Bestselling author Marc Friedrich argues that we are still making the world’s dumbest energy policy. To change that, realism and less ideology is needed. Due to the high energy prices, more and more companies are moving abroad or have to close down, warns the financial expert.
“Germany must die!” is the title of a popular song by the Hamburg punk band “Slime”, to which people like to dance the pogo. Can a country die? Yes, first its economy and sooner or later the whole country, because the economy is the heartbeat of a country. And when the heart dies, everything else stops too.
The patient “Germany” was admitted to the emergency room with a number of conditions which have recently been rapidly deteriorating and the country is now in intensive care. At the moment we don’t have a cardiac death, but a number of warning signals that an acute and severe heart attack is imminent. We see atrial fibrillation in the form of rapidly increasing energy prices and massive insecurity among citizens, which is expressed in reluctance to buy. In addition, a heart stumbling through obviously overwhelmed politicians and blunt warnings from concerned industry representatives. And there have already been a few minor infarctions in the form of short-time work and the insolvency of the first companies. Even a layman would attest: things are not going well for the patient and imminent danger is imminent.
The situation is getting more and more dramatic. You have to rub your eyes and realize that you’re not trapped in a nightmare. If someone had told you a few years ago that we in Germany were talking about the energy crisis, power outages, heating halls, empty shelves and the Green Party’s demand for arms deliveries, you would have rightly dismissed them as cranks or conspiracy theorists. But now we are seeing exactly this paradigm shift at breathtaking speed and the country’s decline with it.
Marc Friedrich is a six-time bestselling author, financial expert, sought-after speaker, pioneer, free spirit and founder of the fee-based consultancy Friedrich Vermögenssicherung GmbH for private individuals and companies.
His new bestseller was the most successful business book of 2021: The Greatest Chance of All Time – What we now have to learn from the crisis and how you can benefit from the greatest wealth transfer in mankind
More and more companies are complaining about the high energy prices and associations and industry representatives are warning of a wave of insolvencies and de-industrialization in Germany.
Because of the immensely increasing energy and electricity prices, not only do we citizens come under more and more pressure, but also the German economy and industry. Above all, the energy-intensive sectors such as chemicals, glass, paper and metal have their backs to the wall. Increasingly, companies are starting to throttle their production to save costs. Employees are sent on short-time work and investments are stopped. Speaking of investments: Foreign companies will think twice about investing in Germany, a high-tax country with record energy prices and tough bureaucracy.
Likewise, ten percent of companies are already considering moving production abroad in order to get energy costs under control again and thus remain competitive on the global market. Others have already given up and closed the gates completely or had to file for bankruptcy. Unfortunately, other companies will follow if the situation does not improve quickly. The inevitable recession will further aggravate the situation for many companies and citizens. Germany’s spectacular decline will go down in the history books just as much as its rise through the economic miracle: From an economic powerhouse to heating halls within a few years.
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The colossal rise in producer prices shows how precarious the situation is.
These last rose in August by 45.8 percent to the highest level since the data was collected in 1955!
Compared to the previous month alone, it was up 7.9 percent!
The biggest cost driver was energy: coal, oil, gas and electricity more than doubled over the year. The increase in electricity is particularly drastic with a plus of 174.9 percent.
Important to know: Producer prices signal further adversity, because they have always been seen as a precursor to inflation.
The companies have to pass on the rising prices to the end consumer, otherwise they face bankruptcy. If they can pass this on, this in turn means further rising prices and thus a further burden for the citizens. Inflation will continue to be fueled. This then results in consumers being reluctant to buy, which can be seen in the following chart. The GfK consumer climate index has set an all-time negative record:
Almost half (47.5 percent) of German companies will increase prices. In the food industry, almost all companies will try to pass the cost on to consumers.
What we now have to learn from the crisis and how you can benefit from the largest wealth transfer in human history – Marc Friedrich
The sources of danger for the heart attack of the economy arose from the accumulation of political mistakes in recent years due to hubris, complacency and dogmatically blinded ideologies:
We are the only country that shuts down safe and working nuclear power plants, while everyone around us wants to switch on and even build new nuclear power plants.
The fact that the EU has now also classified gas and nuclear as “green” with the taxonomy is another slap in the face of German politics and de facto the total declaration of bankruptcy for German energy policy in recent years.
3. Sanctions against one of the main suppliers of cheap raw materials and energy
4. Unhealthy dependence on Russia
The sanctions are working – unfortunately for us!
First of all: what not everyone knows: the majority of the world community is not going along with the sanctions and is happily continuing to trade with Russia. This then takes on such grotesque features that we buy expensive Russian gas via China or India.
The fact is that the sanctions have failed and are hitting us the hardest, while Putin is making more money than ever with his gas and oil sales. His income from the sale of raw materials far exceeds the costs of the war.
5. A failed currency experiment with immense costs – both financial and social
6. Ignoring demographics
7. Resting on laurels
8. Lack of investment in education, research and innovation
All of this will permanently endanger Germany’s productivity and competitiveness. Security of supply and thus our prosperity and social peace are also at risk.
A prime example of the downturn is the former driving force behind the German economy, the automotive industry. In 2021, production fell by 11.7 percent, only to lose another 2.9 percent in the first half of 2022 compared to the previous year.
Whether our car companies will complete the transformation process and survive is anyone’s guess. Likewise, whether the mobile future is actually electric and where the electricity required for this (I won’t even start with the raw materials) should actually come from? Because the truth is that neither the sun nor the wind are currently able to provide a base load.
But things are not only looking bleak in the automotive industry. Industry and trade are now sounding the alarm. “Many are up to their necks in water,” says Hans Peter Wollseifer, President of the Central Association of German Crafts (ZDH). Politicians must step in quickly with state aid, otherwise there is a risk of a wave of insolvencies in the trades.
A survey by the Federal Association of Medium-Sized Businesses BVMW among 835 companies surveyed in Germany shows how dramatic the situation is. Accordingly, more than 40 percent of German medium-sized companies see their existence threatened.
The fact is: if Germany continues like this and de-industrialises, it will lose massively in terms of productivity and competitiveness, which will cost jobs, social security and prosperity. We must act now!
What can be said is that we are still making the most stupid energy policy in the world.
A good symbol of the current crisis is the nationalized energy supplier Uniper. He had relied 50 percent on Russian gas, which was his undoing. Germany shares the same fate: we also rely on Russian gas for 50 percent.
Politicians still have time to prevent sudden cardiac death. But that would require more realism and less ideology and dogmatism. This also includes the admission that we cannot do without clean nuclear energy or fossil fuels at the current time.
Unfortunately, it is rather questionable whether she will do so. The following points would be important to make Germany self-sufficient and to guarantee security of supply for the business location:
Energy has never been as expensive as it is now. But instead of panicking, you should calmly check potential savings at home. As our guide shows, there are many of them.
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