We need new terminology to distinguish between macroeconomic recessions and living standard recessions. Traditionally, those two things are more or less intertwined, so the term "recession" carries connotations of both. With the steady increase of economic inequality, the link between the two meanings becomes less and less firm.
The median living standard in Germany has been in free fall for 20 years. By that criterion, the country (like many other Western countries) has been in a continuous recession since 9/11. By macroeconomic numbers, however, Germany has experienced several booms in between, which can easily be used to create the (intentionally) misleading narrative that "the economy" (insofar as it affects the median individual) is "sometimes up, sometimes down", when in reality there has been a continuous downtrend for a very long time.
Continuous downtrends, free falls, I'm interested what graphs and charts and numbers you're looking at to arrive at this conclusion. Especially when you've called out that someone (who specifically and where?) has been intentionally misleading.
You may be objectively correct about all of this but right now it doesn't come off that way to me.
The median real wage in Germany grew until the 90s, stagnated for a while, then started declining in the early noughts[0], with the effect worse for new entrants to the employment marketplace (i.e. young people and immigrants).
The latter is predictable in a developed country (meaning past peak GDP growth) with high social safety nets and employee protection (meaning an additional burden for newer entrants to clear).
I'm not sure about "free fall", but the median worker's earnings has basically broken even since the 80s or so, with a definite noticeable downward trend since the 2000s.
Looking only at workers earnings is misleading in both Germany and the United States because it ignores monetary transfers through the government, which is a huge component of GDP.
I can't speak for Germany, but for the US, worker earnings continue to climb if you count government mediated benefits.
Similarly, it's impossible for worker income to grow at the rate of GDP while taxes grow faster than GDP
yeah, It is kind of the elephant in the room nobody talks about in these discussions.
If you look at the US, inflation adjusted Government spending tripled between 2000 and 2022. Do people feel that they are getting 300% more services for the taxes 300% higher than 20 years ago. Schools, roads, healthcare, and prisons certainly aren't 3X better.
Looking at government benefits has its own set of shortcomings - it hides the struggle of “the middle class” where “middle class” is defined as starting at the point where one no longer qualifies for the most substantial government wealth transfer programs.
> worker earnings continue to climb if you count government mediated benefits
I thought counting medical inflation as a salary increase only changed the threshold from 90% to 80% of workers seeing wage contraction over the last 40 years.
There's a bunch of papers and books that recalculate growth after transfer payments. Here is a link to one book review and you can take a look at some of the figures that they came up with.
When you see those numbers about wage stagnation it always comes down to three big questions:
1) Are transfers & taxes included
2) Do you calculate the value of the transfer at the cost the government spent, or the utility received
3) What inflation metric you use
China is outcompeting Germany as a manufacturer of high value goods, particularly cars [1][2]. Last year it overtook Germany as the second biggest car exporter. In the first three months of this year, China has surpassed Japan to become the world's top car exporter for the first time. This is due to its strength in EVs (while Germany's strength is in ICEs). Volkswagen holds a 2% share of the Chinese EV market while the Chinese BYD dominates with 40% (Tesla in second at 10%) [3]. It won't be long until Europe imports more cars from China than China imports cars from Europe. If you had said this only a few years ago most Europeans would have laughed in disbelief.
With a world moving away from ICE to EV, and with Chinese brands winning at home and abroad, it presents a double whammy nightmare for Germany. Lowered exports to China, plus lowered exports in other markets. And this is all on top of energy prices from the fallout of the conflict in Ukraine, the shut down of nuclear power thanks to the Greens and the geopolitical tensions between the West and China.
While Germany's economic model has served it well during an era of a rising China, it may not be the case in a era of a risen China.
> the shut down of nuclear power thanks to the Greens
The decision to shut down our nuclear reactors came from a conservative government, where the greens were in the opposition.
The prices have not been rising due to the shutdown of our nuclear plants, but due to price gauging by electrical companies, and due to russia falling away as a cheap gas supplier.
Nuclear only made up 5% of our energy production 2023 and 11% in 2021, with ~4.3Gw and ~8.5Gw respectively. Germany installed 7.2Gw of PV and ~2.4Gw of Wind in 2022. Replacing our entire nuclear capacity with renewables within a single year.
The conservative government of the last 20 years spend an insane amount of effort to stop renewables by limiting the yearly installed PV capacity by law, and introducing NIMBY friendly limitations on where wind turbines can be build, bloating the documents required for clearance from a couple dozen pages to a full binder.
The conservative government were also the ones starting the NordStream projects and overseeing their construction. They are directly culpable for our dependence on russia.
The greens have to spend a lot of effort on reversing those legislations, and they had to do this in addition to handling the Ukraine crisis, and while constantly fighting a conservative/neoliberal party that is part of the government but has made it their stated goal to sabotage everything the greens propose. (They are basically a lobby arm of the german car industry, with several scandals.)
The fact that they managed to push for this much renewable energy, and for this much energy independence is a small miracle tbh.
Also if the conservatives hadn't sabotaged our "Energiewende" and had guided our car industry towards EV, we wouldn't have the issues you pointed out.
> The decision to shut down our nuclear reactors came from a conservative government, where the greens were in the opposition.
The conservative party was in government when that decisions was made, yes, but this discounts the decades of Greens opposition to nuclear power, and crucially that the strong Greens showing in the Baden-Württemberg elections in 2011.
Without the greens there would have been no impetus to shut down domestic nuclear power.
> Replacing our entire nuclear capacity with renewables within a single year
This seems irrelevant to nuclear decommissioning (and pricing). Both can be true. More importantly, since you seem to think that renewables are a cheap replacement for existing nuclear (i think both can easily coexist), do you have any numbers that manufacturing, installing and operating brand new renewables capacity is cheaper than the old nuclear that has already been built? (where most of its cost comes from, already paid decades ago)
> The prices have not been rising due to the shutdown of our nuclear plants, but due to price gauging by electrical companies, and due to russia falling away as a cheap gas supplier.
