Germany Suffers Emerging Market-Style PPI Spiral

Germany Suffers Emerging Market-Style PPI Spiral

Producer prices in Germany soared last month. To the extent "soared" can be an understatement, consider it such. Inflation in Europe is now largely out of the ECB's hands. When an exogenous, existential energy shock comes calling, the only policy that matters is fiscal policy. Because the situation is urgent, fiscal policy in this case means bailouts and, in all likelihood, nationalizations. The thesaurus is now well and truly exhausted when it comes to sensationalizing German PPI prints. And
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6 thoughts on “Germany Suffers Emerging Market-Style PPI Spiral

  1. Germany has no out. They were too trusting of Russia, and were too reliant on russian gas. I thought it was foolish at the time to shut decent nuclear plants with low carbon footprints due to Fukushima. The decision now looks woeful. The only solution is mitigation and a robust policy of conservation for Germany.

    1. They certainly brought it upon themselves. Trusting the Russians after 2014 was bonkers. I really really would like to understand how otherwise smart people made the decision to keep relying on Russia past that point.

    2. Of course, but we (western countries) have all made a lot of mistakes since 2014. The mistake now would be to leave Germany, and the rest of our allies in Europe, to shoulder the burden alone. We are at war with Putin. It just happens that Ukraine is supplying all of the troops and suffering all of the (physical) damage. The US should do everything in its power to mitigate the pain that the German people are feeling.

      1. I’m not disagreeing. Just as bailing out banks in 2008, there’s a point where you got to do what you have to to save the system.

        But, for the avoidance of constant repeat, we need to do 2 things on top. One, understand why the mistake was made and, two, punish the people who made that mistake.

        Again, this isn’t some esoteric stuff no one could have foreseen or even a cost/benefit analysis/choice gone wrong. This was stuff so obvious we all saw it. I’d like to think we’re smarter than the average voter but we shouldn’t be head and shoulders above European heads of state.

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