Angela Merkel remains as clueless as ever about austerity

No matter how bad the economy looks in austerity-hit Europe, Merkel does not and probably never will understand economics. She's played to the pro-austerity crowd - fanning the flames with expertise - and there's almost no way she can work herself out of that position.

In Merkel's eyes, austerity worked well for Germany and now it's working well in places such as Spain. Except it's not. Yesterday the NY Times ran a depressing article about Spaniards now searching for food in trash bins. (And remember, Spain's budget had a surplus before the crisis.) In Greece, the plan to pay back the impossible loans is far off track but again, we all knew it would be that way at the start.

Even in the non-eurozone UK, austerity is now costing the country billions due to families quitting work to help sick family members. This means no more tax revenue and more stress on the system. It's not working and it won't work. There are countless examples of austerity failing miserably in a shrinking economy. Austerity has only worked during a growing economy and that does not exist in Spain, Greece, Portugal or the UK.

With this attitude, things will only get worse in Europe. Let's not forget who keeps insisting on driving the EU economy into the ground. The bankers caused the crisis, but it's Merkel who is making a bad situation worse.

How could anyone think this is the picture of success?

The Chancellor made her remarks in a speech to the Federation of German Industries on another day of turmoil in the currency bloc. The Spanish government faced mass anti-austerity protests in Madrid, while Greece was reported to be billions of euro off-track in meeting the terms of its bailout. Meanwhile, the ratings agency Standard and Poor's once again highlighted the grim state of the EU economy, forecasting that the eurozone would not return to growth until at least 2014.

Against such a gloomy backdrop, Ms Merkel insisted: "We need to take a deep breath to overcome this crisis. We must make the efforts that will allow Europe to emerge from the crisis stronger than it went in."

The German leader conceded that hard-won reforms in southern Europe had helped, but said there was still work to do. The markets, she added, had doubts about their ability pay back their debts. Her comments were overshadowed by the continuing crises in Spain and Greece. The government in Athens conceded yesterday that it would need between €13bn to €15bn more in funding if it were given the two-year extension to the bailout plan it has been requesting.

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Germany making enormous progress with solar energy

These new developments in Germany are impressive. They are now generating as much energy as 20 nuclear power plants, though without all of the downside side effects of nuclear energy. Remember that for years, many in the anti-change camp have insisted that the green energy sources could never provide enough energy.

Thanks to Germany's insistence on moving beyond nuclear energy, we're seeing that other options are possible and that they can work. Change is never easy but just because some say it's not possible, doesn't mean that it's true. Well done, Germany and thanks for showing the world what is possible.

Norbert Allnoch, director of the Institute of the Renewable Energy Industry (IWR) in Muenster, said the 22 gigawatts o f solar power per hour fed into the national grid on Saturday met nearly 50 percent of the nation's midday electricity needs.

"Never before anywhere has a country produced as much photovoltaic electricity," Allnoch told Reuters. "Germany came close to the 20 gigawatt (GW) mark a few times in recent weeks. But this was the first time we made it over."

The record-breaking amount of solar power shows one of the world's leading industrial nations was able to meet a third of its electricity needs on a work day, Friday, and nearly half on Saturday when factories and offices were closed.

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Rahm Emanuel says French president-elect François Hollande unpresidential

Already an update from Rahm's spokesperson; see below –GP
________

You know there will be push-back and resistance against the new France, and against the notion that austerity has gone too far — a key message from Sunday's French elections and incumbent conservative President Nicolas Sarkozy's loss to Socialist party head François Hollande.

Where will the push-back come from? What shape will it take?

■ Here's a clue — this, from Rahm Emanuel. AP via Buzzfeed:

Former White House chief of staff and current Chicago Mayor Rahm Emanuel appeared underwhelmed by Francois Hollande, elected yesterday to lead France, according to a report in the left-wing French newspaper Liberation.

