Germany government collapses at a perilous time for Europe
nytimes.com
nytimes.com
- German economy is heavy on manufacturing: Part of their success was cheap raw materials (oil, gas, etc.) from Russia. That edge has disappeared thanks to the war in Ukraine.
- More competition from China: China is moving up the value chain in manufacturing, competing with Germany in previous strongholds. Lowers margins for lots of German companies.
- At the same time subdued demand from China itself: A large part of growth - esp. in the automotive section - came from China. Domestic manufacturers of EVs have now better offers than Germany, meaning it's losing market share.
- Misguided energy politics: With an unnecessary exit from Nuclear energy (German nuclear power plants were among the most reliable ones). Driving up energy costs just at the moment when gas is already in short supply due to sanctions on Russia.
Will any new Government fix all these issues? Unlikely, they are structurally too deeply a part of the German economic model that a new Gov. could change them (except for restarting Nuclear power plants - but that seems unlikely atm).
I feel that Germany felt like EVs wouldn't take off, and thus ignored them for too long, and they got taken by surprise.
For example, the Model 3 Performance on 20" wheels has 303 miles of range, a 0-60 of 2.9 seconds and is about 20k cheaper than the BMW i4 M50 on 20" wheels has 227 miles of range and a 0-60 of 3.7 seconds.
Why? Well, the i4 isn't a purpose built EV. It sits on a platform that must incorporate everything, starting at a tiny 1.6 liter 4 banger, a 2 liter 4 banger with electric motor, a 3 liter 6 banger, and a plethora of configurations, manual, automatic, (air)suspension, performance (M3/M4), bodies (station wagon). And on top of that a battery pack beneath everything and electric motors.
Look under the hood on a BMW i4. Take the cover off. There is empty space there. It's wasteful.
So now I'm looking at our next car. Do I get the Tesla? Or the BMW?
What's there in the meantime before the elections? Would they appoint some kind of interim ministers? Which of course would not do anything at all to stir whatever policy currently there is, because they are not supposed to have any initiative. Also, "what if AfD wins?".
Situation normal, all fucked up...
Oberfeldwebel Hans Schultz was known mostly for turning a blind eye to the prisoners' various doings at Stalag 13 (to whom he was known simply as "Schultz"). Having proved himself hopeless in that capacity, it's not surprising that he'd be hopeless for Ukraine as well.
Something tells me you may be thinking of the current German Chancelllor, Olaf Scholz.
Technically I guess it's true, but this is not exactly a rare occurrence in parliamentary systems, and since we don't really have an equivalent event in American federal government (the lengthy process to elect a Speaker of the House last year was probably the closest we've come), I think most American readers interpret "collapse" as something much more dire than it actually is.
No. The closest is when the federal government shuts down because of the debt limit, which has happened multiple times. It's also arguably more impactful compared to a government "collapsing" (ie. new elections called).
In the US, again that can't happen because the executive branch is fully separate, and even within Congress it rarely happens because we only have 2 major parties. So the situation where the House couldn't elect a Speaker due to the problems cobbling up a majority vote, which then froze any other work the House could do, is most analogous in my opinion. Debt limit standoffs are a completely separate process, and the impacts they have are nothing like what happens in a parliamentary country when a government can't be formed.
Not disagreeing with the American media’s love for click-baity nonsense, but I’ve been under the impression my whole life that this was a Britishism we imported. Not that British media is known for shying away from shock-value, but for what it’s worth, the BBC and The Guardian both refer to this as a government collapse, and have done so in the past when the French and Dutch governments collapsed.
Also a bit less confident this is a British import now than I was since I can’t track down a useful etymology. Would appreciate if anybody could post one here if they have it.
I thought the "we are fed up" political trend was frenchy french... well, nope, it spans all over EU.
Here, political coalition has never been a thing (we tried after WWII, but hardcore failed) : either one party has the majority by itself, either it is the circus. If we had the same election system than in Germany and UK, the "rassemblement national" would have been in power for years.
We have a "weakest link" election system: if the biggest party is not big enough, all the other parties can team up to block it.
@dang feel free to update to this, I generated it myself.
CDU should just agree to work with AfD in return for some bright lines excluding the most extreme stuff.
