Sewing correctly argued that his countrymen had, for too long, erroneously held “the idea that the economy will continue to run itself and that we don’t have to do much to succeed”. But he failed to spot the problem underlying this.
Germany got extraordinarily lucky in the first two decades of this century.
The replacement of the mighty Deutsche Mark with the far weaker Euro meant that its currency was dramatically undervalued, allowing it to build up huge trade surpluses and dominate a vast range of industries where it may otherwise have been unable to compete.
The industrialisation of China, meanwhile, was built on German machine tools creating a huge new market for the country’s formidable engineering firms.
And it had access to what seemed like an endless supply of cheap Russian gas, allowing it to continue with heavy, power hungry industries – the huge BASF plant in Ludwigshafen uses about as much gas as the whole of Switzerland – long after they would have been obsolete elsewhere.
Add it all up, and this happy combination of circumstances created an illusion of permanent prosperity that allowed Germany during the Merkel era to complacently lecture the rest of the world on the brilliance of its consensual model, while racking up trade surpluses as if they would last forever.
That luck has now run out.
The war in Ukraine meant that the Russian gas had to be turned off, and given the ridiculously self indulgent decision to close its nuclear plants Germany only managed to avoid blackouts by paying eyewatering prices for energy on the global market.
Factories are already closing because they can’t afford power.
China seems to have bought all the German technology it needs, and is now turning the tables mercilessly on its former tutor.
Led by the likes of BYD, the Chinese auto companies could well be about to destroy the German auto giants, and the EU’s planned tariffs on Chinese electric vehicles seem like they will be too late to save them.
Arrogant Germany is incapable of saving itself
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Sewing correctly argued that his countrymen had, for too long, erroneously held “the idea that the economy will continue to run itself and that we don’t have to do much to succeed”. But he failed to spot the problem underlying this.
Germany got extraordinarily lucky in the first two decades of this century.
The replacement of the mighty Deutsche Mark with the far weaker Euro meant that its currency was dramatically undervalued, allowing it to build up huge trade surpluses and dominate a vast range of industries where it may otherwise have been unable to compete.
The industrialisation of China, meanwhile, was built on German machine tools creating a huge new market for the country’s formidable engineering firms.
And it had access to what seemed like an endless supply of cheap Russian gas, allowing it to continue with heavy, power hungry industries – the huge BASF plant in Ludwigshafen uses about as much gas as the whole of Switzerland – long after they would have been obsolete elsewhere.
Add it all up, and this happy combination of circumstances created an illusion of permanent prosperity that allowed Germany during the Merkel era to complacently lecture the rest of the world on the brilliance of its consensual model, while racking up trade surpluses as if they would last forever.
That luck has now run out.
The war in Ukraine meant that the Russian gas had to be turned off, and given the ridiculously self indulgent decision to close its nuclear plants Germany only managed to avoid blackouts by paying eyewatering prices for energy on the global market.
Factories are already closing because they can’t afford power.
China seems to have bought all the German technology it needs, and is now turning the tables mercilessly on its former tutor.
Led by the likes of BYD, the Chinese auto companies could well be about to destroy the German auto giants, and the EU’s planned tariffs on Chinese electric vehicles seem like they will be too late to save them.
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