Deutschland Ist Kaput! (The current German economic crisis)

[914PUTSCH]

I am sure most of us who are of the 'older' persuasion (particularly the 'significantly older' amongst us), or at least those who relish history and try to be as well-versed in previous world events as possible, recall the immediate post-war (2WK) period when Germany's rise, phoenix-like, from the ashes of that war presaged a return to the mythos of "They build 'em good in Germany, Ja Heinie?" type automotive quality that was extant in the pre-war days: those days when the name Mercedes-Benz carried with it a cachet of "äußerst hoher sozialer Status", or supremely high social status.

After the war and concurrent with the rise in Germany's new manufacturing and industrial capability, German automotive products again regained the reputation for superb quality that they had held in pre-war days. Ironically, Germany's economic 'rape' by the Allied victors (notably by Soviet Russia) had worked to its advantage in that whereas most of the rest of Europe labored under the burden of its far older and still somewhat intact, if war-torn industrial heritage, Germany was able to build a whole new industrial and economic base unencumbered by a devastated industrial infrastructure...and did so remarkably well, to the point where Germany earned the title of 'economic miracle.'

Volkswagen AG to a large extent set the standards for this rebirth as well as led the charge of the nation's new post-war industrial economy. Porsche was, naturally, a part of that rise to international prominence, given the closely intertwined relations between the former and Dr. Porsche's design firm.

As a result, the 1950s, 60s and 70s were decades of unprecedented growth and the attainment of the äußerst hoher sozialer Status that formerly obtained in the nation. Many factors supported and contributed to this new rise (occasionally referred to, with tongue firmly in cheek, as the 'new Fourth Reich'), not least being the fact that the rebirth of Germany's industries provided desperately sought-after jobs and employment opportunities seemingly out of nowhere, amidst the utter devastation of the war. And the Volkswagen company, conveniently aided and almost inadvertently assisted by the Brits (I refer here to the British occupying authorities that recognised the amazing genius behind the humble VW Beetle's "People's Car" concept and helped facilitate VW's rebirth), quickly rose to the apex of its postwar glory when the quirky but basic, highly functional nature of the Käfer was adopted around the world as a favorite car of the masses .

Porsche likewise branched off in radical new directions, thanks to the genius of Dr. Porsche, his family and his cartel (no pun intended) of design engineers and advisors, as did Mercedes, BMW and other German marques to a somewhat lesser (but still noteworthy) extent; naturally America played a major role in enabling German automotive products to become known for precision, quality and substance by quickly buying into VWs and Porsche sportscars (the former for their unbeatable all-round utility and the latter for their uber-exclusivity).

Most regrettably, America as a nation has never been known for its 'class alacrity', being an ostensible democracy wherein everyone is supposed to be "equal" (a gross misconception, of course, since the real underlying threads of America's freedoms are "equality under the law" and "equality of opportunity"). Further, as corporate funding and banking institutions developed and exponentially expanded new 'credit' venues (the so-called "buy-now-pay-later" allure), even the least cultivated, least sophisticated ignoramus could (in theory, at least), take out a loan and acquire high-status luxuries formerly regarded as visual symbols of the very wealthy.

One of the results of this was the American obsession with Mercedes-Benz, which nouveoux riche and high-income blue-collar workers later felt was their ticket to bettering the hypothetical 'Joneses' they were supposed to be keeping up with, thus visibly elevating their apparent social class. Rather quickly, ownership of a M-B car came to signify that the driver/owner was a cut above his hoi polloi cohorts, despite the fact that he may not have been schooled beyond the 9th grade!

Back in the 1950s, the M-B car was indeed a very high-quality, high-status vehicle, but the American consumer was blissfully unaware of the fact that this attitude was a rather erroneous assumption elsewhere in the world. In Saudi Arabia, for example, while many wealthy minor Royal Princes emulated the American obsession with top-of-the-line M-B cars, almost without exception all Americans (save those who actually lived and worked in KSA) were totally unaware that in KSA even the 'Sewer-sippers' (night-soil honey-wagons) and garbage trucks were ALL M-B products. The REAL high-status symbols were exotic and incredibly expensive Italian cars (Lambos, Ferraris, etc., etc.).

However, as Germany found that its innate labor resources were insufficient to the task of maintaining both its high standards and high-output industrial requirements, it began what is known (still) as the 'Gastarbeiter' program (or the importation of 'guest-workers' from nations such as Turkey to augment Germany's labor needs). The original understanding that the contracted gastarbeiters worked under was that that they would be granted limited-term work-permits only and that after the specified limit had expired, they would have to return to their lands of origin (or undergo a tediously exacting review process that might or might not result in an extension of the permit).

