Comment by Barrera | Hacker News Reader

Comment by Barrera | Hacker News Reader

Parent Full thread

> Germany has recorded its first monthly trade deficit [€1bn] since 1991 [the year of reunification] amid soaring inflation and supply chain disruption weighing on the country’s industrial base.

Then from Wikipedia:

> In 2016, Germany recorded the highest trade surplus in the world, worth $310 billion. ...

https://en.wikipedia.org/wiki/Economy_of_Germany

So it's not just the magnitude of the trade balance (negative) but the velocity (sharply downward) that should get attention.

The US has run persistent trade deficits (now ~ $50 billion) for years. This brought cheap goods but eviscerated the manufacturing base. You could call it a tradeoff. What the US has going for it though is: (a) the ability to print its own money; (b) the ability to print the world's reserve currency; and (c) the demographics to support a consumption-led economy.

Germany has none of these things going for it. The situation is not sustainable. The article implies that the change is not structural (increased competition from elsewhere, for example), but if it is things could get weird real fast.

Bloomberg has a nice graph.

https://www.bloomberg.com/news/articles/2022-07-04/germany-h...

Warning: extremely nasty back button hijack.

I will never understand why this is done.

https://archive.ph/OftCI

Missed a zero. The US trade deficit is has ranged from about $400 to $800 billion per year for the last two decades[1].

[1]https://www.macrotrends.net/countries/USA/united-states/trad...

Many businesses currently have severe supply issues. Prizes for computer chips are 100 times higher in some cases. The situation is a bit better now but many could not produce as much as they wanted in the past quarters. Now many businesses run extra work shifts because there are massive back orders. My company could send sales into holiday until mid 2023, they currently basically sell stuff that doesn't exist...

But computer chips are just a small part, inflation is mainly driven by energy prices right now. Germany's economy is also heavily globalized and any conflicts or reduced global trade will hit the economy pretty hard.

Still, exports totally were just reduced by ~ .5% while imports increased by 2.7%. But these small percentages already create an imbalance.

>Germany has none of these things going for it. The situation is not sustainable.

What? Balanced trade is inherently sustainable. If Germany exported for the last few decades then it is going to import for a few decades at some point. That is how balanced trade works.

> If Germany exported for the last few decades then it is going to import for a few decades at some point

not necessarily. A situation like this could easily and quickly spiral out of control. High inflation could wipe out decades of trade surpluses and germany cant even control their own inflation, because its using €, which is controlled by the European Central Bank.

As a german citizen I'm hopeful that its only temporary however and that our economy recovers at least somewhat over the next few years.

>. If Germany exported for the last few decades then it is going to import for a few decades at some point.

why does there have to be balanced trade? I don't believe balanced trade just happens naturally in a free market.

Why do you assume trade is balanced

There are other issues with this number that also comes with a surge in imports, just to mention one of the other hidden factors that are making everything extremely unstable.

Reply on news.ycombinator.com