Helga Zepp-LaRouche: Hjalmar Schacht's Policy is to be Incorporated in the German Constitution!
January 18, 2008 • 10:52PM

Hjalmar Schacht's Policy is to be Incorporated in the German Constitution! The Population has the Right to Resist it!

by Helga Zepp-LaRouche

January 18, 2007—As the Dow Jones and the Financial Times of Germany reported on January 18, the Federal Government and the coalition parties of Germany have agreed to incorporate the provisions of the European Union Stability Pact in the German Constitution (or "Basic Law). If that occurs, the Federation and the states would be obligated in the future to submit and to enact balanced budgets.

If the Grand Coalition actually wants to transfer the "debt break' of the Maastricht Treaty to the Basic Law, then this poses a serious constitutional problem, with which the citizens had better concern themselves, before it is too late. For with this "political straight jacket" the government coalition wants to incorporate the completely incompetent politico-economic austerity corset of the Maastricht Treaty in the Basic Law, which would be yet another step towards the complete self-disempowerment of the government in respect to the task of currency sovereignty.

Indeed, the EU-Stability Pact directly prohibits governments from making available state lines of credit for the stimulation of production in times of crisis. It therefore specifically prohibits a solution to economic and finanical crises according to the model of Roosevelt's New Deal or as the Lautenbach Plan or the so-called WTB (Woitinsky, Tarnow and Bade)-Plan of the General Federation of German Trade Unions (ADGB) had provided in the 1930s.

In the face of the systemic crisis which has dramatically intensified over the last six months, the acute national banking crisis in Germany, the global breakdown crisis of the financial system and the immediate threat to all social systems as a consequence thereof, such a "transfer" into the Basic Law is the most mistaken and dumbest thing conceivable. For as Dr. Wilhelm Lautenbach already observed correctly in 1931, in a depression, combined with a world financial and currency crisis, saving (= a balanced budget) is the most absurd thing of all, because it releases the spiral of collapse ever downward into a bottomless pit.

The serious Constitutional question, which this "transfer" thus forcefully raises, lies in the fact that the logic of the Stability Pact represents a direct threat to Article 20 of the Basic Law, in which it states that "the Federal Republic of Germany is a democratic and social federal state." For the application of the criteria of the Stability Pact would mean for the Federation and the federal states under already mentioned conditions of a global breakdown crisis, that Germany could no longer be a social state. Instead, the instruments would be developed, with which the living standards of the population could be reduced by 10, 20, 30, 40, 50 etc. percent. And that is precisely the conception of the international financial oligarchy of how they want to solve the crisis: With austerity in the tradition of Hjalmar Schacht.

However, it reads in the same Article 20 in paragraph 4 as follows: "All Germans have the right to resist against anyone who attempts to eliminate this system, if no other relief is possible." And precisely in this paragraph lies not only the legal basis for resistance to the plans of the coalition government, but also the starting basis for possible complaints of unconstitutionality in Karlsruhe.

But unfortunately, this intention of the government demonstrates that it is light years away from facing up to the reality of the systemic collapse. To what extent this is simply only ignorance of economics, or whether other motives are to be found for their demonstrated incompetence remains for the moment to be seen. While for six months the daily horror reports about the worldwide systemic collapse have followed in rapid succession, the finance ministers of Germany, France, Great Britain and Italy and an EU-Commissioner indulged in a further orgy of suppression of reality on January 17 in their meeting in Paris.

Bercy of the French Economics Ministry stressed that this meeting was not a crisis meeting, but rather it only had to do with the transparency of so-called structured products, and with the role of the banking supervisory authorities and rating agencies. When the French Prime Minister Fillon beforehand on Sunday had proposed a dialog on the level of the heads of state of the Euro-zone on economic policy, the deputy speaker of the Chancellor 's Office, Thomas Steg, initially stressed, that Berlin is open to this idea. Federal Chancellor Merkel on the following day said, she did not see the necessity for this, because the economic policy of the ECB is in good hands (!), yet a meeting of the four heads of state, whose finance ministers had previously met in Paris, is now occurring. As the Financial Times of Germany observed, these were the same four states which at the Financial Stability Forum had requested a report for February 8 for the G7-Meeting in Tokyo. But apparently they did not want to or could not wait for it.