They have not been rising since last month, but that's not really a reliable statistics.
After all, the German Ministry of Economics is working on a law to subsidize electricity prices for the industry. They wouldn't do that if electricity was cheap.
> Nuclear only made up 5% of our energy production 2023 and 11% in 2021, with ~4.3Gw and ~8.5Gw respectively. Germany installed 7.2Gw of PV and ~2.4Gw of Wind in 2022. Replacing our entire nuclear capacity with renewables within a single year.
Nuclear provides baseload, wind and solar don't.
In fact, since 2022, Germany returned 19 coal-fired power units with a capacity of 7.3 GW to the electricity market:
> The conservative government of the last 20 years spend an insane amount of effort to stop renewables by limiting the yearly installed PV capacity by law, and introducing NIMBY friendly limitations on where wind turbines can be build, bloating the documents required for clearance from a couple dozen pages to a full binder.
That's non-sense. Germany built more wind and solar capacity per capita the past 20 years than any other country in the world.
Even one of the strongest EE lobbyists in Germany, Volker Quaschning, admitted that:
> The conservative government were also the ones starting the NordStream projects and overseeing their construction. They are directly culpable for our dependence on russia.
That's a blatant lie. That project was started by SPD/Greens and the Greens even defended it against criticism:
> The greens have to spend a lot of effort on reversing those legislations, and they had to do this in addition to handling the Ukraine crisis, and while constantly fighting a conservative/neoliberal party that is part of the government but has made it their stated goal to sabotage everything the greens propose. (They are basically a lobby arm of the german car industry, with several scandals.)
The Greens have always been fighting nuclear in Germany. So much, that they even preferred subsidizing coal:
> Also if the conservatives hadn't sabotaged our "Energiewende" and had guided our car industry towards EV, we wouldn't have the issues you pointed out.
The only parties that have sabotaged Germany's electricity grid and climate goals are the Greens with their owngoing FUD campaigns against nuclear power.
I'm really surprised how one can put so much disinformation into a single comment post.
> > The conservative government of the last 20 years spend an insane amount of effort to stop renewables by ... introducing NIMBY friendly limitations on where wind turbines can be build, ...
> That's non-sense. Germany built more wind and solar capacity per capita the past 20 years than any other country in the world.
How is "but we built more than others" an argument against "CDU/CSU actively worked against renewable energies by implementing 10H"?
Ah the usual case of the left/green acrobatics biting rh back. Covering for their bad-faith allies and swallowing poison pills for the sake of the coalition and taking home a couple wins, only to be nailed to the Cross with the same set of talking points. Yawn
> Wrong. The nuclear phase-out original came from SPD/Greens:
The phase out in it's current form was decided by a CDU led government.
"Chancellor Merkel was so shocked by Fukushima that she turned Germany’s energy focus from nuclear (of which she closed 41% and will close the rest within a decade) to efficiency and renewables."
> After all, the German Ministry of Economics is working on a law to subsidize electricity prices for the industry. They wouldn't do that if electricity was cheap.
Nobody said that electricity was cheap, but that the cause wasn't the 5% nuclear going offline.
> Nuclear provides baseload, wind and solar don't.
Baseload is such a dead horse. Renewables are cheaper even with batteries included.
>In fact, since 2022, Germany returned 19 coal-fired power units with a capacity of 7.3 GW to the electricity market:
Yeah to offset Russian gas. We haven't increased coal/lignite production either, and considering that lignite is pretty much burned immediately that's a good indicator that the missing nuclear wasn't offset with coal.
You can actually use the very tool you linked (https://www.smard.de/) to see pretty clearly that the phaseout of nuclear didn't increase energy production from coal plants.
> That's non-sense. Germany built more wind and solar capacity per capita the past 20 years than any other country in the world.
Still far below what would have been possible without the "Solardeckel" and the "Altmeier Dip".
> That's a blatant lie. That project was started by SPD/Greens and the Greens even defended it against criticism:
Nordstream planning started in 1997, when Kohl was still Chancelor.
The Greens should have stopped it when they had the chance though instead of blindly hopping onto the bandwagon.
Note that there is not much difference between SPD and CDU to me personally. I consider both conservative parties, opposed to the goals of the greens. The SPD is only less obviously evil than the CDU.
> The Greens have always been fighting nuclear in Germany.
Believe it or not, the new generation of greens would actually prefer Nuclear to Coal if it was cheaper than renewables, but it isn't so they push for renewables.
In a sense the present day greens are not really the ones that governed 20 years ago. I hate most greens from that time period with a passion for example, them killing the transrapid is unforgivable for me personally.
> What energy independence?
We managed to get through winter without shortages didn't we?
> And the Greens even have it in their election program:
"New gas utilities and infrastructure needed for the coal-exit must only be build if it is absolutely unavoidable, and if it is build in a Hydrogen ready way."
It's amazing how you read some kind of gas love from this when in reality it's saying the exact opposite, even arguing that gas is only allowed when it can be switched to clean hydrogen for BaSElOaD later.
> The only parties that have sabotaged Germany's electricity grid and climate goals are the Greens with their owngoing FUD campaigns against nuclear power.
Not even Siemens wants to build new Nuclear plants because they are more expensive and take longer to build than simply rolling out renewables.
Would nuclear have been great if we never stopped investing into them, had fast breeder reactors, and didn't loose the knowhow to build them? Maybe. But as is, it's much cheaper, easier, quicker, and more scalable to just throw our entire weight behind renewables.
> I'm really surprised how one can put so much disinformation into a single comment post.
All optimistic modeling (e.g., by the Fraunhofer) that will “show us the path to green electricity” assume that we will double the capacity for gas by 2030 or so in order to have a backup if solar and wind are not available to sustain the required load.
