Germany in recession

[caningo]

I guess this was just waiting to happen no?

http://news.bbc.co.uk/2/hi/business/7726162.stm

This is sad too because the biggest economy in Europe is that of Germany. That kind of tells you in what shape the others countries in the EU must be in.

How much you think this is going to last? It just keeps getting worse by the day in all parts of the world.

 

[Urwumpe]

If you listen to some experts, Germany is in a more or less enduring recession since 1989. I would not take such prognoses for more than a warning that things are not looking great. But compared to other countries in the EU (or the rest of the world), Germany is economically in a better state as we had our bad times already because of the reunification.

Personally, I expect not more than 2 bad years as we depend much on the export to the USA (and the rest of the world), but if our government does not fall into senseless activism, and invests into things which are needed when the economics kicks in again, we should have all chances to profit from the crisis.

Iceland is for example much harder hit by the crisis as Germany.

 

[jtiberius]

every crisis is a chance.

My grandpa often said: "we lost two wars and we´ll win the third one too."

jtiberius

 

[caningo]

If you listen to some experts, Germany is in a more or less enduring recession since 1989. I would not take such prognoses for more than a warning that things are not looking great. But compared to other countries in the EU (or the rest of the world), Germany is economically in a better state as we had our bad times already because of the reunification.

Personally, I expect not more than 2 bad years as we depend much on the export to the USA (and the rest of the world), but if our government does not fall into senseless activism, and invests into things which are needed when the economics kicks in again, we should have all chances to profit from the crisis.

Iceland is for example much harder hit by the crisis as Germany.

I agree with your analysis. I must say though, it is quite puzzling to see all the major world economies (the G8 for example) all falling into recession. Meanwhile you have countries like China, India and Brazil just exploding. We'll see how long those last..

I would really like to see more initiative by part of the major world economy governments and other emerging countries. With forecasts that the world oil supply will only last 40 more years and the Arabs trying to do everything they can to control the price; now is the appropriate time to start developing and/or creating the infrastructure for alternative energy.

For example, here in the US the democrats are now trying to push a bill that will bail out the US auto industry which is about to disappear. I personally blame them (the US automakers) for being where they are at now. They chose to continue with the production of their fuel guzzling SUVs, instead of using some those profits for the research alternative methods of propulsion. Did they really think oil would last forever? They have now had to replace their entire assembly lines for developing smaller vehicles which use the newer technologies... but look at what price. Now they have to go beg for the government to throw some crumbs at them. It is sick. :chair:

And you can see how the sale of hybrid vehicles and other alternative fuel technologies is skyrocketing. I have heard that orders for Toyota's Prius is backed for a year or so? Toyota wasn't dumb that's for sure. :lol:

I do believe however in the next 10 years we will see an explosion in the research of solar, wind, geothermal, and others. I also think that Europe will be the one leading the way in that area, especially Germany and the other smart countries of Europe. They realize the fact that these resources of now (oil and gas) won't last forever, unlike the idiots here in the USA who only care of making profits and don't care of the consequences in the long run. Maybe that's why this country is going down in a spiral. They don't realize the country does well when everyone is doing well, not just a few.

One last thought... do you guys remember the world economy when Bill Clinton was president of the USA? Ahhh... the good times. Let's see if Mr. Obama can match up to that....

 

[Urwumpe]

Germany is special in the context of finding alternatives to oil...

We never had much of it, so we had been very innovative in finding ways to get oil or to find replacements for oil.

 

[blane]

Time for nuclear powered cars! \o/

SCNR

 

[JamesG]

They chose to continue with the production of their fuel guzzling SUVs, instead of using some those profits for the research alternative methods of propulsion. Did they really think oil would last forever?

They were hoping that it would last at least until their retirement or when they could activate their golden parachutes.

Actually, the reason the US auto industry stuck with producing big SUV and cars so long is more complicated than not adapting to a changing market. Labor costs are so high in the US that smaller cheaper cars are simply not profitable to build. If GM et al. had outsourced production to China or to their developing world divisions (which are still quite profitable) they would easily be able to compete with anyone. But their labor costs, health benefits and pension obligations are an anchor that are driving them down.

One last thought... do you guys remember the world economy when Bill Clinton was president of the USA? Ahhh... the good times.

A lot of the things that led to this crisis, Free trade leading to outsourcing and offshoring which have caused a boom in the developing world which has created a surge in energy demands, and the liberalizing of mortgage leading practices as a form of governmental social engineering, were put into play during the Clinton years and only now is the price for these coming due.

 

[Urwumpe]

Labor costs are so high in the US that smaller cheaper cars are simply not profitable to build.

I would say, that is not true. I come from Wolfsburg, and I know the salaries Volkswagen is paying and how much costs this really means for the company. Still most cars Volkswagen builds are considered "Too small for the US market".

You just don't buy them. That is the problem. Why buy a Prius (yes, why at all?), when you can also get a old gas-guzzling SUV for less. And if you can't afford the SUV, there was always a loan around to get it anyway.

If you can only afford a smaller car than a SUV, your companies still produce obsolete cars which even a Romanian farmer would not touch. I know about these, because Volkswagen has to sell them (made by General Motors), as the European cars (for example, the Caddy Family) of Volkswagen are considered too expensive for the US market.

Even the cheapest European car brands are still more sophisticated as the majority of all US cars - only the luxury cars of the US keep up well with Europe, but cost also the same...