"To me, [Hollande] has more of the head of a prime minister than of a president," Emanuel reportedly said at a reception at the residence of the French Ambassador in Washington. When French diplomats suggested that Hollande could grow into the job, Emanuel reportedly shot back with his "professional" opinion that he couldn't imagine Hollande "grow[ing] in office."

The report is one of a series of ripples of the election of Hollande, a little-known figure here who didn't visit the U.S. during his campaign, over Sarkozy, known domestically as "Sarko the American." ...

The article goes on to talk about "Sarko the American" and how helpful he was to Obama in the Libyan War. (It's not entirely clear when Rahm made his comments.)

■ Which brings up the question of Obama and Hollande.

We know that Obama is a classic Clintonian NeoLiberal — a fan of Robert Rubin from way back, a free-markets maven, a lover of austerity (in the US, "austerity" calls itself of "Simpson-Bowles").

We also know that Rahm is, to quote the linked Liberation article, Obama's former "right arm" ("ex-bras droit d’Obama").

Back to the AP:

In France, Obama was perceived to be supporting Sarkozy; in particular, Liberation writes, the White House, at the request of the Elysee [French presidential residence], allowed Sarkozy's aides to film the French side of a telephone conversation between the presidents. The U.S. Administration has, however, been formally neutral[.]

Is it surrogate time again for Rahm? Is this a signaled preview?

You know there will be efforts to derail the end of austerity in France. What form will they take? The usual method of dealing with a client state is to starve it of funds until their "rulers" are brought to heel — deploy your businessmen, in other words, to make their economy tank until the necessary submission.

France is hardly a client state, but there are still arrows in the quiver of US NeoLiberals and German bankers that can be used as weapons. It will be interesting (and instructive) to see how Obama-Cameron-Merkel work against Hollande and the new France. What method? What means? Stay tuned.

■ Side note — There are interesting early indicators from Hollande regarding the new relationship with the US. This is from another site linked in the AP story, Slate.fr. Hollande in a question-and-answer session (my humble translation):

▪ Les relations avec les Etats-Unis [(About) relations with the US]

«Je veillerai à affirmer l’indépendance de la France sans compliquer la tâche de Barack Obama.»

[I will make sure to affirm the independence of France without complicating the job (task) of Barack Obama.]

▪ Le nucléaire iranien [(About) nuclear Iran]

«Je n’admettrai pas que l’Iran puisse utiliser cette technologie à des fins militaires.»

[I won't admit that Iran can utilize (nuclear) technology for military ends.]

And finally, this fun dig:

▪ [In English] Mister Hollande, do you speak English?

«Yes I speak English, more fluently than the former President. But a French president has to speak French!»

Obviously just the start of a conversation that's going to last a while. (I hope he doesn't have a roving eye ... and use it in New York.)

UPDATE: That was fast. From the original Buzzfeed article, this update. Apparently Emanuel's office has a response:

"What the mayor said was just the opposite," his spokeswoman Sarah Hamilton told BuzzFeed. "What he said was: He doesn't know him, but through the U.S. press coverage, he looks more like a prime minister than a president, but everybody grows into their job."

Yep; just the opposite of what he is reported to have said. Smooth.

GP

(To follow on Twitter or to send links: @Gaius_Publius)
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There are three Europe stories — the Republican story, the German story, and the truth

In his latest column and a related blog post, Paul Krugman revisits the Europe problem, which turns out to be two problems.

The first problem is, How do the struggling European economies — the GIPSIs, meaning Greece, Ireland, Portugal, Spain, and Italy — right themselves economically?

The second problem is, How (and why) do people persistently misstate and misunderstand the first problem?

Krugman looks at the second problem first. He sees three stories (explanations) of what went wrong in Europe. From the blog post (my emphases):

There are basically three stories about the euro crisis in wide circulation: the Republican story, the German story, and the truth.

The Republican story is that it’s all about excessive welfare states ... [and] the German story is that it’s about fiscal profligacy, running excessive deficits.

