Tag Archives: GDP

by | September 25, 2024 · 10:50 am

Germany enjoyed the so-called «Wirtschaftswunder,» (economic miracle) but that has come to an end

For decades, Germany was synonymous with economic strength. Ever since World War II, it enjoyed the so-called «Wirtschaftswunder,» or economic miracle that followed the postwar recovery, which blessed Germany with almost four decades of high growth.

High growth thanks to German engineering, and manufacturing industries. The economic growth eventually slowed down, but Germany had established itself as the industrial heart of Europe, fueled by exports of products with large margins like cars machinery, and chemicals.

Companies like Volkswagen, BMW, Siemens, and BASF became global leaders with German products seen as pinnacles of quality and reliability. As a result of all that, people in Germany enjoyed high salaries, and high quality of life.

Their economic model was built on a few key pillars; strong manufacturing base. A highly skilled workforce, commitment to quality, and very strong exports. But this has come to an end. Last year, Germany was the only G-7 economy to shrink. It`s also the group`s slowest-growing economy with a growth to GDP at -0.1%.

It goes up and down. Down -0,5, up 0,1, down, 0,1, up 0,2, down -0,4, up 0,2, and then down again to -0,1.

Picture: Old economy vs New economies

Germany, long considered the economic engine of Europe, is currently facing significant challenges, leading to concerns that its economy may be stalling or «broken.» What in the world is happening in Germany, and what are the key factors that are affecting their economy right now?

It`s an energy crisis. Germany was dependent on Russian Gas. Germany relied heavily on Russian natural gas before the war in Ukraine. The subsequent sanctions and supply disruptions have led to a severe energy crisis, pushing up prices and harming energy-intensive industries like chemicals, manufacturing, and heavy machinery.

They also have a green transition challenge. Germany is trying to transition to renewable energy, but the shift away from nuclear and coal has left the country vulnerable during this energy crunch. This has increased costs for businesses and households, causing slower growth.

Germany`s economy is heavily reliant on exports, especially in industries like automotive and machinery. Global demand has softened, and supply chain disruptions from the COVID-19 pandemic continue to affect production.

The German auto industry, in particular, has been slow to transition to electric vehicles compared to competitors like Tesla, and Chinese manufacturers. This lag is putting pressure on a key pillar of the country`s economy.

Germany`s economy narrowly avoided recession in early 2023, but growth remains sluggish. High inflation and low consumer spending have contributed to weak economic activity. The combination of rising wages, energy prices, and inflationary pressures has increased production costs, leading to reduced profitability for businesses.

On top of that, you have an aging population. Germany`s population is aging rapidly, and the working-age population is shrinking. This is leading to labor shortages in key sectors and higher social welfare costs, creating long-term economic challenges.

In addition; they have migration struggles. While the country has relied on immigration to fill gaps in the labor market, recent shifts in public sentiment and policy restrictions have made it harder to sustain this approach.

Their biggest companies have been there for about 100 years, but there is a shift in the market. Germany has been criticized for lagging behind in digitalization and innovation, particularly in fields like AI and tech start-ups. This is reducing its competitiveness in the global economy.

Another problem is Germany`s heavily regulated business environment and complex bureaucracy. This can stifle innovation and make it harder for new businesses to scale up.

Like many others, Germany has trade challenges and the global demand is weak. As the global economy faces uncertainty, especially with China`s slowing growth, demand for Germany`s exports has dropped.

Germany`s economic model has long been dependent on strong export markets, so this is a major issue!

At least; EU Tension. Economic divergence within the European Union, especially between northern, and southern European economies, adds another layer of complexity, affecting Germany`s trade relations within the bloc.

It all started in France. Yellow Vest protesters went to the streets for months and years and protested against higher oil prices, electricity bills, and expensive toll stations. Their standard of living was shrinking.

This happened at a time when Donald Trump was cutting taxes and made the best economy in the U.S. ever. People in France asked for a Trump-like figure, but everything has gone straight up since then, and now we see severe problems in Germany and other places.

