Dr. Nicole Essiger-Munk has presented with her publication “Prophylaxis against Insolvency” an operating manual for Federal Government and Economists and a code of behavior for Trade Unions. She has documented with it her vision, a second “Economic Miracle for Germany”.

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Prophylaxis against Insolvency for Germany
Ways of Restoration of State and Economy
Visions of a Second Economic Miracle for Germany

Dr. Nicole Essiger-Munk born 1976 studies of law, economics and politics Manager of “Prüfinstitute GmbH and AM Kapital Beteiligungs GmbH Scientist and Author with emphasis on themes of prophylaxis against insolvency, investor protection, restoration and liquidation.

Fourteen Theses as immediate measures and catalysts for the recovery of the German economy and the enhancement of stability of the Euro.

1. Establishment of severer German and uniform European rules of accounting to prevent balance sheet manipulation.
   
2. Establishment of an effective Federal administrative structure with an independent mobile force for the protection of investments and national income from political and stock exchange lobby.
   
3. Installation of a control body similar to the SEC on national and European level.
   
4. Administration of oaths for management and board of directors with regard to annual reports and balance sheets as per the US American example.
   
5. Introduction of personal liabilities for management and boards of directors for fraudulent balance sheets and faulty decisions, as well as for correctness of share prospectuses.
   
6. Introduction of direct rights of claim in cases of fraud or faulty presentation of status, as well as introduction of collective legal actions as per the US American example.
   
7. Proven competence as precondition for mandates in boards of directors and a higher level of responsibility towards share holders.
   
8. Transparency of activities as well as incomes of board of directors members as well as managers.
   
9. Limitation of compensations for managers upon leaving their employment.
   
10. Tightening up of liability and control of auditors, and total avoidance of conflicts of interest.
    
11. Development of business ethics as part of company governance and share culture.
    
12. Institution of a Federal agency for the certification of shares.
    
13. Limitation of capital volume of Federal share issues to an economically acceptable level.
    
14. Establishment of an independent agency for consumer and share holder protection: Coordination of all protection activities by the “Seven Honorable.”
    

Twenty six basic principles for economical recovery, social justness and prosperity of Germany

1. For all political discussions the office of the Chancellor must request a superior conduct from all social groups with regard to the public discussions that could precipitate insolvency or capital destruction mechanisms which, if need be, might be tied in with directions for specific actions.
   
2. Contrary to the posture in the past, the Federal Government  must make certain as to where amendments for the support of finance markets and insurance oversight boards are concerned, and the abuse of power or insider knowledge is prevented. It is necessary to legislate for a tight capital investor protection which allows the Federal Government to remain at ease, even with more restrictive liability rules in connection with the oversight of banks and insurance companies and their business practices.
   
3. To fight insolvency tendencies in Government and Economy is an ongoing social task. From it, the fight against unemployment cannot be separated neither as thought process nor factually or instrumentally from the scarcity of capital. The capital flows in future must be guided to a much larger extent into investments and qualifications of future generations.
   
4. Each new federal or state legislation must be reviewed for already existing imbalances and if these do not decrease the chances of the self employed or entrepreneurs or if they, which would be more desirable, reinforce the status of these groups. Only continuous incentives to perform by means of economic or legal frameworks will induce self employed or entrepreneurs to accept their trade risks and induce them to generate the necessary growth for the German economy to avoid insolvency.
   
5. Before a sustained rise in the economy can take place, unfortunately, there always will be a reduction in real wages and incomes. This development is unavoidable and is an painful intermediate step on the way to an improvement of the German economy. To limit this phase to a defined period of time, and then to initiate an improvement of the economy with rising wages and incomes, as well as making the social consequences bearable, is one of many immediate duties of the Chancellor of the Federal Republic of Germany. He is not to be envied this task, as his personal credibility as well as his social competence are under public scrutiny.
   
