What happens after a globe-shaking financial crisis? We are stumbling through one right now, and we all want to know what we are in for next. Fortunately—and unfortunately—this situation is precedented.
Early last century, the globe’s First World War extinguished lives, torched economies and left Europe smoldering with grievances. Afterward, the world was rocked by the most violent financial earthquake in modern times—the Great Depression.
The nations were churning: brutal dictators were rising, anti-Semitism was becoming mainstream, civil war erupted in Spain, Japan invaded Manchuria, Italy invaded Ethiopia. But instead of facing the challenges, Britain and America turned increasingly inward, focusing on their own wounded economies, slashing their militaries and pointedly ignoring the world outside.
Decades after World War iii, will historians be writing something similar? The nations were churning. Radical dictators were rising, anti-Semitism was becoming mainstream, Germany conquered the Balkans, Russia invaded Georgia, civil wars erupted in the Middle East, China built a military powerhouse, a new strongman arose in Russia, a crafty emperor arose in Europe. But instead of facing the challenges, Britain and America turned increasingly inward, focusing on their wounded economies, slashing their militaries and pointedly ignoring the world outside.
The tremors of the Great Depression brought down governments around the world. Other factors amplified the shaking, the absence of Britain and America being one. But the Depression was perhaps the single greatest factor that pushed the world into smoldering ruins—and the chaos that followed. The most infamous would-be empire of modern times rose out of its ruins: Nazi Germany.
The lesson: Financial quakes can cause political fires, and even worldwide conflagrations.
“Current Crisis Shows Uncanny Parallels to Great Depression,” Spiegel proclaimed in 2009. The statistics are undeniable. Since the crash of 2008, unemployment rates have reached levels no one has seen since the 1930s.
“One can only guess at the long-term political impact of today’s crisis,” Spiegel wrote. “The reason the comparison with the Great Depression is so horrifying is that the world economic crisis led not only to the impoverishment of large segments of the population in Germany and elsewhere, but also to a political catastrophe.”
Three years later, we have not broken away from those ominous parallels. “When mainstream leaders are incapable of offering solutions to apparently intractable economic problems, extremists will step in,” Stephen Glover wrote in April in the Daily Mail. “That is what happened in Europe in the ’20s and ’30s. Looking ahead to years of sclerosis which none of our leaders shows the slightest sign of knowing how to prevent, it would be a brave man who said the same thing could not happen again.”
The world is still following the pattern it did in the 1930s. The question is, what’s to prevent us from smashing into the same horrendous result?
After the Wall Street crash in 1929, political systems around the world almost completely broke down. Parties refused to work with each other, and blamed everyone else for the mess. Coalitions, if they formed at all, were short-lived. Germany held parliamentary elections in 1928 and 1930 and then three elections in 12 months during 1932/1933. France had five governments between May 1932 and January 1934. Nations became paralyzed and couldn’t respond to the crisis. In Spain, the division went so deep that the country was torn asunder and civil war broke out in 1936.
Since the financial crisis began in 2008, the governments of Italy, Greece, the Netherlands, Spain, Portugal, Hungary, Finland, the Czech Republic, Slovenia, Slovakia and Iceland have all fallen before their time. Incumbents in France and Ireland lost their scheduled elections, with Ireland’s ruling party suffering its worst defeat in history. The nation that is furthest down the road to financial ruin is also experiencing the worst political fracturing: Last year,
Greek Prime Minister George Papandreou was forced to step down. A grand coalition ruled for six months until Greece held elections in May. No party could form a government,
so Greece held elections again in June.
Meanwhile, European leaders have faced similar gridlock in dealing with the financial crisis at the European Union level. They hold conferences every few weeks, emerging every time with disappointing results, then window-dressing them to look like great solutions.
One reason the Nazis were so successful is that the post-World War i government, the Weimar Republic, never gained popular support. The problem wasn’t just a weak government—the population disliked the whole political system. When a new political power stepped in, they weren’t sorry to see the old one destroyed.
Today, the European Union has proven useless in the face of the financial crisis, and Europeans love their ineffectual supragovernment less with each failed summit. People aren’t just becoming fed up with their political parties, but with the whole system: the vague machinations of the European Parliament, the unelected Eurocrats, and the group photos of national leaders attending the latest failed conference. They’re starting to want something new. Like the 1930s Germans.
New Parties Rise
In the 1928 elections, the Nazi Party won 2.6 percent of the vote. It was Germany’s ninth-place party. The Communists did four times better, with 10.6 percent. Just two years later, as financial crisis started to set in, the National Socialists won 18.3 percent and became Germany’s second most popular party. The Communists were third, with 13.1 percent.