Picture: Yellow Vest protesters against high oil prices and low standard of living

This is happening at a time were productivity in the U.S. is great. Germany`s productivity is down -0,1%, while the productivity in the U.S. is up 3%. They are the best. They are at the top of the list! Even better than China! And the stock market goes up. Wow!

Germany`s economy is not «broken,» but it is facing severe challenges. Energy costs, inflation, global demand weakness, and structural issues in key industries like manufacturing are causing slower growth.

Long-term concerns like demographic changes and lagging investment in innovation also threaten future competitiveness. While these challenges are significant, Germany has strong economic fundamentals and could recover with strategic reforms and investments.

However, the current climate is tough, and the country is at a critical point in addressing these issues. Germany is in trouble.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shinybull.com. The author has made every effort to ensure the accuracy of the information provided; however, neither Shinybull.com nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities, or other financial instruments. Shinybull.com and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | February 29, 2024 · 10:35 am

The West is declining and a nuclear war with Russia is the end of our civilization

Russia`s President Vladimir Putin gave a speech today. He delivered his Address to the Federal Assembly. The ceremony took place in Gostiny Dvor in Moscow.

«The so-called West, with its colonial practices, and penchant for inciting ethnic conflicts around the world, not only seeks to impede our progress, but also envisions a Russia that is a dependent, declining, and dying space where they can do as they please.

In fact, they want to replicate in Russia what they have done in numerous other countries, including Ukraine: sowing discord in our home, and weakening us from within. But they were wrong, which has become abundantly clear now that they ran up against the firm resolve, and determination of our multi-ethnic people», Putin said in the speech.

«Together, as citizens of Russia, we will stand united in defense of our freedom, and our right to a peaceful, and dignified existence», Putin added.

Furthermore, Putin said; «We were not the ones who started the war in Donbas, but as I have already said many times, we will do everything to put an end to it, eradicate Nazism, and fulfill all the objectives of the special military operation, as well as defend sovereignty, and ensure that our people are safe».

«Here is a good example of their hypocrisy. They have recently made unfounded allegations, in particular against Russia, regarding plans to deploy nuclear weapons in space. Such fake narratives and this story is unequivocally false, are designed to involve us in negotiations on their conditions, which will only benefit the United States,» he said.

«There are reasons to suspect that the current US administration`s professed interest in discussing strategic stability with us is merely demagoguery.

They simply want to show to their citizens, and the world, especially in the lead-up to the presidential election that they continue to rule the world, that they would talk with the Russians when it will benefit them, and that there is nothing to talk about, and they will try to inflict defeat on us otherwise. Business as usual, as they say.»

«But this is unacceptable, of course. Our position is clear: if you want to discuss security and stability issues that are critical for the entire planet, this must be done as a package including, of course, all aspects that have to do with our national interests, and have a direct bearing on the security of our country, the security of Russia,» Putin said.

Putin also talked about a potential nuclear war, which would be the end of our civilization. He also said that the West is declining. This is what he said:

«We are also aware of the Western attempts to draw us into an arms race, thereby exhausting us, mirroring the strategy they successfully employed with the Soviet Union in the 1980s.

Let me remind you that in 1981 – 1988, the Soviet Union`s military spending amounted to 13 percent of GDP.

We need to shore up the forces in the Western strategic theatre in order to counteract the threats posed by NATO’s further eastward expansion, with Sweden, and Finland joining the alliance.

The West has provoked conflicts in Ukraine, the Middle East, and other regions around the world while consistently propagating falsehoods. Now they have the audacity to say that Russia harbors intentions of attacking Europe.

Can you believe it?

We all know that their claims are utterly baseless.

And at the same time, they are selecting targets to strike on our territory, and contemplating the most efficient means of destruction. Now they have started talking about the possibility of deploying NATO military contingents to Ukraine.»

«But we remember what happened to those who sent their contingents to the territory of our country once before. Today, any potential aggressors will face far graver consequences.»

«Everything they are inventing now, spooking the world with the threat of a conflict involving nuclear weapons, which potentially means the end of our civilization. Don`t they realize this?

