Waiting for the other shoe to drop

This was a spectacularly beautiful fall here in southern Minnesota.  And last week the trees went out in a blaze of yellows and russets and oranges.  Every tree that can turn color did this year so the show lasted over three weeks.  And then it's done—those stunning leaves are replaced by naked branches shaking in the ever colder wind.  In a month, there will be snow on the ground but right now, winter is just a dull dread.

In some ways, I feel the same way about the course of human events.  We seem to be at an end of an era of flamboyant partying by a tiny elite that is about to crash with no alternatives in sight.  Our elections have become almost meaningless with voters forced to choose between different visions of plundering neoliberalism, but even if they were not and this election produced a mandate for major economic change like the one in 1932, who would be qualified to organize the new "100 days?"  We don't have political movements organized around progressive economic issues, our academic economists are hopelessly right-wing, there are no enlightened bankers in the mold of Marriner Eccles, and our media is historically illiterate so the public mostly is too.

Bad as it is here in USA, it doesn't seem much better anywhere else.  The great lefty awakening in Latin America seems to be running on fumes. China has made almost every developmental mistake possible so now her rickety prosperity rests on an environment so polluted, her cities are almost unlivable.  India has just elected a neoliberal crackpot to revive her economy—well good luck to that.  And the great neoliberal experiment that is the EU has now claimed so many angry victims, it seems destined for the scrap-heap of history.

Of course, the Greeks, Spaniards, and Portuguese etc. have been furious / depressed for years now.  But as is always the case, economic rot at the bottom of the social order tends to spread upwards so now Germany, which accounts for 30% of the activity of the EU, is now feeling the pinch.  Unfortunately, things will have to get very bad before Germans will rethink their organizational ideas.  With few exceptions, this is a neoliberal monoculture.

How long will the naked branches wave at the greying skies?  How cold and deep will be the winter?  And is there any reason to believe that there are shoots of new life waiting for spring to blossom forth?  The only thing that inspires hope is that this misery is the result of believing really, REALLY, dumb ideas.  Humans have progressed out of greater difficulties than this.  This misery is wholly optional—all we need to do is change our minds.  Unfortunately, that is both the good news and the bad news.

German business blues as confidence hits 6-month low

RT October 27, 2014

Business confidence in Germany, the EU’s largest economy, declined for a sixth consecutive month in October. The data is ominous for the eurozone on a whole, which is failing to grow, and may dip back into recession by the end of the year.

Germany’s Ifo Business Climate Index in manufacturing, which looks at the confidence of the country’s 7,000 firms, fell to 103.2 in October from 104.7 in September, the lowest result since December 2012.

"Expectations with regard to the six-month business outlook continued to cloud over. The outlook for the German economy deteriorated once again," the President of Ifo, Hans-Werner Sinn, said.

Bad news for the German economy is bad news for the rest of Europe. At $1.5 trillion, Germany accounts for nearly 30 percent of the gross domestic product of the entire 18-member eurozone.

The German economy has been crucial in leading the EU economic revival over the last year, but is expected to again contract in the second half of the year. In the first quarter the economy grew 0.2 percent after it grew 0.7 percent in the first quarter. Third quarter results will be released by Germany’s statistic office on November 14.

The standoff with Russia over Ukraine may be a big factor in the downturn, since Russia is Germany’s largest export market.

As a result, German industry has been struggling; August factory orders fell to their lowest levels since August 2009, before the financial crisis hit Europe.

Consumer confidence also is on the decline as unemployment continues to climb for the second consecutive month.

On Sunday, the European Central Bank (ECB) gave an overall green light to the majority of large banks in the eurozone in a “stress test” audit. Only 25 out of 123 failed the balance sheet test. Only one out of 24 German banks failed the test. The ECB showed that Münchener Hypothekenbank had a €229 million shortfall to deal with a recession scenario at the end of 2013. Since then the bank has raised €408 million which is enough for it not to have to re-jig its plan for the ECB. more