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Allianz chief: don't go back to Deutschmark

The Local · 7 Jul 2012, 12:15

Published: 07 Jul 2012 12:15 GMT+02:00

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“A return to the Deutschmark would be irresponsible,” Allianz CEO Michael Diekmann told the newspaper Welt am Sonntag. “Therefore we should stop toying with the idea.”

Diekmann said his company has made economic calculations for what would happen if Germany were to give up the euro, and that the result would be a deep depression in which a quarter of the gross domestic product (GDP) would be lost within four to five years.

As a way out of the euro crisis, the head of the Munich-based insurer called for a stronger political union “that will only work with more shared responsibility and financing.”

He said limits need to be established on how one country helps another in the eurozone. “Whoever helps another country must also have the possibility of control,” he told the paper.

Diekmann also called for a political process in which there was more public participation. “The question is, what model can one use to convince the people of Europe,” he said.

Story continues below…

DPA/DAPD/The Local/mbw

The Local (news@thelocal.de)

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Your comments about this article

13:10 July 7, 2012 by smart2012
Crisis hitting Germany, finally Germans start to understand (one year too late though)
13:10 July 7, 2012 by pepsionice
There would be a sudden shock for about seven days, and then ninety percent of the nation would be prepared to accept the DM without question. I don't see this as such a big deal. Life goes on. It's not like you are living in Greece, and looking for food to survive each and every day. Germans identify with the DM....end of story.
13:26 July 7, 2012 by Herr Rentz
"...As a way out of the euro crisis, the head of the Munich-based insurer called for a stronger political union ¦quot;that will only work with more shared responsibility and financing....¦quot;

I hope that doesn't mean Germany sharing more of the responsibility for countries that can't manage their money.
15:31 July 7, 2012 by Kennneth Ingle
Money is basically just a measurement of value. Whether it is called, Dollar, Pound or Taller, is only of secondary value. The big problem with modern currencies is ­ as compared to the Gold Standard ­ by having no real value within themselves, they also have no real basis for stability. Each system of financial administration can print, more or less, as many paper notes as it thinks fit. It is the buying power, not the name or numbers on the notes, which is important. We shall no doubt eventually get over this Euro crisis, in the way national governments have so often done in the past, by letting a devaluation ( loss of buying power), take place.

The so often highly praised DM was no different. In the year 1960, a Bratwurst could be purchased for 49Pgs, = about 25 Euro cents, try to get one at that price now! Britain for many years had a chain of shops called the fifty shilling tailors, these days you might just be able to buy a Newspaper for the price paid in those days for a Gentleman-s suit. Nevertheless, the Britons still keep proudly to the Pound Sterling.

As long as banks know that they will be bailed out by the taxpayer, no action will be taken by them to correct the fall of the Euro. Only an international law, requiring credit institutes to cover the losses made by other banks is likely to end the irresponsible activities of these concerns. Without such a legal regulation, however much we are able to save, the interest will never compensate the loss of purchasing capacity.
18:59 July 7, 2012 by IchBinKönig
There goes smart2012 again with his wet dream of more Bank Bailouts. too little, too late in his guesstimation. lol
19:04 July 7, 2012 by Jerr-Berlin
Total BS...Germany would be fine with the DM again...
19:10 July 7, 2012 by smart2012
Hi I am the king, what would be your proposal then? If to go to DM, please ask merkel to do it. It will be the best for all other European countries.. ;)
20:54 July 7, 2012 by mos101392
@ Kennneth Ingle

"Money is basically just a measurement of value"

You are absolutely correct and you need your own talk show!

Thank God there are agencies like MOODYS that track economies and their currencies value.

As much as Germany needs the EURO, Greece needs the Drachma, Spain the Peso, Italy the Lira ect. If you want a common currency, ie Euro, then one needs to except ALL responsibilities that come with that. One cannot just expect to ONLY benefit from a one currency.

The banking mentality is for everyone to be in debt and to always pay interest and never be able to pay off that debt....the same goes for countries like Greece, Spain, Italy, Portugal ect...For these countries to remain with the Euro means to always be in debt and a slave to Germany. Their status have been downgraded and therefore they have higher interest rates for their loans.

