After years of inciting inflation, which amounted to chants of the rain conjuring in extreme drought, suddenly too many of the once coveted percentage points are now to be registered. Three percent in the euro zone, 4.1 percent in Germany: These alarm values trigger a heated debate.
Some argue with special factors: higher VAT, boom in demand after the lockdown, raw material shortages. But at some point it works like cumulative excuses. US economist Larry Summers belongs to the Mahner faction: “The risks of inflation are underestimated – in the US and globally. “It is like the end of the 1960s, when inflation expectations gradually built up.
- Risk one: Due to rapid aging in industrialized countries, workers are becoming scarce. Then wages rise – and then prices. Nothing of this spiral can yet be seen.
- Risk two: The fight against the climate catastrophe causes high costs. Consumers feel higher CO2 prices directly with gasoline and heating fuels, which would have less of an impact if behavior changes were to occur as desired.
- Risk three: The beneficial effect of unleashed globalization, in which competition has dampened prices, diminishes sharply in the wake of economic wars and protectionism.
- Risk four: The galloping national debt is a problem when central banks have to move away from zero interest rates due to the risk of inflation. In any case, the ultra-lax monetary policy has led to an oversupply of capital, which in turn has resulted in extreme real estate prices.
There is only one thing worse than the fear of inflation at the moment: the fear of stagflation. High prices and little growth were the toxic mix of the 1970s.
For the European Central Bank (ECB), the guardian of money, a certain chain of effects is fatal: The more people talk about inflation, the higher it gets. The German board member Isabel Schnabel assures that they will “react decisively” if – beyond temporary fluctuations – inflationary pressure builds up that jeopardizes the target of two percent inflation. So far, however, there is no sign, according to Schnabel, that people are spending their high savings on a large scale.
She firmly rejects the suspicion that the lowest interest rates would be retained as protection for the heavily indebted countries in southern Europe. As a precaution, let’s describe where money is still safe – and where not.
A moral German foreign policy would have to provide sanctions against China, which a pragmatic foreign policy cannot afford. The economic ties are getting stronger, as the auto industry shows. Take Daimler, for example: If the US-heavy truck subsidiary is split off in Stuttgart on Friday, the high Asian dependency in the passenger car business will have a full impact. 32 percent of sales come from there. And with Geely and BAIC, the Chinese are the most important Daimler shareholders alongside Kuwait.
The Volkswagen Group, whose core brand sells almost 50 percent of its cars in China, also has a cluster risk. BMW comes to 35 percent. And in 2022, the Munich-based company will become even more “Chinese”: Then they will take over the majority of the joint venture with Brilliance and consolidate 75 percent of the balance sheet. They all have one thing in common, as the great reformer Deng Xiaoping described: “It doesn’t matter whether a cat is white or black – the main thing is that it catches mice.”
From Berlin there are only reports of nervous parade exercises before the coalition get-to-know coffee party between Friday and Tuesday. The CSU is rightly mocking the fact that in addition to its own five members, the CDU has a large contingent of ten people. The Greens and FDP each need this man and woman strength, while the SPD only shows up with six people. Perhaps an election victory also has to do with being able to limit oneself.
Old strategists like Jürgen Trittin or Wolfgang Schäuble are no longer part of the team. The 79-year-old CDU veteran has to give up his post as President of the Bundestag because the SPD is now the strongest party. After all, he is allowed to give the opening speech in the 20th Bundestag on October 26th, as senior president. “Isch over” for the man who pushed the candidate Armin Laschet through.
The American problems of the alliance worsened yesterday. A New York judge admitted twelve lawsuits, including two class actions, against the German insurance company. Its subsidiary Allianz Global Investors (AGI) had offered hedge funds as an investment, some of which had to be liquidated after the price slump in the pandemic. Investors are now demanding compensation.
In the future, Jacqueline Hunt will no longer have to deal with the ticking time bomb on the board of directors. It will now be inherited by Andreas Wimmer, 47, a homegrown man, most recently head of Allianz Leben. CEO Oliver Bäte has also made the US fiasco a top priority.
My cultural tip for the weekend: “Radicalized Conservatism” from Natascha Strobl, a brisk analysis of the flirtation of large conservative parties with the New Right and a “raw bourgeoisie”. This comes here as a result of the growing importance of social media, with Sebastian Kurz and Donald Trump as prototypical figures. The rule breaking is the campaign, polarization is the content, the “I, I, I” is the leadership style.
In the politics of the 21st century, the narrative and the feelings associated with it count, writes Strobl. The political scientist provides clues to those who are wondering how things will continue in the middle of Germany after the Union debacle – and whether “conservatism” would be strong again if we only build nuclear reactors, collectively bring young people to arms, close borders and women in the kitchen and church would send back.
(Photo: Getty Images)
And then there is the Austrian crystal specialist Swarovski, who is experiencing a revolt after almost 130 years. Two representatives of the owner dynasty let it rattle and pop in a town hall meeting yesterday – and promised to withdraw immediately. After management chaos and deteriorating balance sheet quality, the authority of CEO Robert Buchbauer and CFO Mathias Margreiter was gone. As an interim solution, the new CEO Michele Molon, who comes from the house, but not from the family. His successor is being sought – externally.
Previously there had been an uprising against the old leadership duo in Wattens near Innsbruck. Twelve family members, who hold 40 percent of the shares, stated in writing: “Unencumbered by family policy and conflicts of interest, we demand the appointment of a CEO and CFO from outside the family from January 1, 2022 at the latest.” Swarovski separates from its in-house airline Tyrolean Jet Services. The family managers pushed out of office could do with Karl Kraus: “You could become megalomaniac: you are so little recognized.”
I wish you a relaxing weekend with a lot of appreciation.
Greetings you warmly
you
Hans-Jürgen Jakobs
Senior editor
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