Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

German Economic Intervention Has No Limits

Economics / Euro-Zone Jan 23, 2009 - 06:06 AM GMT

By: Mike_Shedlock

Economics

Best Financial Markets Analysis ArticleAcross the board, the 2009 economic news is bad for Germany. Unshipped goods and containers are piling up at the Hamburg port as Germany Faces Worst Post-War Economic Downturn .

Germany is facing its biggest economic decline since the Second World War with Chancellor Angela Merkel's government saying Wednesday it expects Europe's largest economy to contract by 2.25 per cent this year.


Germany's Economics Minister Michael Glos and Finance Minister Peer Steinbrueck released the latest data on Wednesday, revising their prior 2009 forecast down sharply from last October's prediction of 0.2 percent growth.

Since then, German exports have declined precipitously and are expected to be down 8.9 percent for the year.

Joblessness to increase

At same time, the Berlin government's annual economics report predicts rising unemployment as a result of the global economic slowdown. The number of people out of work is expected to climb by 500,000 to 3.5 million before the end of the year. That would push the German unemployment rate back up to 8.4 percent, according to the ministers' report.

German consumers remain skeptical

Adding to the bad financial news, a Forsa Institute survey published on Wednesday revealed that a majority of Germans remain skeptical of Chancellor Angela Merkel's second 50-billion-euro ($66 billion) stimulus package.

In fact, 59 percent dismissed the government's plan to offer 2,500 euros ($3,200) as an incentive to car buyers who trade in older vehicles for more environmentally friendly automobiles. Only 11 percent said they would even consider accepting the offer.

Only 11% would consider taking $3,200 in "free money". There were string attached of course (you had to buy a car), but all in all that's pretty amazing.

Is Germany Turning Into A Planned Socialist Economy?

Inquiring minds are investigating the the makings of socialist "planned economy" in Germany. Please consider Berlin Sees No Limits to Economic Intervention .

As part of her efforts to combat the economic crisis, German Chancellor Angela Merkel is increasing the state's influence in the market, buying holdings in banks and bailing out individual industries and companies. Is Germany turning into a planned economy?

The government in Berlin is undergoing an astonishing change of heart. Only a few weeks ago, Chancellor Angela Merkel spoke out against "arbitrary, unfocussed economic stimulus programs" and large-scale government intervention in the real economy. She made it clear that under no circumstance should "the government acquire permanent new responsibilities in the economy."

But now, suddenly, it seems like the public sector's economic intervention cannot be forceful enough for the administration. Last week, Merkel introduced the biggest economic stimulus program in German postwar history , as well as giving her blessing to a series of government interventions into companies and industries, the likes of which the country has not seen since German reunification.

The government has acquired a 25 percent share of Frankfurt-based Commerzbank, and it plans to purchase a majority stake in the ailing Munich-based mortgage lender Hypo Real Estate. It is looking into providing assistance to the highly leveraged Schaeffler Group, based in the Bavarian town of Herzogenaurach, and has made several hundred billion euros in additional guarantees available to companies.

With its investment and lending programs, the Merkel administration is promoting questionable merger projects, turning itself into something of an über-entrepreneur in many industrial sectors and, by placing the state-owned KfW in a key position, promoting precisely the financial institution that acquired the reputation of being "Germany's stupidest bank" during the financial crisis.

"With this economic stimulus package, Germany is moving a step closer to the French approach to industrial policy," warns Bert Rürup, chairman of the German Council of Economic Experts.

The Fiscal Insanity Virus has clearly struck German Chancellor Angela Merkel. In the UK, Prime Minister Gordon Brown, Bank of England Governor Mervyn King, and the Chancellor of the Exchequer Alistair Darling, all seem to be in the late stages of FIV as noted in Pound Sinks As Britain Teeters On Edge Of Bankruptcy .

Amongst world leaders there appears to be no immunity whatsoever against the ravages of FIV. And for all the talk of hyperinflation in the US, it appears that Bernanke is not doing much of anything that is not happening everywhere else too. This is precisely why it is highly unlikely the US dollar is going to collapse anytime soon.

Currency debasement is on relative terms. And relatively speaking, government leaders worldwide are all doing the same insane things. So if you are looking for a reason for gold to rise, there you have it. Gold is the only known cure for FIV. Get inoculated soon.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2009 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in