The chancellor seems to have collided with reality during the summer break. Friedrich Merz sees the German social system in deep crisis. Meanwhile, his political allies in Brussels are calling for an increase in the very dose of poison that is making Europe sick.
Let’s be blunt: Large parts of the political elite have a fractured relationship with reality. This applies equally to the economic decay of Germany and the EU, as well as to the public communication of strategic political goals, which are systematically obscured. Open criticism of the course could cause the political fairy tale to collapse faster than reality seeps into public opinion.
Merz and the Welfare State
All the more remarkable are the warning words of Chancellor Merz during his Saturday appearance at the CDU state party conference in Lower Saxony. “I am not satisfied with what we have achieved so far -- it must be more, it must be better.”
Hear that! A faint tremor of self-criticism from the chancellor. Rare, indeed. Yet the statement raises the question: what exactly does Merz mean by “achievements”? Is he referring to the so-called investment booster, supposedly providing marginal relief to the German economy while it teeters on collapse? Or does he mean the massive debt packages and widening financing gaps, most likely to be closed with tax hikes?
In his speech in Osnabrück, Merz later spoke unusually clearly about the state of the welfare system: “The welfare state, as we have it today, is no longer financially sustainable given what we can deliver economically.” A blunt diagnosis, leaving little to be desired in clarity.
There was, however, no mention of a market-oriented turn, trust in individual solutions, personal responsibility, or rapid bureaucratic reduction. The message seems to be: stay the course.
Moments of Honesty
Merz also spoke unequivocally about citizen welfare payments: it cannot continue like this. 5.6 million people receive the payments. Many could work but do not, he said. A reality that politics usually avoids.
A tentative attempt to openly name the precarious state of German social insurance. In times when political sugar-coating is routine, it’s almost a stroke of luck when a leading politician at least partially acknowledges economic realities.
Have the latest economic data perhaps shaken Merz and his colleagues in Berlin? GDP shrank again in the second quarter, and the outlook remains bleak. With the state intervening via massive credit programs and new debt hitting about 3.5% this year, the private economy is contracting at 4–5%. Calling this a recession would be euphemistic -- we are in a depression.
More EU Centralism
While the chancellor stumbled through Germany’s harsh economic reality, EU representatives launched media trial balloons.
It was Mario Draghi, the EU’s political all-rounder, who easily alternates between former Italian PM and ECB chief, presenting yet another report.
He reiterated his familiar demand: the European Union must act more cohesively, like a single state, if it wants to retain a geopolitical role.
More of the medicine that made Europe sick: more centralization, less subsidiarity, and intensified technocratic rule. Draghi once again demonstrates Brussels’ plan -- as during the sovereign debt crisis 15 years ago: power concentrated in Brussels, decisions outside democratic control, enforced by a political apparatus orchestrating media narratives. Strict censorship, media manipulation -- dirty tools to silence opposition to centralization. The same authoritarian logic that worked then is being revived.
Lagarde and Migration
Draghi’s ally, ECB President Christine Lagarde, also hit the media circuit. She touched on migration, a topic skillfully avoided or distorted in German politics and media.
Lagarde floated a trial balloon at the Federal Reserve meeting in Jackson Hole, subtly testing Europe’s mood. According to her, Europe could no longer grow without massive migration (of which growth exactly?). She claimed Germany’s GDP would be roughly six percent lower today than in 2019 without foreign workers.
That the country has been in a depression for some time seems not to have reached the ECB leadership. Then came the familiar trump card: without migration, the labor shortage cannot be addressed. No mention of technological advances via AI or robotics, which could offset labor shortages. No mention of migration as a security risk, of cultural conflicts, or a political Islam incompatible with European values.
Lagarde’s stance was particularly striking as the U.S. begins repatriating illegal migrants, ending the Europeanization of American policy. Her speech in the land of rational awakening and political turnaround likely caused nothing but raised eyebrows.
Jackson Hole highlighted the EU’s trajectory: open borders, elites ignoring risks, while the left expands its voter base at Europe’s cultural and economic expense.
Bitter Balance
Combine the three events -- Merz’s speech, Lagarde in Jackson Hole, and Draghi’s latest report -- and the conclusion is alarming: the economy is accelerating toward collapse due to a self-inflicted energy crisis and overregulation. Social funds, strained by mass illegal migration, risk implosion. The proposed solution? Centralization, regulation, and continued unchecked migration.
Even Finance Minister Lars Klingbeil’s usual tax hike debates fit seamlessly: the individual counts for nothing, the state controls everything, increasingly burdening citizens. The audacity to attack private property and raise taxes further is staggering, meeting little resistance. The Merz CDU has become a paper-thin bourgeois protective wall of hot air.
Image: Michael Lucan