Normal Operations for the First Time: From Reorganization to the AGA Purchase, 1984–99

Abstract

The late 1970s seemed to promise the continuation of a stable economic upswing. The economic balance was still positive in 1979. In fact, with a growth of 4.5 per cent in the gross national product, Germany was the international leader. However, in 1979 oil prices increased again, causing worldwide infl ation and throwing Germany into a three-year deficit for the first time in decades.¹ While deficits are normal in the United States, they caused a great deal of insecurity in German politics and in the German public sphere. Developing countries, however, faced even graver problems. As a result of the recession, the price of raw goods – with the exception of oil – sank, and deprived many thirdworld countries of their incomes. At the same time, industrialized countries restricted the importation of inexpensive industrially manufactured goods from developing countries, and, in addition, an unexpected infl ation of the US dollar sharpened the global debt problem. At the beginning of the summer of 1982, the Falkland crisis and the related inability of Argentina to make debt payments were the forerunners of an international debt crisis. Mexico’s declaration of a moratorium on its interest and debt payments, which was followed by other Latin American countries, posed a menacing threat to the international finance system.² The private bank industry was overwhelmed by the recession, the turbulent foreign exchange market, and especially the debt crisis. The banks were strained by the inverse credit structure: short-term interest rates were higher than long-term interest rates. Commerzbank, for example, faced a severe crisis in the early 1980s.