In 1932, the Nazis won nearly 40 percent of the vote. The Nazis had been a weird fringe party—until the financial crash.
The sudden rise of these fringe parties in the 1930s wasn’t just a German phenomenon. In Austria, the Heimwehr—a farright group similar to the Nazis, but opposed to unification with Germany—rose in a similar pattern. In Czechoslovakia, the Nazi Sudeten German Party came from nowhere to win a higher proportion of the vote than any other. In Romania, the Iron Guard rose to become the third most popular party, winning 15 percent of the vote in the 1937 elections, after having been banned in the 1935 elections. Other extreme parties, like the National-Christian Defense League in France, rose steadily after the Wall Street crash. France’s far-right Croix-de-Feu league grew from 500 members in 1928 to 400,000 in 1935. After it was banned in 1936, its leader started the French Social Party, which grew to become one of France’s largest right-wing parties. Votes for extreme parties in many other countries also jumped.
Today, Europe is traveling a similar road. In Greece, the two major parties have gone from sharing 70 to 80 percent of the total vote to around 30 to 40 percent. Syriza, the Coalition for the Radical Left, went from receiving 4.6 percent of the vote in 2009 to 26.9 percent in 2012. Even the Greek Nazi party won seats in parliament this year.
In April, National Front’s Marine Le Pen won a record 18 percent of the vote in France. The same month, after steadily gaining popularity in the Netherlands, Geert Wilders’s Party for Freedom toppled the government. Far-right parties have also attracted a significant following in Hungary. In Austria, two neo-Nazi parties control a third of the seats in parliament.
The German Pirate Party has risen in a similar fashion. Polls indicate it could be the third most popular party in the country. It’s not a Nazi or far-right party in any way, but its rapid rise reflects a 1930s-like dissatisfaction with traditional politics—perhaps even with the entire democratic system.
No fringe parties have risen to prominence quite as drastically as Greece’s. Other countries have not vaulted these parties to the same heights because their economies have not taken quite the same plunge. But as their economies slump, the fringers will become the mainstreamers.
Mainstream Shifts Right
As radical parties rose during the 1930s, mainstream parties began adopting radical positions themselves. After Adolf Hitler began to grow in popularity, for example, the influential German businessman and politician Alfred Hugenberg and his National People’s Party began shifting to the right. That’s where the votes were. In 1931, Hugenberg’s manifesto called for the end of the Treaty of Versailles, conscription, the reconquest of Germany’s colonies, a reduction of the number of Jews in public life, and stronger links with German communities outside of Germany. Politically speaking, the difference between Hugenberg and Hitler was simply a matter of degree.
In France, far-right leagues succeeded in organizing violent protests. The more prominent right-wing parties responded by shifting toward their direction. These were among those that would make up the Vichy regime that cooperated with Hitler after he conquered their nation. In Romania, the king attempted to create a royal dictatorship to prevent Nazi-like parties from taking power in his country. In Hungary, the regent was forced to accept a far-right, anti-Semitic government.
If it doesn’t seem like the same trends are alive today in Europe, look closely. A few years ago, it was only the fringe groups that would speak out against Islam and criticize the dogma of multiculturalism. Now everybody is doing it. Volker Kauder, who leads German Chancellor Angela Merkel’s Christian Democratic Union in parliament, said on April 19, “Islam is not part of our tradition and identity in Germany and so does not belong in Germany.” Then he diplomatically—and awkwardly—added, “But Muslims do belong in Germany.”
But burkas do not belong in Belgium and France, where they have been legally banned. In Switzerland, the construction of minarets is illegal.
The trends in Italy, one of the original Axis powers in World War ii, are also disturbingly familiar. In 2009, the mainstream center-right party, the People of Freedom bloc, merged with the pro-fascist National Alliance party, whose leaders have openly praised Benito Mussolini. Even Italy’s former Prime Minister Silvio Berlusconi has defended Italy’s World War ii fascist dictator, saying, “Mussolini never killed anyone,” and “Mussolini sent people on holiday to confine them.”
The worse the financial crisis grows and the more popular the extreme groups become, the more you will see the mainstream politicians adopt a harder line in order to get votes. Just like the 1930s.