Most political parties want mostly the same things. They have differences in priorities, and they may oppose the specific means other parties propose, but they are rarely opposed to the actual goals of the parties on the other side of the political spectrum.
Radical fringes often have too different visions of the society to work with those on the other side. But we are not talking about radicals here, but a coalition of three moderate center-left / center-right parties. Those parties should be able to collaborate most of the time, even if you add CDU (another center-right party) to the mix.
The most stable government coalition in Finnish history was Lipponen's first government in 1995-1999. It consisted of SDP, National Coalition Party (center-right), the Greens, the Left, and Swedish People's Party (center). The coalition was stable enough that it lasted the full four-year term and another three years after the elections.
Government stability is ultimately about people. Are those people willing to work together, or do they let political labels get in the way.
But that's the playbook for France and the UK, and all of Europe. I think it will take 10+ more years of slow-grind reductions in their standard of living for Europe to change its ways.
And no, it's not "too late to fix that". We have 8 restartable reactors, we don't need to build new ones to do that. (Isar 2 is probably restartable within a year or two)
What must be gotten rid of is high emission energy sources.
Even with those 3-5 days of high prices, the average price is expected to be 30% lower this year compared to last year. This is also reflected in the prices consumers and the industry have to pay. Consumer prices are still trending downwards and the industry price has been very close to the lowest prices over the last 10-20 years, especially if you consider inflation (but only if you had to pay the EEG before).
The prices also only jumped about as far up as to match the current gas prices, which is somewhat expected if there is no wind or solar and the missing energy has to be produced by burning gas. This is not what will be the case long term. Germany is almost doubling the installed battery storage capacity every year and has been keeping that up for almost a decade at this point: https://www.energy-charts.info/charts/installed_power/chart....
This trend is likely to continue and will smooth out a few days of no renewables soon. Additionally so far biomass has been subsidized without it having to follow the load. This is expected to change this (there was at least one law proposed, don't know if that was decided on yet), which would make Germany follow a lot closer to how Denmark seems to operate its grid.
The big problems in the German energy grid are, that there is not enough transfer capacity, not enough storage and not enough renewables in the grid yet. More renewables make storage more attractive, but earlier conservative governments killed both solar and wind installations, because they wanted to focus on nuclear, only to then reverse course a short time later. Solar was on an exponential trend until the government implemented policies, that basically killed expansion around the 2012 time frame: https://www.energy-charts.info/charts/installed_power/chart....
A similar story applies to wind power, where additional regulation regarding the distance of wind turbines to living spaces made it almost impossible to build new wind turbines (around 2017).
Similar policies also prevented installation of new power lines or at least significantly delayed their installation.
Had conservative governments not implemented those, we would likely be at 100% renewables already most of the time in Germany and the average price for electricity would be significantly lower. But the distraction of nuclear and then gas and coal by conservative governments put us into the position we are in today. A completely renewable grid is possible and not too far off for many countries in the EU and elsewhere, but you need to actually build the infrastructure for it instead of sabotaging it.
Restarting reactors won't help in that regard. The few reactors that were still in the grid in 2022 did not reduce the record electricity prices that year. (They would also not have helped when they were at their peak with about 30% of the grid. Germany stopped constructing nuclear plants in the 80s after all and nuclear has been in a decline since then, even though officially that was only decided in 2002 and then 2011.) And the prices continue falling since the last nuclear plants were shut off in 2023. Today renewables are the cheapest source of energy. Storage is still a problem, but battery prices still half every few years, which makes battery storage economical today already and only cheaper in the long run.
For all intents and purposes Germany is doing ok in renewables. It could be a lot better, but there is a clear plan and if conservative governments don't reverse course next year (again) as well as stop sabotaging renewables in local governments (like Bavaria), prices will soon be the lowest they have been in 2 decades. This is backed up by plenty of data and studies. Nuclear plants are cool in theory, but they can't compete in price in the long term and trying to go back to them would be the same mistake the German car industry made, when it tried to push ICE cars and is now getting steam rolled by China in the EV market. Or when Germans invested into gas pipelines instead of renewables, because it was cheaper at the time. Germany can't afford to make plans only for the next 2 years, it needs to have plans for the next few decades.
