Germany readies itself for more woe as scandal and slowdown hit economy

Guardian UK ^ | 10 October 2015 | Heather Stewart

[Lorianne]

When the German football team lost 1-0 to the Republic of Ireland on Thursday night in a European championship qualifying match, it capped a grim week for national pride.

The shock defeat on the football field followed the ritual grilling of Michael Horn, the US boss of disgraced car-maker Volkswagen, by the US Congress; record losses at the country’s biggest bank, Deutsche Bank; and a clutch of dire economic figures, including the sharpest drop in exports since 2009.

Suddenly, the health of Germany’s economy, powerhouse of the 19-member eurozone, is under question, just as the slowdown in emerging markets, including China, starts to take its toll.

Volkswagen, for decades the ultimate symbol of lean, beautifully engineered German industry, is a byword for shoddy corporate practices since it admitted to deceiving regulators over emissions from its diesel cars. Horn apologised during the bruising congressional hearing, and was forced to concede that it was “very hard to believe” that the scandal was the work of a few rogue engineers.

Meanwhile Frankfurt-based Deutsche Bank, which is being reshaped by its new boss, John Cryan, announced its largest-ever loss, more than €6bn, in the third quarter. Shareholders welcomed the announcement as a signal that Cryan was taking an aggressive approach to turning Deutsche Bank around, and would not be asking them to contribute more capital.

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But news that another pillar of the German corporate establishment looked shaky added to the sense of uncertainty. Germany’s economic model is heavily dependent on exports, including to fast-growing emerging economies, a specialism that has served it well in recent years.

[stephenjohnbanker]

Slowdown?

Wait until the crime wave goes to full bloom. Money will be the least of their worries.

[rrrod]

The US needs to block visitors from Germany...and other Euro zone countries.