Why is the first the "Republican" story (more about those quotes in a second)? Because they love to tell that story, says the Professor in his column:

This story is, by the way, a perennial right-wing favorite: back in 1991, when Sweden was suffering from a banking crisis brought on by deregulation (sound familiar?), the Cato Institute published a triumphant report on how this proved the failure of the whole welfare state model.

The story is false, as this chart shows (click to open in a new tab). The red bars are the GIPSI states, the rest are in blue. Tall bars mean higher "welfare state" spending. Note that of the GIPSIs, only Italy is in the top six of welfare spenders, behind four rather healthy economies.

So much for "Republicans." What about the German story?

[T]he German story ... is that it’s all about fiscal irresponsibility. This story seems to fit Greece, but nobody else. Italy ran deficits in the years before the crisis, but they were only slightly larger than Germany’s (Italy’s large debt is a legacy from irresponsible policies many years ago). Portugal’s deficits were significantly smaller, while Spain and Ireland actually ran surpluses.

And the truth?

[T]he creation of the euro fostered a false sense of security among private investors, unleashing huge, unsustainable flows of capital into nations all around Europe’s periphery. As a consequence of these inflows, costs and prices rose, manufacturing became uncompetitive, and nations that had roughly balanced trade in 1999 began running large trade deficits instead. Then the music stopped.

Where did the GIPSIs (and the U.S.) go wrong?

The best way to think about that last quote is as a simple supply and demand situation (phrases like "capital inflows" make the non-economist's brain hurt). When there's too much cash chasing not enough goods and services, prices simply go up. How can they not?

"Capital inflows" is economist-speak for "cash coming into a country." Investors dumped a lot of eager money into the peripheral countries, more money than the countries could absorb.

The eagerness of investors created a sellers' market for suppliers of goods and services (like manufacturing and labor). Sellers charged what the market would bear (why shouldn't they?) and the peripheral economies experience a bubble-like boom. The money flowed like wine (so to speak).

The same thing happened in the U.S. with the housing market. Take, for example, the temporary boom in towns like Hemet, California. In the days when "no one could lose money on housing," little Hemet was being build up as fast as money could be found to do it.

Why? Hemet was considered "driving close" (under an hour and a half) to the city of Riverside, a place with actual jobs, and houses in Hemet were cheap compared to those in Riverside. Buyers traded driving time for home prices, on the assumption that housing would never go down (and that gas would not go very far up).

Investors were eager to build in Hemet because buyers were eager to buy. Add in the illusion of safety, and the economy of sleepy little Hemet exploded — till it crashed.

The "illusion of safety" that did so much to wreck the U.S. economy also wrecked the peripheral economies of Europe. In the U.S., that illusion was supplied by the supposedly bullet-proof housing market — and by the ratings agencies that "blessed" with AAA ratings all of the mortgage-based derivative products the banks were buying and selling.

In Europe, the euro supplied the illusion. The common currency made everything magically safe. As long as France and Germany were strong, the euro would be strong everywhere. Investment in Portugal, Spain, and other peripherals was "blessed" by German strength, and investors in the GIPSI countries lined up at the door.

"Then the music stopped"

What happened next in Europe is the same as what happened here. After the crash, the elites (Our Betters) had only one bottom line. Make sure no banker loses money. Which explains Krugman's "Republican" and German stories perfectly.

■ "Republican" story — If it's the people's fault (for being lazy and spendy), then it's right to punish them by taking away their welfare benefits (and give it to the banks to make good their derivative-based losses).

■ German story — If it's the GIPSI's fault (for being "fiscally irresponsible"), then it's right to take the losses out of their hide (and give it to the banks to cover their now-vulnerable investments).

