German house price COLLAPSE!

[Sackboii]

When I was over in Sweden a few weeks ago visiting a customer, who are suppliers into heavy industry (very heavy, about as heavy as you can get..) they said that their market into Germany has dropped of a cliff for the simple reason that they have 'major energy problems' (his words, not mine).

They also stated that as Germany had stopped being their largest customer, they have found markets in other countries that are taking up the slack globally for what was once produced in Germany - Canada, the USA and Australia were the places mentioned.

So, this heavy industry that produces a global commodity, which was previously produced in significant proportions by Germany, has gone elsewhere.

So yes, first hand insight into Germany's industrial demise there..

Edited December 22, 2023 by Sackboii
typo

[Sour Mash]

18 minutes ago, Sackboii said:

When I was over in Sweden a few weeks ago visiting a customer, who are suppliers into heavy industry (very heavy, about as heavy as you can get..) they said that their market into Germany has dropped of a cliff for the simple reason that they have 'major energy problems' (his words, not mine).

They also stated that as Germany had stopped being their largest customer, they have found markets in other countries that are taking up the slack globally for what was once produced in Germany - Canada, the USA and Australia were the places mentioned.

So, this heavy industry that produces a global commodity, which was previously produced by in significant proportions by Germany, has gone elsewhere.

So yes, first hand insight into Germany's industrial demise there..

Always good to hear Real World examples.  The USA is hoovering up large amounts of investment from companies divesting from Germany due to the crazy energy prices there.  Not to mention all the fracked LPG they sold Fritz at multiples of what they were previously paying.

Getting the moronic German leadership to spurn Russian energy imports and then blowing up their main pipeline to stop them from getting second thoughts once things started going bad has certainly paid dividends for the Yanks 😆

[Sour Mash]

2 hours ago, Casual-observer said:

Just to clarify the comments are merely requoting Zeihans opinions back to him. 

Germany's current industrial base relied predominantly on cheap Russian gas to be as competitive as it was and in addition a huge Russian domestic market to sell into. 

Without both components it's going to see a decline regardless, if Norwegian energy could have offered a better alterative these deals would already be in existence over Russian alternatives. 

It's somewhat of a contradiction for Zeihan to rightly point all this out and yet release a new video suggesting Germany is now on the cusp of becoming a huge military power for Russia to fear whilst its economy is simultaneously reeling off of the back of reduced access to Russia's economy. The two positions clearly don't jive. 

 

Yeah, the likes of Zeihan point out what a 'mistake' it was to have Russia as such a major energy supplier but it was the very fact that they could get practically limitless amounts of oil and gas for a low price that made pre-2022 German industrial prosperity possible in the first place.

As you say, if energy from other suppliers had been so favourably priced, they wouldn't have been buying so much from Russia.

 

Germany's real mistake was to be a strong economic competitor for their great 'ally' and former benefector - the USA.

 

[Casual-observer]

5 minutes ago, Sour Mash said:

Always good to hear Real World examples.  The USA is hoovering up large amounts of investment from companies divesting from Germany due to the crazy energy prices there.  Not to mention all the fracked LPG they sold Fritz at multiples of what they were previously paying.

Getting the moronic German leadership to spurn Russian energy imports and then blowing up their main pipeline to stop them from getting second thoughts once things started going bad has certainly paid dividends for the Yanks 😆

It's the US effectively cannibalising one of it's post WW2 proxies to its own benefit and to try and harm Russia. Unlike 1945 though Russia does have economically stronger neighbours now to the east and the south to long term diverse away from Europe. 

This is going to hit Europe and the EU hard which will dwarf brexit repercussions. The UK will need to realign to this reality especially the city of London who wanted to be the financial hub of Europe. 

[Sour Mash]

9 minutes ago, Casual-observer said:

It's the US effectively cannibalising one of it's post WW2 proxies to its own benefit and to try and harm Russia. Unlike 1945 though Russia does have economically stronger neighbours now to the east and the south to long term diverse away from Europe. 

This is going to hit Europe and the EU hard which will dwarf brexit repercussions. The UK will need to realign to this reality especially the city of London who wanted to be the financial hub of Europe. 

 

I don't even think it's being done specifically to harm Russia - they are just taking advantage of the situation to take out a competitor and steal their wealth.  They may have been an 'ally' but that didn't matter.  The US Empire doesn't have allies, it has vassal states.  Any harm done to Russia is a bonus, though since oil and gas are fungible and there is a huge demand for energy globally, they can always sell their product to someone else.