We will need to build up 5x of the required peak capacity with renewables in Germany per Fraunhofer.
After we have installed about 6x (!) of our peak capacity in renewables and gas, we will still emit about 150g/kWh on average of CO2 - which is more than twice of France.
This is so ridiculous. Electricity prices will increase insanely - e.g., installing 600% of the required capacity isn’t exactly resourceful. But that isn’t what matters here: it’s ideology we are after, right? Having the right ideology.
You are spreading misinformation. Base load is hardly a dead horse. Batteries might eventually solve that problem, but so far no country has deployed significant amounts of battery storage, let alone done so at a cost that would allow for heavy industrial uses. Until battery storage is proven to work on real power grids, nuclear power remains the only viable option to deliver reliable base load.
Hydrogen gas turbines are also a viable option for that and they have proven to run on real power grids, we will need hydrogen infrastructure not for cars but for steel manufacturing and turbines.
Cool. Let us know when someone has grid scale hydrogen production, storage, and generation actually working at scale and is able to report on real world costs.
...and all this happened because German car makes were willing to give COMPLETE KNOW-HOW (on how to make good cars) just to be able to sell in Chinese market... Now China has learned how to make good (enough) cars and - they will out-compete Germans with low prices... Who wants to pay 60.000€ for an electric car in you can get one for 30.000€ from China?
German car makers got lazy with research and development. In addition, they were hesitant to give up their investment in ICE production, risk staff reductions, and corresponding political and strike problems. This lead to most of the knowledge around EVs being developed and patented elsewhere, especially battery knowledge is firmly in Chinese hands.
At the same time the grandparent is also right, China wisely required knowledge transfers (in the form of forced joint ventures) in exchange for production and sales licenses. German car makers stupidly and greedily agreed, providing the Chinese with valuable knowledge about all the other parts of a car.
Both those mistakes now mean that Chinese companies have all the necessary patents and knowledge, as well as experience, for building EVs. Whereas German car makers will need to buy, license and beg for parts in China.
Not to mention that production in China will of course always be cheaper, and bureaucracy easier in the relevant circumstances.
Shipping and trade barriers are still significant for vehicles. The fact that BYD is looking to build a factory in Europe rather than importing from China shows that local manufacturing still has an advantage.
So you would have bet the future of an entire industry in the German governments ability to actually get the electric grid ready for everyone moving to EV?
No, that isn't a relevant risk. German car companies are mostly export-oriented. Of course the home market is mostly theirs, but if Germany were to lag behind on EV viability, foreign sales can still be sufficient to create a viable EV business. It would never have been a hard transition anyways, EV production would have been slowly built up while ICE production were ramped down accordingly, just as sales figures guide.
Plus there is no infrastructure to actually charge them. Plus our electric grids do not support millions of electric vehicles. Plus, you may realize that in Germany we emit a sh*t-ton of carbon dioxide for generating electricity that ball-park wise you may only save about 25% compared to a regular car (e.g., 25% charging losses, 400 g/kWh carbon dioxide intensity in Germany,…)
The funny thing is: even if we had the infrastructure, right now it costs ~0.50€/kwh to charge on public chargers. Apposed to ~0.30€/kwh which I pay at home. Unfortunately I don't own a home and can't have my own charger. This + that I don't want to sit at a charger for 45m once a week is, for me personally, the strongest argument against buying an electric car right now. And I don't see that changing or plans to change that.
Agreed that Europe & US manufacturers will lose Chinese domestic market. Any data to show Chinese EVs taking over Europe though? Haven’t seen that happening.
Most Tesla's sold in Europe have been Chinese made. That'll change as their Brandenburg plant ramps up. Volvo, MG4 and Polestar are Chinese owned and mostly manufactured in China.
Not sure about Germany, but in my country of 120mln people I don't see many EVs, but I see a lot of Chinese ICE cars lately, those cars are good enough and with the latest cars price increase, a lot of people prefer them over the Japanese/US/EU manufactures
Adding insult to injury, Germany (and other European carmakers) voluntarily withdrew from Russian market, writing down local assets. Then Chinese companies entered the country, negotiated very cheap reusing of abandoned factories (the main condition AFAIK was just to keep people employed), and now dominate the Russian market.
And even the new VW cars sold in Russia are now Chinese-built versions imported without VW's consent.
Meh. At this point China will dominate most things in the Russian market. They're gutting their economy and exacerbating a demographic crisis via heavy losses and huge departures. Outside of nukes they will otherwise be China's pet for the next few decades.
The Chinese are doing great but for now I think about 60% of Chinese EV exports are Tesla's produced in Shanghai.
While I'm sure the actual Chinese brands will catchup the German are also not sitting still. VW is going strong on EVs and other brands are not far behind.
If we look at the issues Tesla has with quality control the Germans are still coming from a position of strength, even if they are ICE specialists.
who can realistically challenge the chinese EV market in terms of efficiency / cost? simplicity of EV motors + established industry + possible commodity imports from russia
Actually the biggest blow was not the energy costs, but the interest rates. They went from 1-2% now at 4-5, even 6% for real-estate ( new building and old ) while the prices are still at last year level. For other types of financing, I had a "good" offer which went to 12% interest. I felt like in a 3rd world country. With such expensive money, nothing will be done.
The construction economy is really going dow from mid 2023, everyone has trouble finding projects while the money are kept by the people in banks and not released out of the uncertainty.
However, German economy is so diverse that it will absorb this as well.
I had a brief interaction with a real estate agent a few months back and he told me they really have trouble selling houses now at those interest rates. The run on housing apparently has dialed back significantly. He also mentioned that he thinks in around 5 and 10 years time the market might be flooded with houses people bought at low interest rates because they will not be able to pay their mortgage at these new interest rates and those are typical timeframes for interest rate guarantees. Maybe someone with more insight can share their perspective.
