A Growth Debate for Germany

Date: 22-01-2019
Source: The Wall Street Journal By The Editorial Board

The main center-right party’s new leader weighs tax reform.

Annegret Kramp Karrenbauer

Now that Europe’s economy shows signs of slowing, the question will be what to do about it. One hopeful development is that tax reform may be back on the table in Germany, the eurozone’s largest and most important economy.

The debate comes courtesy of Annegret Kramp-Karrenbauer, the new leader of Angela Merkel’s Christian Democratic Union, the country’s main center-right party. In an interview with the Welt newspaper last week, she suggested Berlin cut taxes on businesses and individuals before an economic downturn gets worse. “It would make more sense to provide this relief from the beginning [of a downturn] and not wait for growth to weaken more.”

Ms. Kramp-Karrenbauer is right that there’s ample scope to reduce Germany’s oppressive tax burden. The government’s revenue grab each year equals 38% of GDP. The top marginal corporate rate is around 33%. Its second-highest personal income-tax rate of 42% kicks in at €55,000 of income.

On the personal side, there’s also scope to accelerate the scheduled elimination of the “solidarity surcharge” introduced to fund reconstruction in East Germany. Berlin also desperately needs to reform the so-called cold progression by which a complex formula imposes steeply progressive rates on each marginal euro a middle-class taxpayer earns.

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Germany’s Sharp Slowdown Fans Fears That China Woes Are Spreading

Date: 15-01-2019
Source: The Wall Street Journal

Germany posts its slowest annual growth rate since 2013, in the latest sign of a global economic slowdown

FRANKFURT—The economic outlook for Europe and the world darkened after growth in Germany slowed sharply last year, hit by weaker exports to China and elsewhere, and softer demand at home.

While Europe’s largest economy probably narrowly avoided a recession at the end of last year, according to the country’s statistical agency, weaker German growth is ringing alarm bells across the continent, where swaths of companies are bound tightly to the German export machine.

The impact of the cooling Chinese economy is a particular concern: Germany, a maker of high-end cars and capital goods, is one of only few Western economies to have cracked China as a big export market. If that source of growth goes, economists fear Germany could become a conduit for the Chinese slowdown to infect other economies.

Deutschlands unerotischer Flirt mit der Rezession

14. Jänner 2019, 18:11 derstandard.at

Jetzt liegen die ersten Prognosen vor, wonach Deutschlands Wirtschaft nicht nur für kurze Zeit schrumpft

Brüssel/Wien – Die bereits seit einigen Monaten abflauende Konjunkturstimmung hat neue Dämpfer erhalten. Vor allem in Europa häufen sich die schlechten Ergebnisse und Umfragen, eine Rezession in einigen Ländern der Währungsunion wird von Experten immer öfter thematisiert. Jüngste Hinweise auf eine Verschlechterung der Lage gab am Montag Eurostat. Die Industrieproduktion sank demnach in der Währungsunion von Oktober auf November um 1,7 Prozent. Gegenüber dem Vorjahr lagt das Minus bei 3,3 Prozent. Die Werte stellen die schlechteste Entwicklung eines Monatsergebnisses seit Februar 2016 dar. Was noch schwerer wiegt: Die Hoffnung auf eine Gegenbewegung nach äußerst schwachen Ergebnissen im dritten Quartal 2018 zerschlägt sich zusehends. Vor allem Deutschland und Italien hatten die Konjunkturabschwächung bereits im Herbst stark zu spüren bekommen.

Hoffnungen nicht erfüllt

Allerdings waren die Rückgänge bei der Wirtschaftsleistung nicht zuletzt mit den neuen Abgastests bei Autos begründet worden, die zu Produktionsverzögerungen führten. Hier ruhten die Hoffnungen auf einer Gegenbewegung im letzten Quartal des abgelaufenen Jahres. Nach rückläufigen Novemberwerten für die Industrie auch in der größten Eurovolkswirtschaft macht sich Pessimismus breit. Die Analysten der Bank of America rechnen bereits mit einer technischen Rezession in Deutschland. Dieses Kriterium ist erfüllt, wenn zwei Quartale hintereinander negativ sind (jeweils im Verhältnis zur Dreimonatsperiode davor). Für das vierte Quartal erwarten die Volkswirte des US-Instituts einen leichten Rückgang von 0,1 Prozent.

