Germany losing its mojo

Germany’s reliance on manufacturing and world trade has made it particularly vulnerable to recent global turbulence: supply-chain disruptions during the Covid-19 pandemic, surging energy prices after Russia invaded Ukraine, and the rise in inflation and interest rates that have led to a global slowdown…

Germany’s long industrial boom led to complacency about its domestic weaknesses, from an aging labor force to sclerotic services sectors and mounting bureaucracy… Years of skimping on public investment have led to fraying infrastructure, an increasingly mediocre education system and poor high-speed internet and mobile-phone connectivity compared with other advanced economies.

Germany’s once-efficient trains have become a byword for lateness. The public administration’s continued reliance on fax machines became a national joke…

In March, one of Germany’s most storied companies, multinational industrial-gas group Linde, delisted from the Frankfurt Stock Exchange in favor of maintaining a sole listing on the New York Stock Exchange. The decision was driven in part by the growing burden of financial regulation in Germany. But also, Linde, whose roots go back to 1879, said it no longer wanted to be perceived just as German—an association that it believed was depressing its appeal to investors.

DB2

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They need to vote the greens out and get back to sanity.

The Captain

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The WSJ is just not what it used to be. As one of America’s most storied business newspaper companies, WSJ has become just a right wing rag owned by the right wing Rupert Murdoch who’s image has taken a shellacking with FOX News scandal and payment of monies to Dominion for slander.

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That is a rather odd statement. Getting Germany back to sanity would mean starting coal and lignite burning galore.

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No. No. No. 20 times.

The Captain

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That may be, although I disagree. However, the more important questions is how does Germany now recover? It has, over the last year, the poorest performing economy in Europe. Are there structural problems that need to be addressed?

Another paragraph from the article:
Germany today is in the midst of another cycle of success, stagnation and pressure for reforms, said Josef Joffe, a longtime newspaper publisher and a fellow at Stanford University. “Germany will bounce back, but it suffers from two longer-term ailments: above all its failure to transform an old-industry system into a knowledge economy, and an irrational energy policy,” Joffe said.

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Germany and central Europe are headed to a hybrid supply side econ.

Any supply side econ is all about lying to and cheating as many people as possible. Plus getting the gullible to support the lies and cheating.

Germany is stuck with a very bad deal. We had an even worse deal from 1981 to 2020.

You see stupid comments like, “why do people feel entitled”? The people who say that demand entitlement based on pure arrogance. It so far gone calling it hypocritical is going very light on it. The government becomes a nanny state for the wealthy. The average guy feels he has to worry about the poor wealthy folks. Cut taxes…yes we demand it. But the tax cut is not for the gullible. Instead main street shuts down.

Rule of thumb if it sounds good as in particularly expedient in econ with no study…you are being fooled to give your money to someone else. Tax cut? Sure, heavy heavy sarcasm. Totally fooled you.

I disagree with Joffe. Germany is building their clean energy infrastructure and when finished they will be on top of their economic, environmental and social transition.

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There are several components to Germany’s decline at the moment.

It’s industries are ‘old school’ - cars, chemicals, engineering, etc

One of its main export markets, China, is in economic trouble

It has no cheap energy from Russia

People are more and more aware of how the German economy is subsidising much of the EU through an unpayable loan system called TARGET2:

TARGET2 was OK as long as Germany was doing well out of the EU but questions are now being asked, particulary by the rising right wing in Germany:

When it was formed in 2013, the AfD’s main thrust was its opposition to bailouts of indebted European Union member states like Greece. But over time, it has become, first and foremost, an anti-immigration party.

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This is one of the most dangerous things that can happen. Germany is yet again turning right, far right. And usually after that happens they start world wars. The rest of Europe, mainly the south, can’t continue milking Germany to bail themselves out.

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Yep, that about sums it up.

