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Where is Germany (...and Europe) going to? Replies |
rffrydr
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 Posted: Tue Jan 24, 2012 8:11 am Post subject: |
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...Waiting....and waiting...and waiting.....
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rffrydr
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rffrydr
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| Posted: Wed Nov 30, 2011 10:39 am Post subject: |
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"The solution is more Europe, not less." --A. Merkel
"In order to save the village we had to destroy it." --The 'Nam.
So we had banks hesitant to park money even with the ECB--even more than a night! We had the clearing exchanges reintroducing drachma. Poland casting a pox upon all. LIBOR spiking into year-end marks destroying all bank ratios. The Economist cover depicting a euro-coin as a flaming comet.
Everybody's right. Everybody's wrong. Bulls make money; bears make money; pigs get slaughtered. Isn't this the way it always goes in these grand ventures?
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HenryTo
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| Posted: Thu Nov 24, 2011 11:35 am Post subject: |
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Lack of leadership all too evident. The cerebral part of our brains cannot anticipate everything (and definitely not so during times like these)--what we need is a central banker a la John Pierpont Morgan as part of the German leadership before the Euro Zone breaks up.
http://www.economist.com/node/21540283?fsrc=scn/tw/te/pe/ironchancellor |
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rffrydr
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| Posted: Wed Oct 05, 2011 9:45 am Post subject: |
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Euro up over dollar year-to-date.
| Quote: | | I see it more that they are quite weak. I mean they are quite weak in two senses: first, defaults and stuff are going to hit them harder than perhaps other people; and second, they have far less control of the situation than they would like to have. In the end they are the ones in the headlights; they are the ones who don’t know quite what to do; and they are the ones who are prepared to accept a wink and nod from Greece. |
It was this background that gave me no question of europe's survival:
http://www.bloomberg.com/news/2011-07-11/kohl-s-wife-suffered-war-rape-trauma-life-in-his-big-shadow-german-books.html
http://www.bloomberg.com/news/2011-08-25/merkel-defends-her-foreign-policy-against-kohl-s-criticism.html
Former nazi, BB Chairman, Schlesinger coming out at Xmas sealed the deal in my eyes.
But to say it's been a bumpy road doesn't really say it:
Indeed, even if proven right, would have been far better to have bet against this all along (though the one bet for it, May '10 proved fast lucre). Like all good wars, there will be no winner. Better to "emigrate."
One thing I definitely did not see and is only becoming clear to me now is that the idealistic drive to this union is, ironically now pulling it apart. And that is how change happens. Another way to see it is not as a league of nations, but as one big German mercantilism. If money is the new battleground we can see a dominant Germany whose underlings are now spinning out of by simply by the force of their cultural natures. "Europe," far from guaranteeing peace may have simply guaranteed "victory." That's the kind of trade I like...and that's something I've totally missed here. Ce la vie. GM couldn't be hurt anymore by this than they already had anyway.
As far as blaming the messenger, the markets, that story is far from finished. Europe vs. Market...neither will survive the same. In that sense there really has been a war.
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HenryTo
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| Posted: Sat Oct 01, 2011 11:45 pm Post subject: |
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Stratfor's latest update on the European Sovereign Debt Crisis:
| Quote: | STRATFOR CEO George Friedman explains why Germany, though the powerhouse of Europe, is in a weak position with the European debt crisis, and how elites’ commitment to European integration is one cause of the crisis.
Colin: Europe’s leaders — the politicians, the bankers and the bureaucrats — seem locked in near-permanent session on trying to find a way out of the continent’s debt crisis. The rhetoric rolls from their lips. We hear expressions such as “greatest challenge,” “most dangerous phase,” “spinning out of control” and so on. The uncertainty stabilizes the markets and frustrates forward planning and business.
Welcome to Agenda with George Friedman here to join the discussion on Europe. George, first a simple question: who is actually in charge there?
George: Reality is in charge of statesmen, politicians, policy makers. They’re rarely in charge. They like to act as though they are, but the reality that’s in charge here is that the European Union was poorly conceived. It was an institution that was designed to function very effectively in times of prosperity, which it fortunately had in its first two decades, but wasn’t built to handle crisis. It has a decision-making structure that’s very difficult to manage and, more important, the real power is in the hands of the nation states, not in the hands of the EU. Therefore these nation states are making decisions based on their own interest — the interests of their politicians and the interests of their citizens. And so the answer of who’s in charge here is that: the EU is created so that no one be in charge here, so even more than most situations it’s one that’s inherently chaotic.
Colin: George, people are already saying that the current package under discussion is too small — that’s 1000 billion euros, which I think is about $1.35 trillion U.S. and that it needs to be increased, and the Germans won’t be happy about that, and nor will the banks.