Eventually, due to the rapid growth of Germany's post-war new economy, this policy was soon modified and augmented, with the result that a great many of these gastarbeiters ended up being granted the German equivalent of our 'Green card' status (and eventually earned full citizenhood). There were still a great many stringent conditions, however, including mandatory German language study, with the desired “total acculturation” (or assimilation into) into German Kultur logically following in short order.

This seemed to work reasonably well until more recent decades when the new neo-Marxist (e.g. Marcusian 'Critical Theory' based) ideologies gained popularity among younger individuals (thanks to their having been schooled by teachers and professors who had themselves been failed leftist idealists, back in the 60s and 70s; Marcuse himself was a central figure in the so-called 'Vienna Circle'). What followed was the world-wide dam-bursting effect that prompted the welcome of quite often grossly disparate classes of people from other nations who were often impossibly ill-suited to smoothly merge into the Western nations they were so enthusiastically welcomed by. Germany, along with most of the European and Scandinavian nations bent over backwards to accommodate this irresistible influx of ill-matched newcomers, as Germany itself in the 80s and 90s turned sharply to the political left. The results have been felt resoundingly throughout all succeeding decades, to this day.

In the 60s and 70s, a good example of the phenomenon, albeit one purely of political nature, was/is to be found in Italy. The Communist Party has always enjoyed a strong and recognised presence among Italian workers. No better example of this effect may be found than that which affected the Italian auto industry. This dynamic figured hugely in the extremely variable quality of Italian automobiles produced by the FIAT company during those decades. Politically instigated and affiliated strikes by Italian auto factory workers were at that time virtually ongoing and continuous throughout that entire 20-year period and FIAT cars produced when workers were on strike were typically flawed and suffered from extremely poor quality. The opposite was also true (when the workers were happy and NOT on strike, the cars they produced were generally quite good and well-made). Communism does not work compatibly when admixed with Western style democracy, as we have seen so very many times in the past.

Today (and I mention Germany only in the context of an example I am well-acquainted with), Germany suffers both from the down-stream effects of this wildly diverse ethnic/demographic admixed clash of cultures, beliefs and religions, AND the lack of a highly trained, well-educated labor force, each of which is critically important in producing high-precision, high-quality consumer (automotive) products. I feel it is reasonably safe to speculate that traditional German cultural (“Judeo/Christian work ethic”) traditions of high-quality, precision work and exacting techniques have suffered horrifically as a direct result of this socio-political ‘sea-change’ to the point where today, the vaunted German reputation for uncompromising quality in its automobiles has fallen off remarkably.

In fact, it’s hard to dispute the evidence we have recently seen of the People’s Republic of China’s dynamic rise to industrial hegemonic status, all but superseding the former (and well-deserved) reputation of Germany’s products. Of course, modern China is an exceptional example at extreme variance with both the Western socio-economic model and its Marxist counterpart, so comparisons are arguable and fraught with complications and qualifications. But those who truly understand the political economics underlying the above chronology of events and changes since the 2WK would likely agree with this submission, to one extent or another.

OK. This is all backstory to preface a recent article that appeared in an issue of the periodical El Pais https://getpocket.com/read/f4aT4Aq1g8fI ... 1bc9bdea04

Make of it what you shall, agree or disagree at your discretion, but at the very least it should make all of us speculate about the future of German automobiles and most especially (in my case, at least) the changing status of Volkswagen AG and Porsche GmbH vehicles that so many of us take such pride in.

[Aaron_N]

Wow, that's an impressive off the cuff history and economics lesson!

Whatever happens to Germany, Porsche is in a good place purely on brand power. As long as they make products consumers desire, they will survive. You could argue they are starting to lose their way, but I think they will adapt and continue to be successful.

Mercedes, BMW, VW group I think are more at risk to their market share being eroded away.

My read on the global economy is that we are looking at a period of deglobalization, which severely hurts a country like Germany so dependent on import/export. America, to a lesser extent, will suffer as well due to all the off-shoring our major manufacturers have decided to do.

My greatest fear for all developed countries is that the next generations of engineers, scientists, geneticists, biologists, doctors, physicists, and researchers have all been distracted by the devices in their hands and no longer have the motivation or vision to drive progress on the same scale that it's been driven in the last 100 years. New technology (the smart phone and the algorithm) has bitten the hand that will feed it in the future.