I also wonder if people who are in a position to sell our build houses will try (and maybe even succeed?) to sit this out or whether we will see a downward trend in prices again.
10 years is a long time. This prediction requires two things to happen: interest rates never decline in that period and wages of the owners stay the same. Given the inverse relationship between the two, I don't see that happening. Even modest 3% wage growth over 10 years is an increase of 34%, 4% pushes that to 50%.
Since the mortgage is fixed, these wage gains don't even need to be "real" (positive when inflation adjusted).
> I also wonder if people who are in a position to sell our build houses will try (and maybe even succeed?) to sit this out or whether we will see a downward trend in prices again.
You can't time the market. It's so difficult to predict what is going to happen in the future with any degree of certainty. Also, where are you going to live in the mean time?
Lots of people were burned in 2014-now by assuming the housing market was going to "collapse any minute now" then watching the exact opposite happen. It's as if they thought 2008 was some kind of regular occurrence and not a black swan event.
>Lots of people were burned in 2014-now by assuming the housing market was going to "collapse any minute now" then watching the exact opposite happen. It's as if they thought 2008 was some kind of regular occurrence and not a black swan event.
To be fair to those people, the extra low interest rates of 2014-2022 were the historical black swan event which everyone expected to last a couple of years at most and not a decade, but the banks left the money printer running for too long and now we're facing the inflation fallout.
Rates were never in history so low as post 2008. Why would any sane person expect them to last so long?
You're literally responding to a person in France with a fixed rate home loan (not mortgage, the housing isn't direct collateral for the loan). 30y is a bit on the long side, "traditional" is 20-25 years though.
In most cases it isn't a literal subsidy. Fannie Mae acts as a government-sponsored market maker to purchase home mortgages from lenders, then package and sell them to investors. By providing an "artificial" source of liquidity and taking on significant balance sheet risk they keep mortgage interest rates much lower than they would be in a free market system.
Mortgages are subsidized by the federal government. Housing supply is limited by state and local governments. Those are separate entities which often work in conflict with each other.
Doesn't matter who is limiting the supply though? Subsidizing something with artifically limited supply will automatically raise the prices and hurt ppl who they are intending to help. What am i missing here?
> Cheap 30y fixed rate home loans are an American thing. The federal government subsidizes them.
This statement sounded like 3oy fixed rate is possible only because of fed govt. meaning if its wasn't for fed govt subsidies 30yr fixed rate wouldn't have been possible.
FHA alone accounts for something like 1/5-1/4 of all home mortgages, varying slightly over time; and, its entire purpose was to shift the whole market (which it did).
A good number of French people somehow still remember (or talk with awe or anger about) the crazy early 80s, with the rampant inflation, the variable interest rates frenzy, combined with successive devaluations of the Franc Français and the moment the French government decided to follow the example of the Deutschmark and aim for what became the Euro...
Yeah when I asked (in France) about variable rates to a credit guy recently he looked at me like I was an alien. They probably still exist, but the loan-happy people won't even try to sell them, to me at least.
In a thirty years fixed mortgage, each payment includes a portion to paying down the principal and paying interest on the remaining principal.
In the beginning of the mortgage, the principal is higher, thus the interest portion is higher. In the first five years of a thirty year mortgage, a very small percentage goes towards the principal.
Assuming a thirty year fixed rate mortgage and a 7.5% interest rate, less than 15% of the mortgage payments in the first five years go to paying down the principal [1].
In recent decades Swiss and Nordic societies have dealt with rising home values with 50 year mortgages and interest only products that are barely recognizable to US home buyers.
Many Swiss have fairly dangerous interest rate exposure (to the SNB) based on the assumption that it will continue selling francs to keep exchange rates more competitive, etc.
The average duration of a 30 year mortgage being 11 years is due to refinancing or moving, it’s not due to large amounts of borrowers paying their debts early.
Atleast for the past few decades, salaries have increased less than what's needed to compensate for the change of value of the currency. Meaning the amount you make each year will on average be worth less.
Your pay goes up. It just goes up 4% per year, while inflation goes up 10%. This does mean your loan becomes 4% "less" per year. It's just Big Macs go up 6%, making your pay worth less Big Macs. But your pay still becomes worth more loan repayments. The big increase only applies to new loans.
I would also like to point out that at 4% per year pay increases, houses become worth that amount less per year, for the same dollar amount. That means they "drop" 20% in price over 5 years.
Everyone freaked out about rising wages because they saw fast-food worker "we're hiring" signs offering $17/hr... meanwhile the $20/hr worker nearby saw a 1.5% COL raise in a 10+% inflation environment (and higher inflation on the cost of things that actually matter).
Yes, but the interest payments on mortgages with variable rates had doubled. Now some people basically are paying interest only without paying off their principal amount.
Interest rate guarantees last anywhere from 1 to 25 years. That means that in any given year, it is a pretty small chunk of the housing market which will see a change in rates.
Overall, that has a significant damping effect on the effects of changing interest rates.
Maybe in your country. In mine (Canada) even fixed rate mortgages are rarely locked in beyond 5 years, so every mortgage holder will be getting a notable bump in costs in the next few years if rates don't moderate again. In many cases, their servicing rates had 40ish% increases so it's not immaterial.
Homeowners who do have low interest loans will probably also devote much of their disposable income to paying down the principal in anticipation that rates will rise later. That means less spending on home improvements, consumer products, vehicles, travel, etc which will act as a further drag on economic growth.
Isn't this even worse for the banks? Like they're stuck with a whole bunch of mortgages on properties that can't be sold and where the owners are on the brink of defaulting on their loans? Feels like a house of cards that would topple over very easily.
In Germany it is common to have a fixed rate for 10 years or so. Sometimes you get only 5 years fixed, sometimes 15. After that, you either accept the new rate on the existing contract, or refinance somewhere else (if cheaper with the new rate and fees).