 

[movieman]

I would say, that is not true. I come from Wolfsburg, and I know the salaries Volkswagen is paying and how much costs this really means for the company.

As I understand it, VW doesn't have the UAW demanding people are paid huge wages for essentially unskilled labour. GM and Ford have basically become welfare programs that happen to build cars; every car they sell is loaded up with thousands of dollars of welfare benefits for workers, after the cost of their high wages.

VW also have a poor reputation for reliability over here, which is surprising given how highly many of my friends in the UK regarded their European VW cars.

 

[SiberianTiger]

Time for nuclear powered cars! o/

SCNR

 

[Urwumpe]

As I understand it, VW doesn't have the UAW demanding people are paid huge wages for essentially unskilled labour. GM and Ford have basically become welfare programs that happen to build cars; every car they sell is loaded up with thousands of dollars of welfare benefits for workers, after the cost of their high wages.

No, here they pay huge wages for skilled labour, even for tasks which require no skills at all. UAW is sure not worse as the Verdi.

VW also have a poor reputation for reliability over here, which is surprising given how highly many of my friends in the UK regarded their European VW cars.

Which is even more surprising regarding the fact that they still like the Model T - though it was designed to break often (For lowering costs).

I think the main problem are the Lopez years of Volkswagen, they got the manager from Opel who was already responsible for ruining their reliability in favor of saving a few Euro, with the result that Opel was nearly death after the guy left... luckily, the German Government (which is a 20% owner of Volkswagen, BTW) found a decent way to get rid of him quickly.

 

[ar81]

Time for nuclear powered cars! o/

SCNR

A nuclear powered car like this??? :lol:

 

[JamesG]

As I understand it, VW doesn't have the UAW demanding people are paid huge wages for essentially unskilled labour.

Yes, as an example GM's cost per unit for health care for the workers is greater than than the cost of the steel that goes into the car. Its a fixed cost that is the same for a $30,000 SUV or a $14,000 compact car. So it makes sense from a purely accounting perspective to make more high profit products. And it works great so long as people have money and aren't worried about the price of gas.

 

[movieman]

No, here they pay huge wages for skilled labour, even for tasks which require no skills at all. UAW is sure not worse as the Verdi.

I was talking about VW in North America; I believe they build most of their cars in non-union plants in Mexico and America?

 

[FALCONFLYER]

Don't forget that towards the end of Clintons romp (term) the economy was starting to weaken. Look at a stock market graph. He did balance the budget though and what more can a president and Congress do for the economy. The reason GM is failing is its impossible obligation to its retired employee's with pensions and healthcare. Bankruptcy should take care of that including being able to void all union contracts. Just bailing them out will not fix the problem...just prolong it.
Never thought I'd see the demise of the US auto industry..I grew up in Detroit. Now the ?? is do you but GM stock at $3 bucks and hope for a bailout or sell now in case they go chapter 11.


-----Posted Added-----


Hey US engineering is the best in the world!! We put a man on the moon!

 

[Urwumpe]

I was talking about VW in North America; I believe they build most of their cars in non-union plants in Mexico and America?

Most currently in Mexico, but they will open a new factory in Tennessee soon. My brother currently attempts to get assigned to the process planning group. I don't know if this factory will be subject to the UAW, but I would say it is very likely, that Volkswagen will cooperate with them, they are used to negotiate with unions from Europe.

Maybe, there will be some cultural problems with it... as far as I can tell from my limited knowledge, US labor unions do not often work together with the management for finding a good solution for future business. Here, it lately happened very often, that unions accept business friendly decisions (for example, the 4 day work week), for the sake of securing jobs. One success for them in Wolfsburg is sure, that the former "Auto 5000" workers, which had been experimentally employed with lower salaries (accepted by the union for preventing from a car model being produced outside Germany), will now all work under the standard contract. Which makes sense, as most German car manufacturers plan with a strong increase in demand in 2010, after the financial crisis.


-----Posted Added-----

Hey US engineering is the best in the world!! We put a man on the moon!

Yes, but there is a another tiny parallel to the moon landing. Like NASA, GM also needs German aid.

The Adam Opel AG, owned by GM, lobbies for German government money (additionally to the planned moratorium of the car sales tax), for rescuing the company. In very dramatic words. The main problem though, is not Opel itself. GM demands about 2 billion € from Opel, for reducing their negative cash flow. The money will not stay in Germany, but go to the USA soon... directly or indirectly. That's why most politicians are very reluctant though they also want to save the jobs of the Opel plants.

The Volt, which will first be released on the US market, was developed by the R&D department of Opel, one of the many things GM takes quickly from it's German property. Most problems, Opel has come from the bad work of the US GM management - which of course pay themselves large bonus payments for their repeated good work.

 

[FALCONFLYER]

Yes we stole Von Braun!!!

 

[Urwumpe]

Yes we stole Von Braun!!!

Stole? I thought this disloyal bastard decided to work for you voluntarily. As long as you are not the Russians of course.

 

[Ghostrider]

Time for nuclear powered cars!

Like this one?

The Ford Nucleon. Helping to ensure nobody ever forgets how many car crashes happen every year or where they happened. Because there are tons of concrete there and the place has the glowing feeling.

 

[MajorTom]

Like this one?

The Ford Nucleon. Helping to ensure nobody ever forgets how many car crashes happen every year or where they happened. Because there are tons of concrete there and the place has the glowing feeling.

OOh, this one's my favorite.