There is precendent - the US did the same thing to Japan in the mid-80s  with the 'Plaza Accord'.  It basically knocked Japan's runaway success on the head and benefitted the US who had been losing out massively to Japanese businesses.

[Casual-observer]

7 minutes ago, Sour Mash said:

 

Yeah, the likes of Zeihan point out what a 'mistake' it was to have Russia as such a major energy supplier but it was the very fact that they could get practically limitless amounts of oil and gas for a low price that made pre-2022 German industrial prosperity possible in the first place.

As you say, if energy from other suppliers had been so favourably priced, they wouldn't have been buying so much from Russia.

 

Germany's real mistake was to be a strong economic competitor for their great 'ally' and former benefector - the USA.

 

It was US money that built up Germany to dissuade it away from Soviet influence.  

The current issue though is the error that sat at the heart of post WW2 EU thinking...i.e. if we made everyone economically co-independent (including Russia) it would.

1) reduce the threat of war

2) naturally make Russia orbit Western influence. (I suspect the UK elite also assumed that allowing Russians to park a lot of wealth in London would force the issue). 

That plan failed and likely the US amongst others realised Germany's compromised position and forced the issue by blowing up Nordstream. They were never going to get off Russian gas willingly. 

All the US is now doing is cannibalising Germany, longer term I suspect Germany's electorate will drift away from US influence eventually as they adjust to their new economic collapse. We're seeing it already with the rise of the AFD. 

The red sea now effectively being closed to Western shipping (not Russian shipping) is going to increase this trend. 

[Confusion of VIs]

24 minutes ago, Sour Mash said:

Always good to hear Real World examples.  The USA is hoovering up large amounts of investment from companies divesting from Germany due to the crazy energy prices there.  Not to mention all the fracked LPG they sold Fritz at multiples of what they were previously paying.

Getting the moronic German leadership to spurn Russian energy imports and then blowing up their main pipeline to stop them from getting second thoughts once things started going bad has certainly paid dividends for the Yanks 😆

I am currently working in Germany and it is clear their economy has taken a huge hit from the loss of cheap Russian gas.

However, the populace have belatedly realised that the cost of that cheap gas was allowing Germany to become a vessel state of a reconstituted Soviet Union and that is a price they are not prepared to pay.

The majority view of the Germans I work with is that Germany should do more to to help Ukraine, specifically by giving them the long range weapons needed to help  destroy the Russian logistics system.

 

[Sour Mash]

6 minutes ago, Confusion of VIs said:

I am currently working in Germany and it is clear their economy has taken a huge hit from the loss of cheap Russian gas.

However, the populace have belatedly realised that the cost of that cheap gas was allowing Germany to become a vessel state of a reconstituted Soviet Union and that is a price they are not prepared to pay.

The majority view of the Germans I work with is that Germany should do more to to help Ukraine, specifically by giving them the long range weapons needed to help  destroy the Russian logistics system.

 

 

 

Bwahahahhahaahahahahah 🤡

[TenYearToGetMyMoneyBack]

On a more general note I think companies have realised the problems of concentrating manufacturing in one particular country. Today you can buy a Tesla made in Germany and a VW ID.4 made in the U.S.A.

[Confusion of VIs]

6 minutes ago, Sour Mash said:

 

Bwahahahhahaahahahahah 🤡

Enjoy your ignorance. 

[Casual-observer]

20 minutes ago, Confusion of VIs said:

I am currently working in Germany and it is clear their economy has taken a huge hit from the loss of cheap Russian gas.

However, the populace have belatedly realised that the cost of that cheap gas was allowing Germany to become a vessel state of a reconstituted Soviet Union and that is a price they are not prepared to pay.

The majority view of the Germans I work with is that Germany should do more to to help Ukraine, specifically by giving them the long range weapons needed to help  destroy the Russian logistics system.

 

 

They've been a vassal state since 1945. 

The bottom line is Germany is going to turn into a basket case without proper access to the Russian domestic market, that's where this is going to end up. 

Trying to blow up that market means economic suicide for Germany. Eventually the German electorate will realise this...they already are with the AFD flying high in the polls. 

[Maghull Mike]

The Laffer Curve is about to blow up the SNP

Decision to introduce 48pc top tax rate is only going to bring in modest amounts

Wisdom can be found in unexpected places, as is demonstrated by the recent forecast report of the Scottish Fiscal Commission on the SNP government’s finances and tax policies, which says that the rises in top Scottish tax rates just announced will bring in only modest amounts.

