Deutsches Kanzleramt rechnet zeitnah mit Rezession

Die schwache Industriekonjunktur dürfte „weiter anhalten“. Das geht aus einer Vorlage des Kanzleramts hervor, aus der der „Spiegel“ am Freitag zitierte

23. August 2019, 18:00 derstandard.at

Die Experten von Bundeskanzlerin Angela Merkel (CDU) rechnen für die Zeit von Juli bis Oktober mit einem ähnlichen Rückgang wie im Quartal zuvor.

Berlin – Das deutsche Bundeskanzleramt rechnet zeitnah mit einer Rezession. „Für das dritte Quartal zeichnet sich abermals ein leichter Rückgang des Bruttoinlandsprodukts und damit eine technische Rezession ab“, zitiert „Der Spiegel“ aus einer Vorlage des Kanzleramts. Im zweiten Quartal war die Wirtschaftsleistung bereits um 0,1 Prozent gegenüber dem Vorquartal geschrumpft.

Die Experten von Bundeskanzlerin Angela Merkel (CDU) rechnen nun für die Zeit von Juli bis Oktober mit einem ähnlichen Rückgang. So hatte sich Anfang der Woche auch die Bundesbank geäußert: „Die gesamtwirtschaftliche Leistung könnte erneut leicht zurückgehen“, hieß es. Ausschlaggebend dafür ist demnach der „anhaltende Abschwung in der Industrie“.

Rise of Electric Cars Threatens to Drain German Growth

Date: 16-08-2019
Source: The Wall Street Journal

Industry executives worry that a transition away from fuel-powered vehicles threatens jobs, tax revenue

Workers assemble sports cars at a Porsche factory in Stuttgart-Zuffenhausen, Germany.

STUTTGART, Germany—Concern is rising in Europe’s automobile heartland about the economic impact of the industry’s move to electric vehicles from gasoline-powered cars.

Officials and executives in Germany fear the country’s big car companies and rich ecosystem of suppliers and service providers are insufficiently prepared for the transition, and that their leadership may not be assured in an electric-car world, threatening jobs, tax revenue and even growth.

Assembling electric cars isn’t as complex or labor intensive as making traditional vehicles and relies partly on imported technology. At the same time, China has made rapid forays in electrification and is shaping up as a potentially formidable competitor in the field.

Markets are braced for a global downturn

Date: 15-08-2019
Source: The Economist

The signals from bonds, currencies and commodities are increasingly alarming

Looking for meaning in financial markets is like looking for patterns in a violent sea. The information that emerges is the product of buying and selling by people, with all their contradictions. Prices reflect a mix of emotion, biases and cold-eyed calculation. Yet taken together markets express something about both the mood of investors and the temper of the times. The most commonly ascribed signal is complacency. Dangers are often ignored until too late. However, the dominant mood in markets today, as it has been for much of the past decade, is not complacency but anxiety. And it is deepening by the day.

It is most evident in the astounding appetite for the safest of assets: government bonds. In Germany, where figures this week showed that the economy is shrinking, interest rates are negative all the way from overnight deposits to 30-year bonds. Investors who buy and hold bonds to maturity will make a guaranteed cash loss. In Switzerland negative yields extend all the way to 50-year bonds. Even in indebted and crisis-prone Italy, a ten-year bond gets you only 1.5%. In America, meanwhile, the curve is inverted—interest rates on ten-year bonds are lower than on three-month bills—a peculiar situation that is a harbinger of recession. Angst is evident elsewhere, too. The safe-haven dollar is up against many other currencies. Gold is at a six-year high. Copper prices, a proxy for industrial health, are down sharply. Despite Iran’s seizure of oil tankers in the Gulf, oil prices have sunk to $60 a barrel.

Warning Signs Point to a Global Slowdown

Date: 15-08-2019
Source: The Wall Street Journal

Weakness in Germany, China, puts pressure on record U.S. expansion as recession risks rise; U.S. stocks tumble

Warning signs pointing to a deepening global economic slowdown—and the risk of recession—are flashing more brightly.

Many of the biggest troubles are showing up overseas. But stock and bond markets are signaling that the threat of a downturn is spreading to the U.S., the world’s largest economy, now in its longest expansion on record.

Economic output in Germany, the world’s fourth-largest economy, contracted in the second quarter, according to a report Wednesday, while a report on factory output in China, the second-largest economy, came in lower than expected.

“It’s almost like we’re starting to see a textbook version of a pre-recessionary period,” Nicholas Akins, chief executive of Ohio-based American Electric Power Co. , said in an interview Wednesday. The company provides electricity to industrial, commercial and residential customers in 11 states.

Deutschlands Digitale Rezession

Sollte es wirklich eine Rezession geben, wird die deutsche Wirtschaft zwar schnell Donald Trump als Schuldigen identifizieren. Aber die eigenen Versäumnisse wird sie ausblenden wie bisher.

https://www.spiegel.de/netzwelt/web/rezession-droht-deutschland-ohne-digitale-innovation-sascha-lobo-kolumne-a-1281847.html

Die Verantwortung dafür tragen die seit gefühlt 62 Jahren herrschenden Regierungen Merkel, die – ganz genauso wie die deutschen Unternehmen – noch stets andere Prioritäten hatten als offensive, zukunftsgewandte Investition.