Riots and Coups
Almost every nation experienced riots. In February 1934, riots in Paris killed 15 and injured 1,500. They also brought down the French government. In many nations, street fighting between elements of the far-right and far-left began before the Great Depression, but these battles intensified as the economy got worse. This unrest sparked nothing less than government takeovers. Economic strain led to unemployment, unemployment led to riots, and riots led to coups. Dictatorships arose in Argentina, Austria, Brazil, Bulgaria, Cuba, Germany, Greece and Spain.
Bold protests are once again commonplace in Europe. In Greece, crowds 100,000 strong have gathered outside parliament. Some governments are beginning to take draconian steps to clamp down on them. In Spain, the government wants to outlaw street protests that “seriously disturb the public peace.” Anyone found guilty of provoking or taking part in violent acts of protest could be jailed for a minimum of two years. Opponents of these proposed laws compare them to General Franco’s dictatorship.
Italy has had to protect the targets of popular protests with armed guards, calling in the military to safeguard tax collectors and another private company targeted by anarchists.
The protests aren’t nearly as big or as violent as the ones that toppled governments in the ’30s. But there is discontent, and it is growing.
Hitler is famous for pinning the blame for the financial crisis on the Jews. But as economies fell apart, he was far from alone. The Jews were singled out for condemnation all around the world. During the 1930s, European nations shut their doors to Jews who were fleeing from Hitler because “virtually all European governments had an anti-Semitic problem and were terrified of aggravating it,” according to Johnson.
“The martyrdom of Jews in the 1940s would strip anti-Semitism of its respectability,” wrote William Manchester in his book The Last Lion, “but in the 1930s, it was quite an ordinary thing to see restaurants, hotels, clubs, beaches and residential neighborhoods barred to people with what were delicately called ‘dietary requirements.’ … Contempt for [Jews] was not considered bad form. They were widely regarded as unlovable, alien, loud-mouthed, ‘flashy’ people who enriched themselves at the expense of Gentiles.” Manchester wrote that this was true not only in Germany, but also in Britain and elsewhere in Europe.
Anti-Semitism is rising again in Europe. There are no concentration camps—yet. Still, 2012 is on track to become the worst year on record for anti-Semitic incidents in France, as catalogued by the Council of Jewish Institutions in France. A poll this year by the Anti-Defamation League (adl) found that since 2009, anti-Semitic attitudes have risen in most European states. While they have risen by less than 10 percent in most countries, in the UK they have come closer to doubling, going from 10 to 17 percent, and Hungary has gone from 47 percent to 63 percent. Fifty-three percent of Spaniards have anti-Semitic attitudes; so do 48 percent of Poles.
“Anti-Semitism is back in style,” wrote Jerusalem Post columnist Caroline Glick in January. “Its new justification is not race or religion. It is nationalism. Today’s anti-Semitism is predicated on preferring Palestinian and pan-Arab nationalism to Jewish nationalism.”
Jews weren’t the only scapegoats in the 1930s. Another, more rational one was the Communists. Fear of the rising Communist menace that had already taken over Russia pushed respectable businessmen to support the alternative: the Nazis. This time around, the pushback may well be instigated by Islam. As people like Mark Steyn and Geert Wilders point out, Islam poses a real and serious threat, just as communism did. But Europe is slowly waking up to the threat of Islam. When it does, it will rush to the opposite extreme, just as it did with communism.
Beating War Drums
Another scapegoat for the 1930s crisis was foreigners. As they struggled through compounding crises, nations blamed each other. More importantly, some leaders saw war as a way out—an ignominious way to both increase employment and procure more resources. This was a major factor in Italy’s war with Ethiopia. For other leaders, war’s appeal was in distracting people from troubles at home. This was part of the reason for Japan’s war against China. In both cases, war increased economic activity and national unity.
The idea of using war to distract a divided and impoverished nation did not begin during the Depression. When Napoleon took over France, the first thing he did was attack Italy. Otto von Bismarck used war to unify Germany. The technique is so common it has its own name: “diversionary foreign policy.”
At the same time, when a nation is languishing in economic crisis, grievances that people overlook in peacetime come back into focus. It is no coincidence that German dissatisfaction with the Treaty of Versailles built to a crescendo at the same time as the financial crash. Germans were quite dissatisfied beforehand, but when the jobs disappeared and the currency faltered, Germans blamed a lot of their woes on the treaty.
Argentina demonstrates a modern example of this. Faced with huge debts and a struggling economy, Buenos Aires is beating war drums over the Falkland Islands to distract Argentines from their troubled economy. This is where Europe’s crisis is leading.
