Germany is now once again the ‘sick man of Europe’, experts have warned.
Not the image that they like to portray:
About half of Germany’s food banks have seen their number of clients double since last year, and many are turning people away. Increasing demand and decreasing donations are leaving many in need of help with few options.
New industry heading East and the reliance on old technology is failing:
A related problem is that Germany’s most important industrial segments — from chemicals to autos to machinery — are rooted in 19th-century technologies.
So if Germany is going down the tubes who is going to pay the EU’s bills - I can’t see France doing it and Italy is an economic basket case.
Peace in Ukraine or more green energy can do a lot for Germany. In the meanwhile very expensive energy is a strong negative on economic activity.
But as always experts are very concerned about the slope of the curve. That does not imply business has ceased, merely that is not growing as fast as some hoped.
Your posts are hyperventilating the situation. Germany is OK. They have a recession. They will recover.
My worries are about England going down the toilet with their idiotic policies and economics. Where did all the intelligent people go? Are the people believing the conservatives conspiracy propaganda like they did for BREXIT?
From the way I see it, it is Germany’s push into green sources that has resulted in the “very expensive energy”. Germany’s Energiewende program is the reason. The EU country with the highest electric rates is Denmark, which has also gone heavily into green energy, particularly wind farms.
Over here in the US, California continues to mandate more and more electricity be generated from renewable sources. The result is very high, and ever-increasing, electric bills. Those high bills affect low and middle income people the most, because they can least afford it. During certain times of the day, the local utility here in San Diego charges 74 cents a kilowatt-hour for electricity. The national average is around 15 cents/kwh. How soon before I am paying $1.00 or more for a kwh? Just a matter of months, perhaps.
When fully depreciated green energy–wind, solar, geothermal, tidal–has to be cheaper. “Cost” number always include investment costs. Coal fired plants are usually ancient and fully depreciated. Cost of coal fuel is less than finance charges for new green energy.
In time no fuel green energy will win. For now fossel fuels brag based on dubious arguments.
Added to all of this is the structure of the eurozone. Generally a central bank like The Fed. or BofE can recapitalise itself quite easily, but not so the ECB.
Eurozone members would need the approval of their respective governments for this. Germany, Luxemburg and one or two others might be asking about the perpetual, and growing, loans under TARGET2. Think that they would have a chance of getting their money back?
In the ECB chart of the TARGET2 balances we can see how Spain and Italy have increased their debts with Germany and other countries. Spain from 189.9 billion euros to 319.7 billion. Italy from 188.6 billion to 353.9 billion. Not insignificant amounts.
The eurozone members have painted themselves into an economic corner - it shows the problems of inventing currencies for political and not economic reasons. Somw would take a more sober approach to this though:
The LCOE (levelized cost of energy) number is calculated by using both the construction and operating costs. If either one goes up (or energy production goes down) then the LCOE goes up as well. However, what is not included in the LCOE are grid costs which can be an order of magnitude greater for renewables.
No we are not going back to coal, gas and nuclear.
It is not the cost of renewables which are causing high residential prices for electricity. Renewables are the cheapest for of wholesale electricity generation.
Wholesale prices are the prices paid to electricity generators, and are not the same as the prices for residential users. Wholesale prices are increase by the distributers due to taxes, maintenance, etc. as discussed in the following link;
Electricity is bought, sold and traded in wholesale and retail markets, which operate similarly to wholesale and retail markets for other products. The purchase and sale of electricity to resellers (entities that purchase goods or services with the intention to resell them to someone else) is done in the wholesale market, while the purchase and sale of electricity to consumers is done in the retail market.
Organized wholesale electricity markets were created to address ever-increasing electricity prices and to encourage innovation through free-enterprise competition.
PJM’s markets have done just that. Competition has helped to create a less expensive, more reliable and cleaner grid that can offer market-based solutions to changes in public policy and the industry.
The chief executive of steelmaker Salzgitter has warned that Germany’s big energy users must commit to the country as a base to stave off the creeping deindustrialisation of Europe’s largest economy.
Gunnar Groebler, who joined Germany’s second-largest steelmaker two years ago, told the Financial Times that if manufacturers of materials needed by industry, such as steel or chemicals, were to leave the region due to high energy costs “you run the risk of losing the whole value chain” of production.
His comments come as 32% of surveyed industrial companies in August told the German Chamber of Commerce and Industry (DIHK) that they favoured investment abroad over domestic expansion — double the 16% identified in the previous year’s survey — amid concern over a future without cheap Russian gas.
Is Germany building any LNG terminals? Last year some time, the head of one of the Baltic states was talking about how her country wanted to be free of Gazprom, so they built an LNG terminal a few years ago. That terminal is now on line. They made a discovery. Their cost for gas, bought on the global market, is lower than what Gazprom was charging.
I’m trying to remember more details of that conversation. I think part of the problem is there is no pipeline out of her country to Poland, tho they were thinking of building one. With no means of exporting the gas to the rest of Europe, pricing in that one state will be decoupled from the price in the rest of Europe.
Can’t find the interview with the Lithuanian PM, but did find this piece from Deutsche Welle last year. One LNG carrier delivers enough to fuel the entire country for two weeks, but Lithuania is a small country. The rest of the EU is constrained by LNG importation capacity, and capacity to draw gas from the Lithuanian terminal.
Once-booming property prices in Europe’s largest economy have declined over 10% since they peaked last year as the European Central Bank hiked interest rates by 450 basis points in just 15 months, ending an about decade-long era of rock-bottom borrowing costs.
