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For the First Time Since 1991, Germany’s Trade Surplus Vanishes

July 4, 2022

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8:39 pm

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61 comments

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Economics

Germany balance of trade, from Tweet below

Good Morning from #Germany, which is falling as an economic powerhouse on a global scale. Germany’s trade surplus is gone. Foreign trade balance came in at MINUS €1bn in May, which is the 1st negative print since 1991 due to its energy problems & weakness in manufacturing. pic.twitter.com/HnRBwNaQon

— Holger Zschaepitz (@Schuldensuehner) July 4, 2022

Suicide Watch for Deutsche Bank

BBG: German bankers fear a surge in defaults if Russia cuts off the gas supply

Deutsche bank on suicide watch again

— Alessio (@AlessioTMAD) July 4, 2022

Germany’s Model is Ugly

Germany’s growth model has been to import cheap energy from Russia, use that to assemble manufactured goods and export those goods to the rest of the world. While Germany now seeks new energy suppliers, its trade balance and that of the Euro zone will look ugly. That’s all… pic.twitter.com/DiEsyuXZkA

— Robin Brooks (@robin_j_brooks) July 4, 2022

Germany’s Stock Market Cap

The fall of Germany in one chart: German total mkt cap as % of global mkt cap has hit another All-Time low at 1.97%. Only 1 German comp, Linde, is among global Top100 when measured by mkt cap. 2nd largest comp SAP #110, 3rd largest Deutsche Telekom #123, 4th largest Siemens #127. pic.twitter.com/FXMDZPxtok

— Holger Zschaepitz (@Schuldensuehner) July 4, 2022

Nitrogen Restrictions

https://twitter.com/SNMilitary/status/1543956777389146113

Battle of the Bulge

😂 https://t.co/D7ZSyDGku3

— Ginny Webster ☕🍷 (@GinnyWebster) July 4, 2022

Mandatory Measures to Drastically Reduce Nitrogen Emissions

Please note Dutch Farmers Angry Over Mandatory Measures to Drastically Reduce Nitrogen Emissions

Farmers in the Netherlands have been angered by the government’s plans for tougher measures that would drastically reduce emissions of nitrogen oxides.

The Dutch government unveiled its goals on Friday, mandating reductions of up to 70% in many places and as high as 95% in others in a bid to protect nature — or what the cabinet called an “unavoidable transition”.

“We have to emit so much less nitrogen, and unfortunately the agricultural sector emits a lot,” explained Christianne van der Wal, Minister for Nature and Nitrogen Policy.

The small, densely populated country of 17.5 million has a large animal population — nearly four million cattle, 12 million pigs and 100 million chickens.

Population Picture

The Message

Tiny Netherlands is the second-largest agricultural exporter in the world after the US.

But more cows, pigs, and chickens are unacceptable even as the cost of food is soaring globally.

How Long Before Putin Shuts Off Natural Gas Delivery to Europe?

The big question of the day remains: How Long Before Putin Shuts Off Natural Gas Delivery to Europe?

Here are the two key questions of the day Europe needs to address: How long and what’s the economic impact?

Some readers commented Putin would not cutoff the gas as it is a source of revenue.

Don’t be so sure of that. A cutoff does not have to be permanent. It could be for a week. Also drastically reduced supply could have the desired impact that Putin wants.

A Laughable Explanation of the G7 Oil Price Buyers’ Cartel Emerges

It’s important to note that a huge decrease in supply as opposed to a total cutoff would cripple the EU while keeping money flowing to Russia. That’s more likely than a total shutoff.

These outcomes are all in the hands of Putin. The EU has no control of supply, it is a buyer not a seller of energy.

Yet, the EU thinks of creating a “buyer’s cartel”.

For discussion, please see A Laughable Explanation of the G7 Oil Price Buyers’ Cartel Emerges

Meanwhile, please note the battle between the Greens and the realists is coming to a head.

Second, please note the export chickens are coming home to roost. Germany, Japan, and China are all struggling with exports. This is what happens when the US goes on a buyer’s strike.

