France and Germany and You

I sense that a lot of people are waiting for the next shoe to drop on the economy. They fear that some event will happen and drive the economy downward, or perhaps downward at a still faster rate. It’s a form of pessimism that is uniquely its own.

I believe that such a shoe will come from one of two sources, both of which are east moving west. One will be in the Middle East, likely involving Iran. The other is what I’d like to address with a little more depth.

This second source is Europe. I know that’s not a revelation, at least if you follows the news at all. European economies are teetering on the edge. This affects you because quite a few American banks are deeply involved with various European bonds and securities.

At the core of this European situation is a relationship that has historical roots back at least 150 years. I’m referring to France and Germany and their relations. They have been continental rivals since Germany formed as a nation-state in the mid-19th century. The story of their interaction is the story of how three major wars unfolded (Franco-Prussian of 1870-1871; World War I of 1914-1918; and World War II of 1939-1945). While it’s true that they’re not fighting today, they are still rivals in many ways and have simply traded bullets and barbed war for budgets and debt.

Behind the equally historically compelling story of European union, there lies the fundamental dynamic of French-German relations. They affect you.