Trump has not given wings to US industry

Donald Trump

The US President visits the Whirlpool Corporation washing machine factory in Ohio.

(Photo: Reuters)

Berlin According to the Institute for the World Economy (IfW), US President Donald Trump failed with his goal of strengthening domestic industry. “Trump was unable to boost production or employment in industry or in the sectors he sponsored,” said IfW economic researcher Klaus-Jürgen Gern on the analysis published on Tuesday.

“Positive trends have already been initiated by the Obama administration or are due to economic catch-up processes. In the automotive industry, upswing tendencies have even weakened under Trump’s America First policy. “

According to this, US industrial production increased by a total of 7.2 percent from 2017 to 2019, more strongly than in most of the other large industrialized countries (G7). However, the high growth rates are largely due to catching-up processes after the American industrial recession in 2015 and 2016. Their trigger was the crash in oil prices, which had put the fracking industry in the USA under pressure in particular.

Trump has sponsored the steel and aluminum industries, for which he imposed protective tariffs in 2017. The Republican has also taken on the auto industry, for which a higher proportion of domestic production was stipulated in the newly negotiated North American free trade agreement.

“In none of the industries can a remarkable increase in production be determined for the Trump years,” said the IfW. In the steel industry, only the economic dip in 2015/16 was overcome and the level of the years 2010 to 2014 was reached again. The production level of the aluminum and auto industries did not increase in the Trump years.

The positive employment trend tended to slow down under Trump

The announced employment boom did not occur in any of these three sectors. In the aluminum industry, the number of employees stagnated, while in the steel industry it increased only slightly in line with the overall economy.

The positive employment trend in the auto industry began in 2010 and has tended to slow down under Trump. The share of the three industries in total employment in the USA did not change and remained extremely low at 0.3 percent.

“Trump has not given US industry any positive impetus. Supposedly good numbers are due to impulses before his term in office and a good overall economy, ”summarized the researchers. “Protectionist strategies are not suitable for providing sustainable growth impulses.”

It is more promising to rely on the strengths of the US economy in international competition. The coming President of the USA must better cushion the associated structural change – for example through targeted investments in infrastructure and education in the regions particularly affected.

More: These industries would benefit from a US President Joe Biden – also in Europe.

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Deutsche Bank has to be credible – opinion

Mockery and ridicule were safe for Deutsche Bank after scandal after scandal in recent years. It was a criminal organization, was one of the bad accusations, or a single “bad bank”, at least that is the title of a book about the recent history of the largest German financial institution.

We will probably only know in a few years whether Deutsche Bank is really clean today or whether it is still essentially a “bad bank”. Crooked deals often only come to light later. The board of directors around CEO Christian Sewing advertises that it is now making a “positive contribution” – for whoever. Is it for the customers, the shareholders? Or perhaps the investment bankers themselves who want to continue indulging in bonuses as if there was no tomorrow?

The latter is indicated by the handling of the internal bad bank, which the financial institution sold as a major liberation in summer 2019, but which in reality will produce high losses. Deutsche Bank lacks transparency in crucial areas, as research by SZ shows. There is a hint of balance sheet cosmetics, to put it in a friendly way, but also the suspicion that multi-million dollar investment bankers are continuing to serve themselves.

It starts with the fact that the Deutsche Bank has not sunk complicated loans from the real estate business into this balance sheet trash, but rather papers from investment banking; on the order of an entire Landesbank, by the way. Such an exercise is also called “bad bank” in technical terms. It is intended to relieve the balance sheet and is useful, for example, when an institution threatens to be crushed under the burden of bad loans or to withdraw from business. In the case of complicated project loans, it can be better if experts take care of realizing them as well as possible.

In the trading business, however, such a unit makes no sense because the traders know their market much better than any processing specialists. Unless they want to push away their losses to make their own business area shine all the brighter. Actually, the Remuneration Act for banks stipulates that bonuses must be frozen or even paid back if transactions turn out to be lossy. So has the bank now reclaimed bonuses or frozen them? One does not want to comment on what is telling.

In addition, the Deutsche Bank has long since sunk not only the stock business in its “Bad Bank”, which the financial institution has officially given up. It has also pushed loss-making investment banking transactions from bond trading there, which Deutsche Bank still has in its range of products. So if you want to know whether the business area is really buzzing as the bank wants you to believe, you have to offset the bad bank losses against the profits in investment banking.

The money house resisted the term “bad bank” with a sniff

In addition, the money house has euphemistically called the division “unit for the release of capital”, has fought against the term “bad bank” with a sniff, referring to the fact that the papers are mainly “quality” papers. In truth, however, the bottom line will be around nine billion euros in losses, so that, at best, the unit does not need any additional capital, but it does not “release” any, as Sewing clearly promised in July 2019.

