Germany's economy has been shrinking for the past two years in the wake of the coronavirus pandemic, war in Ukraine and competition from China. Amid both structural problems at home and global challenges, Chancellor Olaf Scholz's fractious three-party coalition failed to find a way forward on some key issues.

The situation came to a head Wednesday night when Scholz announced he was firing Finance Minister Christian Lindner. The move effectively meant the collapse of the chancellor's coalition, which relied on Lindner’s pro-business Free Democratic Party, and left the government bereft of a parliamentary majority.

The coalition's breakdown followed weeks of internal disputes over how to boost Germany's ailing economy. 

Scholz said he planned to seek a vote of confidence in parliament on Jan. 15, a move that could lead to an early election by the end of March if he loses. Germany's next regularly scheduled election is not until September. In the meantime, he said he would reach out to opposition leader Friedrich Merz of the center-right Christian Democrats to discuss ideas for strengthening the country's economy and defense.

But business leaders called Thursday for Scholz to act much more quickly to produce a stable government that is poised to tackle the crisis.

“Every additional day with this federal government is a lost day. We demand new elections as soon as possible,” said Dirk Jandura, president of the German wholesale lobby BGA. “Germany needs an economic turnaround. We have to turn the tide before the waves get too high.”

The coalition's collapse came in the final hours of a day in which European leaders began to digest the certainty of another Trump presidency, which will have serious implications for European security and the economy.

“At the European level, political instability in Germany is not good news,'' Antonio Villafranca, vice president of the Italian think tank ISPI, said, noting that a strong Franco-German alliance at the center of the European Union provided an important counterweight during Trump's first presidency. 

Trump has threatened a withdrawal of NATO commitments and a fundamental shift of support for Ukraine in its war with Russia. He has also threatened to slap tariffs of up to 20% on goods from the EU, (and even higher tariffs on goods from China), raising the prospect of a trade war with Washington's European allies. 

Tariffs would deal a sharp blow to German exports and serve another painful setback to an economy long powered by cheap and plentiful energy from Russia and large export markets. 

German industry still has not fully recovered from the shocks of the COVID-19 pandemic. Then came Russia’s full-scale invasion of Ukraine in 2022, which led Germany and other Western countries to cut themselves off from Russian gas and oil. Competition from China, including its electric vehicles, has meanwhile forced German and other and European carmakers to lower production and lay off workers.

“Political developments over the last 24 hours have further darkened the already bleak short-term outlook for the German economy,” Carsten Brzeski, global head of macro at Dutch banking firm ING, said. 

“A second term in office for Donald Trump in the U.S., with the expected new trade tensions, will hit the German economy, which has 10% of its exports going into the U.S.," Brzeski said in a note published Thursday. “It doesn’t require a lot of imagination to see U.S. tariffs on European cars sending the German automotive industry into deeper problems.”

Other analysts say Trump’s embrace of tariffs might actually benefit Germany’s automobile industry, whose woes have been one of the reasons for the weakening economy. While Trump has threatened to impose new tariffs on European products, President Joe Biden already placed 100% tariffs on Chinese electric vehicles vehicles, which are flooding the global market.

“Trump can save the German automotive sector” by keeping the tariffs on Chinese EVs, said Daniel Gros, director of the Institute for European Policymaking at Milan’s Bocconi University. “The United States is the only market in the world where German carmakers don’t encounter much competition from China.”

Last month, Volkswagen said it planned to close at least three factories in Germany, the first domestic closures in its 87-year history. 

"Some factories will have to close, but perhaps fewer,'' Gros said. 

Scholz's firing of the finance minister came after his center-left Social Democrats and the environmentalist, left-leaning Greens had discussed plans for massive state investments. The Free Democrats, however, rejected tax increases or changes to Germany’s strict self-imposed limits on running up debt.

Scholz accused Lindner of refusing to find common ground on economic issues, including by publicly calling for what the chancellor said would be tax cuts worth billions for a few top earners while at the same time cutting pensions for all recipients. 

“That is not decent, that is not fair,” Scholz said.

Scholz’s Social Democrats, Vice Chancellor Robert Habeck’s Greens and Lindner’s Free Democrats, a party that in recent decades was mostly allied with conservatives, set out in 2021 to form an ambitious, progressive coalition straddling ideological divisions that would modernize Germany.

The government can point to achievements: preventing an energy crunch after Russia cut off its gas supplies to Germany, initiating the modernization of the military and a series of social reforms. But the impression it has left with many Germans is of deepening dysfunction.