The problem is the euro. It was created for political and not economic reasons. Now the eurozone is trapped in this financial doom loop. I fear that it will not end well. I suspect that some in Brussels see a problem and they are making a power grab to help stop the break up of the union:

https://rmx.news/european-union/enormous-power-grab-germany-france-want-to-end-veto-rights-in-the-eu-this-year/

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I agree with you but we have different timelines. You seem to think it can be done short term but reality says it will take quite a long while to get there. Despite my “credentials” as a climate change denier I’m more than happy to see the world burning less fossil fuels and using these hydrocarbons as raw materials in the petrochemical industry. Diesel is a favored industrial fuel but it’s dirty as hell, not the CO2 but the particulates and other pollutants. The heavy Canadian tar sands and the heavy Venezuelan bitumen can be used to pave roads instead of using them as fuel.

The problem with the short timeline is that the infrastructure that needs to be redone is absolutely huge. The main ingredient of life is energy. Life exists because it can overcome local entropy by absorbing external energy like sunlight. Fossil fuels are fossilized sunlight (Richard Feynman’s dad told him so). Starting with the Industrial Revolution that energy has come almost excessively from fossil fuels, coal, oil, and gas. Don’t expect to convert infrastructure that took centuries to build in just a few years. It will take decades. Instant gratification in this task is not possible.

The Captain

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Some old school. You heard that elsewhere @Divitias It is a bold lie. The US and Mexico are soaking up those industries. We get the better deal. The German public is getting used.

The Germans want to become tech leaders. As opposed to make cars. Laughable. But okay we will take your old school industries. No problem doing so. Just know it is a pack of lies about cutting taxes.

Simpleton lies on tax cuts are for the very gullible.

The Euro will collapse just as the Bretton Woods’ gold backed dollar collapsed. Now the US dollar is backed by the American economy, the rest of the world can use their own currencies for local trade. That facility, that freedom, does not exist in the euro zone and for a long time forecasters have predicted the euro’s collapse based on that lack of flexibility.

The Captain

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That is not at all what is going to happen. The USD when supply side econ came in appreciated. Don’t tell people nonsense in the bad times about things getting worse. That is only in Venezuela that things can only get worse. Things get better afterwards in the first world. But the German government will be shafting the German public. Why not the German public are being talked into being shafted just like the American fools were.

True that I heard it elsewhere - I heard it in Germany the last time that I was there. Take the car industry:

The race to lead the electric revolution isn’t over, but it’s already far from clear if the likes of Mercedes, Volkswagen, BMW, Bosch — or indeed Porsche — will be able to keep pace. For the first time in the industry’s history, the prospect of Germany’s most storied brands suffering the fate of faded American powerhouses like Pontiac or Oldsmobile no longer seems like an impossibility.

The Germans want to become tech leaders.

So does every country. It hasn’t happened yet for Germany has it?

The Euro was and is mostly a disaster for the simple reasons that

  1. It came into being almost exactly at the moment when it was already obsolete as the once very real “frictional” costs of currency exchange in trade were vanishing due to the coming via of electronic messaging and computation of rapid and easy calculation and exchange of currency.

  2. It was set up with no mechanism to control or balance differing independent national policies of debt, taxation, and interest rates that were once handled by changes in independent currency valuations. With that gone they were screwed whether on what had been the strong currency side, the mark and friends, or the weak like the lira and drachma.

  3. No rational discussion can be had on this politically because it is an issue so tied up in nonsensical ignorance and national pride.

Europe must end the Euro or go whole hog and have a continental budget with much less freedom for using debt mecahnisms across all states as does the USA.

david fb

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Who ever said that Germany’s time line was a few years. Not Germany and not me. It was Waterfell who keeps up the silly drumbeat beat Germany is not going down the right path.

What is the matter with engineering. The world needs more engineering to design and implement new infrastructure, systems and machines to better the lives of people and save our environment.

The export markets of many countries are tied to China.

All of Europe has no cheap energy from Russia.

Abolishing the principle of unanimity — in those areas where it still exists — for votes in the European Council would be the right thing to do. Unanimity is an absurd rule in any government.

Just think if the US had to have the unanimity of all states to pass any Act or Bill in Congress. The US is lucky to get a 51% to pass most Acts or Bills.