It’s even worse for Germany with its decimated trade ties with Russia and China.

This post originated at MishTalk.Com.

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61 Comments

Newest

Oldest Most Voted

Bam_Man

4 years ago

I have a a funny feeling that Germany will soon be separating itself from the suicidal death-cult of Eurotardistan.

I predict that within the next 18 months they will leave the Euro (if it still exists by then), EU and NATO and become a “non-aligned” country – much like Switzerland – which will allow them to have closer commercial and diplomatic ties with Russia.

JackWebb

4 years ago

Reply to Bam_Man

When has Europe ever done anything that quickly since 1945, and probably long before?

8dots

4 years ago

Russian forces might move on the Mariupol/ Kharkiv line, sandwich Karamators & Slovyansk from both sides, east and west, blockade them,

blow them up, until they give up. Summers are for mopping up. Winters are for cracking NATO.

8dots

4 years ago

Europe have to solve her chronic negative energy deficit with nukes and mini nukes. France, Germany, Italy… have to beef up their defense industries, to survive on their own, for more political clout and for export.

JackWebb

4 years ago

Reply to 8dots

All of that is long-term. Imagine a city on fire, and someone saying, “We need to buy fire trucks and tanker planes.” Well yes, that’s certainly true, but what about that fire right now? Italy is going to build up its military? Would that be the same Italian military that was defeated by the Ethiopians? LOL

8dots

4 years ago

Eurozone trade deficit/ surplus :

Red, energy : hopefully a negative spike to ignore, under 2013 lows, when Brent was above 100, before the 2014 collapse. Red might stabilize at higher negative level if Ursula Von der behave.

Blue : peaked in 2016 when export to China was booming. Since 2000 blue was never negative. That might change.

If both Blue and Red are in negative territory, the Euro will decay and DXY will rise above Nixon trading range towards the 1999/2001 level.

8dots

4 years ago

It’s either EU19 or NATO32.

ZZR600

4 years ago

Looks like we will benefit from price controls in the UK

https://www.theguardian.com/business/2022/jul/04/john-mcdonnell-calls-for-strict-price-controls-fuel-food-basics-cost-of-living-crisis

Obviously, when everything disappears off the shelves they will blame in on Putin

Scooot

4 years ago

Reply to ZZR600

I expect they’d introduce rationing.

JackWebb

4 years ago

Reply to Scooot

Maybe America will have to organize convoys to resupply Britain? LOL

prumbly

4 years ago

I guess EU leaders are wayyyy too arrogant to do the two things they should be doing:

1) Admitting they were wrong allowing themselves to become so completely dependent on Russian energy in the first place

2) Making nice with Mr Putin

The problem is EU bureaucrats have little to lose personally, with their huge, guaranteed salaries. They won’t be the ones paying the price for their hubris.

Bam_Man

4 years ago

Reply to prumbly

Their “huge, guaranteed salaries” will soon be paid in hyper-inflated, near-worthless Euros.

JackWebb

4 years ago

No one knows what Russia will do. There are three camps: 1) Nothing, 2) Temporary shutoff, maybe even just the threat, 3) Shut ‘er down for quite a while. No one in “the West” should ever forget just how outrageously “the West” has acted. Nor should anyone have any illusions. The strategic initiative is not “ours,” but “theirs.” There are prices to be paid for stupidity. We will soon learn what those prices might be.

shamrock

4 years ago

Biden considering dropping Trump’s China tariffs to ease inflation pressure. Stocks up.

PapaDave

4 years ago

Reply to shamrock

Lets hope so.

But then, will China invade Taiwan?

JackWebb

4 years ago

Reply to PapaDave

They’re not ready yet. Thankfully, by the time they’re ready I will be dead.

JackWebb

4 years ago

Reply to shamrock

Crumbs.

prumbly

4 years ago

Who knew that the Germans were this stupid?

effendi

4 years ago

Will Germany ever get back to a trade surplus? Any LNG they import to replace Russian piped gas must cost multiples of piped gas. That means a permanent reduction of production of energy intensive goods for export in addition to paying the extra for the LNG denting the balance of payments.

