Germany’s export dependence – China manufacturing PMI – Greece

Germany depends heavily on exports to China. HSBC has put out some graphs and the summary looks like this:

HSBC

HSBC

HSBC graphs here

The Greece government seems to be toppling and Martin Wolf summarizes the Greek triple tragedy thus:

“In brief, the Greek crisis proved a triple calamity: a calamity for the Greeks themselves; a calamity for the popular view of the crisis inside the eurozone; and a calamity for fiscal policy everywhere. The result has been stagnation, or worse, particularly in Europe. Today, we have to recognise that the huge falls in output relative to pre-crisis trends may well never be recouped. Yet the reaction of policy makers has not been to admit the mistakes, but to redefine acceptable performance at a new, lower level. It is a sad story.”

Add to that the intention of Cyprus to have its bailout renegotiated.

AEP, love him or hate him, forecasts that

Germany’s ascendancy over Europe will prove short-lived

He is right in seeing demography as THE problem Germany is and will be facing, just like Japan.

If demography is destiny, it may be clear within five years that ageing Germany is going the way of Japan. Within 20 years it may equally be clear France and Britain are regaining their 19th century role as the two dominant powers of Europe, albeit a diminished prize.

The European Commission’s 2012 Ageing Report says Germany’s population will shrink from 82m to 66m over the next half century due to social structures that cause low fertility, while France jumps to 74m and Britain to 79m. This is out of date already since the German census revealed in May that the country has 1.5m fewer inhabitants than thought. They miscounted foreigners going home. The total is down to 80.2m.

Even their own man at the ECB warns:

Jorg Asmussen, Germany’s man at the European Central Bank, made much the same lament recently, warning that the country risks becoming “the sick man of Europe again in five to 10 years” if it does not get a grip on infrastructure and education. Germany’s top university – Munich Technical – ranks 53 in the world. All of the top 19 are Anglo-Saxon.

The much hailed Agenda 2010:

We have come to believe the narrative that Germany was transformed into a Teutonic Tiger by the Hartz IV reforms of Gerhard Schroder in the country’s Thatcherite blast a decade ago. As always with such stories, it is half true.

He is right in seeing a coming energy crunch for Germany due to its delirious renewable energy policy in cloudy Germany.

He concludes:

Germany is not the villain in this saga. It is as much a victim of the EMU project as any other country, though the damage is delayed and the biggest loss is intangible goodwill. Festering anti-German feelings across half Europe are undoing 50 years of enlightened diplomacy.

As for Germany’s qualities, they are beyond dispute. The country has become the stoutest defender of freedom and democracy in Europe. Its reform miracle, however, is overrated.

full article here

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