Auch Italien kriselt

End of the Boom: Germany Prepares for an Economic Downturn

Date: 09-01-2019
Source: SPIEGEL

Clouds are gathering on the horizon of the global economy and the risk of a recession is growing. Many experts believe that the international banking system is unprepared and Germany has begun getting ready for the worst.

The economic outlook for Germany and other large economies has darkened recently.

The International Monetary Fund (IMF) is something like a global weather station for the economy, carefully registering even the tiniest of disruptions to the world economic stage. And in the past week, IMF analysts have concluded that a storm is brewing on the horizon.

Its experts carefully register every impulse, and in the past week they’ve concluded that the forecast is looking increasingly dark. „I see storm clouds building,“ David Lipton, the IMF’s first deputy managing director, recently said in London, adding that the global banking system isn’t ready for another downturn. „The work on crisis prevention is incomplete,“ he said.

The economic outlook is worsening almost by the week. A general consensus among economy experts has emerged that 2019 will be worse for all large national economies than last year. Stock exchanges already began dropping last year, with Germany’s blue-chip index DAX losing almost 20 percent of its value in 2018 while the Dow Jones also showed losses.

Neue Finanzwelt 2018: Zwischen Kryptocrash und Challenger-Banken

Dank an R.K.

Fintechs, Kryptowährungen und Bad News zu Deutscher Bank und Commerzbank – die deutsche Finanzbranche hat ein bewegtes Jahr hinter sich. Ein Rückblick von Capital-Kolumnist Dirk Elsner.

von Dirk Elsner

28. Dezember 2018

Wahlweise findet man für einen Jahresrückblick über den deutschen Finanzsektor gute und schlechte Nachrichten. Unbestritten ist, dass 2018 für große börsennotierte Banken kein einfaches Jahr war. Schaut man auf die Marktwerte von Deutscher Bank oder Commerzbank, dann stehen sie so schlecht da wie zu Zeiten der Finanzkrise. Mit Blick auf die deutlich freundlichere Lage spanischer, französischer, schweizerischer oder gar der US-Banken taugen die üblichen Erklärungen Niedrigzinsphase, Regulierung und nun auch schwächelnde Konjunktur nicht besonders für die Ursachenforschung. Ein Ende des “Aktiendebakels” (Finanz-Szene) der Deutschen Bank ist nicht erkennbar. Als Zeitenwende wird die Ablösung der Commerzbank durch die technologisch orientierte Wirecard Bank im prominentesten deutschen Aktienindex, dem DAX, angesehen.

The Coming Franco-German Bust-Up

Dec 21, 2018 Mark Leonard, Project Syndicate

Mark Leonard is Director of the European Council on Foreign Relations.

The partnership at the center of European integration is unraveling just when Euroskeptic forces are coming together. If French President Emmanuel Macron and German Chancellor Angela Merkel cannot start rebuilding the political center, next year’s European Parliament election will produce the biggest victory yet for anti-EU populists.

BERLIN – The politics of Brexit is descending into chaos. The European Union is fragmenting into northern, southern, eastern, and western tribes. And now the Franco-German marriage at the center of the European project is in danger of falling apart.

In May 2017, when German Chancellor Angela Merkel and newly elected French President Emmanuel Macron met for the first time, many hoped for a renewal of vows. Crowds of pro-European well-wishers urged them on. Macron, the fresh-faced reformer, seemed to have a Midas-like political touch. And Merkel was at the height of her power on the international stage, having been deemed the new “leader of the free world,” supplanting the “very stable genius” in the White House, Donald Trump.

Quoting the German author Hermann Hesse, Merkel observed that, “There is magic in every beginning,” but added a caveat: “The magic lasts only when there are results.” Eighteen months later, the magic most certainly has not lasted. Merkel has now handed over the leadership of the Christian Democratic Union (CDU) and will not seek another term as chancellor. And Macron, far from walking on water, has been trying not to drown in a sea of yellow-vested protesters.

Germany’s Hidden Crisis by Oliver Nachtwey review – social decline in the heart of Europe

Date: 23-12-2018
Source: The Guardian by Stuart Jeffries

How has Europe’s most powerful country become as unequal and class-obsessed as Britain?

