Category: Essays

  • Made in Germany – will it stay a strong brand without the US partnership?

    https://bmw-grouparchiv.de/
    BMW HISTORY

    Europeans are starting to accept that they will have to go it alone and figure out how to deal with their own issues – now that the “Partners in Leadership” pact that lead the world is dead and gone.   Since the end of World War II – Germany gladly tamed its own internal monsters by relying on this partnership with the US.  Germany has followed the US, partnered with the US, implemented US strategies, fully trusting that the promises Reagan, W.H.Bush, Bill Clinton, W. Bush, and Obama made to the Germany and by extension to the EU. Now the world has to come to grips with the current change of direction that sometimes feels like a betrayal by the US. As Thomas Kleine-Brockhoff explained to Juurd Eijsvoogel, in the NRC News.

    “Now Germany is faced with the horrible truths as Germany has no nuclear weapons. The country is completely dependent on the American security umbrella. That awareness was of course there earlier, but only in abstract. Trump’s harsh attitude here has caused an acute sense of complete powerlessness in Berlin. The world is no longer about Europe. The problem why America engages here dates back more than seventy years ago. In itself it is understandable that America wants to shift its attention to other parts of the world. We could have seen that coming. You also saw it with previous presidents.”

     

    Trump’s wishes to focus the US inward.  He wants to cut the country off from the world and seems merely eager to please Putin, Kim Jong-Un, Xi JinPing, and the Saudis.  He welcomed Duterte and Erdogan, and the right-wing leader of Poland and Hungary.  He disregards all the leaders of democratic nations and voices his dislike of most European, NAFTA leaders and Australians.

    The West is floundering.  Blaming immigrants, closing borders will not be the most constructive way to run a country or economic region.  It doesn’t matter whether we are talking about the US or Europe.  The US wants to close its borders to immigration instead of strengthening the middle class. This policy will not succeed regardless of whether the US succeeds in offending the rest of the world and shutting itself into its tiny fortress.  Without a growing population and without international trade every country will move backwards.  The policy of breaking promises and committing inhumane and egregious acts will backfire for many years to come regardless of whether it is carried out in the US or in Europe. All we have to do is watch the Middle East and Africa to see that conflict doesn’t pay many dividends, except to weapons’ dealers, mining operators and eventually construction companies.

    Similarly in the EU, the ill-fated Dublin-Agreement burdens Greece and Italy as the point of entry states with all the problems of integrating immigrants.  Naturally this doesn’t work, it could never have worked.  Without a healthy immigration policy the EU will suffer terrible economic consequences.  It is already a tiny region when compared to China, India, Latin America and North America. Without immigration, the population and therefore the economy  will shrink, burdening the ever fewer young with the cost of caring for an expanding older population.

    Ronald Barazon states in his article in the DWN: ” With a realistic attitude that emphasizes the need for immigration, meets foreigners positively, but does not close their eyes to problems and needs, a constructive policy should be possible.

    The US and Europe are partly responsible for the prevailing chaos. The interventions of recent years – from Afghanistan to Iraq to Libya – have been driven by a very positive effort to eliminate brutal dictators in these countries. However, not a flourishing democracy followed, but the abolished rulers were replaced by numerous other brutal actors who are now triggering the waves of refugees. Currently, too many politicians are misusing immigration as a means of concealing their many failures in other areas. “

    Strengthening the middle class works wonders for stability.  That role falls on investors and business leaders. Politicians are too dependent on donors and simply carry forth policies that are in the best interest of a few wealthy donors. Only when global business leaders realize that an eroding middle class erodes ROI, will the world move in a better direction.  Perhaps things have to get quite terrible in terms of ROI before business leaders and politicians get personally affected enough to choose change. In Europe that time is now.

  • Trade Wars: What will the multi-billion dollar trade wars accomplish for the US?

    http://www.businessinsider.com/the-art-of-the-deal-royalties-trump-2017-6
    http://www.businessinsider.com/the-art-of-the-deal-royalties-trump-2017-6

    Trump Supporters are exhilarated about their US created global trade wars 

    Trump supporters approve of the US presidents actions, words and attitude at historic levels. 90% approve of everything Trump does or says, not everyone agrees.  Yet, many wonder whether the GOP actually is following a plan:

    “Yes, they have a plan. No, I don’t think it will work,” said Bill Reinsch, a senior adviser at the Center for Strategic and International Studies. “The plan is always push harder, demand everything and offer nothing.”  Source:  South China Morning Post

    European’s, especially Merkel, are frightened by the changes imposed on the EU. The situation depends on the individual global companies business strategies.  Many European and Asian companies are baffled by Trump’s strategy.  For many decades they have listened to many US presidents and their “Partners in Leadership” promises and in the spirit of collaboration have created hundreds and thousands of jobs for Americans in the US.

    https://global.handelsblatt.com/mobility/vw-bmw-daimler-trump-import-895206

    Das Handelblatt’s, Lukas Bay, reports: “The US president has threatened European automakers such as VW, BMW and Daimler with a levy. He’s forgetting that the Germans have huge plants in the US.  At the time, he warned that BMW and other carmakers could face a 35 percent import duty for cars not built in the United States. He targeted BMW because it is building a new plant in Mexico. Trump doesn’t seem to realize that the BMW plan in Mexico is there to meet rising demands for cars in Latin America.” BMW actually exports cars made in the US by American workers.   Source:  Das Handelsblatt

    Der Spiegel reports:  “Executives at Siemens, the global engineering giant, are still relatively relaxed at company headquarters in Munich. Siemens operates its own plants in the U.S. for products with high steel or aluminum content like trains, gas turbines and ultrasound equipment. In theory, at least, its subsidiaries could buy raw materials or semi-finished products locally to circumvent the punitive tariffs. But that does not apply to special alloys that are not produced in the U.S. They would have to be imported from Germany and would be slapped with the additional tariffs.  The biggest concern is not the impact the trade tariff’s have on the US – German trade – it is only 4% for many companies so they can withstand that comfortably.

    The bigger issue that companies and countries are grappling with is cheap steel that is now diverted from Russia, India and Turkey.  Since these companies were not given a temporary exemption they have dumped their inferior products in the EU for super low prices.  The EU is more worried about the effect these inferior steel will have on the EU brand around the globe as cheap inferior products are making it on the market.  It will not affect the US either in trade nor in taxes.

    In Germany for instance 95% of all wealth is created by small and midsize firms. This is the reason why Germany is thriving and able to withstand economic upheaval.  Germany has a very strong middle class that has been growing jobs.  In the US the Middle Class has been eroded by corporate welfare laws that favor large global conglomerates.