The way I see it, the current German economic model is chiefly built around manufacturing, and the export of said manufactured goods. This model, at least in its current proportions, was only possible on the back of guaranteed access to cheap, reliable sources of energy i.e. coal and more recently natgas. Renewables are still unable to substitute for the likes of coal/gas when it comes to providing base load...and the Germans effectively threw themselves out of the Nuclear conversation and refuse to stick with coal long-term citing green goals.
Now, they are legitimately looking at cutting themselves off from piped Russian gas full stop. It doesn't look like even if they wanted to continue buying it, the US would ever allow it - if Nordstream 2 deep below the sea is not safe, the overland pipelines traversing through Ukraine, a warzone, (or Belarus, a potential future warzone) are probably not long for this world either.
There are hard limits to how much LNG supply from other sources (US, Mideast) can be scaled up. Even if they do, the economics of liquifying the gas, shipping it across the ocean and re-gasifying it can simply never compete with the costs of a pipeline. A lot of these manufacturing businesses operate on wafer-thin margins...an increase in cost of inputs of this magnitude is likely to cause a lot of damage long term. A lot of production could no longer be viable.
At the least, we're looking at a permanent downsizing of scale. At worst, we're talking almost near-complete deindustrialization (which would take away atleast a third of German GDP and lead to the country becoming a more Services-centered economy like UK). But a lot of Germany's existing Services economy is directly related to or performed in support of the Manufacturing, so the effect is likely to be compounded. There are also a lot of EU countries neighbouring Germany who's own economic well-being is dependent in one way or another on the German manufacturing industry.
www.reuters.com
The EU in its current form has Germany at its economic heart...soon, that could become France.
I'd like to hear the thoughts of people on the forum regarding the situation & potential outcomes.
++++
P.S. - Let's also talk about the Energy question. I for one refuse to believe that the almost irrational fear that Germany (and most of EU, except France) have for Nuclear is not the result of a multi-decade campaign by Russian actors & influence operations. They're drowning in a sea of Russian gas & they've literally thrown away the one life raft they potentially had to develop an alternative, green, base-load energy source.
The effects of that decision alone is likely to be the most profound when it comes to downstream effects.
@Ashwin @randomradio @suryakiran @vstol Jockey @BMD @Gautam @Picdelamirand-oil @Amarante
Now, they are legitimately looking at cutting themselves off from piped Russian gas full stop. It doesn't look like even if they wanted to continue buying it, the US would ever allow it - if Nordstream 2 deep below the sea is not safe, the overland pipelines traversing through Ukraine, a warzone, (or Belarus, a potential future warzone) are probably not long for this world either.
There are hard limits to how much LNG supply from other sources (US, Mideast) can be scaled up. Even if they do, the economics of liquifying the gas, shipping it across the ocean and re-gasifying it can simply never compete with the costs of a pipeline. A lot of these manufacturing businesses operate on wafer-thin margins...an increase in cost of inputs of this magnitude is likely to cause a lot of damage long term. A lot of production could no longer be viable.
At the least, we're looking at a permanent downsizing of scale. At worst, we're talking almost near-complete deindustrialization (which would take away atleast a third of German GDP and lead to the country becoming a more Services-centered economy like UK). But a lot of Germany's existing Services economy is directly related to or performed in support of the Manufacturing, so the effect is likely to be compounded. There are also a lot of EU countries neighbouring Germany who's own economic well-being is dependent in one way or another on the German manufacturing industry.
BASF seeks 'permanent' cost cuts at European operations
BASF said costs at its European sites must be cut to a "permanently" smaller size because of a triple burden of sluggish growth, high energy costs and over-regulation, with the German industrial giant's boss throwing his weight behind a planned expansion in China.
The EU in its current form has Germany at its economic heart...soon, that could become France.
I'd like to hear the thoughts of people on the forum regarding the situation & potential outcomes.
++++
P.S. - Let's also talk about the Energy question. I for one refuse to believe that the almost irrational fear that Germany (and most of EU, except France) have for Nuclear is not the result of a multi-decade campaign by Russian actors & influence operations. They're drowning in a sea of Russian gas & they've literally thrown away the one life raft they potentially had to develop an alternative, green, base-load energy source.
The effects of that decision alone is likely to be the most profound when it comes to downstream effects.
@Ashwin @randomradio @suryakiran @vstol Jockey @BMD @Gautam @Picdelamirand-oil @Amarante