There are mortgages with yearly adjustments, but those are rare afaik.
Most countries raised interest rates to the same level but they are not in recessesion. I don't know what does it says about Germany's economy... At least in Canada I believe the recession was averted by increasing immigration.
I guess the reasons are more than just the interest rates. Interest rates kill off longer-term investments like building homes.
But there was also a rather steep hike in (mostly greed-caused) inflation of everyday goods and energy prices, official overall rate was slightly above 10%, but for foodstuffs it went above 20% inflation. At the same time, wages didn't keep up, raises were below 10%, often below 5%. Inflation-corrected disposable income went down roughly 10%. So consumers also have less money to spend on their day-to-day needs and of course reallocated all the spending on "extras" (like luxury items, organic foods, leisure), to the basics (energy and less expensive basic nutrition). Which can be seen e.g. at energy providers raking in the profits while e.g. gastronomy is in a bad place.
OECD predicts 1.3% GDP growth with what, 2.5% population growth from immigration? Canada is also getting poorer, the government is just better at juking the stats.
Not from what I know. The high energy costs are due to a effective and possible felt scarcity which occured at the beginning of the war in Ucraine.
The energy companies are now planing to reduce the costs with as much as 25% from next month, since the marked is now flooded with gas and renewables ( a lof of new wind parks and solar installation will go online the next month ).
I honestly I do not know why the interest rates went up. If someone can explain the correlation with the energy price, please do.
There is a correlation. Germany has the reputation of being very concerned with inflation, which happens when the amount of money in circulation grows relative to the supply of goods to buy. When there is a supply shock (such as this energy conflict), inflation is the natural result, but a concerned government can respond by increasing interest rates to reduce the amount of money in circulation. That way they get less inflation than they would have otherwise, at the cost of slowing down the economy.
It's going to be tough for Germany to resume economic growth without a strong chemicals industry. Much of that depends on cheap natural gas for profitability. Germany can import gas from other sources to replace Russian pipelines that have been cut off, but costs for those new sources are too high to make most bulk chemical manufacturing profitable. We will probably see those industries migrate from Germany to places with cheaper gas supplies.
Producing industry in Germany is a dead man walking. Chemical industry is seeking a quick exit due to extreme gas and energy prices, as is all smelting and metal processing. They are keeping appearances for now, in the hopes of a big "green" bailout, e.g. by subsidizing electricity from 30ct/kWh down to 5ct/kWh and a few billions of free money for "doing something with hydrogen". But that will at best delay the closure of existing works.
As a reminder: any year-over-year economic numbers still need to consider pandemic effects. Current numbers look bad when the baseline of a year ago was artificially high.
The pandemic shutdowns caused pent-up demand that became time-shifted, causing anomalously high results for that time period, and so year-over-year numbers a year later look worse. For the US, that happened starting in summer 2021, and thus we had that apparent recession in 2022 as those numbers were compared to 2021's artificially high baseline. The same is now happening for Germany, since the shutdowns lifted later in most of Europe, such that the early-2022 numbers had that time-shifted effect so that the early-2023 numbers seem to look bad.
(To illustrate the point: remember the "great resignation"? That wasn't a real effect, that was a statistical artifact of pent-up demand for normal job switching that didn't happen during the pandemic.)
For a real comparison, compare this year's numbers to 2019 and you'll see that economic growth looks fairly normal for a four-year period.
Technical recession. Recession nonetheless. The ECB has a real problem with asymmetry. Can't cut rates just for Germany. At the same time there's high inflation in Austria, Slovenia and the Baltics.
>The ECB has a real problem with asymmetry. Can't cut rates just for Germany.
It's as if a single currency and a single central bank for 25 different economies with different levels of debt, doesn't really work that well in every situation.
> At the same time there's high inflation in Austria
Inflation in Austria is now mostly due to greedflation. If you cross the border into Germany the same goods are suddenly cheaper.
A monetary union without a fiscal union doesn't really make sense, imo. The US (mostly) works because states run balanced budgets(if you ignore underfunded pensions) and the federal govt corrects trade imbalances by taking money from some states and sending it to others.
Economists in the EU must have understood this and if I had to guess they assumed a fiscal union would develop at some point?
True, but every system has flaws. For the most part the Euro and ECB has been a benefit for every country in it.
Even a country like Greece. As bad as the single currency was for Greece, outside the EU and Eurozone, Greece could very likely have been closer to Venezuela with even fewer resource wealth to benefit from.
Was it really a benefit? The only benefit is belief that Germany won't let euro fail and will bailout anybody no matter how shitty situation is. On the other side, this prevents fixing root causes. Why fix anything and make people angry if you can ride the wave, hope for the best and in worst case someone will bail you out?
That's why we have this massive inflation. No real value is created, yet everybody is flush with the money. Pandemic was just a perfect excuse for BS that is brewing since at least 08 crisis.
>That's why we have this massive inflation. No real value is created, yet everybody is flush with the money.
Indeed. Most of EU's economic growth since the 2008 crash was just printing money and propping up assets. A bunch of wealthy boomers buying expensive houses from one another does not mean actual economic prosperity.
We just printed our way into prosperity but Covid supply chain disruptions, the energy shortage, and the Ukraine conflict exposed the EU emperor had no clothes.
And lots of money poured into various „EU-funded“ (= money pulled out of thin air) programmes. All sorts Bs training that creates no wealth. Sure, topics may read nice on paper. But does it create any value? All while basic economy is going down the drain.
Who cares if everybody and his or her dog can discuss emotional intelligence, yet we end up relying on China more and more? Both to import crucial stuff and export crappy extravaganza nobody else is buying.