“In view of the global political situation and the poor economic development of Germany as a location, we now need a new, capable government with its own parliamentary majority as quickly as possible," said Siegfried Russwurm, president of the Federation of German Industries. 

"With the inauguration of the new U.S. government at the beginning of 2025, uncertainty is expected to increase,” Russwurm said.

https://www.marketbeat.com/articles/germanys-economy-is-in-trouble-the-governments-collapse-and-trumps-return-bring-more-risk-2024-11-07/

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“It’s hard to do cartoons without economy…”

         Gus Leonisky

Robert Habeck has thrown his hat in the ring to become his Green Party's top candidate for the upcoming election. Even though he is expected to be endorsed by his party, Habeck is unlikely to become chancellor — the job traditionally goes to the leader of the strongest party, which is likely to be the center-right Christian Democratic Union (CDU). The Greens are currently polling between 9% and 11% of the vote.

Habeck announced his bid on social media.

Habeck wants to continue to fight for climate protection, for the restructuring of the economy, and for paying out high state subsidies. In other words, for the core issues of the Green party platform. He is not popular with the left wing of his party, which has been incredulous at his approval of measures to tighten asylum and immigration policy.

The conservative CDU and the allied Bavarian Christian Social Union (CSU), which are leading in the polls, have long attacked and ridiculed the Greens and their leader. CDU chairman Friedrich Merz, who has a good chance of becoming the next German chancellor, had nothing but scorn and derision for Habeck's candidacy. "The self-declaration as chancellor candidate with 9% voter approval certainly has an amusing side to it," Merz told journalists with a smug smile.

Habeck had a very favorable image with voters at the beginning of his term in office. His approval ratings were much higher than those of the taciturn Chancellor Olaf Scholz. Following the start of Russia's war of aggression against Ukraine, it was Habeck who found simple and heartfelt words to explain the impact of rising energy prices and inflation to the German people.

Soon, however, the government's ongoing dispute over almost all of the important issues began. Now, Habeck says he wants to look ahead.

When Habeck announced Annalena Baerbock would be the Green Party candidate for chancellor for the 2021 general election, he was applauded for standing aside. He stood by Baerbock throughout her rocky campaign and sat through countless interviews where he was asked whether he would not have been the better candidate.

Since the election, he has come to the forefront and taken on a pivotal role. He has forcefully taken on Brussels for its plans to label nuclear energy as "green."

Indeed, Habeck has been extremely popular throughout his political career. Author and translator, politician, and philosopher — with his tousled and unshaven look, he has always seemed relaxed and approachable.

Habeck was in his early 30s when he joined the environmentalist Green Party in 2002. At that time, the Greens were junior partners to the Social Democrats in the German government. That coalition was ousted from power in 2005 at the beginning of what would come to be known as the Merkel era.

Before entering politics, Habeck looked destined for an academic career. He initially studied philosophy, German language and literature and philology before earning a master's degree in 1996 and being awarded his doctorate in 2000. He also spent a year at Denmark's Roskilde University, where he picked up fluent Danish.

People are often dazzled by his conversational grasp of philosophical matters. But there are others who are driven to distraction by what they see as his philosophical flippancy: his habit, for instance, of tossing quotes by great thinkers into a discussion.

Habeck initially earned a living as a writer, co-authoring detective stories and children's books with his wife, Andrea Paluch. Together with their four sons, they live in Flensburg, the capital of the state of Schleswig-Holstein. Germany's northernmost city lies just 10 kilometers (6 miles) from the border with Denmark, in a region that is home to a strong Danish-speaking minority.

Habeck's political career really got going in 2012 when he was appointed as Schleswig-Holstein's environment minister — a post he would hold for six years. During that time, he built a reputation as an easygoing, pragmatic Green politician who always had an ear for his SPD coalition partners, as well as for staunch conservatives in the farming community.

This gave the hands-on politician a platform for his efforts to push for a profound shift in Germany's energy policy. As a "windy state," Schleswig-Holstein is suited for wind power, and Habeck set for himself the tough task of winning people over to install giant wind turbines. And it seems he succeeded: From 2012 to 2016, the amount of wind energy generated in Schleswig-Holstein nearly doubled.