What's the answer to the first question above — "How do the GIPSIs right themselves?" They don't. They wait until the crisis is so great that leaving the euro won't make it worse, then they leave the euro, one by one. From the blog post (the article says roughly the same thing):

[I]f you’re running a peripheral nation, and the troika [European Commission, IMF, World Bank] demands austerity, you have no choice except the nuclear option of leaving the euro, coming soon to a Balkan nation near you.

Count on it.

Why the scare quotes around "Republican"?

Those quotes are mine alone. Krugman calls his anti-welfare story Republican (no quotes) because the state of the Krugman is Dem-friendly in these articles.

Yes, the Republicans hate welfare, but they're not alone. The fact is that all of Our Betters, including the NeoLiberals, the Obamas and the Clintons, the Leahys and the Schumers, think like the so-called "Republicans."

It's not a Republican story, it's a Village story, an elite story, the DC cocktail story they all are telling.

Bill Clinton got caught here agreeing with Paul Ryan about the safety net.



By "paralysis" Clinton means "failure to cut the safety net." He might lie to you (remember all those NAFTA jobs?) but not to Paul Ryan. Village-on-Village violence is beyond the pale.

This is, unfortunately, the one time you can trust Bill Clinton. (Does the phrase "Tea Party the Democrats" suggest anything to you now?)

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Occupy brings out protesters in Germany

Berlin wouldn't be Berlin without protesters but Occupy is also camping in front of the European Central Bank in Frankfurt as well. Germany has hardly suffered from the economic crisis as badly as other countries in Europe or in the US, but the problem is still obvious.

According to police figures, about 2,500 people rallied in Frankfurt to march on a route that took them past the headquarters of both the German national bank and the European Central Bank (ECB).

The activist group Attac, which organized the event, said at least 5,000 had attended.

Members of the Occupy Frankfurt group, which has been camped outside the ECB for the past two weeks, have said they plan to remain at the site for two more weeks.

In Berlin, some 1,000 protesters gathered outside the main city hall carrying plaques bearing the message "Occupy Berlin."

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The US could learn a few things from Germany

While Germany may be bullying Greece and kicking Spanish farmers, but it's still hard to argue against it's impressive ability to maintain a middle class. Not that we like to ever learn from any other country, but it wouldn't be so bad to try this. NY Times:

Unlike what happened here, German laws and regulators have also prevented the decimation of their labor unions. The clout of German unions, at individual companies and in the political system, is one reason the middle class there has fared decently in recent decades. In fact, middle-class pay has risen at roughly the same rate as top incomes.

The top 1 percent of German households earns about 11 percent of all income, virtually unchanged relative to 1970, according to recent estimates. In the United States, the top 1 percent makes more than 20 percent of all income, up from 9 percent in 1970. That’s right: only 40 years ago, Germany was more unequal than this country.

Finally, there are taxes. Germany does not have a smaller budget deficit because it spends less. Germany, you’ll recall, is the original welfare state. It has a smaller deficit because it is more willing to match the benefits it wants with the needed taxes. The current deficit-reduction plan includes about 60 percent spending cuts and 40 percent tax increases, Mr. Hüfner says. It’s like trying to lose weight by both eating less and exercising more.

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E. coli remains a mystery as sprout tests are negative

What seems increasingly likely is that Germany and Germany alone was responsible for the E. coli outbreak. While there have been victims outside of Germany, they were people who had been in northern Germany. Over the weekend German authorities were convinced that the problem was with bean sprouts grown at a German organic farm but tests have come back negative. The Guardian:

A first set of 23 results from 40 samples taken at the farm were negative, Lower Saxony's agriculture ministry said in a statement.

"The search for the outbreak's cause is very difficult, as several weeks have passed since its suspected start," it said. "A conclusion of the investigations and a clarification of the contamination's origin is not expected in the short term."