Since with Mrs. Merket there will be no "state orgy of re-regulation of hedge funds," as she had said at the New Years reception of the Bundesbank in 2007, no limit was also placed on the mega-speculators. But that all this greed for gain has an impact in the real world, becomes clear to another purpose. Thus, now already over a dozen German cities, including Reavensburg, Hagen, Pforzheim, and Wuerzburg, have brought a suit against Deutsche Bank, because they had been "falsely advised" in the purchase of so-called interest rate swaps. The accusation against Deutsche Bank is, that it had consciously withheld information about the risk of these papers, which, however, had been well-known in-house. Together, these cities had suffered losses of over a few million euros. According to the Sued Deutsche Zeitung (SDZ), in Germany up to 200 cities and communities are said to have engaged in similar speculation, and thereby a total loss of around one billion euros is said to have occurred. Naturally, also here the tax-payer is again the loser, if complaints for damages should meet with no success.

The attorney Klaus Nieding spoke to Handelsblatt about "capital swindlers," against whom investors are not sufficiently protected. Similar accusations are also made in several U.S. states against Deutsche Bank and diverse special-purpose vehicles, that with fraudulent intent they had not told investors about the risks of investing in the sub-prime market. As a matter of fact, it is hard to comprehend, that it should not have been clear to financial experts in the banks and financial institutions, that the massive awarding of mortgages with adjustable interest rates to debtees with a low degree of credit worthiness had to lead directly to the bursting of the mortgage bubble, which has represented the trigger for the global financial crash.

When the crisis broke out at the end of July, Jochen Sanjo of the BAFIN observed, that this was the worst banking crisis in Germany since 1931. In the meantime, every person knowledgeable about the situation had to be clear, that what is involved is a very profound crisis due directly to the cluster of risks of globalization, due to the "creative financial instruments" and the paradigm shift continuing for 40 years and the destruction of productive capital connected with it. This is to be compared if anything to the collapse of the banking system in the 14th Century. But nonetheless, the statement by Sanjos was useful, because it brought to mind, that in Germany 1933 came very soon after 1931. And while in Europe with Mussolni, Franco, Hitler and Hjalmar Schacht, as well as Petain, fascist solutions for the world economic and financial crisis were selected, in the USA Franklin D. Roosevelt demonstrated on the other hand, that it was possible to lead the economy out of the depression with the New Deal.

And here lies the actual shattering effect of the plans of the coalition government to transfer the criteria of the EU-Stability Pact into the Basic Law. For under the given conditions of the systemic financial collapse, a "balanced budget" means in practice the prescription of Schachtian austerity. The persons, who in the 1930s did not know that a rejection of the plans of Lautenbach, Woitinsky, Tarnow and Bade would very rapidly give rise to Hitler, can still be credited with the fact, that there was still no precedent for Hitler. Today this obviously is no longer the case.

What is urgently necessary today is not the transfer of the Stability Pact into the Basic Law, but rather on the contrary the suspension of the Stability Pact based on the massive breakdown of the economic equilibrium. If it is proven that an international treaty violates the fundamental interests of one or several of its signers, then it is absolutely permitted under international law to withdraw from this treaty. Minimally what should occur is a suspension of this treaty, until the breakdown of the economic equilibrium is remedied and then one can in all tranquility reconsider the sense or absurdity of the treaty.

In any event, the authors of the Basic Law have written Article 20 and in particular paragraph 4 into the Constitution, so that precisely what the coalition government has in mind is rendered impossible. It is high time, that all organizations and institutions, to whom Article 20 is important, remember their right to resistance.