George: It clearly is drifting on. The problem is this: the Greeks have voted most of the austerity measures they were supposed to. That doesn’t mean they’re going to enforce it. The cost for Geece of enforcing those measures would be overwhelming. It would mean instability in Greece — political chaos — and so they are not going to do that. So what we have here is a wink and a nod. The wink by the Germans saying, “okay you do austerity and we will give you money.” The nod is basically from the Greeks, “Okay, we will accept money but we are not going to be really executing the austerity.” So the real thing to look at here now is not all the statements and all the votes — it is what is the Greek government going to do? But the Greek point of view is that they’re not bailing out Greece; they’re bailing out the German and European banks that the Greeks owe money to. The money doesn’t stay with them (with the Greeks) it goes to the Germans, and like any bankrupt — be it a major corporation, an American airline, an individual — they’re not looking at how they got in this situation. They are looking at what happens next. What the Europeans are asking of each other is a level of austerity and control that they don’t have the ability to enforce, and the Germans don’t have the ability to enforce Greek laws. And that’s the problem.
Colin: Another tangential point. There are many in Europe who are arguing that this is not the time for austerity. What is needed is growth and major reform.
George: You have two issues on table. One is the macroeconomic issue that the United States for example or even China, are experiencing. Is it better to balance the budget? Is it more damaging if you don’t balance the budget for growth? Do you incur greater deficits? These are all discussions that nation states have. The problem the Europeans have is they cannot have that discussion because they have not built those institutions to manage things. In the United States, in the end, the stimulus package, if it comes out, and jobs package, if it comes out, is going to be managed from Washington, where there are institutions to do it and is enforceable across the table. You don’t have that in Europe. In Europe, you’re having other discussions and those discussions are: how can we save Europe’s banks? And the second discussion that they are having is: how can we make sure this doesn’t happen again? And very frankly Europe doesn’t have the ability to control what constituent states do. Some of those states cannot live under the euro; other states aren’t living under the euro, and are not sure they want to continue living within the framework they live in. You know it’s interesting — people keep saying that the Germans are so powerful. I see it more that they are quite weak. I mean they are quite weak in two senses: first, defaults and stuff are going to hit them harder than perhaps other people; and second, they have far less control of the situation than they would like to have. In the end they are the ones in the headlights; they are the ones who don’t know quite what to do; and they are the ones who are prepared to accept a wink and nod from Greece.
Colin: And then there are the banks, and that reminds me of a quote by the famous economist John Maynard Keynes who said that if you owe the bank a hundred pounds then you’re in trouble. But if you owe the bank a million, then they’re in trouble. Well, they’re in trouble now. There is really no easy way out.
George: Well. There is a way out in the sense that the governments can subsidize them, as they did in the United States with the TARP and the follow on subsidies. That takes care of the problem of the banks, but where you get the money, and how are you going to assure that the wave of defaults doesn’t just surge higher and higher? The basic problem here is that the Germans and northern Europeans have the cash and the Southern Europeans have a debt, and therefore the southern Europeans are much more powerful position than northern Europeans. You’re in a very weak position in relation to your creditors before you borrow the money. After you borrow the money, they’re the ones in a weak position. And so I read Europe in a way very differently than others in this sense that certainly the Germans are in a healthier financial position, but they have far more to lose from defaults, I think, than the other countries. In the end, you have an institution, moreover, that requires a set of European institutions that requires near unanimity in order to get anything done. You have a large number of countries — and we were just up the discussion about Slovakian politics and whether the Slovaks in the end are going to vote for a loan package through the banking system — and what becomes apparent is that there’s something quite mad when the future of the European banking system and of many of the nation states is in the hands of Slovakian politicians and what they are going to do, not because Slovakia’s particularly funny or anything like that. It’s simply because it is a small country and with the rules of Europe, of unanimity, just about any country, including Matla now, may be a problem.
Colin: So what is a way out of this?
George: Well, I don’t think there’s any way out of this within the context of the European Union. The European Union creates three realities that are unsupportable. The first is a single currency that is designed to manage both the German economy and the Greek economy, which obviously is impossible to do. Second is a free-trade zone in which the world’s second-largest exporter — Germany — is able to move its goods into any country that wants to buy it, and, therefore, essentially outcompete the locals. And finally you have a massive bureaucracy in Brussels, which tries to control and micromanage so much of the European economy and really doesn’t have the ability to do so wisely. Now what the Germans are trying to do is rescue all of this. And the problem is the more they rescue all of this, the deeper the problem gets. Of course they don’t quite know how to go in any other direction, but it’s the rescue itself that’s the problem, because it links together countries in a single fate that have totally different realities. The reality of Greece and the reality of Germany have nothing to do with one another and trying to manage them not only by these institutions but through unanimity, where the German-Greek relations are going to be dependent on Slovakia’s vote, is sort of a recipe for disaster, and they’re having it.