“Behavioural responses”, it outlines, will cause big reductions largely offsetting the gains calculated on “static” assumptions of no taxpayer response. The new 48pc top rate, it says, will bring in virtually nothing at all.

This use of “dynamic costing” is a most welcome contribution from Scotland’s equivalent of the Office for Budget Responsibility (OBR).

It reminds us of the debate on the Laffer Curve triggered by Nigel Lawson’s famous Budget of 1988, when he abolished the 60pc top rate of income tax.

The late chancellor argued that it actually reduced tax revenues, owing to its effects on the labour supply of those paying it; they reduced effort, switched activities to lower tax areas, left the country or otherwise found legal ways to evade the tax.

In later research on UK data, I found strong evidence of such Laffer effects, joining other international evidence.

If this analysis can happen north of the border, why not in the UK generally? 

It has been very largely ignored by both the Treasury and the OBR, which have failed to evaluate the supply-side effects on tax revenue of our top marginal tax rates, not simply the 45pc notional top rate but also the 60pc rate created by the withdrawal of the personal allowance at the 40pc threshold.

All hell broke loose over the proposal to abolish the 45pc rate in 2022’s Truss-Kwarteng mini-Budget, even though its abolition would probably have raised tax revenue.

But dynamic costing should not stop at these basic effects on revenue due to labour supply shifts. The effects go far further, to impacts on capital investment and productivity growth from both business taxes like corporation tax and the higher rates of income tax paid by entrepreneurs on their profits.

These do two key things: they reduce the return on capital, reducing investment and capital through substitution with labour. 

Also, more radically and with much bigger long-term growth consequences, they reduce the return to innovation, alias productivity growth. The rise in these, and allied disincentives, accounts for our dreadful growth performance in recent years.

The Truss-Kwarteng mini-Budget set out in 2022 likely would have raised tax revenue CREDIT: AARON CHOWN/PA

Again, much research supports these effects on growth, as does the most casual look around the world at successful cases of growth, whether Texas among US states, or Poland in recent decades, or China under Deng Xiaoping (versus today’s slowing under Xi Jinping’s interventionism). 

The best accessible review of the post-war evidence on how growth is damaged by tax is still the Institute of Economic Affairs’ Sharper axes, lower taxes, published in 2011 and edited by Prof Philip Booth.

Our Cardiff work based on the simplest of ideas, that a firm’s owner-managers will divert energy to innovation if its returns exceed the costs in tax, regulation and lost wage income, predicts that low marginal tax rates and light regulation spur growth. 

And richer entrepreneurs are less worried about the downside because they have a stronger balance sheet. 

One of the challenges for the tax-growth nexus is establishing causation and not just association, and opponents of the low-tax agenda exploit this problem. 

To overcome, it requires building causal models of growth and testing their ability to replicate the facts of economies’ behaviour.

With today’s powerful computers and recent advances in econometrics, we are able to do this by simulating these causal models and checking how well their simulations statistically match that behaviour, a roundabout procedure known as “indirect inference”.

In research carried out by me, my colleagues and our PhD students (some still unpublished) at Cardiff, we have found that this model can satisfyingly explain trends in growth and inequality in the UK both recently and over the last century and a half, as well as in the postwar US, and across Chinese regions.

The UK effects are clearly visible in our lived experience since the Thatcher reforms of the 1980s, largely retained during the 1990s but since then progressively reversed by ill-considered, mostly EU-led, regulation combined with rising marginal tax rates. 

On GDP per capita, we had overtaken France and Germany by 2000 as those reforms took effect, only to fall back relatively since then.

Yet for all the declinist talk of our parlous situation, we have the world’s eighth largest manufacturing sector, we are a leading world centre for business and financial services, and we rank second in Europe on the EY rankings for foreign investment attractiveness.

The growth prospect can be turned around if only this government would pay attention to the case for cutting down our high marginal tax rates on income and business.

This should go hand in hand with the generally agreed agenda for liberalising business regulation and development planning.

The trouble has been that the community of commentators has forgotten the supply-side lessons of Lawson and Thatcher, and drifted into thinking that productivity growth is unexplainable and “exogenous”,  nothing to do with government policy.

Hence the view that tax can be raised to pay for redistribution and public services at no cost to the economy’s performance.

This view is convenient for those on the political Left, who are strongly represented in that community, but both theory and evidence contradict it, as we are now discovering with a vengeance.