6. The German trade unions have to be won over by unbiased facts for this all comprising operation of prophylaxis against insolvency of the country’s economy. The contribution of politics on federal level , however is marginal. It is up to the union members to make their own leaders understand that the German people does not want a union inflicted self destruction. As to this end it may be necessary to create a forum for cooperation with the trade unions.
   
7. New legal terms as well as a wide public discussion are required for a drive for longer working hours. It is indispensable to review all relative legislation and if necessary institute changes, wherever there is a barrier to better performance. The maxim of Old-Chancellor Kohl: ”Performance must pay” is a socio-politically ongoing project.
   
8. All social groups agree that the ”well-being-for-all” will have to be fought for and be defended on an ever growing number of foreign markets. Arguments which tend to defend roots in the early capitalistic periods or the so called “Manchester Capitalism” must be dropped. Instead, all social groups will have to learn to deal with the consequences of BASEL I and II. Companies and Corporations ought to assimilate quickly to these requirements and set themselves up to be able to operate under these new terms. These require that the factor “labor” is to be viewed separately for each enterprise. Only if this factor is no longer looked upon as a brake for necessary activities in countries abroad, but becomes an enhancement to being able to serve or enlarge such activities, will these enterprises be able to present balance sheets which will meet the Basel I and II terms. In the last consequence this will mean that the politicians will have to prevail over the “Blockheads” in the trade unions.
   
9. Germany must present itself as a host country for foreign investments. The German labor-, tax- and socio-political environment must not present itself as a hurdle to the settlement of foreign corporations or capital. Germany could create a Ministry for the settlement of investors or at least create a  domestic government body for such tasks. Also Germany should maintain contact points in all its partner countries to advertise for Germany as a location for capital intensive investments.
   
10. All future legislation of the Federal Government would have to be such as to prevent a sustained drop in income of its citizens. German tax experts therefore would have to create a tax code, similar to the civil code, that will initiate growth by simplification. The necessity for a solid, simple and all comprising tax system has already been stated.
    Economic policies and social politics must present practical suggestions for such a tax code. German universities are to be called up to enter into a competition for the best solutions. Starting parameters as put forward in the tax reform 2004  initiated by the German Chancellor are insufficient in depth and width. The decision for a substantial decrease of the maximum percentage of taxable income and a limitation to only 3 tariff steps was not based on a convincing economical concept, but dictated by need:
    Inspite of maximum tariff application on corporate and private income, Government revenue fell drastically. This because companies and corporations did not make profits, or because private citizens fled into tax saving structures such as real estate in the new federal states, ship- and movie financing structures. These tax saving absurdities, however, will only become obsolete, or at least will be reduced if respective incentives no longer exist. Only a general tax reduction will have that effect. To introduce only 3 tariff steps is the right direction, i.e.12% for low incomes, 24% for medium incomes and 36% for the high income brackets. However, a true tax reform cannot stop there. The Federal Government will only receive consent by a broad public if what is considered to be a medium or a high income bracket by the Government is in step with reality.
    
11. The Federal Government has to crush the power play in public health structures and legislate for health insurance in such a way, that invoicing fraud becomes impossible. This will help to provide the capital for a sustained improvement of economy. The resulting relief will stimulate investments and consumption at the same time.
    
12. Subsidies must be reduced drastically and resulting capital must be made to flow into sensible investments for the future. To gain public consent such cuts in subsidies must touch on everybody and be proportionate. Other suggestions for subsidy reduction could be or could be similar as those tabled by Governors Koch(CDU-Hessen) and Steinbrück (SPD-NRW).
    Of prime importance is, that the reduction of subsidies must begin at once.
    The control of economic-political success must be permanent. Remarkable at this time is the observation that a bi-partisan cooperation between two federal states can work.
    
13. Ludwig Erhard’s book ”Wohlstand für Alle”(Prosperity for All) is a MUST reading matter for every social-politician and a reflection should result into practical politics.
    