Colin: Final question: Do we see the collapse of the eurozone, and then what happens?
George: Well what Europe used to have was a series of countries, and these countries had their own currency, they managed their own economy, they borrowed money in their own currency or, if they wouldn’t be leant money in their own currency, they borrowed money in some other country’s currency based on that. However they did it, they did it for themselves and they suffered their fate. And it was not necessary that the entire continental-wide system collapse. The problem you have is that there is no way for the euro to collapse. It won’t collapse. There has to be an orderly regression, and the ideology of the European elite is so committed to the idea of European integration that they have not yet coped with the fact that it was European integration that helped create this problem. They believe the European integration or greater integration is the solution. So long as that ideology stands opposed to the realities that have been created, there really is no hope but further deepening of crisis. I don’t know at what point European elites say, This didn’t work,” and I don’t know at what point they simply lose control and new political parties emerge that are anti-Europeanist. But clearly the issue is not so much collapse — it’ll stay there — it is how you manage your way out of crisis you created?
Colin: Well I think one thing is certain: There will be a lot more rhetoric. George Friedman, thank you very much for joining Agenda this week. Until the next time, goodbye. |
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rffrydr
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| Posted: Fri Sep 23, 2011 9:48 am Post subject: |
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Below now looks very stupid ('cept for the getting out of irish bonds part!). I have been totally blindsided by the leadership vacuum across the western world for that matter. Still believe that the buck stops at the door of the state--but am being sorely disabused of that belief right now. Kohl had to go AGAINST politics to establish europe. Politicians now stand for next to nothing.
But what of the vaunted "market"? That force, by current standards, applies clearly to their "liberalizing" politicians. Remember the US "Chamber of Commerce" passing out panama hats on the eve of Washington shutdown?! Finally a squeak:
http://www.ft.com/intl/cms/s/0/5f4b6372-e5e9-11e0-8e99-00144feabdc0.html#axzz1Yn0U8smR
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rffrydr
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| Posted: Sat Jan 22, 2011 8:47 am Post subject: |
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They call Germany the "locomotive of europe" for a reason. Yes, extreme circumstances have made for extreme divergences but THERE IS NO WAY that this "boom" won't spill across the rest of europe. Not to say that any other nation will boom--the germans, for that matter, don't see it as a boom. Indeed their puritan "tight-assed" spending habits are a reflection of their need to punish their neighbors. But the money will find its way.
ps Had to sell my Ireland bonds yesterday without a single payment: 5% on the currency and 5% on capital in a little over a month makes for my own kind of puritanical revenge 
I want to be in this trade for years not days. We'll wait for the inevitable scare but still maintain this trade bottomed summer 2010.
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HenryTo
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| Posted: Fri Jan 21, 2011 8:44 pm Post subject: |
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Bridgewater on the divergence between German and non-German Euroland growth:
| Quote: | German Business Sentiment Highlights the German Divergence
Friday's release of German business sentiment confirmed the recent strength in German growth. Growth continues to be highly elevated, and capacity in the German economy is getting utilized at a rapid clip. German growth has not been this rapid since re-unification. As we've mentioned often recently, the extreme divergence between economic conditions in Germany and much of the rest of Euroland is creating another complication for the ECB, which is stuck with implementing monetary policy that is too easy for Germany and too tight for the periphery. |
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rffrydr
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| Posted: Thu Mar 09, 2006 6:43 pm Post subject: |
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Take apart that BMW and you will find plenty of GM parts. No-one does a better transmission for the price and longevity. Which is why I'll drive them--their trucks that is.
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HenryTo
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| Posted: Sat Dec 31, 2005 11:30 am Post subject: |
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Goodfella,
That depends on what you're looking for in a home. In terms of price, I believe the only developed country in the world that has not seen its housing prices appreciate in the last 35 years (in real terms) is Germany. Number 2 (second lowest) is Switzerland, number 3 is New Zealand, and number 4 is Japan.
Given home ownership is low (44%) in Germany, there is also no incentive for the general population to see housing prices go higher for the foreseeable future.
Have a good New Year's,
Henry |
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Goodfella
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nodoodahs
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| Posted: Tue Dec 06, 2005 8:22 am Post subject: |
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http://news.ft.com/cms/s/4875157e-62d9-11da-8dad-0000779e2340.html
Article is very negative on the general state of corporate governance in Germany, placing it on a par with China.
Maybe it's more societal than it is whether the economy is based on clicks or bricks ...
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Goodfella
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| Posted: Mon Nov 07, 2005 10:04 pm Post subject: |
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France Germany both have low home ownership rates. And relativley low HPI.
Uk and Ireland are the opposite. GDP growth has been high compared with other established economies in the EU.
Without doubt HPI increaes consumer spending, a large part of GDP. |
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victor
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| Posted: Mon Nov 07, 2005 2:33 am Post subject: |
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Hello again,
Here is a the composition of the Eurostoxx50, the 50 biggest companies in Europe (excluding UK).