No, I want energy policies that account for the need to support a reliable base load in all circumstances. The prices are an expression that got fucked up. And that baseload specifically includes heavy industry, which has limited ability to rely on batteries alone.
Simply, "most of the time" is insufficient. That means we need an answer for what happens until we reached the "next few decades" state.
This is not advocacy to replace renewables with nuclear, but to a) do the baseload thing, now, and b) cut the LNG cord, which is a very tenuous tether to hang yourself off.
I don't think you and I are disagreeing much about the long term (though questions around battery sustainability need answering for the long term baseload case). But there's need for fairly immediate action. Germany is massively deindustrializing right now, and it's due to energy supply issues, at least in part.
Regardless I'll be curious to see whether what you predict will happen (energy storage becomes enough to deal with bad weather periods). Doesn't seem smart though to rely on the sun in a relatively cloudy country.
The outcome is political instability when voting citizens and industry demand that the government solve the issue, and people get more upset as the energy market get more unstable. A secondary effect is that most political solution to this problem results in significant government costs which get put on taxes and energy fees, which only infuriate people more when price variability continues.
If there is any reference to a disaster, a catastrophe or poor decision(which there always is in any thread about Germany, even if it has nothing to do with energy), it's ALWAYS about Nuclear.
My favourite was a comment which unironically described it as "the most catastrophic peacetime decision in human history".
It was more than 30%
> replaced with about the same amount of renewables.
That turns out not to be the case. You cannot compare electricity produced by intermittent/weather-dependent renewables with electricity produced by dispatchable sources. Different products.
So we replaced cheap, reliable, CO₂-free electricity with expensive, unreliably and also CO₂-free electricity. At a cost of € 400-600 billion.
Pretty bad.
> "the most catastrophic peacetime decision in human history"
That's actually pretty apt description. Since you think it is ridiculous, I am sure you will be able to trivially come up with a at least about ten that were worse. (If it's less than ten, it would still be in the top 10 of most catastrophic decisions).
Sabine Hossenfelder described it as "the dumbest thing the Germans ever did" in one of her videos.
(To the objection that there might be this other thing she replies that that was evil, not dumb)
New companies that do what?
But with which skilled workforce? Investment? Regulatory flexibility? Infrastructure? Energy?
So the real question is "how", IMHO.
You just described word-for-word "Industrie 4.0" - Germany's attempt at this back in 2014 [0]
It did not take off.
And this is the issue - these are all buzzwords, but there are more systemic issues in Germany caused by it's conglomeratization. It's always the same handful of conglomerates (Siemens, VW, Bosch, etc) lobbying for industrial policy.
[0] - https://ec.europa.eu/information_society/newsroom/image/docu...
I'm an entrepreneur myself and there is still a lot of red tape I'd rather get rid off, but the last four years saw a lot of movement and were really good in this regard. If anything I would hope that any new government keeps up the pace!
I'm, however, with you in the matter of public investment. The Schuldenbremse needs to go.
CDU’s policy document this week is likely to keep the debt brake which is actively preventing any meaningful investment in infrastructure here.
So the Germany economy can die while being in perfect health. Super.
They have imposed 3% deficit cap and then expanded it all over Europe using the Maastricht Treaty. Economist Steve Keen has called a ‘suicide pact’.
There’s a definite time bomb coming on the aging population, to boot.
Although I still think things are looking better in Germany than the UK right now.
The problem is not that the government cannot spend enough. We have higher tax revenues than ever. The problem is that most of the taxes are spent on consumption instead of investments. More money for the government through debts won't necessarily increase investments, but it will 100% increase consumption ever more.
Also, you should look into why the French government collapsed: because their high-debt policies haven't been sustainable.
The opposite seems to be working in Argentina, sure, but I always quote Kuznets when it comes up: "there are 4 types of economies: developed, undeveloped, japan and Argentina".
As someone who studied economics and is doing wildly different things, I'm looking forward to see how the "DOGE" thing Elon is doing will change things. I bet it'll be for the worse, but there is a reason why I didn't become an economist at the end :)
Existential threat almost at the door yet 0 reaction, Germany is still massively under mandatory NATO 2% contributions and 0 attempt to get there. Wehrmacht is a joke considering size of the country.