This is the worst possible news for both German consumers, who face indefinite warnings against raw salad leaves, tomatoes and cucumbers, and, more acutely, farmers. Spain's farmers, whose cucumbers were wrongly at first blamed by German scientists, have suffered in particular. The news also came too late to prevent the small town of Bienenbüttel, 40 miles south of Hamburg in Lower Saxony's rural heartland, being overrun by media while police sealed off access to the farm. Its owner, Klaus Verbeck, told a local newspaper he was baffled at the apparent connection, given there were no animals or animal products on the site.

The German handling of this is so bad that American experts have called them incompetent. Read the rest of this post...

E. coli outbreak wanes as scientists dismiss vegetables as source

Germany may have overplayed its hand when the government blamed Spain and their vegetables for the source of the E. coli outbreak. It was convenient since so many in Germany are obsessed with bashing southern Europeans but the facts aren't there to support the attacks. It will be interesting to see what is the source of the problem and if it has nothing to do with Spain, Germany should be reprimanded. And then fined. A lot. Who knows, they may even stop bashing the Greeks and every other country that they find is beneath them, which would be most of them.

Remind me again who thought the European Union was a good idea?

German officials have set up a task force to hunt the source of a highly toxic strain of E-coli that has left at least 19 people dead in 12 countries across Europe.

Health authorities repeated warnings on Friday to avoid some raw vegetables in northern Germany, as officials said 199 new cases of the rare strain of the bacteria had been reported in the past two days.

But the warnings came as a European Union laboratory in Rome said there was no scientific evidence that vegetables were the source of the infection.

E-coli 0104 bacteria has claimed the lives of 19 people across Europe, the World Health Organisation [WHO] said on Friday, in a strain it said has "never [been] seen before".

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German government votes to go nuke free by 2022

Remember that the government in Germany is a center-right coalition. Germany may not be as deep into nuclear energy as France but this is still very big news. Changing energy sources won't be easy but if Germany can show that it works, it will be hard to argue against such a significant change for other countries. CNN:

Minister of Ecology Norbert Roettgen of the Christian Democratic Union party made the announcement early Monday after negotiations with coalition partner, the Liberal Party, which had been opposed to setting a date for decommissioning the nuclear facilities.

Opposition parties have long supported shuttering nuclear energy in Germany

"The decision looks like this," Roettgen said. "Seven older nuclear power plants ... and the nuclear plant Kruemmel will not go back online ... a second group of six nuclear reactors will go offline at the end of 2021 at the latest, and ... the three most modern, newest nuclear plants will go offline in 2022 at the latest."

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Merkel rejects debt restructuring for Greece

This will be a lesson in how to make a bad problem even worse. Merkel played this game before and it cost everyone money and now it looks like she's going to do it again. There's a strange fixation on bashing the Greeks by some in Germany and it's not clear why that is.

On the day that European Union finance ministers approved a 78 billion euros ($110 billon) rescue programme for Portugal, Ms Merkel declared that outright debt restructuring before 2013 – when a permanent bail-out fund is in place – would be “incredibly” damaging to the eurozone as a whole.

“It would raise incredible doubts about our credibility if we simply were to change the rules in the middle of the first programme,” causing a flight of investors in government bonds from the euro zone, she told Berlin students.

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Green Party celebrates success and prepare to run coalition in German state

This is quite a big jump for the Greens who won less than half of the votes in the previous election. Angela Merkel's center-right party still polled well but lost enough votes to fall out of control of the prosperous state of Baden-Wuerttemberg. Merkel's CDU had controlled the state since 1953. The nuclear issue was a contributing factor but voter fatigue with Merkel's policies was also an issue. The Guardian:

The chancellor's Christian Democratic Union party, or CDU, had ruled the region's state legislature for almost 58 years, but found itself on the wrong side of the nuclear debate following Fukushima. Even before the Japanese earthquake, the party was unpopular locally for sanctioning a multibillion euro project to build a railway station in Stuttgart.

Support for the CDU slumped from 44.2% in the 2006 state election to 39%, according to official results.

