The faltering world power USA: The editor-in-chief’s weekly review

Good morning dear readers,

a few weeks ago I had a lengthy conversation with Moritz Koch, head of the Handelsblatt office in Brussels. He told me about the growing concerns in the EU about the domestic political situation in the USA. Koch himself was a correspondent for years – first in New York, later in Washington, but he has known the country for much longer.

Even as a child he traveled to Florida almost every year. He later studied in America and experienced the transformation of the country first-hand: the patriotic frenzy of the George W. Bush years, the rise of Iraq war opponent Barack Obama and finally Donald Trump’s election victory over Hillary Clinton.

Koch recently traveled to the USA again — and came back with a harrowing portrayal of a country divided. The story begins with Hart Kelley, a Florida retiree who enjoys fishing and watching Fox News.

The America where Kelley feels at home, is the antithesis of the European welfare state. Low taxes, few regulations, no redistribution. But Kelley believes his America is in danger. He’s not afraid of Putin, but of President Joe Biden’s Democrats. Before the congressional elections on November 8, the country is divided and insecure. “If this continues, there will be violence,” Kelley fears.

Consistent with this is disturbing news from San Francisco: The husband of Nancy Pelosi, Speaker of the House, has been attacked by an assailant at his home. Pelosi’s spokesman said the attacker was looking for her.

This is one America. The European partners in the Ukraine war are experiencing something else: the protecting power that is providing military and economic aid to Kyiv, coordinating sanctions against Russia, and holding the West together.

In the fall of 2022, the United States is both: leadership and fragile democracy. Our US title sheds light on what this means for Europe.

What else kept us busy this week:

1. The federal government had tried very hard to keep the numbers under wraps, nevertheless, two days before the current tax estimate was published, Martin Greive knew how much more tax the state would collect in the next few years, namely at least 110 billion euros. The official confirmation came on Thursday: it’s 126 billion euros – that’s a record. The problem for Christian Lindner: The new scope in the household will arouse new desires.

2. Is the federal government carelessly jeopardizing the energy supply? Is Germany facing de-industrialization? And where is the growth coming from in the future? We had many questions when we drove to the interview with Federal Economics Minister Robert Habeck. And we not only came back with many answers, which were then quoted by numerous media – we also experienced a thoroughly self-critical minister: “We should play less gambles in the coalition and talk to each other earlier,” says Habeck.

3. German dealings with Chinese companies is now causing massive resentment within the federal government. A few days after the Chancellery pushed through the entry of the Chinese company Cosco at a terminal in the port of Hamburg, the Handelsblatt caused new discussions with two investigations: First, Handelsblatt reporters showed that technology from the Chinese Huawei group is still an integral part of German mobile networks – despite the new IT security law and warnings from security circles. A few days later, another example of a lack of risk awareness, when the Handelsblatt reported exclusively that the federal government wants to wave through a delicate chip deal: the takeover of the chip production of the Dortmund company Elmos. This much is clear: when Chancellor Olaf Scholz travels to Beijing next week, there will be a lot to discuss.

4. Notwithstanding these debates some German companies are even increasing their dependency on China. BASF is such a case, as is Siemens, as research by our company reporters shows. Siemens boss Roland Busch wants to align the important group division “Digital Industries” much more closely to China: “Marco Polo” is the name of the secret project, in the context of which even a possible complete relocation of subdivisions and the opening of further headquarters in China were discussed. The plan has been shelved for now. But possibly not in the long term, as an insider reports: “China knows the plans and wants to see their implementation.” Incidentally, other companies are also reporting on such pressure from Beijing to relocate critical areas to China these days.

5. While a new government was sworn in at Rome, Italy correspondent Christian Wermke traveled through the economically and socially deeply divided country and, based on many encounters and observations, describes where the country’s economy is headed. The new prime minister, Giorgia Meloni, faces a gigantic task: she must counteract the crisis – and with debt accounting for 150 percent of economic output. In a large report, Wermke describes how the Italians look to the future.

6. German companies are valued particularly low on the stock exchange in an international comparison. My colleague Ulf Sommer describes which stocks are currently cheap to invest in.

7. At the end of the week there was a small stock market tremor. In two days, big tech stocks have lost nearly $700 billion in value. Recent example: Amazon. On Friday, the stock lost around nine percent. My colleagues from the Frankfurt office clarify the background – and the question of how to proceed.

8. To start the weekend I would then like to recommend a really remarkable interview to you, namely a conversation between my colleague Kirsten Ludowig and the brain surgeon Peter Vajkoczy, the director of the clinic for neurosurgery at the Berlin Charité: At 39, Vajkoczy was the youngest chief physician at the Charité and led around 20,000 surgeries in his career. In the interview, he talks about his feelings, such as the shame when complications arise during surgery, nightmares, his mentor, who liked to “gave him a punch” so that he didn’t take off, myths, rituals and the emotional relationship to his rubber shoes.

9. And then there is Hans-Jürgen Jakobs, who relinquished the chief authorship of the Handelsblatt morning briefing last Friday. After the big farewell celebrations, I talk to him in the new episode of my podcast “Handelsblatt Disrupt” about his daily night shifts, why he even got involved in the morning briefing – and his most important trick when writing. Of course, we are also talking about his new book, which is well worth reading: “The Monopoly in the 21st Century – How private companies and state-owned corporations are destroying our prosperity”.

Have a relaxing weekend everyone.

Best regards
Her
Sebastian Mathes
Editor-in-Chief of the Handelsblatt

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