German business feels better!

Something for Mssr. Trichet to ponder

rte.ie/business/2008/0326/germany.html

Blue Horseshoe

I really can’t make sense of these figures. Is Germany riding on an exporting house of cards? If the US is going into recession and remortgages are being strangled while the dollar plummets, who is going to be buying all those expensive German cars? Something doesn’t add up.

its not cars.
More like high tech milling machines and other manufacturing tools for the far east. The germans build the best machines. You surely know that! :wink: Leave the mass production to the asians but the high technology high value stuff to the germans.

From press reports here though it seems like every branch of industry is looking more positively to the future.

You have to remember, when ye in Ireland were goin MAAAD building houses in west cork with borrowed money, and giving yourselves big pay hikes (well, compared to house price inflatio of 20% it may have seemed small) German industry was quietly reorganising and rationalising.

Some firms in agreement with the unions introduced pay CUTS in order to become more competitive.

You even had the 2 largest parties, sworn enemies akin to the FF FG rivalry in Ireland, going into coalition together to try and get the economy back on its feet and eliminate the parliamentary stalemate that stopped even the smallest reform legislation over the years.

Now is simply payback time. The pain is (hopefully) over and its time to look to the future.

The US isn’t Germanys main market … these are 2005 figures but don’t expect there to have been a major change.

  1. France … US$99 billion (10.2% of total German exports)
  2. U.S. … $85.5 billion (8.8%)
  3. U.K. … $76.7 billion (7.9%)
  4. Italy … $67 billion (6.9%)
  5. Netherlands … $59.2 billion (6.1%)
  6. Belgium … $54.4 billion (5.6%)
  7. Austria … $52.4 billion (5.4%)
  8. Spain … $49.5 billion (5.1%)
  9. Switzerland … $36.9 billion (3.8%)
  10. China … $31.1 billion (3.2%)
  11. Poland … $25.3 billion (2.6%)
  12. Czech Republic … $23.3 billion (2.4%)
  13. Sweden … $21.4 billion (2.2%)
  14. Russia … $19.4 billion (2.0%)
  15. Japan … $16.5 billion (1.7%)

The Majority of German exports remain in Europe/The Euro Zone.

Blue Horseshoe

Thats one really well diversified export base…unlike ourselves!

Yeah and look how most of it is immune to the decline of the dollar/pegged to the euro!

I was thinking about it there over lunch (in the beerhall over a pint) and I would really love to see a breakdown of the figures.
Germany indeed exports a shed load of stuff to it neighbours but how much of that is low value food/ dairy produce.

The only reason this came to mind was casting my mind back to about 10 years ago and the top 100 companies in Ireland. A number of Marts were there included in the figures, but their profit was shag all to speak of even though the turnover was 100s of millions of pounds.

The media here keeps harping on about the “industry exports” and China, so I presume thats where all the trick kit is ending up.
So what in the name of jeasus then is Germany exporting to Austria and the likes?

Its hardly just through trade, just like the Marts in Ireland, that boosts its export figures for neighbouring countries?
i.e. Landlocked Austria recieves goods from a third country but as they have no port it is first “imported” into Germany through the massive Port at Hamburg and then “Exported” to Austria.

corner_back, next time you’re in Lidl, have a look at where the specials are made. Most of the electrical, pressed steel, plastics stuff is Made in Germany. There is huge manufacturing industry. As you yourself point out, labour costs have been kept low. With a skilled labour force and largely automated operations, they can produce low price good quality product that competes with the far east.

IIRC, 2 of the top 100 Irish companies grow and export mushrooms.

To put the German export figures into context;

German exports to France in 2005 … US$99 billion or € 79.54 bn (at an average fx rate for 2005 of €1 = $ 1.244713 (average of the monthly averages))

Total Irish exports for 2007 (according to the CSO) € 88.581 bn

cso.ie/statistics/botmaintrpartners.htm
cso.ie/statistics/botrade.htm

Blue Horseshoe

What % of this figure is attributable to US corporations who use Ireland as their EU tax haven I wonder?

92% was the percentage of irish exports by foreign owned multinationals (for some recent year) - how many are here for ‘tax’ as opposed to ‘other’ reasons is anyone’s guess.

German consumer confidence in slight pick-up

So what this seems to suggest is that lowering interest rates will be bad news for German consumption. The Germans just can’t get enough of that ECB “tough love”, can they! :laughing:

Honestly, I think those pesky Europeans have an anti-Dan agenda - trying to make him look so stoopid.

But let’s get this straight, the Germans are still envious of the Celtic Tiger. Someday they hope to have an economy based on property speculation too. But it will take great structural reform.

Surprising at it may seem (especially to economists) the germans seem to spend less when there is high inflation.

While anyone else would say ‘buy now because it will be more expensive tomorrow’, the germans say ‘save now because essentials will be more expensive tomorrow’.

Ironically, this if taken to extreme suggests that the germans will increase spending in a depression - how’s that for non-conventional?

And it may also be part of the reason why germany is less boom / bust driven than other economies - it doesn’t need central bank action to slow down spending, the population do it voluntarily.

Trichet makes a veiled reference to the German unions nearly every month. If they start getting bolshie over pay deals, he’s highly likely to raise rates to put manners on them.

If it’s priced in USD then that increase can be explained by the strong Euro.

How about this from the horse’s mouth:

Germans Fear Meltdown of Financial System

spiegel.de/international/bus … 88,00.html