Biscuitman

An article from today’s Investment Adviser, (a trade paper), by Roger Nightingale.

(I don’t know if Roger is a member of UKIP but I do know he spoke at meetings in the 90’s – he’d make an excellent economics spokesman for us that’s for sure. I haven’t put his columns up before as they are not available in electronic form and it means a lot of typing but I thought this weeks column was very encouraging as the upside to the Germany economy WON’T happen because of the EU and the downside is good for all of us).

SHAKING OFF EU SHACKLES ONLY HOPE FOR GERMANY.

Chancellor Schroder has been the principal architect of Germany’s new labour laws. Over the last few years, he has invested personal capital in persuading fellow politicians and countrymen to deregulate their employment practices.

Thus far, though, the investment seems not to have paid off.

There has been downward pressure on pay and an upwards surge in unemployment, but no improvement in economic vitality, not even in expectations.

Last wee there was another blow. A survey of US businessmen operating in Germany indicated little progress was thought to have been made in rendering the economy internationally competitive. The cost of labour in the Federal Republic was quoted as being excessive, and a third of American executives were reported to be planning to reduce their workforces.

Germany was seen as a market INTO phpbb_which to sell goods, not a location from which to source them. There were plans to increase investment, but most of the expenditures were aimed at marketing rather than production.

Is this a realistic assessment of the current German situation or a distorted reflection of things as they used to be? It is much too early to tell. Opinion surveys tend not to be reliable; businessmen are as bad at anticipating the future as politicians or economists. The genuine test of the effectiveness of the measures will be the progress of the German economy over the next five years; a country loses its competitiveness slowly and has to be expected to regain it equally slowly.

That said, there are no grounds for complacency. The efficient parts of the world are not standing still, but making giant steps. To regain its previous pre-eminence, Germany has to not merely lower its costs but to lower them more quickly than its rivals. Is it doing that? Certainly not. Its failure means that it must retreat from large areas of industrial activity. The production of virtually all nil low-value-added goods, ( and many medium value added ones), will have to be surrendered to the newly developing Asian and Chinese economies.

How will Germany redeploy the workers thereby displaced? It would like to expand output of sophisticated products, but the market for these items is not huge and a number of other counties, notably Japan, have similar ambitions.

The last thing the country needs is for difficult circumstances to be made more difficult by the implementation of senseless regulations and mindless monetary restrictions, at some stage Schroder is going to have to confront the commission on the one hand and the ECB on the other.

The first must be persuaded to make drastic reductions in its budget, the second to organise a more sensible valuation of the currency.

If 90% of the Brussels beaurocrats could be dismissed and if the Euro could be devalued by 25% against the Yen, Germany might be on the way to recovery.
The more likely short-term scenario is that things get worse before they get better. Unhelpful fiscal, monetary and regulatory policies will be preserved and Germany will sink slowly INTO phpbb_economics insignificance. It is only when people get angry, when they demand radical action that things will change.

What will happen? Nobody knows. But precedent, which may or may not be relevant, suggests the people’s anger will be directed against foreigners who are deemed to have impoverished the country and against the domestic politicians who have let them.

Paris and Brussels will be the principal external targets; the big three political parties, the domestic ones. Retribution will come in the form of a refusal to continue to pay the EU’s monstrous bills. That will be sufficient to cause the whole decaying European edifice to come crashing to the ground.

Which country, besides Germany, will be the biggest beneficiary? Britain. It too will be released from the communities debilitating strictures and the resources that would otherwise have disappeared INTO phpbb_the commissarial black hole will be available for domestic purposes.

If, for instance, the countless billions due to be paid to the Brussels loafers were to be allocated to pensions contributions, and deficits will disappear as the snow in spring.

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IF THE EU WAS THE ANSWER, IT MUST HAVE BEEN A STUPID QUESTION!

Hartlepool

Better watch out Europe.The Germans have a history of turning to aggression when their economy turns to mush.

UKIP MAN

Sounds like the begining of the end for the European Union!

Other than the time we (UKIP) started the begining of the end for the European Union

Hartlepool

At this time,Germany is a melting pot of undecided,resentfull citizens who are having a rough time because of the state of the economy,unemployment and general loss of faith in the EU system.It's fortunate for the German Government that the people of Germany don't have the choice of referendums.It's been really bad for them for nearly two years now.

Bluemerle

Watched this evenings news. The town shown in Germany has 25% umemployment, people are moving away. 70,000 people originally, now down to 20,000. I remember Professor Patrick Minford sometime ago writing an article "Will Germany be the first country to leave the EU"?