Skip to main content

Germany is Collapsing

http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/2008/12/19/germany_is_already_collapsing

Germany is already collapsing
Posted By: Ambrose Evans-Pritchard at Dec 19, 2008 at 07:26:46 [General]
Posted in: Business
Tags:View More depression, ECB, Euro, Eurozone, financial crisis, foreign exchange , germany, monetary policy, recession

The German economy is on the "brink of the abyss", says the IMK institute in Dusseldorf. The country's GDP could contract by 3.5pc next year.


Trading down: Despair at the Frankfurt Stock Exchange

We are reaching depression levels here.

The IFO confidence index published by its sister institute collapsed to a record low of 82.6. This is an industrial melt-down.

It is becoming ever clearer that the surplus countries (angels) will suffer just as much - if not more - than the deficit countries (sinners), even if this offends moral justice. This was ultimately the story in the 1930s, though it did not look like that at the outset.

Germany and China have become addicted to exports. This is not as healthy as it looks. They will bear the brunt of belt-tightening by the Anglosphere Club, and East Europe.

Carsten Brzeski, ING's Europe economist, said Germany's fourth quarter will "very likely make history as the worst collapse of the German industry ever. One thing is evident: The current downturn could behave like a rock that threatens to roll down a hill. Once the boulder has gained momentum, it will simply mow down everything in its path. It should be stopped in time."

Quite. Unfortunately the fractured Left-Right coalition of Peer Steinbruck and Angela Merkel lacks the leadership capable of stopping it in time. They have quite simply lost the plot. Like the hapless Bruning government in 1932.

(Note that the German economy tipped into recession even earlier than Britain's economy and faces an equally bad year in 2009. This is not to gloat, nor is it Schadenfreude. It is merely to put matters in perspective at a time when the British press is in extreme self-flagellation mood.)

IMK may or may not be right in calling for another €50bn (£47bn) stimulus for Germany. But it should clear be now that the German people have been very badly let down by the do-nothing crowd in Berlin.

It should also be clear that the ECB has been asleep at the wheel. The IMK institute took the rare step today of attacking the bank, saying it had been "very late" in responding to the crisis.

Julian Callow at Barclays Capital says the euro's trade-weighted index has risen 10.7pc this month (sterling is a big part of it).

This is equal to a rate rise of 175 basis points. Monetary policy is tightening like a vice, although its awful effects will not be felt until deep into next year. (Never underestimate those killer FX time-lags)

The ECB is taking a big risk by refusing to follow the lead of the Switzerland, Sweden, Norway, the US, Canada, and Britain in slashing rates. The result of going it alone has been to drive its currency to levels that have ensured the now inevitable bankruptcy of scores of companies next year. Many of them might have survived under a more pro-active central bank.

A case can be made that the ECB is better off engaging in "qualitative easing" - to borrow the term from Willem Buiter - rather than cutting rates so far that its paralyzes up the money markets and repo system.

Jean-Claude Trichet has not ruled out the purchase of eurozone government debt. The ECB is banned by the Maastricht Treaty from doing this directly - for fear it would be used as a covert bail-out for EMU's profligate states - but it could in theory do it on the secondary market. This would be a political can of worms, of course.

I am coming round to the view that zero rates may be an error. It may be better to hold at 1pc and do "quantitative easing" instead - ie, printing money.

If the ECB chooses this enlightened - albeit late - course of action, I promise readers to be fulsome in my praise.

Comments

Popular posts from this blog

Bishops of Colorado gave an apparent Vaxx "Exemption" Letter & Stated: "Vaccination is Not Morally Obligatory and so Must Be Voluntary"

Today, the bishops of Colorado gave an apparent Vaxx " exemption" letter (21_8_Vaccine_Exemption_CCC_Fin...docx(20KB)) and stated that "Vaccination is Not Morally Obligatory and so Must Be Voluntary":  COLORADO CATHOLIC CONFERENCE 1535 Logan Street | Denver, CO 80203-1913 303-894-8808 | cocatholicconference.org   [Date]   To Whom It May Concern, [Name] is a baptized Catholic seeking a religious exemption from an immunization requirement. This letter explains how the Catholic Church’s teachings may lead individual Catholics, including [name], to decline certain vaccines. The Catholic Church teaches that a person may be required to refuse a medical intervention, including a vaccination, if his or her conscience comes to this judgment. While the Catholic Church does not prohibit the use of most vaccines, and generally encourages them to safeguard personal and public health, the following authoritative Church teachings demonstrate the principled religious

Does Francis's "Right-hand Man" Parra have a "Sexual Predation against Seminarians, Adultery, and even a Deadly Sex Game...[that] 'might even be a Scandal Surpassing that of McCarrick'"?

  Archbishop Edgar Peña Parra with Francis Today, the Call Me Jorge website asked "What could be so important that Francis interrupted his weekly adulation [Audience] session?": Pope gets a phone call during the Audience. Haven’t seen this before. Then he quickly leaves and says he will be back. pic.twitter.com/npCuPzdnxP — The Catholic Traveler (@MountainButorac) August 11, 2021 It was Abp. Mons. Edgar Robinson Peña Parra, Substitute for the Secretariat of State, who was involved in the recent scandal of mismanagement during the acquisition of a € 300 million building in London. Still no word on what the phone call was about . [http://callmejorgebergoglio.blogspot.com/2021/08/what-could-be-so-important-that-francis.html] Who is Archbishop Edgar Robinson Peña Parra ? Parra according to the Catholic Herald is Francis's "right-hand man"[https://catholicherald.co.uk/roman-curia-the-popes-new-right-hand-man/] In 2019, Life Site News reported that Parra alleged

Might it be Good for all of us & for Francis to Read about the "Gruesome Death of Arius"?

  I have read the letters of your piety , in which you have requested me to make known to you the events of my times relating to myself, and to give an account of that most impious heresy of the Arians , in consequence of which I have endured these sufferings, and also of the manner of the death of Arius . With two out of your three demands I have readily undertaken to comply, and have sent to your Godliness what I wrote to the Monks; from which you will be able to learn my own history as well as that of the heresy . But with respect to the other matter, I mean the death, I debated with myself for a long time, fearing lest any one should suppose that I was exulting in the death of that man. But yet, since a disputation which has taken place among you concerning the heresy , has issued in this question, whether Arius died after previously communicating with the Church ; I therefore was necessarily desirous of giving an account of his death, as thinking that the question woul