By Jack Rasmus
The German economy had been long hailed as the economic engine of Europe. If so, it clearly needs a major ‘valve job’ and is running on only 5, or maybe even 4, cylinders.
It is in a recession that will no doubt deteriorate further. Politically, it is also becoming more unstable as the right wing Afd party, and the newly formed left party led by Susan Wagenacht, are about to register major gains within days in German regional elections now underway.
The ruling SPD Sholtz coalition with Greens–both strong proponents of support of Ukraine with weapons and funding until recently–last week announced it would provide no further funds or weapons for Ukraine. The unpopularity for the SPD support for that war is widespread now, as is public opinion about Sholtz’s handling of what can only be called the de-industrialization of Germany.
Recent German public revelations that German police investigations revealed Ukraine special forces, with NATO assistance, were responsible for blowing up Germany’s Nordstream pipeline in September 2022, and the fact Sholtz’s government has remained silent about the matter–except to complain to Poland as one of the saboteurs of the pipeline’s destruction, a Ukrainian businessmen, successfully fled to Poland which allowed him to make his way back to Ukraine.
German public opinion is also complaining the Sholtz government has also meekly addressed policies of the USA since 2022 responsible for Germany’s continuing economic decline as well. Not just the US direction of the sabotage of the Nordstream pipeline but subsequent economic policies of the USA that have been undermining Germany’s economy as well: in particular the USA’s oil companies’ charging natural gas imports to Germany costing 3X and 4X that formerly charged by Russia; the Biden administration announced tax and trade policies that have been now luring German business investments to the USA that otherwise might have been invested in Germany itself; and US convincing EU supra-elites in the EU Commission to join the US in sanctioning and raising tariffs on China imports to the EU.
The declining condition of Germany’s economy as the ‘economic engine’ of Europe reveals that perhaps the ‘Plan B’ purpose of Biden/US Russia sanctions on Russia has been to make Germany/EU more economically dependent on the USA. Even if those same sanctions haven’t proven successful with regard to ‘Plan A’ which was has been precipitating the economic instability of Russia!
The USA sanctions policy has thus succeeded re. making Europe more dependent on the USA–even if that policy has failed with regard to destabilizing Russia’s economy and the Putin regime.
A recent post by UK economist and political commentator, Michael Roberts, has gathered extensive data with charts revealing the depth and extent of the growing crisis in Germany’s economy and electoral alignments as of today. It is worth referencing and can be found at: https://mail.google.com/mail/u/0/#inbox/FMfcgzQVzPDQzQgKSStzdXXrxBRKKWpr
My only ‘critique’, if it can even be called that, of Roberts’ data and data that show conclusively the serious condition of Germany as the engine of Europe is he perhaps might have discussed more how US economic policies have seriously contributed to the decline in Germany and the growing economic (and political) dependence of it, and Europe itself, on the USA as a result of those US policies.
My contributing comment to Roberts’ otherwise excellent piece is as noted below:
Excellent summary, Mr. Roberts, but I would have liked to have read more analysis how US policies re. Europe, especially sanctions, takeover of energy, tax incentives to invest in USA instead of Germany, etc. are contributing to German recession. Also, the West (G7/8) is in a goods recession everywhere. US manufacturing PMI has been contracting for 8 months, now lowest level, while construction activity is down 1/3 and contracting further this summer. US GDP numbers are misleading. How can it be 3% in 2nd quarter when corresponding Gross Domestic Income, GDI, is only 1.3%? Unemployment is not 4.3% when part time & discouraged workers leaving labor force is counted; it’s 7.8%. Inflation is not 2.6% (PCE) but at least 5% when the questionable assumptions for calculating prices are removed from both PCE and CPI. Even official US stats show a seriously slowing economy: manufacturing PMI, new housing starts, home sales, commercial construction, industrial activity, CPS (small bus. sector) job statistics (not CES), even real retail sales flat, and so on. US and global recession will deepen in 2025, given economic trends that will be exacerbated by USA & EU intensifying political crises and decline of the $US as BRICS challenge accelerates.
About the Author
Jack Rasmus is author of the recently published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, 2020. He publishes at Predicting the Global Economic Crisis.