Also one thing I never here the MSM mention when they say exports to Russia will be reduced for decades is that also means exports to many countries in Central Asia will also be reduced as the logistics of shipment across Russia becomes more expensive without depots in Russia that supply both the near and far reaches of Russia as well as all the Central Asian former soviet nations,

TexasTim65

4 years ago

Reply to effendi

This is indeed the crux of the matter.

Gas from Russia is just the tip of the iceberg. The cheap nuclear power is being abandoned, as Mish noted, farmers are going to be forced to stop farming over Nitrogen (lol). Basically doing business in the EU is just getting more and more expensive which makes Germany less and less competitive.

The UK was lucky it got out when it did.

HippyDippy

4 years ago

Reply to effendi

Maybe if there remains a Germany much longer. With every politician working extra hard to come up with the absolute worst decisions for their countries, there’s liable to be some changes in the near future. Personally, the last 10 years have looked more like an Ayn Rand novel than anything else to me. Just my opinion.

Doug78

4 years ago

If you were leader of Germany or even all of Europe what would you do? I am curious. I hear a lot of can’t do this and shouldn’t that but that is all.

PapaDave

4 years ago

Reply to Doug78

That’s about all you ever get here. They are all so sure of their criticisms until you ask about their investment ideas and all I hear is a bunch of scared kids, waiting for the depression, cowering in the shadows with their gold and cash.

goldguy

4 years ago

Reply to PapaDave

Nothing wrong with gold and cash, especially now

PapaDave

4 years ago

Reply to goldguy

Gold is a dead asset. Historically, a terrible investment.

As Warren Buffett likes to point out: if you bought $10000 in gold in 1942 it would be worth $500,000 today. Whereas $10000 in a US index fund would be worth over $51 million today. 100x the return.

And the cash is still worth $10000. But it buys a heck of a lot less.

goldguy

4 years ago

Reply to PapaDave

Hmmm, funny, I have made somewhere between 500k and 1mm over the last 15 years or so buying and selling gold stocks… Not bragging, just showing what can be done with the proper company’s and some patience.

You sound as if your money is burning a hole in your pocket…

Have you bought your first 10k in I bonds yet? Currently at 9.62% basically risk free

PapaDave

4 years ago

Reply to goldguy

I can understand owning gold stocks. I have occasionally owned them.

But over the last two years, oil and gas stocks have been incredibly rewarding. Far outpacing gold stocks.

goldguy

4 years ago

Reply to PapaDave

Gold stocks are due for a decent bounce, be on board

PapaDave

4 years ago

Reply to goldguy

I don’t see the reasoning. Costs are going up for gold miners, but the price of gold isn’t.

I am interested in the long term scenario and I just don’t see it in gold.

But that’s what makes a market. Differences of opinion.

Felix_Mish

4 years ago

Reply to goldguy

I bonds? What are they?

goldguy

4 years ago

Reply to Felix_Mish

https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm

prumbly

4 years ago

Reply to PapaDave

Historically, investing in an index fund is a terrible idea. If you had bought $10K in the S&P index in 1998 you would now have $60K, but if you had bought Amazon stock you would now have over $4M.

PapaDave

4 years ago

Reply to prumbly

Lol! Hindsight on a successful stock! Why didn’t you pick Kodak or Blockbuster? Too funny.

prumbly

4 years ago

Reply to PapaDave

You clearly missed my point. Saying that gold is a bad investment because it under-performed a US stock index in the past is just as silly as what I put in my post. Investments are for the future, not the past.

Do you think the next 50 years in the US are going to be as good as the last 50? Is that the track we’re on?

PapaDave

4 years ago

Reply to prumbly

Wow! You just don’t get it do you?

Even an index fund, which includes large numbers of stocks (winners and losers) did 100x better than gold over a 70 year time frame.

You are welcome to your gold.

I will stick with stocks of productive companies.