The state parliament's new leader would be Winfried Kretschmann, 62, a spiky-haired former science teacher. He is likely to become the Green party's first regional "minister president" after his party gained 25% of the vote; enough, when combined with the 23.1% for the centre-left Social Democratic party, to form a coalition. Minister presidents are powerful on a national as well as a regional level, because they have a vote in Germany's upper house, the Bundesrat, and can veto legislation.

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Angela Merkel's CDU may lose in regional elections over nuclear power

This would be quite a blow to Merkel's party as well as Merkel's hold on power. It would also be interesting to see the catastrophe in Japan have such an impact on German elections. After years of calm, who in their right mind isn't concerned about the safety of nuclear energy? A strong majority (64%) of Germans are against nuclear energy and Merkel's recent flip-flop did her no favors. It would be a credit to the intelligence of voters if they saw through her naked attempt to grab votes by changing from her robust, pro-nuclear energy position last year to her last second change. One would hope that voters somewhere could see through political opportunism.

On Tuesday evening, the CDU's Stefan Mappus did his best to seem upbeat. The incumbent state prime minister, a squat 45-year-old, took to the podium at the Sillenbuch retirement community in Stuttgart and told the crowd what they wanted to hear. "We in Baden-Württemberg are the best and we want to keep it that way," he said. "We have the lowest unemployment – just 4.3% – and our economy is growing by 5.5%."

But Mappus was in trouble and he knew it. Just 50km up the road from Sillenbuch, in the village of Neckarwestheim, was one obvious cause of his – and Merkel's – nosedive in the polls. Surrounded by vineyards and potato fields are two nuclear power stations, Neckarwestheim I and II. Thirteen days ago, Merkel announced that one of them would be immediately taken off the grid, along with six other nuclear plants built before 1980. The decision, taken after the explosions at the Fukushima reactors in Japan, was a brazen U-turn in CDU policy and a naked attempt to shore up votes – 70% of Germans saw it as such, and their suspicions were confirmed on Thursday with a leak of comments made by Merkel's economics and technology minister, Rainer Brüderle, who told a group of businessmen that the chancellor's decisions in the run-up to the Baden-Württemberg elections were "not always rational".

Perhaps more painful for Merkel were comments by the veteran CDU chancellor Helmut Kohl, who wrote a piece in the tabloid Bild on Friday criticising her "overly hasty" decision. Retreating from nuclear energy would "not help anyone", said the 80-year-old, and would "even make the world a more dangerous place" because Germany's respected engineering know-how would no longer be used to improve the industry.

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Germans to buy New York Stock Exchange

But wait, they're socialists so how could this be? We all know that the US is the only country in the world that is truly capitalist so there must be some mistake. Obviously the Germans don't understand that the US is number one in everything.

The board of NYSE Euronext is expected to meet on Sunday to discuss a planned takeover by Deutsche Boerse and a deal announcement is likely to come by Tuesday, according to news reports.

Deutsche Boerse and NYSE Euronext said on Wednesday they were in advanced talks to merge, just hours after London Stock Exchange unveiled a bid for Canadian market operator TMX Group Inc.

Other exchanges said they were considering striking their own deals or looking to take advantage of the distraction, in early signs of ripples through the world's capital markets.

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Berlin body scan protesters: 'Be a good citizen — drop your pants'

Leave it to Berliners to come up with a great protest earlier this year. (There is no nudity but you should be cautious opening at work if people in underwear is a problem.) It would be difficult to imagine such a protest in the US or some other countries where arrests would be made for public indecency. It's only OK to see naked bodies if you work for the security team. It's open season for them. Read the rest of this post...

Roubini criticizes German austerity, says they need to spend more

By the time they wake up (it will be the same story in the UK) the moment will be lost. The strict austerity in Germany isn't necessary today despite what the right believes. Spain, Greece and Portugal may be a different story, but in this case, the belt tightening is going to be costly in the long term.

"The German economy is nowhere near pre-crisis levels yet," Roubini told Capital on Monday. "The current growth rate may look good on paper, but that is mainly a statistical effect."