«Indeed, just like any other ideology promoting racism, national superiority, or exceptionalism, Russophobia is blinding, and stupefying.

The United States and its satellites have, in fact, dismantled the European security system which has created risks for everyone.»

«Clearly, a new equal, and indivisible security framework must be created in Eurasia in the foreseeable future. We are ready for a substantive discussion on this subject with all countries, and associations that may be interested in it.

What Putin said next is very important to understand. He talked about Russia as a sovereign country. That is very different from a Russia controlled by the EU. What Putin talks about is very similar to what President Najib Bukele in El Salvador talks about.

It is their own sovereignty and freedom. Bukele said that globalization in El Salvador is dead. They want to rule their own country and have their own freedom. Out with the globalists, he said.

Putin talks about the same, but when it comes to Russia, he talks about the «balance of Power.» If the EU takes over Russia, it can fall into a gigantic dictatorship, and everyone in Europe will end up like slaves and losers. This is what Putin said in his speech:

«At the same time, I would like to reiterate (I think this is important for everyone) that no enduring international order is possible without a strong, and sovereign Russia.»

«We strive to unite the global majority`s efforts to respond to international challenges, such as the turbulent transformation of the world economy, trade, finance, and technology markets, when former monopolies, and stereotypes associated with them are collapsing.»

Europe has throughout history tried to take control of other countries, and they have earned a lot of money on it. But that era is coming to an end. Now, it is different. Europe is declining, and Putin talked about it in his speech today. He said:

«For example, in 2028, the BRICS countries with account taken of the new members will create about 37 percent of global GDP, while the G7 numbers will fall below 28 percent.

These figures are quite telling because the situation was completely different just 10 or 15 years ago. You have heard me say it publicly before. These are the trends, you see.

Look, the G7 countries’ share in global GDP in terms of PPP stood at 45,7 percent in 1992, while the BRICS countries (this association did not exist in 1992) accounted for only 16,5 percent.

In 2022, though, the G7 accounted for 30.3 percent, while BRICS had 31,5 percent.

By 2028, the percentage will shift even more in favor of BRICS, with 36,6 percent, and the projected figure for the G7 is 27,8 percent.

(Editor: The Group of Seven is an intergovernmental political and economic forum consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States; additionally, the European Union is a “non-enumerated member).

There is no getting away from this objective reality, and it will remain that way no matter what happens next, including even in Ukraine,» Putin said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shinybull.com. The author has made every effort to ensure the accuracy of the information provided; however, neither Shinybull.com nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities, or other financial instruments. Shinybull.com and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | September 21, 2022 · 6:40 pm

Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man

Inflation is serious stuff. It makes people`s money less valuable, and it means a lot of trouble for a lot of people. But I`m not shocked, because we knew it was coming someday. I wrote about nine years ago, and here we are.

Ronald Reagan was fighting against inflation in the ’80s, and he once said;

«Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.»

Photo by Monstera on Pexels.com

I bet Chair Powell thinks the same, as he raised the federal fund’s rate by 75 bps to the 3% – 3,25% range during its September meeting. This is the third three-quarter point increase, pushing borrowing costs to the highest since 2008.

Policymakers also anticipate that ongoing increases in the target range will be appropriate which was reinforced by Chair Powell during the press conference.

«We have got to get inflation behind us. I wish there were a painless way to do that. There isn`t. The so-called dot plot showed interest rates will likely reach 4,4% by December, above 3,4% projected in June, and rise to 4,6% next year.

Meanwhile, GDP growth forecasts were revised lower to show a 0,2% expansion this year, compared to 1,7% seen in June and 1,2% in 2023, below 1,7% seen in June. Inflation as measured by PCE is seen to reach 5,4% in 2022 (5,2% projected in June) and 2,8% in 2023 (vs 2,6%).

They also expect the unemployment rate to raise up to 4,4% next year. In August this year, the unemployment rate rose to 3,7%, which is the highest since February and above market expectations of 3,5%.