[blueline]

Wow, that's an impressive off the cuff history and economics lesson!

Whatever happens to Germany, Porsche is in a good place purely on brand power. As long as they make products consumers desire, they will survive. You could argue they are starting to lose their way, but I think they will adapt and continue to be successful.

Mercedes, BMW, VW group I think are more at risk to their market share being eroded away.

My read on the global economy is that we are looking at a period of deglobalization, which severely hurts a country like Germany so dependent on import/export. America, to a lesser extent, will suffer as well due to all the off-shoring our major manufacturers have decided to do.

My greatest fear for all developed countries is that the next generations of engineers, scientists, geneticists, biologists, doctors, physicists, and researchers have all been distracted by the devices in their hands and no longer have the motivation or vision to drive progress on the same scale that it's been driven in the last 100 years. New technology (the smart phone and the algorithm) has bitten the hand that will feed it in the future.

Excellent observations.

Regarding German automakers, a friend sent me the following yesterday. As a word of precaution, I have not verified the numbers nor do I know if they are for Q3 only or year 2024 to date.

"VW, profits slump by 64%.
Audi, profits slump by 91%.
BMW, profits slump by 84%.
Mercedes-Benz, profits slump by 54%.

Germany's core industry is staring into the abyss."

More on automakers' woes in the latest article from SSO Report, highlighting some reckless spending and reckless strategy from Jaguar, Lotus, & Rivian. Regarding Rivian, VW Group's pledge to invest $5.8 billion in the company may come back to haunt VW. Time will tell. (Rivian's balance sheet is unbelievably horrendous. Rivian lost $1.1 billion in Q3 2024 and has lost $4.0 billion in 2024 YTD.)

Shakeouts, failures and consolidation would appear to be on the horizon for the world's auto manufacturers as a whole.

https://ssoreport.com/thoughts-nov-24

[914PUTSCH]

All very cogent opinions, guys! Given the utter sea-change shift in political fortunes America has just undergone, with talk of tariffs already taking shape on the new Admin's agenda, I'd hate to put my money on any prognostications at the moment, but certainly all of your takes on this rather complex are well-thought-through, expressed and appreciated, here. Given that my degree in International Economics like my JD and my MD, has been obtained through the Acey-Deucey Diploma Mill, I can't claim to be the complete authority on Just About Everything that my (insatiable) ego demands of me, but one thing for certain: keep your seats upright and full forward, your tray in the locked position, seat restraints securely fastened...and a 'brace for crash' attitude will always be handy in keep in one's hip-pocket (next to your Made in Occupied Taiwan inflatable PFD!).

Economics aside, I shall always be partial to Austrian and German developed sports machines (2o maternal roots). To borrow a couple lines from Walt Dizzy's 'Der Fuhrer's Face' (in 2WK), "Are Porsches not za Super cars, VW pioneered Supercars? Ja, zey are za Super cars, Super-Duper Supercars!" VW/PORSCHE über alles!

Seriously, reference an opinion (page A-20) aired in the 20-26 Nov issue of the EPOCH TIMES (aired by Michael Hochberg and Leonard Hochberg), I agree with them that one of the greatest threats to world economic stability at this time is the 'Nuclear wild-card' wielded so irresponsibly by Russia, N.Korea and Iran. Despite Putin's typical Russian bargaining tactic of making unrealistic demands, blustering with dire threats (in this case use of nukes) and ultimately settling for half of what he actually wanted (due to predictably weak Western resolve and lack of bargaining skill), it's always possible that at some deranged moment, someone might push the Big Red Button (accidentally or not) and the Genie would be irretrievably fissioned out of the bottle!

In further speculation, recalling the scientist in Nevil Shute's immortal 50s classic, 'ON THE BEACH', who goes out to his garage, warms up his Ferrari racecar and lets the CO overwhelm him, I'd probably grab wifie and head out to the most remote Mojave Desert wastes in 'Jezibel' (my 914) to await the Grim Reaper's arrival under such circumstances here. A return to the 'Stone Age' does have a certain John Zerzan https://johnzerzan.net/ appeal, but...I think NOT!

PS: As long as we're talking the possible End of Civilisation as We Know It, I highly recommend MONTY PYTHON's absolutely hilarious movie, 'THE MEANING OF LIFE. https://en.wikipedia.org/wiki/Monty_Pyt ... ng_of_Life']