“Don’t mention the war. I mentioned it once but I think I got away with it.” In what aims to be a serious appraisal of the state Germany’s economy and the implications for investing in German shares, it may be risky to start with the best known line from the most famous of the 12 episodes of Fawlty Towers, John Cleese’s slapstick sitcom from the 1970s. But it’s apposite because that’s the trouble – nobody mentions the war, yet to understand Germany today it has to be done.
To grasp the dysfunctionality of any nation you must look into its past. For Germany, you take the 30 years, 1914-45. Everyone knows what you see – two world wars, for whose origins Germany bears the heaviest responsibility, and a spell of hyperinflation that wrecked Germany’s first attempt at democracy, the Weimar Republic.
It may be that the hyperinflation has had the greater effect on Germany’s collective consciousness, as we shall see shortly. However, the wars shaped the way Germany has seen its role in Europe since the early 1950s – to be a model citizen, constructive and committed but never pushy. The peak of Germany’s aspiration was to be a bigger version of Switzerland – economically successful, politically reticent and militarily nowhere.