The number of unemployed people increased by 344 thousand to 6,014 million, while employment levels went up by 442 thousand to 158,732 million. Meanwhile, the labor force participation rate rose to 62,4% in August from 62,1% in July.

The unemployment rate was about 4% right after the dot com bubble, but it rose to about 6% a few years later. In 2010, the unemployment rate rose to about 10% but it peaked at an all-time high of nearly 16% after all the lockdowns.

Banks in nearly every country (not China and Japan) are facing similar trade-offs as they raise rates to combat their own inflation problems.

The inflation rate in the US is 8,3%. In the UK it`s 9,9%. Euro Area; 9,1%. In China and Japan, the inflation rate is 2,5% and 3,0%. But this is nothing compared to Turkey where the inflation rate rose for the 15th consecutive month to 80,2% in August of 2022.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shinybull.com. The author has made every effort to ensure the accuracy of the information provided; however, neither Shinybull.com nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities, or other financial instruments. Shinybull.com and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | June 15, 2022 · 4:15 am

Hawkish Fed can make the biggest rate hike in 28 years on Wednesday

Investors don`t like higher rates. Normally, the higher the rates go the lower the stock market goes. The Fed needs to do something with the inflation, and raising rates is a tool they use, and this year they seem to be very aggressive.

In March, the Fed raised the fed-funds rate by a quarter of a percentage point, and that was the first increase in three years. Two months later, they raised the rates by another half-point. The Federal Open Market Committee has a meeting on Tuesday and Wednesday this week, so what now?

Experts claim the rate hike can be 50 points, but it can also go to 0,75% or as much as 1,00%

Photo by Pixabay on Pexels.com

Nasdaq is already in a recession, and S&P 500 jumped into that territory a few days ago. Investors fear the Fed will be more aggressive than expected, as they are opting for the first three-quarter-point increase in the Fed-funds rate since 1994. That was 28 years ago.

Raising the rate 75 points or more is not what we often see, and the last time we saw that happen was in November 1994. The Fed hiked rates many times that year to try to fix the inflation. The problem for the Fed is that if they raise the rates too much and too fast, a recession can occur.

The Fed will look at Unemployment, GDP, and inflation. So, where do we go from here? The Fed Funds futures are now at a rate of 3,05% for December 2022, and it will peak at 3,65% for July 2023. As you can see, there is more hawkish Fed to come.

Will the Fed sacrifice employment and growth to bring down inflation? The higher the rate is, the more expensive the money is for borrowers. This means that people will save more as they borrow less. That can lead to slower growth and lower prices and inflation.

The risk here is that this will lead to a recession. Corporations’ earnings will fall, and so can the stock market. Let`s listen to FOMC and Powell on Wednesday.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shinybull.com. The author has made every effort to ensure the accuracy of the information provided; however, neither Shinybull.com nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities, or other financial instruments. Shinybull.com and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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by | May 3, 2021 · 4:00 am

The biggest welfare state in the world is France

I need to follow up my recent article about tax, GDP, a free lunch and big governments. The Biden administration is calling for a tax hike and a much bigger government. Is the United States on the way to be a socialist country like France? If so, how would that be?

Let`s take a look at France. The biggest welfare state in the world. No other coutries in the world spend more money on welfare than the French government. No other coutries has higher taxes either.

But who is protesting a lot? No other countries in the world are protesting more than the people of France, and the yellow vest protesters showed us that. There were multiple reasons for all the protests in France. What they all had in common is that they were all dissatisfied.

Does the people of the United States really want to be a socialist state like France?

Photo by Alex Azabache on Pexels.com

First of all; lets talk about tax. No other countries in the world have higher taxes than France. Personal income tax has dropped to 45%, down from 59,6% about twenty years ago. In other words; half of your hard earned money goes to the government.

Corporate tax rate in France dropped to 28% under president Macron. Do doubt that Macron is doing something right. A Trump strategy that is boosting the economy with lower taxes (but that was before the covid attack).

