching:

"Sensing a growing threat, Germany’s top security official, Wolfgang Schäuble, is breaking down resistance within the government to surreptitious online searches of computers belonging to people they deem suspicious. He is pushing for a law to allow security forces to shoot down a plane commandeered by hijackers. And he said this week that Germany should consider detaining potential terrorists and approving the killing of terrorist leaders abroad.

Such proposals are anathema to many in a country that has sought to eradicate any vestiges of state-sanctioned savagery by erecting a legal framework that enshrines the rights of the individual over the state. Critics say the changes would erode civil liberties and jeopardize Germany’s hard-won rule of law."

Germany is now at a crossroads.  It can follow the British model of systematic law enforcement in preventing terrorism, or it can go down the American path of "Guantanomizing" society with a lawless approach of torture, open-ended detention, and kidnapping (rendition). That is the fear expressed by the journalist Heribert Prantl in his op/ed piece  Der Angst-Mach Minister (The Fear-Mongering Minister):

"Der Minister redet so, als könne Deutschland sein Heil nur durch seine Verwandlung in einen 007-Staat finden - durch Mutation des Rechtsstaats in ein Regime der legalen Extralegalität. Er redet von Besonnenheit und praktiziert das Gegenteil; er warnt vor Hysterie, verbreitet sie aber höchstselbst; er missbilligt Guantanamo, redet aber so, als sei dringlich eine Guantanamoisierung des deutschen Rechtssystems vorzubereiten." ("Wolfgang Schäuble is making us afraid. The minister talks as if Germany could only be saved by turning itself into a 007 state - by mutating from a constitutional state into a regime of legal illegality. He talks of prudence but practices the opposite; he warns of hysteria yet propagates it himself; he disapproves of Guantanamo but talks as if it were vital to prepare the way for the Guantanamisation of Germany's judicial system.")

Triumph of Christo-Fascism: Part II

Watch what happened today on the floor of the United States Senate when a Hindu cleric was invited to deliver the invocation.

The group of ultra-patriotic American Christians who staged the disruption later put out the following press release:

"Not one Senator had the backbone to stand as our Founding Fathers stood. They stood on the Gospel of Jesus Christ! There were three in the audience with the courage to stand and proclaim, 'Thou shalt have no other gods before me.' They were immediately removed from the chambers, arrested, and are in jail now. God bless those who stand for Jesus as we know that He stands for them." Rev. Flip Benham, Director, Operation Save America/Operation Rescue

The Sex Lives of Politicians

Politicians' sex lives are a source of endless entertainment. Last night another right-wing senator - David Vitter - was snared in the DC Madam Scandal.  Evidently the good Baptist was paying prostitutes for sex while he was holding press conferences on the Sanctity of Heterosexual Marriage.

I was reading an interesting account in Der Spiegel about the ultra-conservative Bavarian politician Horst Seehofer - a man who evidently had so much time on his hands in Berlin that he started a second family with another woman - when I came across this paragraph (print version only):

"Man kann die Frage stellen, ob es richtig ist, Politiker nach ihrem Privatleben zu beurteilen; einiges spricht dagegen.  Ein liederlicher Ehemann kann ein passabler Politiker sein, umgekehrt gilt die Sache genauso.  Bill Clinton liess sich im Oval Office mit der 21-jährigen Praktikantin Monica Lewinksy ein und war trotzdem ein erfolgreicher Präsident.  George W. Bush führt, was man weiss, ein vorbildliches Eheleben, aber es ist höchst unwahrscheinlich, dass die Geschichte ein gnädiges Zeugnis über seine Amtsjahre ausstellen wird." (one can ask whether it's fair to judge politicians by how they conduct themselves in their private lives; there are reasons to think otherwise. A philandering husband can be a decent politician, and the reverse is also true. Bill Clinton got involved in the Oval Office with the 21-year old intern Monica Lewinksy, but was a successful president anyway. As far as we know, George W. Bush is faithful in his marriage, but it is unlikely that history will judge his presidency favorably.)

I couldn't care less whether a political leader is faithful in his/her marriage. Some of the most successful politicians were notorious adulterers - FDR, JFK, Willy Brandt.  What is unacceptable is the hypocrisy of Seehofer or Vitter - politicians who demonize gays and lesbians, and who routinely attack feminists.  They deserve the humilation meted out by the press.