He didn't turn around Merkel's horrible energy policies while whole world was just watching in awe how it unfolded. Nothing about semi-permanent migrant crisis.
Really, german population deserves much better leaders than him or Merkel, these are tough times and weak leaders lead to degradation of not only economy, plus it spills all over EU.
You should strike that word from your active vocabulary. Our armed forces are called Bundeswehr, and people might mistake an honest mistake for some Nazi leanings.
Do you think German voters want to spend more money on military?
If it weren't for the nukes, no one would talk about russia so much. China would be a different story.
Of course part of this is by design, letting the education sector drift into becoming utter crap. Wouldn't want a populace capable of thinking for themselves, now would we? And as such maybe we do deserve better, but are somehow incapable of voting ourselves out of the bad situation we are in. Doesn't help at all, that there is a growing aging polulation, that is basically not actually capable of living democracy and simply always and forever votes for corrupt gangs, oops, I mean parties.
I expect from a person valuing and living in a democracy, to actually inform themselves before voting, instead of letting calcified brain cells vote. Maybe I am asking too much here, but all it takes is 2-4h once every couple of years, and not only thinking of oneself, actually being a member of society and understanding oneself as such.
> Existential threat almost at the door yet 0 reaction
June 2022 "German lawmakers approve 100 billion euro military revamp" https://www.reuters.com/world/europe/german-lawmakers-approv...
> massively under mandatory NATO 2% contributions and 0 attempt to get there.
2015: 1.19%, 2016: 1.20%, 2017: 1.24%, 2018: 1.26%, 2019: 1.36%, 2020: 1.57% (https://www.nato.int/nato_static_fl2014/assets/pdf/2020/10/p...)
2023 is still well below 2% at 1.5%: https://www.sipri.org/sites/default/files/2024-04/2404_fs_mi...
2024 is expected to maybe barely scratch 2%, but maybe only with accounting tricks such as including road and train infra spending: https://www.politico.eu/article/berlin-germany-pump-defense-... Also, the 100mio are only expected to last until 2026 at most, and the budget for 2025 led to the blowup of the traffic-light-coalition government and is expected to include major slashes in spending when the next government after the spring election gets working on it.
Why do people pretend that Russia is capable of even threatening the EU? They can't even subdue the backwater that is Ukraine. Even if Putin takes all of it, he will need decades to make Russia capable of striking meaningfully into Europe. And we can outproduce him 10 to 1 for every piece of military hardware, and we have enough fighting age immigrants pouring into Europe in the last decades that we can mobilize and throw into the meatgrinder before having to tap our own population. I am convinced that this is one of the reasons we have so lax borders in Europe - to have cannon fodder for WWIII
I could say that this is extremely macabre (which it is), but I guess I have a better chance reaching the HN crowd by saying that soldiers under force usually perform atrocioucsly, especially fighting for a cause they have zero interest in.
Because its regime has verbally done just that, and has conducted sabotage and assassinations on EU soil on multiple recent occasions.
The fact that is attacking Ukraine in part as a response to its attempt to join the EU is also very reasonably interpreted as part of this intrinsically threatening stance.
And he absolutely does have the capacity to use his nukes. It'd be stupid and plainly irrational for him to do so. One can safely say it's objectively unlikely that he will.
But that in no way means he doesn't have the capacity.
Meaning: "Of course he is threatening, but ..." after you just said "He isn't capable of even threatening".
Can't you just acknowledge that it wasn't the best choice of language you used up front?
A pomeranian barking when angry is not threatening but funny. So is Putin
This is just weird, verbal gymnastics.
I don't lose any sleep over Putin either. But there's nothing in the least funny about him, or what he says.
I would hope so, the Bundeswehr is the thing we should worry about though.
The reason Scholz came to power, was not because he is strong, but because he wasn't. Germany is as divided as the rest of europe. Some think the war in Ukraine is the most important. Some think climate crisis is. Some think cheap energy is the most important, some think the immigrants, ... so how does it all go together? Well, it doesn't. And since we are a democracy we need to find some compromise. Not a dictator.
But yeah, some indeed want to have a dictator and a strong Wehrmacht back. And their numbers are rising.