Christoball

4 years ago

Reply to PapaDave

If we all became millionaires the same way we would never become millionaires.

prumbly

4 years ago

Reply to Doug78

It’s abundantly clear what they should do – drop their idiotic, ineffective sanctions against Russia and stop supplying Russia’s enemies with weapons. If the Germans want to end their reliance on Russian energy they need to do it slowly over years, not in one suicidal, panicked, self-destructive action.

TexasTim65

4 years ago

Reply to Doug78

There is no defacto leader of Europe so it’s impossible to imagine someone with that kind of power.

That said, Germany should never have abandon Nuclear energy, nor should they have stopped buying cheap Russian gas. I personally would have let Ukraine go on day 1 because it’s clear where its going to end anyway. If the US wants to prop up Ukraine let them but if I was Germany I would not have done any sanctions.

Germany should probably also abandon the Euro too since it’s bankrolling multiple dead beat countries. They will have to take some write downs but in the long run will be much better off without doing the bankrolling since that’s also hanging over their heads until the stop doing it.

Doug78

4 years ago

Reply to TexasTim65

Basically you are saying do what Russia says and weaken yourself even more.

prumbly

4 years ago

Reply to Doug78

Huh? Most of the world isn’t sanctioning Russia – is that “doing what Russia says”? Is China doing what Russia says? India? Mexico? 170 countries!

TexasTim65

4 years ago

Reply to Doug78

I’m saying I would not wreck my entire country for someone else’s country that I am not treaty bound to defend.

Russia and Ukraine are like a husband and wife having a domestic issue in public (husband hit the wife). Germany (and by extension Europe) could choose to stay out of it or get involved and pick sides. They decided to pick the side of the wife even though they depend on the husband for their livelihood.

You asked what they should do and I’m saying they should not have picked sides. America can pick sides because America doesn’t depend on Russia for anything.

Doug78

4 years ago

Reply to TexasTim65

Russia and Ukraine are not like a husband and wife. They are different countries and your analogy does not fit in any way. Germany and Europe did decide to get involved and they decided it for their reasons which are very logical.

I asked you what you would do now and you responded with the “they shouldn’t have done it” when that is not what I asked you. I asked you what would you do now. I guess you don’t have a clue.

TexasTim65

4 years ago

Reply to Doug78

Russia and Ukraine were once married (ie belonged to the USSR) prior to it’s breakup. So maybe husband and wife should be changed to 2 ex’s fighting over who gets the kids (those eastern provinces + Crimea) in public and the husband hits the wife.

I already said what I would do now.

1) Cut off any/all support for Ukraine and rescind sanctions on Russia. Re-open and commit to Nord 2 pipeline.

2) Start getting those nuclear reactors back online and/or start the 10-15 construction process on new ones. The transition to green energy is a multi-decade effort so nuclear still makes sense for several decades while transitioning to wind/solar.

3) Start planning to leave the Euro (something Mish has been discussing since the PIIGS issues back in 08) since Germany is clearly the country most equipped to go it alone (better than the UK).

BTW, America is already cutting off the gas to Europe (Biden not allowing LNG plant to restart to keep gas prices here low for political reasons) and it hasn’t even been a few months time since the US pledged to help Europe transition from Russian gas. Not a real shocker but should open the eyes of anyone in Europe who thinks they can get away from having their gas supplies cut on a whim.

Doug78

4 years ago

Reply to TexasTim65

The US and Great Britain were once together too but no longer. The husband-wife analogy is bull unless you look at it as Russia loving to screw Ukraine and slap the country around.

So you want Europe to declare Russia winner, buy Russian oil and gas and take that time to build nuclear power plants. As an aside Germany leaves the Euro also.

Your first proposal is off the table already. If Europe comes back to Russia you can be sure that Russia will make sure Europe can’t leave it again which rolls into the second proposal which assumes that Russia will not stop Europe from building reactors to make Europe free from Russian energy. Your last point that Germany leaves the Euro is not attractive to Germany because the new currency will appreciate so much that Germany’s exports to the rest of Europe couldn’t afford them. Being in the Euro is an great advantage for Germany and will remain so.