Europe has not yet reached this stage. Politicians will have to get a lot more desperate before they resort to war rhetoric. But with jobs disappearing, the currency faltering, politicians failing, democracy becoming optional, anti-Semitism back on the radar, Islamism on the hot seat and the Anglo-American financial system in question, beating the war drums will, at some point, become an irresistible temptation for some of Europe’s leaders.
Faced with the inaction of normal politics and the dangers of civil unrest, normal democratic procedures failed. But this didn’t always result from the sudden rise of an evil dictator. Sometimes, democracy was suspended in a way that felt almost legitimate. Germany’s first ruler to wield dictator-like powers during this period wasn’t Hitler—it was Chancellor Heinrich Brüning, who ruled without regard to parliament for months. Paragraph 48 of Germany’s constitution stated that “in cases where public security and order are seriously disturbed or threatened in the German Reich, the president of the Reich is empowered to take the measures necessary for restoring public security and order.” Brüning argued that Germany’s dire economic situation meant that parliamentary rule could be suspended. Brüning’s successor, Franz von Papen, took the next step away from democracy. He took over Prussia’s state government and police force, using a riot there as a pretext. “He thought by this act to strengthen the hand of central government,” wrote historian Paul Johnson, “but in fact it marked the end of the Weimar Republic and directly prepared the way for a government of illegality.”
Austria’s experience was a little more clear-cut. Engelbert Dollfuss quickly set himself up as a bona fide dictator. But even there he did not simply stand up and proclaim himself über-ruler: He simply took advantage of irregularities in the Austrian Parliament’s bylaws.
The same thing has happened in Greece and Italy today. Parliaments and politicians have taken too long to find solutions and make changes, so an undemocratic solution has risen. In Greece, Prime Minister Georgios Papandreou said the terms of the EU’s bailout package should be put to a referendum. EU elites couldn’t allow such a slow, messy democratic process to hinder their plans, so they forced out the prime minister and set up a new government by dictat. It was also EU elites who pressured former Italian Prime Minister Silvio Berlusconi to resign, and a technocratic government of economists and academics, not politicians, replaced him.
This isn’t the end of democracy in Europe. Greece still went on to hold elections. But Germany held elections after Brüning too. Democracy, however, has been compromised. Now that Europe has allowed a precedent of setting expediency above democracy, the trend is set. Worse violations will follow. The EU has simply “prepared the way for a government of illegality.”
Despite all these parallels, conditions in Europe aren’t as bad as the 1930s. Democracy is still the soup du jour. Dictatorships are still seen as barbaric. But don’t let that lull you to sleep. The way the 1930s started out was different. Europe’s democracies were less stable to begin with. Unlike today, there was no consensus that democracy was the best way forward. Dictators ruled Portugal, Italy and Poland. Communism had conquered Russia. Today, though democracy is beginning to crumble, it may take longer to do so.
But the major reason Europe hasn’t fully descended into 1930s conditions is the welfare state. Eighty years ago, if a man lost his job, he often lost his savings and even his home. Today, thanks to unemployment checks, it’s far easier to get by. In the 1930s, unemployment meant poverty, or even starvation. People were genuinely desperate. Spouses fell sick, children couldn’t be fed. People acted more drastically—and the outcomes were far more intense and terrible than they have been thus far.
Does that mean we would have faced a 1930s-like future, but to our great relief, the welfare state has saved us? Hardly. While the unemployed masses are not starving, they are on the dole. And that has consequences of its own. Governments are already creaking under loads of unsustainable debt all over the world. The welfare state, one of modern democracy’s core concepts, is actually breaking down in Greece. As the crisis continues, this problem will spread. Despite Europe’s austere reactions, nations are still hemorrhaging money and accumulating debt—in addition to provoking their populations. Soon welfare states will collapse.
Then we really will be in trouble. The ’30s will come early this century.
Past that tipping point, the descent becomes rapid. People who have never been at risk of hunger in their lives will suddenly have nothing. Panic will break out almost overnight. We will be swimming in the same dangerous cocktail of seething hatreds and war-mongering governments. Once again, strong and extreme leaders will rise to the top. That combination cannot do anything but explode.
But there is good news in this rapid descent. As the Trumpet has been publishing for years, the Bible prophesied this descent into chaos—as well as what will come next. Just as it did in the 1930s, this world-rocking financial quake will spark a world-rending world war that will be far worse than World War ii; it will threaten the lives of everyone on Earth. But his time, the catastrophe will be interrupted by the return of Jesus Christ. The fact that the world is facing all of this bad news—retracing its steps into world war—also means that the good news is not far away. ▪