In addition, the Deutsche Bank is silent about when the business in the Bad Bank actually originated. Was it possible that at some point securities were valued too optimistically and suddenly have to be written off again? After all, Deutsche Bank already had a bad bank, which was only closed in 2016/2017 after high losses. Only a small part of the papers from the old unit was transferred to the new Bad Bank. This in turn shows that this cannot be a legacy of the ancien regime. Obviously, it is about deals that were entered into under the aegis of Sewing’s predecessor John Cryan, with Sewing himself already on the board and Paul Achleitner the chairman of the supervisory board. Even then, the management team had promised a lot and kept little. The bank will be less risky and in 2017 it will be a “normal bank” again. But it is still a long way from that.

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The end of capitalism: is it coming soon?

Published on : Modified :

The Covid is just one sign, among others, of the limits of our thermo-industrial civilization based on the extraction and massive exploitation of natural resources.

It is therefore our overall functioning that must be rethought, starting with an economic system which, like all its predecessors, has a history that may come to an end: capitalism. But, why is it easier to imagine the end of the world than the end of capitalism?

Guests :
Hervé Kempf, editor-in-chief of Reporterre, which has just published Let capitalism die, it will be him or us, published by Le Seuil
Christian de Perthuis, Professor of Economics at Paris-Dauphine University, founder of the Climate Economics chair which has just published Covid 19 and global warming, advocacy for a resilience economy, at De Boeck Superior.

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Two thirds of Germans expect another lockdown – WHO chief warns of overloading the intensive care units

Fast two thirds of Germans expect it to rise again because of the dramatically increasing number of corona infections Closures of shops, restaurants or schools will come. In a survey by the opinion research institute YouGov on behalf of the German Press Agency, 63 percent said they had one Lockdown expect. Only 23 percent do not believe in it, 13 percent did not provide any information.

Under a Lockdown one understands far-reaching restrictions on public life. To combat the first corona wave, the federal and state governments had decided Schools and daycare centers to close as well Cultural and sports facilities to be closed to the public. Most Restaurants, shops and service providers were not allowed to receive customers, meetings for example in Churches or Sports clubs were forbidden. Gatherings of more than two people from different households were not permitted for weeks.

Chancellor advises because of the tense Corona situation Angela Merkel (CDU) and the prime ministers of the federal states on Wednesday in a video conference on how to proceed.

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The crash of the SAP share – economy

Christian Klein only moved to the helm of SAP in October last year. At first he managed the largest software company in Europe together with the American Jennifer Morgan. The 40-year-old has been the sole CEO since she left in April – and is now facing his biggest test to date.

On Monday, early in the morning, Klein explained his new strategy. The night before, SAP had surprisingly revised its forecast downwards. Both had consequences: when the stock exchange opened, the SAP share virtually crashed. Investors sold en masse. The paper gave way by more than 20 percent – the biggest price fall in more than 20 years. SAP is not just any company. The DAX company is the most valuable German stock exchange company. On Monday alone, the unprecedented decline in shares destroyed an arithmetical value of around 30 billion euros.

SAP_271020

“I do not sacrifice the success of our customers to optimize our margin in the short term,” Klein said on Monday morning. The sentence had consequences: The SAP boss, who started as a student trainee in 1999 and then worked his way up, not only lowered the short-term forecast for 2020, but above all also lowered the earnings targets up to 2023. That frightened many investors. “We are at a turning point,” emphasized Klein. The Walldorf-based group now wants to use the corona crisis to accelerate the change to a so-called cloud provider and to further move away from the traditional business with software licenses, with which SAP has become big and successful. According to CFO Luka Mucic, the group wants to invest a three-digit million amount to improve the range of cloud services. However, this will dampen the margin, which is much noticed on the stock exchange, for the next few years. In the 2019 annual report, the group had announced that the operating margin would grow by one percentage point per year, which was based on the strategy of Bill McDermott, Klein’s predecessor at the top of the group.

The changes should pay off by 2023 at the latest, says Klein. Then sales growth should accelerate and the operating result should increase in the double-digit percentage range. In 2025, revenues of more than 36 billion euros and an operating profit of more than 11.5 billion euros are expected. The traditional business with software licenses should only play a subordinate role. The share of the cloud business, on the other hand, should be around 85 percent.

Still, the question remains, why is the stock of a large company in the IT industry falling so badly? An industry that actually seems to benefit from the corona pandemic, as it accelerates digitization.

“During the Corona crisis, investors pounced on some favorite stocks that they believed were largely immune to the virus,” said Frank Rothauge, technology analyst at AHP Capital Management. Technology stocks in particular boomed in the months that followed after the March slump. Behind this was the expectation that software, internet and social media companies could even benefit from the corona crisis – unlike retail, aviation or the automotive industry – because the economy has to increasingly digitize itself.