In 2017, the Greens in Schleswig-Holstein entered a new coalition government with Chancellor Angela Merkel's conservative Christian Democrat (CDU) and the neoliberal FDP. Habeck made the most of the alliance, becoming a close friend of Daniel Günther, the conservative leader of the coalition. That he could harmonize with others on the opposite side of the political spectrum is taken as further evidence of Habeck's talent as a people person. This did, however, result in a limited backlash: Some core Green voters accused Habeck of bending too easily in the wind.

This article has been translated from German and has been updated after the election to reflect latest developments.

https://www.dw.com/en/who-is-german-economy-minister-robert-habeck/a-57093689

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YOURDEMOCRACY.NET RECORDS HISTORY AS IT SHOULD BE — NOT AS THE WESTERN MEDIA WRONGLY REPORTS IT.

“It’s hard to do cartoons without amusements…”

         Gus Leonisky

SEE ALSO: https://www.youtube.com/watch?v=2b5OnZPFYn8 

SEE ALSO: https://www.youtube.com/watch?v=RZKthCxD2NQ

How blind support for Ukraine broke Germany
The collapse of Berlin’s ruling coalition was the logical result of throwing ever more money at Kiev at the expense of its own country

Germans love stability. Their whole political system is designed to prevent change or, at least, to slow it down to a glacial pace. Germans also love to complain. That’s why they can’t stop grousing about the obvious stagnation (another word for “stability”) of their country. They also love compromises that to many others would seem foul and ineffective but appear reasonable and, again, stable to them. That’s why they are stuck between wanting nothing to change and everything to finally get better.

Yet, from time to time, that German system of national frustration recycling breaks down at the top. Such a collapse has just occurred. On Wednesday, November 6, German Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner. He thereby also ended the so-called “traffic light” coalition that has ruled Germany – for bad and for worse – for almost three years.

Named after the colors of the participating parties, the coalition consisted of Scholz’s own “red” SPD party (the Social-Democrats, who are so centrist they might as well be conservatives), the Greens (right-wing NATO-fetishists and fanatic Russophobes who also like to ruin the economy), and the “yellow” FDP (center-right “free-market” liberals whose worst nightmare is taxation). Since former finance minister Linder is also the head of the FDP, booting him out in what the New York Times has rightly described as a “spectacular breakup” led to all other FDP ministers – except one who rather abandoned his party than his cabinet position – also exiting the government. This leaves the latter in existence but dead in the water, commanding only a minority in the federal parliament, and incapable of actually governing. 

Now the question is what comes next. Or to be precise, when: Since the parliamentary opposition, mainly the centrist conservatives from the CDU, is not politically suicidal and therefore will certainly not provide majorities for Scholz and his rump government, early elections are inevitable. If the coalition had lasted its full term, they would have taken place at the end of September next year. Now they will happen some time in its first quarter.

When exactly is currently a matter of contention. In constitutional terms, how to get to these emergency elections is clear: Scholz will have to call a confidence vote in parliament to predictably lose it. This will allow the German president – mostly a representative figure – to disband the parliament and initiate the elections. (A hypothetically possible variant of this maneuver that would lead directly to the establishment of a new, CDU-conservative-led government has been ruled out, for now, by their leader Friedrich Merz.)

Politically, things are not so simple. Without going into excessive detail, the key fact here is that the constitution sets certain deadlines, but individual players still have room for maneuver. This means that Scholz is interested in delaying the elections until late March, which made him announce his confidence vote for as late as January 15. That was a transparently selfish and desperate attempt to skew a losing game in his favor. Unsurprisingly, his rivals insist on moving much faster.

The conservatives from the CDU, trying to profit from their own favorable polling numbers and the ruling coalition’s breakdown and unpopularity, plausibly argue that Scholz is “eine lame duck” (in Germano-English in the original, by the way; the German elite just is that way) and that the country is in crisis and cannot afford an excessive interregnum. Scholz’s former partners, now enemies, in the FDP also call on him to get a move on and “make room.”

This particular game for advantage-by-timing will play out one way or another. But since it won’t make a great difference, it is not very interesting. There are more important issues to discuss. Regarding the causes of the coalition collapse, there are many, of course, including that it was always a rickety contraption bringing together ideologically unsuited partners, represented by often dissembling and backstabbing personalities with immense egos. The premeditated and below-the-belt manner in which Scholz went after his former finance minister after kicking him out was, as the conservative Welt newspaper rightly noted, indecently demagogic. But it was also simply representative of the true, for want of better words, moral climate in that anti-team.