They are ordered by descending P/E.
As you can see, the market values 1€ of SAP earnings at 29,27€. This is twice of say Bayer or Allianz.
The market values more SAP, l'Oreal, LVMH or Danone than the others because it believes that this companies may be able to improve their earnings above the others.
Now, tell me. Can you see in this list any real blockbuster that may rule the world as Coca-cola, Microsoft or Intel do?
tick/ company/ last/ market cap/ div.yield/ p/e (2005)
SAP sap 144,20 € 45.588 0,82% 29,27
OREP loreal 60,80 € 40.053 1,48% 24,03
LVMH Louis Vuitton Moet 66,85 € 32.752 1,66% 21,63
DANO danone 84,50 € 22.328 1,81% 20,29
GASI generali 25,30 € 32.283 2,09% 19,73
AIRP air liquide 151,20 € 16.503 2,49% 18,03
SIE siemens 62,14 € 55.372 2,14% 17,96
NOK1V nokia 14,46 € 64.112 2,49% 17,87
DCX daimler 41,60 € 42.133 3,61% 16,91
CGEP alcatel 10,05 € 13.123 0,70% 16,75
TLIT telecom italia 2,41 € 44.423 4,57% 16,43
AHLN ahold 5,70 € 8.859 0% 16,29
PHG phillips 22,38 € 29.454 1,88% 15,74
EAUG vivendi 26,70 € 28.641 3,30% 15,62
TEF telefonica 12,74 € 62.695 3,38% 15,36
UNc unilever 56,70 € 32.427 3,44% 15,18
IBE iberdrola 22,16 € 19.978 3,47% 14,80
SASY sanofi 67,00 € 93.511 2,07% 14,71
LYOE suez 22,60 € 26.000 3,89% 14,66
CARR carrefour 37,28 € 26.287 2,76% 14,51
SPI sanpaolo 12,45 € 23.277 4,42% 14,39
ELE endesa 20,42 € 21.620 3,62% 14,10
ENEL enel 6,72 € 41.296 8,04% 13,99
BAYG bayer 29,29 € 21.392 2,97% 13,98
RWE rwe 56,28 € 31.357 3,20% 13,90
CRDI unicredito 4,97 € 31.517 4,43% 13,44
BBVA bbva 14,73 € 49.947 2,42% 13,39
DTE deutsche telekom 14,93 € 62.672 4,62% 13,33
AXAF axa 24,95 € 47.626 3,17% 13,06
SAN banco santander 10,53 € 65.858 3,35% 12,61
EONG e.on 75,50 € 52.246 3,64% 12,28
ALBK. allied irish 17,20 € 15.034 3,78% 12,03
LAF lafarge 68,10 € 11.912 3,67% 11,62
FTE france telecom 21,97 € 57.142 4,55% 11,30
SGOB saint gobain 45,45 € 15.692 3,08% 11,30
DBK deutsche bank 79,65 € 43.669 3,14% 11,16
ALV allianz 119,20 € 47.190 1,74% 10,93
BASF basf 59,02 € 30.929 3,22% 10,73
SOGN societe generale 97,70 € 42.970 3,99% 10,67
CAGR credit agricole 25,00 € 37.433 3,52% 10,42
AAH abn amro 20,15 € 37.892 4,96% 10,37
TOTF total fina 217,10 € 134.925 2,86% 10,33
MUV muenchener 102,73 € 23.585 2,53% 10,33
AEGN aegon 12,96 € 20.439 3,40% 10,31
BNP bnp 65,20 € 57.221 3,82% 10,12
ENI.MI eni 22,64 € 90.661 4,20% 9,72
REP repsol 25,39 € 30.998 1,97% 9,13
ING ing 24,59 € 54.214 4,55% 9,06
FOR fortis 23,94 € 31.148 4,59% 8,96
REN renault 71,00 € 20.231 3,00% 5,66
simple average 39.772 3,17% 13,97
What I see is a list of very mature industries. None of them will go bankrupt (despite I will take care with Ahold, Vivendi and all italian related stocks), but quite probably none of them will be a 21st century world champion.
Just 2 stocks, from my point of view, may become big players.
The first one is NOKIA.
Nokia already is a world champion in mobile phones. Despite than its market share is decreasing because competition from Motorola or Sony-Ericsson, they still have the best known brand in this list.
The second is DANONE.
Danone is the closest thing we have to Coca-Cola. A well managed company with a solid brand in Europe, a good R+D team and focused in producing healthy food. And, by the way, it's an impossible target for merger or adquisition (ask Pepsico).
If ever it reaches a p/e near 12 I swear I sell my house, my car, ... even my wife and two children just to accumulate as much stock as possible. |
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