HELLO!!!! If these countries were in trouble and needed loans or bailouts, even a fool can see they will have problems paying back these loans with higher interest rates. It's simply about the greedy German bankers making an attempt to make more money. It's as simple as your local pub allowing you to maintain a bar tab and as long as they have you on the "hook", they continue to get your money...just like the banks that loan to individuals and countries!!!

The rich elite depend that everyone remains in debt...period!

Germany would prosper with the DM and the Germans would see that when they convert their currency in Greece, Italy, Spain ect.

However, to try to keep the Euro and to postpone the inevitable, will only prolong the suffering of the average European.
12:28 July 8, 2012 by Navigator_B
Who is going to finance the continuation of the Euro, Herr Diekmann? Is your company Allianz and other financial institutions offering to pay for the endless bailouts that they benefit from? That seems only fair when it was the financial institutions who lent the money for the dodgy loans in the first place. 

It's more likely to be the German taxpayers who are in effect being made to guarantee those loans. It will also be the people of Greece and other countries who will pay through endless austerity and an overvalued currency, neither of which helps them to grow their economy and pay back the loans. This continuous debt is only of use the financial industry.
00:34 July 9, 2012 by NEUEVILLA
The banking crisis was caused by people taking loans thet they could not afford to repay. The Euro crisis was started by the German government ignoring the deficit rules from the start, and getting away with it. It is hardly surprising that other countries thought they were entitled to do the same!
09:36 July 9, 2012 by AlexR
@pepsionice: "There would be a sudden shock for about seven days, and then ninety percent of the nation would be prepared to accept the DM without question. I don't see this as such a big deal."

Seven days? Ninety percent? Where do you get those numbers from? Are they coming from a real scenario developed by a qualified economist? Or is it a wishful-thinking scenario developed by yourself. Because the *real* scenarios are quite different and all equally pessimistic.

1. Economist Dirk Meyer has developed a scenario in which the total costs would fall somewhere between €250 and €340 billion. That would represent 10 to 14 percent of German gross domestic product, a considerable amount.

2. UBS chief economist Stephane Deo, has even gone so far as to estimate that 20 to 25 percent of GDP might be realistic in the first year after a German exit alone. That would translate to a per capita cost of between €6,000 and €8,000, with costs of between €3,500 and €4,500 in subsequent years.

3. The calculations undertaken by ING chief economist Mark Cliffe are similarly pessimistic. In his scenario, he assumes that the breakup of the euro zone would create many additional problems: falling stock prices, the need to bail out further banks to the tune of billions and a sharp drop in the euro exchange rate. "Compared to the presumed long-term benefits, the scope of the economic damage in the first two years would weigh heavily," he concludes. "Decision-makers," he warns, "perhaps ought to think of that before they gleefully describe the exit from the currency union as an option."


So your "seven days shock" is more like many years of shock. And your "ninety percent of the nation would be prepared to accept the DM without question", actually calculates to between €6,000 and €8,000 for each German the first year of a possible German Eurozone exit and between €3,500 and €4,500 in subsequent years.

Did you ask any German if he is "prepared" to pay €8,000 the first year and €4,500 in subsequent years? Do most of the German people know that this could happen? Of course not, because the media and the politicians have told them again the convenient lies that the "shock will last for 7 days" and after that all will be rosy and easy like the time before the euro.
15:11 July 9, 2012 by BR549
First, @ Kenneth Ingle - I just wish I could get a bratwurst for .49 pfenning like in 1960. Would that include senf and brotchen?

Secondly, nobody knows what would happen if Germany went back to the DM. Some financial experts say stay with the Euro, others say go back to the DM.

But either way, taxpayers in Germany (I'm one of them) will pay and pay and pay some more...and that's the way the cookie crumbles.

I agree with Pepsionice...give it a week and the DM will be accepted...

after that, I think given two weeks, financial experts and politicians will find a new crisis and we'll pay for that too.

Now, back to finding a cheap bratwurst...
17:41 July 9, 2012 by neunElf
Allow me to translate for Herr Diekmann;

Now the cost to the German citizen is hidden , if you go back to the DM then it will be much more transparent and Allianz will be unable to take advantage of the system like we do today!

Funny to take lessons on finance from the company that lost billions for its shareholders with the purchase and sale of Dresdner Bank.
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