Posted on 07/16/2014 3:25:41 PM PDT by Kaslin
I have a guest post this morning from Saxo Bank chief economist Steen Jakobsen regarding the slowing German economy. Steen says the German economy is decelerating too quick for comfort and faces a triple whammy from Asian rebalancing, the US economy, and a bad energy policy.
From Steen Jakobsen
Germany May Have Won the World Cup, but Its Economy is Cooling Fast
We need to congratulate Germany on its World Cup win. It was a victory for organisation and science, but unfortunately the Germany economy is slowing fast — and too fast for comfort when we look at Eurozone GDP.
I have long argued this slowdown was coming based on Asia rebalancing (reducing imports of capital goods and turning more domestically-based); Bad energy policy (being dependent on Putin and his Russian gas rather than German nuclear energy — not exactly perfect substitution); A new minimum wage and a coalition government that has either reversed or halted a lot of the progress that had been made in the labour market.
Unlike its football team, Germany became complacent and the switch to a reliance on green energy is now at risk as growth collapses.
A few charts to illustrate my old argument ...
ZEW Expectations
Industrial Production
Strategy
This confirms that we are destined for new lows in yields in core Europe, something I have constantly said since Q4-2013. The world is barely producing growth with zero interest rates — how can ANYONE believe rates will go higher? Beats me!
Therefore: Long IEF, Bund futures and 10-year US Treasury notes.
Above courtesy of Steen Jakobsen
Europe is not prepared for a German slowdown, but it is coming.
In 2011 they saved Greece and other PIGS. Now they are going down themselves.
Above market energy costs, more than necessary, will help do that.
Should also mean that there’s more European money coming into US markets looking for yield.
Didn’t they have a bunch of “free” energy from renewable sources like solar?
That was supposed to solve all of their energy problems.
I know that Germany switched to green energy in reaction to the damage at Fukushima. While I blindly trust the the statement from the OP is true, can somebody explain why reliance on green energy is at risk as a consequnece of economic(?) growth collapsing?
I thought they were the only ones prospering.
That was Spain and it destroyed her economy.
Actually, it was German, too. A couple of years ago, my friend visited one of their major arrays. It was supposed to be the end all.
I recently read that Germany were now balking at renewable energy.
I thought Germany was smarter than that.
It sounds like Germany's switch to green energy was politically motivated. I hope other countries learn from Germany's mistake.
That is what happens when someone mentions global warming. They lose all of their smarts and stop asking why.
Seems like a good reason to round up and expel the pro-jihadist rioters, eh Merkel?
The green movement in Germany is decades older than Fukushima, and resulted in German abandonment of nuclear energy, perhaps ten years ago already. The Germans had developed something called pebble bed reactors but after the initial work didn’t wind up using them. There was interest from outside Germany, including I think South Africa and Japan.
Green is an ideology, nothing more. It’s based on nothing.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.