This Conservative government tells us it believes in low tax and good business incentives. Yet its record seems to reveal opposite beliefs, in line with its Labour rivals for power.

It is time for it to revert to its true principles and restore the economy’s health and dynamism. Much is at stake, with an election coming that could well see the emergence of a damaging Left-wing agenda concealed under an apparently conservative cloak designed to fool the voters. That could really drive a stake through our still-revivable business culture.

This government needs to find once more the courage of its real convictions. For the SNP, it is already too late.

[Brendan110_0]

They have a great mature rental system, tenancy agreements of decades not months. Nothing like our cowboy market.

[fellow]

2 hours ago, Housepricecrash91 said:

The Germans are leading the way when it comes to crashes. The UK should follow their lead 

That's German efficiency for you. They get their housing crash over with in no time while our lazy housing market takes ages to do the same job.

[Stewy]

17 minutes ago, fellow said:

That's German efficiency for you. They get their housing crash over with in no time while our lazy housing market takes ages to do the same job.

It's a different national mindset. 

You don't change the UK's national mindset with a brief blip of high interest rates. 

[NorthamptonBear]

1 hour ago, TenYearToGetMyMoneyBack said:

On a more general note I think companies have realised the problems of concentrating manufacturing in one particular country. Today you can buy a Tesla made in Germany and a VW ID.4 made in the U.S.A.

I thought that any non-European-built "German"/"European" brand cars on sale in UK were all built in China eg BMW, VW, Dacia, Polestar, Volvo etc. There are also plants in Turkey (Transits?). 

ID4 is made in USA for North American markets. ID3 is not made in USA, I don't think ID3 is sold in USA.

All Right-Hand Drive (UK) Tesla Model 3 & Y come from China. It's why UK suffers more supply problems, rest of Europe can get Model Ys from Berlin (all Model 3 still from China).

Only Tesla own their own factories in China, rest are Chinese owned (theoretically joint, but in reality, not so much). Sometimes two different manufacturers make the same model of "European" car, without the European brand having much control or even oversight.

Crash tests can be very different eg Passat.

Edited December 22, 2023 by NorthamptonBear

[shlomo]

3 hours ago, Sour Mash said:

but it was the very fact that they could get practically limitless amounts of oil and gas for a low price that made pre-2022 German industrial prosperity possible in the first place.

 

This was the German economic miracle, times are going to get very tough in Germany over the next few years

[Maghull Mike]

41 minutes ago, shlomo said:

This was the German economic miracle, times are going to get very tough in Germany over the next few years

& meantime in London

Major London workspace company BE Offices goes into administration

BE Offices, which provides “all-inclusive, inspirational office space solutions” across London and in Birmingham, Belfast and Southampton, has gone into administration, according to a report.

It has previously been in a voluntary arrangement with creditors.

The company was not answering its main telephone line this afternoon.

It follows the collapse of WeWork, which entered Chapter 11 bankruptcy protection in the United States, after its model of taking out long-term leases and selling on fashionable space with office buildings on a short-term basis came unstuck. 

[shlomo]

2 hours ago, Maghull Mike said:

& meantime in London

Major London workspace company BE Offices goes into administration

BE Offices, which provides “all-inclusive, inspirational office space solutions” across London and in Birmingham, Belfast and Southampton, has gone into administration, according to a report.

It has previously been in a voluntary arrangement with creditors.

The company was not answering its main telephone line this afternoon.

It follows the collapse of WeWork, which entered Chapter 11 bankruptcy protection in the United States, after its model of taking out long-term leases and selling on fashionable space with office buildings on a short-term basis came unstuck. 

https://find-and-update.company-information.service.gov.uk/company/07337363

 

[Plasmaz]

I wish this was the UK. I don't even care what happens to the economy, good or bad, I just want HPC

[longgone]

Sounds like a mini crash to me, surely just a Wurst Käse scenario in the making. Krauts are a load of sunlounger robbing Cock Käsers anyway. Good luck to them.

 

 

[Mandalorian]

6 hours ago, Maghull Mike said:

The Laffer Curve is about to blow up the SNP

Decision to introduce 48pc top tax rate is only going to bring in modest amounts

Wisdom can be found in unexpected places, as is demonstrated by the recent forecast report of the Scottish Fiscal Commission on the SNP government’s finances and tax policies, which says that the rises in top Scottish tax rates just announced will bring in only modest a

Need to find my glasses.  Can't quite read this text.