For decades European intellectuals have preached that business and commerce are evil. They, the politicians, and the bureaucrats have done everything possible to make doing business impossible. The outcome has been predictable: widespread misery. Somehow, that’s never evil. From Chris MacIntosh at internationalman.com:
We did promise it after Putin blew up his own pipeline supplying cheap energy to Europe, but the implosion of European auto companies is really something to behold.
Consider this:
VW’s profits dropped by 64%. Audi’s profits dropped by 91%. BMW’s profits dropped by 84%. And Mercedes-Benz’s profits dropped by 54%.
German carmakers are in trouble. Their business model was based on two things: cheap Russian energy powering the German engineering coupled with sales in China subsidizing antiquated, overblown unions protecting their cost structure at home. The first pillar collapsed and the second is now under severe pressure.
China now builds its own decent cars. There’s no need for the Chinese to buy anything other than Chinese cars.
Now, let me show you something else. The flow of trade, of course, is seen in the currency markets.
What you’re looking at above isn’t so much the dollar gaining as much as it is the euro losing. Capital is fleeing Euroland — exactly as we’ve been promising you it would.