Systematische Fehlentwicklungen haben einen riesigen Investitionsstau in Deutschlands Städten und Gemeinden anschwellen lassen. Um das Problem zu lösen, reicht selbst ein einmaliges Sonderprogramm nicht mehr aus. Vielmehr müssen strukturschwache Kommunen langfristig und generell finanziell ertüchtigt werden – doch einer solchen Lösung steht die Schuldenbremse im Weg. Ein Beitrag von Jens Südekum.

A Navarro Recession?

Date: 08-08-2019
Source: The Wall Street Journal By The Editorial Board

Trade and currency mistakes are eroding economic growth.

Peter Navarro in Washington, D.C., March 4.

Multiple reports out of the White House last week say President Trump overruled all of his economic advisers other than Peter Navarro when he decided to impose new tariffs on China. Global and American economic conditions have been heading south ever since, so perhaps we should call this the Trump-Navarro trade-policy slowdown.

Mr. Trump used to talk as if stock prices were his economic lodestar, which was never wise since stocks fluctuate for many reasons. But on Wednesday he professed not to be too concerned by the stock-market correction. The Dow Jones Industrial Average dropped sharply Wednesday morning before stabilizing, though it still closed lower than it was in January 2018 when his tariff offensive began. He can ignore stocks if he chooses, but financial markets across the board are signalling worry about more trade and currency tensions and a slowing global economy.

Stocks stabilized Tuesday but then fell again Wednesday amid fears of weaker economic growth world-wide. Germany turned in lousy industrial numbers, and a European recession is as likely as not. Commodity prices have been falling—from copper to iron ore to oil to farm goods. Some of this reflects the rise in the dollar, but another reason is concern about falling demand as the global economy slows.

Expansions Don’t Die of Old Age

Jun 21, 2019 Anatole Kaletsky, 

Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics. A former columnist at the Times of London, the International New York Times and the Financial Times, he is the author of Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis, which anticipated many of the post-crisis transformations of the global economy. His 1985 book, Costs of Default, became an influential primer for Latin American and Asian governments negotiating debt defaults and restructurings with banks and the IMF.

Many economists have become convinced that a recession in the United States is now overdue, if not immediately then surely before the 2020 presidential election. But US recessions since the end of World War II have generally resulted from three causes, none of which is currently present.

LONDON – The US economy has entered its 11th year of uninterrupted expansion, breaking the previous record for the longest period of growth in American history without a recession. But far from celebrating, many economists conclude from this unprecedented performance that a recession is now overdue, if not immediately then surely before the 2020 presidential election. Fortunately for the US economy, but sadly for President Donald Trump’s opponents, the idea that economic expansions have some kind of natural lifespan and then die of old age has neither empirical nor theoretical support.

Making the Euro Area More Resilient Before the Next Recession Hits

June 17, 2019, IMF Blog

By Shekhar Aiyar, John Bluedorn, and Romain Duval

Growth in the euro area rebounded earlier this year, but it remains fragile, while risks have increased. Now is a good time for euro area economies to strengthen their ability to weather any future economic difficulties.

A new IMF staff paper looks at the resilience of euro area countries and finds that they have had more frequent and severe recessions than other advanced economies over the past 20 years. An even greater cause for concern is that differences between member countries’ growth and unemployment rates after euro area-wide downturns have widened. This widening was most stark following the 2008 global financial crisis.

The Trump Trade War Recession?

By John Mauldin, May 31, 2019

Hoover, Smoot & Hawley
Multiplayer Game Theory
Trade Sandpile
Victim List
Lopsided Polls
The Seven-Body Problem

Publisher’s Note: John Mauldin is recovering from a minor illness. He’ll be back next week. Meanwhile, with trade disputes still roiling markets, below is a still-timely letter he wrote last year. You should definitely read it again. —Ed D’Agostino

“A conservative is someone who stands athwart history, yelling stop, at a time when no one is inclined to do so, or to have much patience with those who so urge it.”
—William F. Buckley, Jr., 1955

I will never compare myself to Bill Buckley, as a writer or anything else. He was one-of-a-kind and a personal hero who I am disappointed to say I never met but who I read a lot. The response to my recent tariff comments gives me a small hint of how it must have felt to “stand athwart history” and launch the modern conservative movement.

Many of you support the tariffs. And I understand your reasons. I really do.

How central banks should prepare for the next recession

Date: 30-05-2019
Source: The Economist

They must change their targets and find new tools—while avoiding a populist takeover

It has been a decade since America’s latest recession, and it has taken that long for the Federal Reserve to ask itself whether it is ready for the next one. On June 4th officials and scholars will gather in Chicago to debate how monetary policy should work in a world of low interest rates. The benchmark rate is 2.25-2.5%, which gives the Fed little room to cut before hitting zero—and less than half as much as it has needed in past downturns. As if to remind policymakers that rock-bottom rates are here to stay, the ten-year Treasury yield fell below 2.3% this week. Other central banks, many of which preside over still lower rates and weaker economies, are looking to the Fed for inspiration.