Germany can currently borrow money cheaper than ever and German Chancellor Angela Merkel should take advantage of this and only start consolidating once the rest of Europe is in better shape, Roubini said.

The switch to “savings mode” at that point would still slow growth, but at least it would prevent “an emergency stop without a safety belt,” he said.

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Angela Merkel turns on foreigners with attack on multiculturalism

It's not as though we haven't seen our own culture wars in the US, but in light of the recent poll in Germany, Merkel's attack is even more troubling. Outside of pure politics, why would Merkel make this such a big issue? There's a serious xenophobia issue in Germany that needs to be addressed. After all, it was only a few months ago when the country was worked into an irrational frenzy over the Greeks. Who will the scapegoat be tomorrow?

Chancellor Angela Merkel has branded Germany's attempts to build a multicultural society an "utter failure" in an unprecedented speech designed to revive her own and her conservative party's flagging popularity and regain the initiative in an increasingly hostile public debate about immigration.

Ms Merkel, who normally scrupulously avoids courting xenophobic opinion, bluntly told a meeting of young members of her ruling Christian Democratic party that the "Multikulti" notion of people from different cultural backgrounds living happily side by side simply did not work.

"This approach has failed, utterly failed," she told applauding young conservatives gathered at a conference in Potsdam outside Berlin on Saturday. Instead she urged Germany's 16 million immigrants to do more to integrate into society and to learn German.

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Disturbing new poll out of Germany

Extremist views are certainly present elsewhere in Europe (and beyond) but it's unsettling that these numbers in Germany.

A new survey in Germany shows that 13 percent of its citizens would welcome a “Führer” – a German word for leader that is explicitly associated with Adolf Hitler – to run the country “with a firm hand.”

The findings signal that Europe’s largest nation, freed from cold-war strictures, is not immune from the extreme and often right-wing politics on the rise around the Continent.

The study, released Oct. 13 by the Friedrich Ebert Foundation, affiliated with the center-left Social Democratic Party, revealed among other things that more than a third of Germans feel the country is “overrun by foreigners,” some 60 percent would “restrict the practice of Islam,” and 17 percent think Jews have “too much influence.”

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Bundesbank board member quits following racist remarks

It's about time. His desk should have been cleared the day after he made his remarks. BBC:

Mr Sarrazin, in his book entitled Germany Abolishes Itself, says that Muslim immigrants are a drain on German society.

"Most of the cultural and economic problems are concentrated in a group of the five to six million immigrants from Muslim countries," he stated in the book.

The issue has proved divisive in Germany, with right-wing groups claiming his views vindicate their own stances.

But advocates of improving integration say he has made it harder to hold an objective debate by polarising opinion and obscuring the facts.

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German Bundesbank votes to sack racist board member

It's not quite final, but almost. Some more background on the events that led to the vote here. If Sarrazin was in the US, he'd already be on Fox News and preparing his speech for the next Teabagger rally.

The board of Germany's Bundesbank said on Thursday it had voted unanimously to seek the dismissal of board member Thilo Sarrazin, who has sparked uproar with his comments about Muslim immigrants and race.

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German Bundesbank board member releases book, still employed

Berlin, we have a problem. Considering the not-so-distant history in Germany, this can't be tolerated.

In Deutschland Schafft Sich Ab, or Germany is Digging its Own Grave, Sarrazin argues that most of the country's immigrants cannot be integrated into society and contribute nothing to it.

He also blames foreigners – mainly Germany's Muslim population – for "dumbing down" society. He says that the rate at which Muslim women are reproducing means that Germans may soon become "strangers in their own country".

The book is already a bestseller and has prompted comparisons to Geert Wilders, the head of the Dutch far-right Freedom party.

The former Berlin finance senator said he wrote the book to outline his own fears that his grandchildren will grow up in a country where "their lives are measured out by the muezzin's calls to prayer".

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