The bitter, cheap mud-slinging from the very top also signaled – once there was nothing to lose and all pretense was dropped – just how much mutual hostility the coalition members used to hide from the public. In that sense, the true, toxic atmosphere among them resembled the senility of outgoing US President Joe Biden – not really a secret for anyone with eyes to see, while still veiled in much opportunistic lying, and, finally, coming out with an unseemly embarrassment made worse by all that preceding hypocrisy.

But two issues stick out among the reasons for the end of the coalition: The economy, obviously, and, not so obviously perhaps but all the more intriguingly, Ukraine. The immediate trigger for the showdown among the non-partners were fundamental disagreements over how to address Germany’s deep economic crisis that has madethe country the worst performer in the G7. In addition, the impending second presidency of Donald Trump will make things even harder not only for German politicians but for German business as well: Trump’s long-announced tariff increases are certain to hit Germany, too. Currently, German companies are profiting from a record trade surplus with the US, but that is also painting a giant target on them for Trump. They will face even greater pressures to leave Germany behind as too expensive and shift production elsewhere, including, of course, to the US. 

The money question was made urgent for the coalition more than a year ago, when Germany’s Constitutional Court invalidated a large chunk of its 2024 budget as, to put it bluntly, fraudulent. Which it was. Since then, the coalition partners have had no money to paper over their differences and this fact, in turn, made it impossible to put a budget together for next year and helped produce the breakdown.

Against that dismal backdrop, former finance minister Lindner argued for the usual neoliberal panacea of austerity and cuts, in particular defending a strict application of Germany’s retrograde “Debt Break,” an economically daftly rigid constitutional prohibition against providing stimulus by increasing budget deficits. His partners in the coalition, with Scholz and the SPD in the lead, argued for a more flexible approach or, of course, for more handouts for their constituencies. But make no mistake, these policy positions are close to irrelevant because no one wants to address Berlin’s real core problem, namely the decision to cut itself off from inexpensive Russian energy. 

Which brings us to the second, less obvious but very important trigger of the collapse of the coalition: Ukraine. At first it was almost a rumor, but it is now clear that one issue that Scholz and Lindner could not agree on was (even) more money for, yet again, Kiev. It is true that Scholz launched a whole volley of provocatively inacceptable dealbreakers at his former finance minister. The impression that, at this point, the chancellor wanted to drive the coalition into the ground while seeking ways to shift the blame is well-founded: Scholz demanded fresh subsidies for energy companies, special government gifts for enterprises that stay in Germany (yes, that’s how desperate the situation is), and a new subsidy set for the tanking car industry. There was no reason to assume that Lindner – or his party, which is fighting for electoral survival – could possibly concede any of the above. And then, the icing on the cake: more money for Ukraine and, again, for that purpose as well the suspension of the “Debt Break.”

The “Debt Break” is economically illiterate. But it also is, unfortunately, a constitutional rule. Lindner may have a tendency to dramatize his personal struggle over this bad piece of policy. Yet he is absolutely correct that neither he nor the chancellor can simply pretend it is not there. And while the law does allow for exceptions in emergencies, the current government seems to think that every day is emergency day.

That one of these emergencies was supposed to be to throw yet more money at a losing and self-defeating proxy war against Russia via Ukraine is something special again: It is as if the German government feels more responsibility for Ukraine than for Germany. Indeed, German Foreign Minister Annalena “360 Degrees” Baerbock confirmed that impression again in a recent talk show: There she blamed Germany’s misery – drum roll – on Putin and then, quite stunningly, admitted that Berlin has given Ukraine almost €40 billion ($42.6 billion) by “painful” cuts in other – i.e. domestic, including “social” – parts of the budget.

Make no mistake: Lindner is no representative of reason. His idea was to not give Ukraine more money again but deliver Taurus missiles instead. He had a point about the budget; his proposed solution betrayed reckless idiocy. It is sad, but even at this point almost no one in the German elites – whether political or media – is prepared to finally recognize that what Berlin needs to do is repair its relationship with Moscow. Such voices are there but still on the margins. Before that insight becomes mainstream again – if ever – Germany will not be able to solve its worsening problems. And who knows? Maybe this is not the last German government to fall, among other things, over Ukraine.  

https://www.rt.com/news/607465-support-ukraine-crashed-german-government/

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YOURDEMOCRACY.NET RECORDS HISTORY AS IT SHOULD BE — NOT AS THE WESTERN MEDIA WRONGLY REPORTS IT.

“It’s hard to do cartoons without amusements…”

         Gus Leonisky