Could the rise of Golden Dawn save the Eurozone?

In Germany's nightmares, inflation leads to Nazis. But now that there are Nazis anyway, perhaps we'l

More growth would obviously do a lot to help the Eurozone. For Spain and Italy, a healthy level of growth alone might be enough to pull them out of crisis mode. For Greece, more would have to be done, but it would be a strong start.

Unfortunately, that growth is being at least partially quashed by the outspoken desire of Germany (and thus the European Central Bank) to keep inflation low. High inflation in Germany would overcome the problem that the Eurozone currently has where wages in Spain, Greece and Portugal need to fall relative to those in the core, but are showing no signs of doing so.

Why is Germany so against inflation?

Well, the fact that high inflation would negatively impact the German economy is obviously a large part of it. But equally important is the experience of the German people in the 1930s. Put bluntly, there is a fear in Germany that high inflation leads to fascism.

Which is why the rise of Greek neo-nazis Golden Dawn (whose flag looks like an alternate-universe version of the swastika) could be a blessing in disguise. Albeit a really, really good disguise. Because the one thing Germany hates more than inflation is Nazis.

Greece has price of a little under 2 per cent. There are a lot of things causing the rise of their homegrown Nazis, but hyperinflation is not one of them. So right now Germans are seeing their worst nightmare happen even though they managed to keep inflation low across the Eurozone.

Could this mean that they'll back off slightly over their overbearing desire to keep inflation low?

Well, so far there isn't a huge amount of encouraging news. On Wednesday, the FT did report that:

A future German inflation rate above the eurozone average could be part of a natural adjustment process as crisis-hit countries pulled themselves out of recession, the Bundesbank argued in evidence to German parliamentarians.

Except that that was only a couple of days after the Bundesbank president wrote in the same paper that:

To prevent the recovery stalling, demands have been directed at the Eurosystem to deliver yet lower interest rates (or at least to forego raising them), yet more liquidity and even larger purchases of assets.

However, the assumption underlying such well-intentioned advice does not hold up to closer scrutiny.

So they don't appear to have been spooked into monetary expansion anytime soon. Perhaps Golden Dawn aren't really a blessing in disguise after all; sometimes, to misquote Freud, a Nazi is just a Nazi.

The leader of the fascist Golden Dawn party. Photograph: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The SNP retains power as Scottish Labour faces being beaten into third

Ruth Davidson’s Conservative Party looks on track to become the official opposition in Holyrood.

As expected, the SNP have performed well in the Scottish elections, with an increased vote share and some key gains – particularly from Labour in Glasgow, where Nicola Sturgeon’s party took all eight constituency seats. As it stands, they could be on course for a second successive majority in Holyrood, once the list members are fully counted.

The story of the night, though, is the demise of Scottish Labour, which put in its worst ever performance in Scotland (my stalwart liveblogging colleague Stephen Bush points out that it’s the party’s worst result since universal suffrage was introduced in 1928). The party’s vote share was done across Scotland, and the results are sufficiently poor that they could see them fall behind the Conservatives to become the third biggest party north of the border.

Losses for Labour include seat of Eastwood in Glasgow, where Scottish Conservatives deputy leader Jackson Carlaw defeated Ken Macintosh. Labour had held the seat for 17 years, though it had been Conservative beforehand.

Other key losses for Scottish Labour include Dumfriesshire, where they were beaten into third; Renfrewshire South (which went to the SNP); Cowdenbeath, where Gordon Brown's old constituency manager and protégé Alex Rowley also lost to the SNP; Glasgow Pollok, where former Scottish Labour leader Johann Lamont lost to the SNP’s Humza Yousaf. There was a close call for Labour’s Jackie Baillie in Dumbarton, where she held on by just 109 votes.

Rare successes came in Edinburgh Southern, where Daniel Johnson took the seat from the SNP’s Jim Eadie (although since the seat is effectively a four-way marginal, it’s not a particularly indicative gain), and East Lothian, where former Scottish Labour leader Iain Gray managed to increase a previously slender majority.

Speaking to the BBC, Scottish Labour leader Kezia Dugdale said:

“A very bad night for the Labour party… There’s no doubt that the constitution has dominated this election.”

She also confirmed that “no matter what, 100 per cent, I will remain leader of the Scottish Labour party”.

In a great night for her party, Ruth Davison won her seat in Edinburgh Central, making her the first Scottish Conservative leader not to need the list system to enter the Scottish Parliament  since 2005. The Tories also gained Aberdeen West from the SNP as well as their success in Dumfriesshire.

The Liberal Democrats also had a better-than-expected night. Their leader, Willie Rennie, took the Fife North East seat from the SNP, and his party also had comfortable holds in Orkney and Shetland.

Caroline Crampton is web editor of the New Statesman.