‘Permanent Crisis Mode’: Germany Limps Out Of 2023 In Rough Shape
If you're wondering whether the fiscal fiasco in Germany impacted the business outlook for the world's fourth-largest economy, the answer is "yes."
Recall that the German government was plunged into a budget crisis last month when The Federal Constitutional Court, in response to a challenge filed by conservatives, invalidated an effort to shift tens of billions in emergency funds to an off-budget financing vehicle.
The debacle -- a self-inflicted wound towards the end of a very difficult year
TBH, they’ve been asking for it for a long time.
I take no pleasure in the biggest economy in Europe getting mired in problems since this will inevitably affect us all. But their stubbornness, trust in their Mittlestand and conviction that “made in Germany” was a get out jail free card for any industrial mistake are really self inflicted wounds, driven by excessive pride…
To avoid the fall, they’re going to have to be smart and the rest of Europe better pull with them.
As I was looking at the last chart showing German-Chinese trading patterns it occurred to me that there is an interesting trend in here. Because of the war and Russia’s denial of energy exports to Germany and Europe, Germany’s economy has been harmed. However, as Germans have stepped up imports of Chinese goods and the ability of China to obtain Russian energy, China is effectively passing Russian energy along to some of its trading partners, as that energy is embedded into Chinese goods. Interesting way for Russia to get around the energy embargo and China to boost trade.
Seeing far-right parties win one election after another in Europe, I’m reminded of the Tom Wolfe quip: “The dark night of fascism is always descending in the United States and yet lands only in Europe.” Let’s hope the other half of that coin at least holds true, i.e. that we manage to avoid a second Trump presidency.