14. The German “Social Care State” must be restructured to provide in all areas of collective  saving or mandatory saving the “capital stock principle” instead of the “receipt and expenditure” system. The capital stocks have to be accrued in times of booming economy and of course their time dimension reaches into the future, far beyond one or several electoral periods. The initiation of such stocks, cannot be deferred to a time of a booming economy. The required billions of capital for such capital stock will have to be created by a radical reduction of Governmental expenditures and a more effective tax load which must support and save . Resulting free capital resources are to be dedicated to flow into the capital stocks of the social systems.
    
15. The history of the DDR (German Democratic Republic) should still serve as a text book example for an “insolvent” Country and Economy.
    
16. The efforts to reduce the National Debt of the Federal Republic of Germany must begin now for many years to come, and will be a task that serves to maintain our national identity and sovereignty.
    
17. The sell out economical and ecological foundations of the German people has to be stopped. Instead a privatising of unprofitable state-owned enterprises should be initiated. This would give small industry and businesses a chance of survival and with this measure make certain that they can succeed on their own in the business life of Germany.
    
18. Any form of governmental direction has to be removed from areas that can be served better by private enterprise. The exception are those that serve as public defense against danger.
    
19. The political bodies of the Federal Republic of Germany, especially its legislative bodies  must develop themselves away from the democracy of associations towards a real open democracy, thereby reducing the influence of these associations. If necessary a change of constitution must make sure that other social groups as well as economical groups gain more influence in legislation.
    
20. Ideas voiced by the people on political ideas, themes, processes or regulations will have to find more reflection in legislative processes of Government and Parliament. Globalisation is here today, also with the German political functionary, and unless this fact is recognized, also by the last defender of the “yesterday”, will send these into the pension or the woods.
    
21. All legislative measures put forward have to make performance the everyday yardstick for company or corporation management.
    
22. The AGENDA 2010 needs to be developed into an AGENDA 2004/5 rapidly. It requires significantly more flesh than only adapting the existing circulation of money to the changed structure of the people. The present can simply be computed by insurance mathematicians, however politics require a much higher level of quality. than the albeit late introduction of logarithmic chains. An AGENDA 2004/5 has to have the structure of a new MAGNA CHARTA of social economy. And it has to be recognized that the introduction of the social economy was one of the few fortunate moves in the younger history.
    
23. If a rise in economy is intended than the advancement of tax reduction in the 3rd step of the tax reform cannot remain the only action taken. It has to be sensibly supported by other useful measures. One of the measures which was successfully employed by the USA in the eighties was the drastic reduction of high tax rates, particularly the highest and the lowest bracket. The privatising of State investments as means of providing finance will have a positive effect in the healing process of the German economy. The present proposals for refinancing generally do not sound convincing. However, privatising should not only be discussed, but it should be carried out.
    
24. Immediate need exists for an oversight body for the privatisation of non-profitable State or Municipal enterprises to quickly and energetically stop the chronic destruction of capital on all levels of State industry.
    
25. An axiomatic principle of enhancement of economy is transparency. Future generations must be spared from paying for investments into their future two times, once by general levies and dues and a second time by general taxation to pay for non-profitable state enterprises. Furthermore the structure, the function and the direction towards tangible projects of the KFW will have to be redefined.
    
26. The German foreign- and economic policy is under pressure to succeed – together with its European partners to establish a policy to support the EURO on the international growth markets. This entails automatically that on these markets the EURO and the EU itself will meet the US dollar and the USA head on as natural enemies. So eventually the European foreign- and fiscal policy will have to come to terms with the USA and the Federal Reserve Bank of the USA on how they wish to have these two currency systems deal with each other on the world markets. Unless they do, there will be a diplomatic wrestling with each other relative to the goodwill of other National Banks outside of these two blocks. For this very reason the European Union needs to find to one single foreign policy quickly so that it presents a clearly defined position in negotiations relative to US American fiscal policies.