SAP was one of the investors’ favorites. The share price rose between March and September from 87 to 142 euros. But now the company has announced that it is also affected by the Corona crisis because many industries are suffering, which in turn are SAP customers. “That caught the investors unexpectedly, so they are falling out of the clouds and selling the stock almost in panic,” says analyst Rothauge. He gives examples of why SAP is also suffering from Corona: Many companies are actually planning to switch to the new SAP S4 Hana technology. Many customers did not want to get consultants in-house because of Corona and would therefore postpone projects. Analyst Jochen Stanzl from CMC Markets sees the collapse of the SAP share as a sign of increasing nervousness on the stock market. “There was too much hope in the stock market, especially in technology stocks,” he says. Their prices rose in the summer well above the record levels that existed before the outbreak of the Corona crisis in February.

But at the beginning of September there was a setback on the US technology exchange Nasdaq, since then share prices have struggled to reach their old highs again. Negative news is particularly strong in such a phase. Stanzl points to a fact that he has been observing for a long time: “If the news is only rudimentary, investors throw a stock out of the portfolio very quickly and switch to similar papers.” The main competitors of SAP are the US companies Oracle, Microsoft and Salesforce.

“Those who are now selling did not understand our model,” said an insider. SAP would now invest so that things run better in the future. But apparently this message from Klein, the newcomer to the top of SAP, had not really got through.

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For the first time more than 1000 new corona infections in Denmark

Denmark – Denmark has recorded more than 1000 new infections compared to the previous day for the first time since the pandemic began. As emerged on Monday from figures from the state health institute SSI, 1056 new corona cases have been registered since Sunday. SSI director Kåre Mølbak pointed out, however, that this time, due to technical problems, this number is 28 instead of 24 hours and that the level is thus roughly the same as on Sunday.

On Sunday, the Danes reported a high with 945 new infections. However, Denmark tests much more than in spring, which is why the numbers can only be compared to a limited extent with those from March or April.

The development in Germany’s northern neighbor is being watched with concern. 145 people are now in hospital with a coronavirus infection, the highest level since mid-May. There were also six deaths on Monday. This means that more than 41 400 cases have been confirmed in Denmark so far, 708 people with corona infection have died so far. Based on the population of around 5.8 million people, the number of new infections every day is on a similar level as in Germany.

In the fight against the spread of the coronavirus, further restrictions came into force in Denmark on Monday. From now on, no more than ten people are allowed to gather in one place. Most people from Germany have only been allowed to enter the country for a valid reason since Saturday. From Thursday, the mask requirement will also be extended from local public transport to all public spaces such as supermarkets.

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Karstadt-Kaufhof boss warns of “massive shop deaths” – US authorities report more than 63,000 new positive tests

Schleswig-Holsteiner are allowed to continue after Denmark enter, although the number of new infections per 100,000 inhabitants within seven days in the state has been over 30 since the weekend. For Monday – as of midnight – the Robert Koch Institute shows an incidence value of 36.33. Denmark, however, counts a little differently in order to classify a country as a so-called quarantine country with corresponding entry restrictions. A quarantine country becomes a country if the average number of cases there is more than 30 per 100,000 inhabitants per week for 14 days.

The Danes had last Thursday Germany classified as such a quarantine country – with the exception of Schleswig-Holstein. The website of the Danish health institute SSI said on Monday that the weekly number of new corona infections for the state of Schleswig-Holstein was 16.2 per 100,000 inhabitants.

If the number of new infections in Schleswig-Holstein does not drop drastically, it should the borders will soon also be closed for Schleswig-Holstein residents. You would then also need a valid reason for entering the country or would have to present a negative corona test, no more than 72 hours old, in order to be allowed into the country.

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The Spanish government will increase the salary of public workers by 0.9%

The government of Pedro Sánchez will finally include a 0.9% increase in the salaries of public workers for the year 2021 in the draft general budget of the State of 2020, as confirmed by sources from the Ministry of Civil Service in the ‘NOW. The increase in public salaries will be approved tomorrow, Tuesday, by the Council of Ministers, together with the draft general state budget. The Ministry of Civil Service says that this approval is in line with the inflation forecast for next year and the expected revaluation also for public pensions, which will be 0.9% for 2021.

This increase is less than the 2% approved for 2020. The cost is around an additional 1.5 billion euros in a labor group, that of public employees, which today already involves a salary expenditure of 23 billion euros annual, according to data from the Ministry of Civil Service. This increase was not included in the budget plan presented in Brussels on October 15 due to internal discrepancies within the coalition government, as well as disagreement with the unions. While figures such as the Minister of Economy, Nadia Calviño (PSOE), opened the door to freeze public salaries, from United We Can insist on maintaining purchasing power and increase wages.