Have you read Germany’s justifications for weaning themselves off of Russian energy and for supporting Ukraine? If not you should. You may not agree with them but they do set out why they chose as they did. You are assuming that Russia is still viewed as a benevolent power in Europe. It is not and they says everything.

Christoball

4 years ago

Reply to TexasTim65

Wife cheated on husband and keeps flirting with NATO

Lisa_Hooker

4 years ago

Reply to Doug78

Doug, for me it’s an even toss-up between Bali and Tahiti. As my Dad put it: “The more you ‘rassel with a turd, the more shlt you get on your hands.”

Bronco

4 years ago

“Suicide Watch for Deutsche Bank”

…

Always a candidate to be a Black Swan.

$1.34 trillion balance sheet

$17 billion market cap (and heading South)

What, me worry?

PapaDave

4 years ago

Reply to Bronco

So how are you going to trade this?

Captain Ahab

4 years ago

No wonder FromBrussels is frustrated.

TexasTim65

4 years ago

The cost of supporting Ukraine is rising rapidly and Germany essentially bankrolls the ‘PIGS’ countries so imagine how bad things are going to be there in a few months time when Germany is no longer running a surplus to bankroll those countries.

The leg is officially turning black now. Europe should have cut off the toe (Ukraine) months ago but the leg may soon have to go.

Mish, I am not sure the US is on a buyers strike as much as energy cost making Germany not viable economically.

HippyDippy

4 years ago

Germany falling? I guess this is the beginning of some very interesting times indeed!

PapaDave

4 years ago

Food, water and energy. Three things we are very dependent on.

I know how to invest in energy. Looking for ideas on food and water.

TexasTim65

4 years ago

Reply to PapaDave

On the food side of things it’s mostly commodities trading. Not for the faint of heart but about 15 years ago I knew a guy who liked to do it (instead of stocks) and when he was right he made a LOT of money but when he missed he lost a lot of money.

I don’t know any company or companies that own water rights. That’s typically always owned at the state or country level and not for sale to companies for obvious reasons.

HippyDippy

4 years ago

Reply to TexasTim65

Nestle owns the rights to bottle water from a river near me. And probably you as well. For example, coke had their Deja Vu bottling plant in Dallas set up just downstream from the waste management treatment plant on the Trinity River over 20 years ago.

TexasTim65

4 years ago

Reply to HippyDippy

So they can bottle water from the river. Are they guaranteed ‘X’ amount of water such that they can divert it. That would be ownership of the water because it means if the river was running dry they could collect 100% of it.

My guess is that’s not the case and even if it was, I’d also wager a lot of money that should that river ever run low/dry that their guarantee would be rescinded in a heartbeat by politicians because you can’t live without water.

HippyDippy

4 years ago

Reply to TexasTim65

I know around here it has already affected the river. Never underestimate the corrupt nature of local governments. Keep in mind that in Florida, the state owns the rainfall even. No rain barrels allowed! Due to their deep concerns for the aquafer system of course. But they don’t mind draining the lands for corporations. Who actually run things. In related news, there is another county near me that used to be filled with small farmers. Bill Gates bought a lot of land there for farming, and coincidentally got the water usage regs rewritten to his benefit. Many of the farmers had to fold as it affected them so much.

JackWebb

4 years ago

Reply to TexasTim65

There was a big wrangle where I live over this. The usual nutcases killed the project, which would have been limited to a max of 15% of the river’s flow.

JackWebb

4 years ago

Reply to HippyDippy

So that’s why I never really liked Coke. LOL

Captain Ahab

4 years ago

Reply to PapaDave

Stockpile Evian!

JackWebb

4 years ago

Reply to Captain Ahab

We get our water from a well. Country living.

Lisa_Hooker

4 years ago

Reply to PapaDave

Papa, I tend to favor having shelter first, then I can wash down my food with water, while I still have some energy.

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For the First Time Since 1991, Germany’s Trade Surplus Vanishes

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