In the early 80`s, the corporate tax rate in France was at a record high with 50%. All that happened under President Fracois Mitterand who served as a President of France from 1981 to 1995, the longest time in office in the history of France.

Mitterand started political life on the Catholic nationalist right, but joined the resistance and moved to the left. He opposed Charles de Gaulle`s establishment of the Fifth Republic.

He invited the Communist Party into his first government, which was a controversial decision at the time. In the event, the Communists were boxed in as junior partners and, rather than taking advantage, saw their support erode. The left the cabinet in 1984.

Interestingly, right after that, the taxes started to decline. Mitterand followed a radical left-wing economic agenda, including nationalisation of key firms, but after two years, with the economy in crisis, he reversed course.

He pushed a socially liberal agenda with reforms such as the 39-hour week, and the end of a government monopoly in radio and television broadcasting.

His partnership with German Chancellor Hermut Kohl advanced European integration via the Maastricht Treaty, but he reluctantly accepted German reunification. By the way; he was also the only French President to ever have named a female Prime Minister; Edith Cresson.

Beyond making the French left electable, Mitterand presided over the rise of the Socialist Party to dominance of the left, and the decline of the once-mighty Communist Party (as a share of the popular vote in the first presidential round, the Communists shrank from a peak of 21,27% in 1969 to 8,66% in 1995, at the end of Mitterand`s second term).

As you can see, the popularity of the Communist Party declined from about 21% to 8%, but so did the corporate tax rate under Mitterand too.

But taxes need to come from someone, and that is the people. How is that going to work out if millions are unemployed? In France, the unemployment rate has always been high. It dropped to 8% in December of 2020, down from 9,1% in the previous period.

The number of unemployed people decreased by 340 thousand to 2,4 million. That sounds expensive. Someone has to pay for it.

France spend nearly one third of their GDP on social welfare, according to OECD. France are on top of the list (27,5) while the U.S is number 22 with 14,3% (as a percentage of GDP).

If we look at total net social spending, France is still at the top with 31,7%, but interestingly, the U:S is second with 30%. Total net social spending takes into account public and private social expenditure, and also includes the effect of direct taxes (income tax and social security contributions), indirect taxation of consumption on cash benefits, as well as tax breaks for social purposes.

Top 20 list of all the countries with tax revenue as a percent of GDP from 40% to 50% are all from Europe. except one; Cuba, at number 8 on the list. A communist country among all the European countries.

The debt in France is skyrocketing. Under Mitterand, the debt to GDP was about 20. Now, under Macron it has increased to 115,70 percent in 2020 from 97,60 percent in 2019.

At the same time, Government Budget in France decreased to -9,20 percent of GDP in 2020 from -3,10 percent in 2019. In other words; the government spends more money than it takes in from taxes and other fees.

So, socialist welfare state France has more debt than the United States. Devt to GDP in the U.S increased to 107,60 percent in 2020, up from 106,90 percent in 2019.

The unemployment rate is also lower in the U.S. The unemployment rate fell to 6 percent in March of 2021. The U.S government is also spending more money than they have. In 2019, the U.S recorded a government budget deficit equal to 4,60 percent of the GDP, but it`s expected to be about 13 percent in 2020.

On top of all the taxes, people in France also need to pay for the roads. A typical socialist country has toll roads. From Boreaux to Paris, you need to pay 55,60 euros for Classe A and 85,60 euros for Classe B.

All the money you earn from Janury to June goes to the government. The govenment will give the money you give them to sick people who ask for free healthcare. State healthcare insurance is available to everyone staying in France for more than three months.

The French Social Security system runs this insurance (called PUMA), and this insurance covers about 70% of the medical costs, and in some cases, even 100% of the costs. The state also pays for every child`s education from 6 to 16 years old.

So, if you pay nearly half of your hard earned money to your welfare state, and drive a car from Boreaux to Paris often, you have to ask yourself what your real tax actually is?

To contact the author: post@shinybull.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shinybull.com. The author has made every effort to ensure the accuracy of the information provided; however, neither Shinybull.com nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities, or other financial instruments. Shinybull.com and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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