The green whatever plan is great example. Let's fuck over our farmers and kick out remaining manufacturing. Just to pretend we're soooo environment-friendly. And then import fuckton of stuff from far away. Thankfully there will be CO2 import tax. But CO2 regulations is not the only thing curbing local economies while faking low CO2 reports in far away countries may be a lucrative industry...
Maybe not outright exiting the EU. But maybe exiting the Eurozone and removing some other problematic economic straightjackets like overly large tax-financed subsidies.
Imo that would leave Italy and Spain and their respective union members in the dust competing against the US, China and India.
But maybe that's worth it, or maybe the Brexit will turn out great like pg said due to them not having stringent EU-type regulations on things like AI and banking (though if you're a founder leaving the EU i don't see why you'd go to the UK over the US or Canada).
Italy and Spain are heavily based on tourism and snobbery (e.g. high fashion). They ain't competing against US/China/India. And that's OK. But they need different economical policies than, for example, Germany.
Greece's problem is internal, not external. Endemic bad management that used to be dealt with by devaluing the currency. With the euro there is nowhere to hide but at least that indeed prevents runaway devaluation.
Not really. US is in a better position for a federal-wide monetary union. Labor mobility is a key component, and it is easier when you don't have different languages and cultures.
To what extent does each state run its own economy? The EU does not have centralised taxes or a centralised economic policy, but it does have a single currency. It's possible a single currency also requires more centralised financial/economic policies.
State economies do differ dramatically though, and monetary policy can indeed affect them in opposite ways at least for a while. And state revenues are almost entirely collected by the state aren't they? There are funds for interstates and railroads, and schools, but often schools are primarily funded at the city level by property taxes.
>The major difference between states is tax rates.
Also tax spending. For example there's no central EU funded military but each member budgets it differently, just like how there's no New York military and Pennsylvania military.
Austria is always lagging behind Germany. I'd say about 6-12 months. So I have no worry that Austria will go down to roughly the same level as in Germany.
Gas prices have already dropped to a level where it is slowly getting in the range of pre-covid
> then why am I being asked to bail out a generation's college loans?
Wouldn't that fit perfectly with the comment you're responding to? Because the money is there. In fact I'd expect us to be bailing people out as we get richer. Less govern
So perhaps there are just more people! (Anything can be an "all time high" or "record X" if you ignore this fact). Or local trust in food banks has risen. Or food banks have more money now to hand out more food.
> then why are more six-figure earners reporting to be living paycheck-to-paycheck?
Because the popular report you're citing here, sponsored by lending service LendingClub, includes buying groceries on a credit card as "living paycheck to paycheck" even if you're paying it off each month and only doing it for the points.
> then why is personal credit card debt at an all time high?
Because there are more people! Or are you actually talking about debt as a percent of income which is a more realistic stat? Because people spend less on their debt now than almost ever. https://fred.stlouisfed.org/series/TDSP
this is called "hopium" one-liner.. look at the demographics.. twelve billionaires and 2.6 million adults having trouble paying monthly bills in my US West coastal area. Asset bubbles notably residential housing. capital-flight..
There is a trend that some people lean heavily on government intervention to solve their problems, rather than exercising personal initiative. This dependence can exacerbate issues in densely populated regions, where high living costs, limited housing, and food security concerns are rampant, despite surprisingly low out-migration rates.
However, alternatives are readily available. Inland areas beyond the coastlines offer affordable living and plentiful housing.
> some people lean heavily on government intervention to solve their problems
this lecture is better pointed at the naive.. look at system rules in place, benefiting "stall" politics and high tax on labor, local govt zoning, and access to capital projects. You explain to me how "Noah's Bagels" makes multi-hundred franchise with high-end remodelling, to sell bagels. A person "exercising personal initiative" goes out of business in less than half a year! Also construction contractors..
hollow platitudes work when the system is flush.. dont be surprised to get serious pushback with that
Government is not able to fix the peoples' problems. Entrenched poverty and homelessness has been a problem in New York [3] and California for decades, but even though the same party has been in power for similar decades -- New York has been under single-party control since 1975 [1] and California since 1959 [2] -- the problems remain. There is no motivation to solve the peoples' problems, only "lectures pointed at the naive" around election time.
For the individual, the only realistic option is out-migration to lower density areas.
> New York has been under Democrat control since 1975 [1] and California since 1959 [2] -
Neither of those claims are supported by those links (and even the control that actually is shown by those links may be misleading, in that it ignores things like “controlling all of the separately elected executive offices and having majorities in both houses of the legislature is insufficient to govern California since it takes a legislative supermajority to make tax changes that involve any increases, and, prior to 2014, to even pass an annual budget”.)
Feel free to post a source for your claims that the party with 5+ decades of majority control is excused from its failures to alleviate the problems of its most desperate citizens because of spoiler votes.
In any case, the fact that that situation is even possible is support enough for folks to move to lower density areas.
German speaking. My personal summary of Germany’s technical problems in all different areas boils down to “arrogance”.
- Whenever I had the chance to talk to „leadership“ people about the lack of progress in transforming energy production towards renewables they were essentially telling me “all is good, we have a great deal with Gasprom, they will always deliver because we’re too important for them”
- Whenever I asked about things digital and a lack of local Cloud providers and expertise in Software Engineering: “we have excellent education (we don’t) and look, when there’s the time we will be excellent in shipping great software with our products. The market just doesn’t require it yet (about 10y ago)”
- “China needs us as much as we need them. Look at the import/export fraction to China in recent years”
- “Look we are world class with out ICE tech. Why would we give that up for stupid electro?”
And so on.. German politicians were stupid enough to follow the lobbying and public opinions. Meanwhile even German conservatives that used to be halfway reliable start campaigning using fake news and drive cultural wars. Chancellor Scholz publicly stated that Germany has a new Wirtschaftswunder in nearsight “because of all the work that needs to be done” (lol)
German industry is also very lazy with any kind of R&D and even minimal risk-taking, to the point of requiring research subsidies to look into anything new. German car makers started looking into EVs and hydrogen powered cars 30 years ago, but only because of the government paying them to do so, consistently and repeatedly. When the money dried up because the programs ended, research stopped. A few years later, Tesla ate their lunch and half their dinner, because the car industry just wasn't interested if it wasn't subsidized.