The cover of Oliver Nachtwey’s book depicts a VW Beetle, emblem of Teutonic manufacturing prowess since Hitler’s day, driving off a cliff. Is the country that got used to imposing its values on feebler client nations – bailing out southern Europeans with their oversized public sectors, rampant tax avoidance and long lunches – in trouble? The Germany described by this Frankfurt School professor is a basket case – post-growth, post-democratic, with the first fascists in the Bundestag since the Third Reich. Despite being Europe’s richest country, it has higher numbers of working poor than any other EU state; almost one in four of its workers is paid less than the €9.30 (£8.40) minimum wage, many requiring state support.

Sociologist Ulrich Beck in the giddy 1980s called Germany an elevator society, in which millions of skilled workers upgraded from VWs to Audis and expected their children to rise still further in social status and wealth. The elevator may have seized up for a while after reunification, but only five years ago Germany seemed unstoppable. Every German, Beck thought, was in the same lift. No longer. Not only has downward mobility become more evident but the poor get poorer, the rich get richer, the older get tenure, the younger join the precariat. Sure, greater equality of opportunity means more women work than ever before, but of all German women in work only one in three earns the minimum wage. “So while German women are more equal in terms of rights, inequality between women has never been greater than it is today,” Nachtwey argues.

Konjunktur: Sorgen der deutschen Manager wachsen

Das Konjunkturbarometer des ifo-Instituts sinkt zum vierten Mal in Folge. Außenwirtschaftliche Risiken drücken auf die Stimmung.

18.12.2018 um 13:49, diepresse.com

Brexit-Chaos, Handelsstreit: Die deutschen Manager beenden das Jahr wegen einer Vielzahl außenwirtschaftlicher Risiken im Stimmungstief. Das Barometer für das Geschäftsklima sank im Dezember überraschend deutlich um 1,0 auf 101,0 Punkte und damit den schlechtesten Stand seit mehr als zwei Jahren.

Das ist bereits der vierte Rückgang in Folge, wie das Münchner ifo-Institut am Dienstag zu seiner monatlichen Umfrage unter 9.000 Managern mitteilte. Ökonomen hatten lediglich mit einem Absinken auf 101,8 Zähler gerechnet. „In diesem Jahr fällt die Bescherung für die deutsche Wirtschaft mager aus“, sagte ifo-Präsident Clemens Fuest.

Germany Tightens Foreign Acquisition Rules Amid China’s Push for Technology Deals

Date: 16-12-2018
Source: The Wall Street Journal

Any non-European foreign company planning to buy more than 10% of a German firm involved in defense, technology or media will see its deal probed by German authorities

In July, Germany’s KfW bank acquired a 20% stake in German transmission system operator 50Hertz Transmission’s holding company to fend off a Chinese bid.

Germany is tightening rules to make it harder for non-European companies to buy stakes in German firms without its approval, signaling growing concern in Berlin about China’s push to acquire key technology and know-how.

China’s aggressive plans to purchase assets around the world has forced a series of countries to take steps to screen the investments, many times blocking them. The European Union has recently agreed to establish a common framework to tackle the issue. In the U.S., Congress has moved to strengthen the vetting procedures for transactions involving homegrown technology.

If Macron Fails, Europe Fails

Date: 18-12-2018
Source: SPIEGEL A Commentary by Henrik Enderlein

Yellow Vests Protests

French President Emmanuel Macron has tried to calm protesters by raising the minimum wage, among other concessions. But if the yellow vests continue eroding his authority, it’s not just France that will suffer. And Germany is partly at fault.

The yellow vests in France are eroding President Emannuel Macron’s authority.

Famed German political sociologist Max Weber once argued that the two great drivers of revolutionary power were charisma and rationality. Charisma depends on enthusiasm, rationality on intellectualization. According to this blueprint, Emmanuel Macron would seemingly be the ideal revolutionary. He combines charisma and intellect like few others and believes in the need to change France, Europe and the world. The book about his campaign is called simply: „Révolution.“ Macron sees himself as a know-it-all in the best sense of the term, but precisely that is also his greatest weakness. Nowhere did Weber write that charisma and intellect magnify each other when combined. A glance at the trajectory of Macron’s popularity in France might lead to the assumption that the two qualities cancel each other out. Can a charismatic leader be a know-it-all? Can a know-it-all have charisma?