Along with this announcement, this Tuesday’s council of ministers will also approve the call for public vacancies, which will add 28,055 new jobs, an offer lower than last year’s 33,000 vacancies. Instead, the call will also include 8,996 internal promotion sites, the largest in history. The government, however, will approve it without the support, for now, of public administration unions.

The Sánchez government transferred the proposal to the unions on Monday afternoon. CCOO calls it “unilateral” and says that the Civil Service has “discredited social dialogue.” They also criticize that the increase of 0.9% has not been consulted. The union said in a statement that the proposed remuneration and public places “breaches” by the administrations the agreement with the unions to improve public works. They ask to include, among others, a salary increase of at least 8% in three years in the next general budgets.

Pre-agreement on budgets

The president of the Spanish government, Pedro Sánchez, and the vice-president, Pablo Iglesias, will present this Tuesday the draft of the general budgets of the State. This has been confirmed from La Moncloa this Monday night. Negotiations between the two government partners, PSOE and Unidas Podemos, continued this Monday afternoon and lasted until well into the night with two issues that failed to unravel: the purple party demanded the shielding of the minimum income vital and the regulation of rental prices. Finally, the Iglesias party has managed to snatch the commitment to regulate rents within four months and facilitate faster access to the living minimum income.

We can pressure Sanchez and he says now that there is no agreement closed by the budgets

United We Can has pressed until the last moment for the text to include measures to ensure the functioning of the living minimum income and to promote the regulation of rents. Until now, from the Ministry of Transport and Urban Agenda (PSOE), which has powers in housing, had not been open to regulate de facto rental prices, but to wait, at least, for the “market to stabilize” after the pandemic.

In turn, the rise of the Iprem, the indicator used to provide social assistance, and an increase in personal income tax have also been two of the battlehorses. In this last sense, Podemos wants it to increase for incomes of more than 200,000 euros per year, and has also expressed the desire to put more pressure on the wealth tax. Two measures, however, not presented by the Spanish executive in Brussels. What the government does calculate, however, is to raise 2,548 million euros in direct taxes. These will be part of the 493,836 million euros, a record figure, which the Sánchez executive plans to raise next year.

For now, the only known investment figure that affects Catalonia is 2.5 billion in transport and housing that the portfolio manager, José Luís Ábalos, said this Sunday in an interview with The newspaper, and have confirmed from the ministry to ARA.

€ 210,000 million, annual cost of the anti-pandemic economic policy

What is presented tomorrow, however, is only the draft. This pre-agreement will have to be sent to the lower house for a vote in the plenary of the Congress of Deputies, which is estimated to be the week of November 19 or 26, that is, a month from now.

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Brexit survey: German-British economy less pessimistic

German-British economy

A few months before the end of the Brexit transition period, the mood among companies is improving.

(Photo: dpa)

London Two months before the end of the Brexit transition phase, the pessimism of German-British companies has decreased somewhat. This was the result of a survey published on Monday by the German-British Chamber of Commerce and Industry in London.

Accordingly, a little more than 50 percent of the companies surveyed said that they were severely or very severely affected by the pandemic – in the summer it was still 75 percent. 20 percent (previously 15 percent) saw no effects or even saw an increase in their activities. Nonetheless, companies expect the general upswing to take longer than originally thought.

“Chemicals, automobile construction, pharmaceuticals, aircraft construction and suppliers are particularly affected,” said the chief executive of the German-British Chamber of Commerce and Industry, Ulrich Hoppe, of the German press agency. In addition, Great Britain is particularly hard hit by the Corona crisis compared to Europe. “In contrast to Brexit, however, Corona only has a strong short-term effect, in which one assumes that there will be no recovery.”

According to the autumn survey, travel restrictions, canceled trade fairs and events, a decline in demand and the cancellation of orders as well as canceled investments continue to have the greatest effects on companies. Many of them expect supply chains and business activities to be relocated, according to Hoppe.

Most companies are said to expect that London will sign a minimal free trade agreement with Brussels. But regardless of the outcome of the negotiations, a large majority expects that Brexit will negatively affect British economic growth by more than 2 percent in the coming year. The British government had temporarily declared the talks on the planned free trade agreement for the time after the Brexit transition phase from 2021 to be over. However, after assurances from Brussels, she returned to the negotiating table. The Brexit trade pact is intended to avert tariffs and reduce trade barriers.

As part of the study, 82 interviews with companies in the German-British economy were evaluated in October. It was part of the World Business Outlook of the German Chamber of Commerce and Industry.

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