The overall level of subsidy-dependence in the economy is so large that no new undertaking will be done without a corresponding subsidy of some kind. Where an American might look for venture capital, a European (and especially a German) will look for a government subsidy program. Any industry that doesn't look for and mold itself along those subsidies will be leaving money on the table, therefore becoming uncompetitive. That means that all our industry will always be shaped by political programs and will always lag years behind the rest of the world.
The chain will always be:
foreign company does new thing X -> X looks good -> EU/German politician envies X -> subsidies for X -> EU/German industry does X in the exact size and amount of the subsidies.
And of course each of those arrows will be a year or more.
Everyone I know who didn't go in to this with a lot of income above their spending level is struggling, mostly due to price increases in things they can't not spend money on. Housing's way up the list, and food, which, I dunno, maybe it's a local thing, but that's up a ton more than overall US inflation figures would lead one to guess. Utility prices are up, too. Basically the only things that are still cheap are optional crap. Extremely-low-paid (think: fast food worker) jobs saw a bump, but jobs above that aren't seeing a corresponding increase, so the bottom's basically just flattened and now a bunch more people are making the same money as fast food workers, which is about the same as they were making before, while their expenses are up a lot.
> overall US inflation figures would lead one to guess.
I think part of the problem is that people see rates of inflation in the news, but their mind thinks in terms of cumulative inflation. They think, "housing has gone up 30% since before the pandemic but the government says inflation is only 9%." Even though, 9% inflation per year over 3 years is 30% total.
Then there's the fact that inflation stats are an average of a "basket of goods". So housing might go up 15%, but that's offset by other items going up 2%. Then there is regional factors, and how inflation is mentally sticky (i.e., people making jokes about the price of eggs, even though wholes prices are down 80% over the past 4 months).
The big problem with food cost inflation is that it is extremely bimodal. Fresh and frozen green veggies are still around $1-$2 a pound. However, now a bag of chips is $5. If you weren't able to afford the time cost of making food from scratch before, you are taking the brunt of food cost increase. IMO, this is another reason to believe the "most inflation is from greed" line. Our farmers up north aren't paying more for illegal mexicans to pick the broccoli, and gas is the same price it was quite some time ago, so their produce isn't significantly more expensive and they aren't really even earning more money. Even beef in our local store is the same price it used to be, including the weekly cheap sale stuff.
But the big conglomerates that own all the branded products saw an opportunity to jack up prices without taking all the heat.
Speaking of which, if you grab a package of mccormick's chili seasoning off the shelf in your store, it will tell you to buy a 15 oz can of tomatoes. Cans of tomatoes have been 14.5oz for at least a decade, and this seasoning product has had that recipe on the back changed at least 4 times in as many years, yet they never admit to the shrinkflation that happened to those cans of tomatoes.
Is there a TL;DR translation for the comic? I don't think I get the humour/point. All I understood is that the government and media are faking the inflation numbers to be lower than reality that people notice.
I don't think the comic is particularly insightful, but here is a translation. I tried to stay close to the original, but you might say some things a bit differently in English:
Title: Dishonest
Could you explain this to me? Government and media are talking about low inflation, but what I am seeing is that prices are exploding.
...they lie, by deliberately calculating incorrectly or sometimes even skipping details.
The bad thing is,
it doesn't just happen here. Everywhere in the world all central banks seem to be doing it.
Through their dishonesty they give themselves more opportunities for influence..
...Balances are inflated..
...to trick a part of the population and to make them believe things would get better..
...while the standard of living is moving in another direction..
through highs and lows! You know that. You have to learn to talk to the subordinates to keep them optimistic...
They shouldn't be shutting down nuclear. Build more nuclear reactors. That will provide more clean energy and a lot of jobs. Modernize the grid. Make it a smarter grid that is more resilient to harm. These projects pay for themselves quickly and are easy to finance with how much wealth Germany has.
What is about HackerNews and the obesession with the decision to remove Nuclear Power, which was only a minority component at it's peak, from the German energy mix, as somehow being the dominant factor in the entire German society and economy?
A while back someone unironically described Germany's nuclear power policy as "the single most catastrophic decision ever made by any government in peacetime".
> A while back someone unironically described Germany's nuclear power policy as "the single most catastrophic decision ever made by any government in peacetime".
German here. Accurate description if you ask me. It's one of the dumbest and most irrational decisions ever made in energy politics. It's completely inexcusable.
The French regret their decisions on this front. It took a war for them to realize their huge mistake regarding energy independence.
Germany is repeating the same mistake because of pride. If there are still talks about needing to use fossil fuels to bridge the gap introduced by eliminating nuclear, then eliminating nuclear was clearly the wrong move. The reactors should be maintained, upgraded, and worked on so that there's a lot of employment and a lot of clean, independent energy.
Afaik the main reason for the Western world to not sanction Rosatom, the russian nuclear supplier, is France because they frantically need their supplies..
Fossils are not used to bridge the elimination of nuclear, that's already done by renewables. Fossils are used for industry and heat, where nuclear never added anything in the first place. And while technically it's possible to use the heat from nuclear plants to replace the heat-usage from fossils, the German plants were not designed for this, and probably not even in useful locations for this. AFAIK for using heat of plants, they need to be located near the places there it's used. And I kinda doubt many people would like to build nuclear plant in big cities.
There is a good deal of misinformation, astro turfing, and I think also nerdy love for fancy toys. And there is also the problematic trend of the right wing to demonize environment- and green politics. It seems it has reached a level of conspiracy theories now.
