Meanwhile in Germany .. Between distorted economics and politics in the terror of the double red

31 August 20213 years ago babelfish

Two news items are moving the German news these days, apart from the world news linked to the US defeat:

inflation, which reached 3.9% on a monthly basis in July;
the elections, with the CDU plummeting in the face of a growing SPD.

We talked about inflation yesterday, but we must not think that this flare-up is the result of overwhelming economic growth and a desire for investment, but rather of a rebound of the same physiological, after a crisis that has included prices. A chart by Asif Abdullah shows that the average German two-year inflation is still below 2%

Inflation is picking up what it left behind during the early and most acute stages of the pandemic. The two-year moving average always remains below 2% and the trend is down, as is the trend in interest rates. After all, Germany is full of liquidity, to the point of bursting of it, and does nothing with it, in the end nullifying the expansionary monetary policies. Let's see the following graph:

The graph is a product of prof. Heimberger . The liquidity held by German non-financial companies has doubled in the last 10 years and is now over 80% of GDP. These resources are obviously the result of the ECB's expansionary policies, but they are sterile, they are not even used to invest in the companies themselves. With these frozen and sterile resources who can give against the ECB that keeps negative rates? At the same time, it is also a sign that German companies do not even believe in the profitability of their business. Is everything really going well in Berlin?

Then there are the political reasons, which get stronger every day, as the polls of the CDU / CSU worsen. The loss of ground towards the SPD, unthinkable two months ago, is consolidating.

At this moment, considering the barrier at 5%, the majority Red Red Green (SPD, Linke Verdi) is possible. The conservative German journalists have started to counterattack, with headlines like "Red Red Green Will Destroy the German Economic Climate", but it is too late. The turnaround will not be easy.

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The article Meanwhile in Germany .. Between distorted economics and politics in the terror of the double red comes from ScenariEconomici.it .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/intanto-in-germania-fra-economia-falsata-e-politica-nel-terrore-del-doppio-rosso/ on Tue, 31 Aug 2021 08:00:46 +0000.