German powerhouse struggling

buglawton

A production surplus probably means producing too much and the stock cannot be sold fast enough.
A trade surplus means selling more than you are buying.
A balance of payments surplus (which usually goes with a trade surplus) means you have piles of foreign cash.

Kicker

Hi Kicker, the German, here.

Running a big surplus, oh well, it's been discussed here. Can only work for so long until all others in the economical zone have been eradicated. Germany can do it, I'm sure, but ECB under Draghi won't let us.

Infrastructure is a huge problem here, government doing jack !!!!!! to invest in the right way.

Communal housing stock was largely sold to private investors, now there's a shortage in housing (big cities naturally) and rising cost of living that's due to the complete fail of our "environmentally friendly" approach to renewable energy. What a complete mess and joke this is can't even be put in words, it'll haunt us for the rest of our lives, I reckon. One of the major problems is a massive -really massive- overproduction of renewable energy... until there's a solution to this. They're planning an "energy highway" from North to South through the entire nation... guess it'll be finished by 2122 with all those lawsuits being filed against it and the most powerful leader in the South, Seehofer from Bavaria, says they won't even want or need it! This energy policy over here is a huge black hole that swallows up so much money that should be used in other ways (except for more social freebies).

The roads/bridges/railway tracks, etc. as in general infrastructure is in a relatively bad shape. Despite record tax income, the government is more in the free hand out and charity type of route than in investments. Just a year ago before the last national election our magnificent Madame No (Merkel) happily announced that under her "reign" there would be no highway toll ... one year later they're half way through the process of installing it nonetheless, because they figured out, we actually need more money to fix the great many problems. You don't hear much from Madame No about this nowadays.

People here are rather unhappy with the gap between rich and poor spreading more open by the day, salaries are really low, companies very much benefiting from the policies in place. This system, of course, won't be working forever, but the general population isn't taking any measures to stop the mind-numbing policies being put in place, voting the same parties into power again and again, there's no change expected at all.

Instead of using the cheap money being available now and starting an infrastructural revamp, a lot of good tax money goes into totally mismanaged projects (BER Airport being the biggest failure of them). Once the fathers of the current state of the nation actually seemed to have a logical way of mastering challenges, nowadays we're getting lost in debates over immigration, gender equality, welfare and most of all the ideologically motivated energy issue.

I mean, you can talk a lot and say little. However Merkel and company have taken this to a whole new level and selling the future for immediate success, completely leaving the really expensive issues to the following generation... those who're being systematically disadvantaged, starting with cuts in the educational sector. Basically the success of the economy is being upheld by huge government subsidies in form of welfare and benefits to working (full time!) class, who can't live from their wages. It's a ridiculous situation that, bundled with the large capital, makes competing with Germany for other EU countries nearly impossible.

However, I kind of doubt that other countries' politics or politicians are much better really.

Generali

Kicker wrote: »

Hi Kicker, the German, here.

Hi Kicker. Great post.

What do Germans on the whole think of the current situation vis-a-via the trade surplus? Do they think they're one of the great successes of the world as they have this massive surplus or do they feel that the fact that they produce far more than they can consume makes them vulnerable to external changes that they can't control?

The US economy, which has been undeniable successful over the last century, has been built on internal demand for the most part. Would many Germans like to emulate that? Or do they want to make well engineered products for the rest of the World to buy?

Kicker

How can I speak for Germans on the whole? From my perspective there aren't many macro economists out there working in production facilities assembling cars, machinery, etc. Folks are happy to have jobs and a seemingly enjoy the benefits of a rather extensive social welfare system. Biggest common concern is the bad weather, that's why on August 4 of this year, I couldn't get a holiday package from any airport in the entire country and only one offer for the following day (previously mentioned here when talking about an unusual holiday dip leading to an explanation attempt for the sudden drop we've discussed here).

Life's good as long as economy is great is the consensus probably and Merkel is still uber-popular generally. My sister and her family, probably a solid average household with double income and 2 kids on the verge of moving into a new home, aren't capable of spelling "trade surplus", much less see any reason why having a job over some greek family is negative.

But when I look at the UK, or this forum, you're all obsessed with property and the economical implications of the housing market... It's definitely a British pet peeve, I think. The Germans are a different breed and love to hear they're not only taking home the World Cup trophy, but also being "world export champion" suggests relative econimical safety, thus personal benefit. Don't see too many house owners in the UK complain about a positive future outlook in property prices.

Political discussions on the interwebs/TV and economists debating this situation in technical terms isn't really the most popular past time topic for the large majority of people anywhere, I believe.

shortchanged_2

Isn't part of Germany's problems the fact that it has very little of its own natural resources, therefore I assume to compensate for this they manufacture lots of stuff.

In_For_A_Penny_2

How much have the Russian sanctions affected German exports? I'd imagine Russia is a huge trading partner for Germany.

Thrugelmir

shortchanged wrote: »

Isn't part of Germany's problems the fact that it has very little of its own natural resources, therefore I assume to compensate for this they manufacture lots of stuff.

Likewise why service industry accounts for 78% of UK GDP.

Kicker

In_For_A_Penny wrote: »

How much have the Russian sanctions affected German exports? I'd imagine Russia is a huge trading partner for Germany.

Numbers aren't readily available to me at this point, but part of the discussed topic is directly connected to these sanctions. There's of course a diverse controversy about the form and shape of these sanctions, implications on an economical and ethical level,...

Export down 4,7% YOY to non-EU countries. That number should be highly influenced by those sanctions towards Russia.

The mere fact that the USA were the leading force in those decisions and Germany as their lapdog is suffering from them on a larger scale, is enough for me to judge that we've yet again been screwed over in the entire ordeal.