How's advocating for nuclear power related to demonizing environmentalist politics?
Shouldn't it be an obvious fit to help reduce CO2 - which is the currently the biggest topic of the green movement?
Nuclear plants are not green, just greener than fossils. And they have no real benefits overall, but bring many problems to the table. So yeah, while they technically would reduce emissions, other options will reduce them even more, with significant less problems and more flexibility.
But the actual point is that people who rage about shutting off nuclear plants, usually don't bring these arguments, and don't care for the environment. Many of the more vocal ones somehow have adopted the mindset that environmentalists aim to destroy modern society, because they are against cars and harmful industry, so they want to reset everything into a medieval state. And nowadays, they seem to drift very hard into arguments of the "Great Reset" conspiracy and the like. And one result of this thinking is to be against everything which their enemies want, and support all of what their enemies hate, like nuclear plants.
So, what I mean to say is, there is a loud group of people who support nuclear plants, because they hate environmentalist for whatever reason, not the other way around. And while not all supporter of nuclear plants are from that group, it seems to be at the moment the msot vocal group.
The tinfoil hat theory is this: Nuclear is expensive and takes forever to build. Right now there is a lot of effort and money pushing for renewable energy sources, and it has been immensely successful at proving its viability. Certain groups make a lot of money off fossil fuels, and even though they know that will eventually end, every year they can delay that end is billions in their pocket.
The push for "we shouldn't do renewables, because they can't do the job, so we should invest in nuclear" is about taking the wind out of renewable's sails. Even if we turn around today and start building a hundred nuclear plants all over the world, it will take decades for them to come online and start displacing fossil fuel energy production, meaning a long delay until fossil fuels stop putting billions into the pockets of certain people. They do this because even at the half assed effort we have now, renewable power generation is increasing by tens of terawatts per year in germany alone.
This is why the same people who DGAF about all the carbon we release into the atmosphere and all the pollution we dump into rivers suddenly "care" about "windmills kill birds", why conservative states like Florida, with ample sun, continue to push for laws that screw over home solar.
Nuclear is mostly carbon neutral energy, which is great, but if we wanted to solve climate change with nuclear energy, we needed to start building it in the 70s, when all the pushback happened. Unlike most other situations, the second best time to build nuclear is not today. Maybe it will be good to have it in the mix in the future, but we can't let it distract us from the renewable energy sources that have the potential to decarbonize our world before even the first new nuclear plant could come online.
It also might not even be cost competitive anyway.
> Even if we turn around today and start building a hundred nuclear plants all over the world, it will take decades for them to come online and start displacing fossil fuel energy production
A. Construction start to finish is well under a decade.
B. This concern is true of any alternative energy source.
> The push for "we shouldn't do renewables, because they can't do the job, so we should invest in nuclear" is about taking the wind out of renewable's sails.
The push against nuclear is to line the pockets of renewable companies, and exploits the layman's misunderstanding about environment impact of nuclear and its alternatives.
There are just as many manipulative, disingenous arguments by Big Oil as by Big Renewable.
Not really. Building the plant, and mining+refining the nuclear fuel involves a significant amount of emissions. Far more than most renewables have on the list. Overall it's greener than fossil fuels, but less green than renewables. And we are at the point where such differences matter. And that is not the only problem with nuclear. The high costs and the political problems are another things. Russia has their hands deep in nuclear fuels too.
There's no way that's gonna happen unfortunately. The greens have absolutely dropped the ball in terms of big picture goals. We've been brainwashed into thinking nuclear power is dangerous and the problem of waste is bigger than the problem of having non renewable, oil based, energy. In hindsight I wouldn't be surprised if the oil lobby had a hand in that.
The greens haven't been part of the national government for decades until 2021.
I disagree with their decision to not keep the nuclear reactors running, but if you want to point fingers at people it's not them that unilaterally decided to stop building new reactors.
That's technically correct, however much of the Greens' ideology has been gradually adopted by essentially all other political parties over the past 10-15 years, most likely since it's rather popular with the voters here.
There's no political party left you could vote for if you are in favor of nuclear.
Right and their ideology is to build more solar and wind. Which, even when factoring in the cost of batteries, is cheaper than nuclear or almost any other form of energy.
Well the plan was created >20 years ago but depended on the lifeline to actually develop enough renewables which got almost completely blocked by conservative governments in the last decade who still phased out nuclear. Don’t blame the Greens for that.
Solar and Wind power was completely blocked up by conservative governments all over the globe for the past 50 years. Consider Reagan, who removed solar panels from the roof of the white house just a few years after they were installed and not long after multiple oil supply crises in the 70s. Even if the solar panels being installed in the first place was only symbolic, removing them was also purposefully symbolic.
America at least had a great chance to invest in nuclear energy and completely end dependence on the middle east for it's energy, but it chose Reagan instead.
> I disagree with their decision to not keep the nuclear reactors running
It wasn't their decision, the reactors had to shut down anyway for at least some years, as they are lacking fuel and an up-to-date operating permit. The remaining reactors were already running on their last ounce, and it would take some years to produce new rods at Russia, even if we ignore the political problems.
And that's even ignoring the billions(?) of euro for penalties that Germany likely had to pay in that case, because the whole shutdown was executed somewhat shaky from the old government.
Fed sets rates banks decide what rates to lend out for mortgages.
Just like we tax things at different rates, we may want to require mortgage lending at different rates, maybe a bit higher if necessary. I don't think that exists, but I could be wrong.
The median living standard in Germany has been in free fall for 20 years. By that criterion, the country (like many other Western countries) has been in a continuous recession since 9/11. By macroeconomic numbers, however, Germany has experienced several booms in between, which can easily be used to create the (intentionally) misleading narrative that "the economy" (insofar as it affects the median individual) is "sometimes up, sometimes down", when in reality there has been a continuous downtrend for a very long time.