Central banks need to “get the rods out”

That this time the brains have slipped into the testicles will hardly impress the frustrated ones on the far left and far right. As we think of the turbulent near future, we anxiously read Napoleon: “The doctrines called the Principles of 1789 will forever be a menacing weapon in the hands of the malcontent, the ambitious, and the ideologues of all ages.”

The alarm data of a fragile bourgeoisie include reports from the inflation front. At 9.1 percent, it has climbed to its highest level since 1981 in the USA. Galloping inflation is increasing the pressure on the American Federal Reserve to raise interest rates further – perhaps even by one percentage point to a corridor of at the meeting at the end of July 2.5 to 2.75 percent.

The Canadian central bank had now acted so ruthlessly and raised the interest rate from 1.5 to 2.5 percent. Global factors such as the Ukraine war and supply disruptions are the strongest drivers, but domestic price pressure due to excess demand is also becoming increasingly clear, according to the reasoning. Bloomberg Economics already puts the recession risk in the USA at 38 percent.

Rising interest rates in the US could drive investors into American bonds – and thus further fan the dollar exchange rate. Yesterday, after reaching parity with the dollar, the euro briefly underperformed the US currency for the first time, trading in London at $0.9998. The last time this happened was in the early days of the common currency in December 2002. The euro slump strengthens the position of exporters (who suffer from supply chain problems) but makes imported goods more expensive.

The euro will probably only become stronger again in the coming week – due to the interest rate hike by the European Central Bank. The central banks would have to “take action now,” says the prominent economist Markus Brunnermeier. So now we think of a bad-tempered servant Ruprecht and with that also briefly of the retiree of the nation, Angela Merkel: “If the euro fails, then Europe fails.”

When Olaf Scholz promised to revitalize the tired armed forces with 100 billion euros, German armaments companies sensed big business. Quite apart from whether all the important raw materials and preliminary products for their weapons and tanks are available, there are serious problems in getting the skilled workers they need. Recruiting talent in the military industry is tough: “They don’t want to tell acquaintances and neighbors that they assemble tanks,” says Eva Brückner, who is looking for managers for the defense industry.

The “armament” project could therefore fail, after all Rheinmetall is looking for 1000 new employees by the end of the year, Airbus (“Defence & Space”) almost 600, Thyssen-Krupp Marine Systems around 540 and Hensoldt 200. If the personnel situation does not change much, it will it will soon be called “conditionally ready to defend”.

As is well known, things are not going smoothly at Volkswagen with the software subsidiary Cariad and even a works council election poses massive problems for Germany’s largest industrial group. In any case, the Braunschweig labor court has now, after complaints from some participants, actually found deficiencies in the course of the last works council election at the VW main plant in Wolfsburg – and declared them to be ineffective for the time being. “The challenge to the election was successful,” the court said.

A few swords of Damocles are circling over works council chief Daniela Cavallo, who won the elections on the IG Metall list by a clear margin. The works council goes to the next instance and has the judgment reviewed by the regional labor court.

With a debt of 132 billion euros, Deutsche Telekom was as mobile as a tanker in dry dock in the fight for the digital future. Now the situation is easing a little: The sale of the radio tower business to two investors from North America means billions are flowing into the coffers. The Canadian asset manager Brookfield and the infrastructure specialist Digital Bridge from Florida take over 51 percent of the shares for a total valuation of 17.5 billion euros. The rest remains with Telekom. The 30-year contract is to be announced today.

With its most important customer, the owner Telekom, Deutsche Funkturm GmbH had achieved an operating result of 669 million euros in 2021. Now the crown jewel of Telekom boss Timotheus Höttges is gone – and perhaps thanks to strengthened finances the next deal in the USA is very close.

And then there is the highly controversial Mayor of Frankfurt, Peter Feldmann (SPD), who, with his resignation games, even surpasses the arts of the fining British politician colleague Boris Johnson. But he lacks support in his own party, and even more so in the Greens, Volt, the FDP and the CDU.

And so a grand coalition will vote today in Frankfurt’s Römer on the motion to vote Feldmann out of office, who is suspected of corruption. With a two-thirds majority, the deselection procedure is formally initiated. Since Feldmann only wants to resign in January 2023, the people of Frankfurt would then have to decide on the future of the mayor in a referendum on November 6th.

Feldmann does not seem to be dissuaded from his defiance by references to the costs of the election process in the amount of around 1.6 million euros. It is a last pleasure for him to dictate the conditions for his deselection again and again.

With Georg Christoph Lichtenberg we are warned: “If you are looking for an angel and only look at the wings, you could bring a goose home.”

I wish you a successful day with heart.

It greets you cordially
Her
Hans Jürgen Jakobs
Senior editor

PS: In the gas meltdown, politicians are calling Save energy on. What measures have you taken? Increased the stock of wood? Are you considering swapping gas heating for a heat pump? Have you reduced your shower time? Should you limit yourself at all? Or are the problems in the hands of politicians and companies? Write us your opinion in five sentences [email protected]. We will publish selected articles with attribution on Thursday in print and online.

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