Tag Archives: German economy

“Social Peace Is In Great Danger”: Germany Is Quietly Shutting Down As Energy Crunch Paralyzes Economy, by Tyler Durden

And its all self-inflicted. From Tyler Durden at zerohedge.com:

Earlier today we wrote that Germany’s largest landlord, Vonovia, had taken the unprecedented step of restrictring heating at night, a terrifying preview of what lies in stock for the “most advanced” European nation this winter. Alas, it’s going to get worse, much worse.

According to the FT, Germany is now rationing hot water, dimming its street lights and shutting down swimming pools as the impact of its energy crunch begins to spread like the proverbial Ice-Nine wave, from industry to offices, leisure centers and residential homes.

The reason behind Germany’s slow motion paralysis is well-known: the huge increase in gas prices triggered by Russia’s move last month to sharply reduce supplies to Germany has plunged Europe’s biggest economy into its worst energy crisis since the oil price shock of 1973 (see “What’s Unfolding In Europe In Recent Days Is A Fresh Big Negative Supply Shock“)

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The Collapse in Germany is Real — and Accelerating, by Tom Luongo

Europe’s largest economy is faltering and the slide appears to be getting worse. From Tom Luongo at tomluongo.me:

Back in April I told you that Germany was a “Dead Economy Walking.” Today I get to tell you that it’s legs are gone.

This morning’s manufacturing PMI print was the worst news Angela Merkel could have imagined, 41.4. A figure so awful dogs will want to roll on it.

Overall, Germany’s economy at the purchasing manager’s level is contracting. And with Merkel masking a massive tax increase as a political cave to the rising Greens the future for Germany’s economic growth looks as bad as the following chart.

Aside from the obvious, the big takeaway from this chart is the consistency with which analysts who are paid a lot more than me over-estimate this number. It’s a brilliant depiction of confirmation bias.

And you can see why this happens. Conventional wisdom tells us that an accommodative central bank, and the ECB’s negative interest rates are the height of accommodation, should support continued manufacturing growth because credit is cheap. Continue reading