Vollgelaufene the basement, on the banks of stepped water bodies, and numerous lightning strikes: storm-like rains and Thunderstorms have made appearances in the night to Sunday in many regions of Germany for many rescue. In the Bavarian district of Garmisch-Patenkirchen had to be evacuated to a municipal District. There’s a stream after the heavy rains overflowing. Were affected, according to the police, dozens of villagers.
The fire Department in Nuremberg, Germany reported about 100 operations because of the severe weather. Predominately the basement had walked in the middle Franconian town. With a full completed basement, the fire Department had to fight in Westerstede in lower Saxony. Here is the carbon monoxide Warning equipment of the firefighters sounded the Alarm. A large contingent evacuated the affected buildings before and after a water sample taken from give the all-clear could be.
Attic fire after lightning strike
In Berlin, the fire-weather counted due to about 40 times since Saturday night. Among other things, the firefighters from advanced after a lightning strike to a roof fire. Otherwise, the rescuers reported mainly water damage or inserts due to loose components of the building.
On the timetable of the Deutsche Bahn, the weather, however, had a booth earlier on Sunday morning – less impact. There are no major faults were found, it was said of the track. Only on the route Cologne-Bonn, there is an overhead line fault. This was not, however, due to the weather. “Long-distance trains between Cologne and Bonn, to be redirected to. Part of the Stop Köln Hbf fails,“ tweeted the track.
In helmet village in the southern Harz mountains, North-West of Halle/Saale, Germany, was flooded a country road after a landslide and was closed to traffic. In addition, the trees by the severe weather toppled in Saxony-Anhalt, a few similar to the one in Thuringia. Here, the police reported, among other things, of covered roofs and ooded basements.
On Saturday Thunderstorms, hail and strong in many regions of rain in Germany in the handle had. Especially, it met first, in the North-East. In Wismar and the surrounding area the firemen had in the afternoon, approximately 65 operations, as a spokesman for the Regional control centre said. More than 40 liters of rain fell per square meter.
In Brandenburg, the Storm caused damage calculated in the regional control centre for emergency calls in Eberswalde a water. There is the control centre for the fire and civil protection, as well as the rescue service of the rural districts of Barnim, oberhavel and Uckermark delivery, according to the district water in the building.
Higher severe weather potential
Violent Storms have unloaded on Saturday in the neighbouring countries. In Switzerland, the Thunderstorms moved in, according to the news Agency Keystone-SDA initially in the area of lake Geneva, and brought heavy rainfall in the Western part of Switzerland. Locally, nearly 30 millimeters of rain fell per square meter from the sky.
For Sunday, the German weather service (DWD) of Franconia, and Saxony, predicted over the mid-to lower Saxony once again, heavy showers and strong Thunderstorms with elevated severe weather potential. Further to the northeast the longer it stays Sunny and dry. Further to the southwest of the South of Bavaria and Baden-Württemberg up to the Rhineland, there are with changing to heavy cloud cover, regional rainfall, with individual storms. The maximum temperatures are usually between 21 to 25 degrees in the East to 28 degrees in the South, and the lake is hardly 20 degrees.
In the Monday night gewittriger rain is about from the ore mountains about the middle up to lower Saxony and Westphalia, the next part is possible. The temperatures go back to 16 to 9 degrees. On Monday, it remains, especially in the southwest half, cloudy with bright intervals and isolated showers and strong thunderstorms.
Dhe time has become sluggish. She pulls up and gradually reaches the floor, which looks strange. But it is not the time that is hanging here, but a carpet-sized piece of floor coating, cleanly peeled off the bridge, that a caring passer-by has put over the green railing. The covering hangs there like one of Dalí’s melting clocks from which time seems to drip, and the effect is noticeable. Today is Sunday. Like yesterday. Or not? The corona virus changes how people feel about time. The sun is where it was yesterday, the temperature is the same, the silence too. In this silence, the people of Cologne are drawn to the Rhine, they like to do that, always, for every occasion, but now they are looking to see if the river is still there and are reassured. Low water, but the Rhine flows. It flows so deceptively as if nothing had happened. The direction of the flow is also right, and the zoo bridge is there, so we go over the stream on our expedition, on the footpath next to the six-lane bridge in the north of the city, and keep our eyes down.
The zoo bridge has been renewed, its lanes sparkle in silver. Not even the shadows of the cable car cabins break the picture because the cable car has ceased to operate. The distance of one and a half meters from each other cannot be maintained in the cabins, and who likes to drive alone? Only drivers do that. Occasionally someone overtakes us, then the sound swells up and down again. Images of the oil crisis come to mind. Back then people were walking on the road. Nobody does that today. The passers-by remain well on the footpath, they politely bow and move as if there were dog piles everywhere. At the same height, they turn their heads and hold their breath. Just don’t look into the eyes. It could be the Grim Reaper. We climb over swollen seams in the asphalt, see the rust in the railing and the moss in the joints. The pavement reveals everything about a city.
The Chancellor is in top form in times of corona crisis. Angela Merkel explains complicated population doubling rates and reproductive numbers. But she also knows everyday things. “They have to be washed or ironed regularly, put in the oven or in the microwave,” Merkel explains how to care for respiratory masks. “Even if that sounds a bit housewife, so to speak.”
The omniscient state – embodied in the chancellor. The subjects are explained life down to the smallest detail. With this self-image, Merkel takes “measures that have never existed in our country before”. Fundamental rights are restricted, the economy is pushed to the brink and then supported with unprecedented aid.
One of Merkel’s closest confidants, Peter Altmaier, is more than enthusiastic. “An uncle who brings something is better than an aunt who plays the piano”, the Federal Minister of Economics remembers of his childhood.
And what is brought along! If you add up everything the federal government now wants to offer to combat the corona crisis, you get a gigantic sum of at least 1.2 trillion euros. No other country in the world has raised so much money in relation to its economic strength.
Germany has a full 35 percent, far more than the EU average or the USA. Federal finance minister Olaf Scholz did not understate what he promised a few weeks ago: “It is not spilled, but padding.”
The increase in importance and power is unique. Never in the history of the Federal Republic has a government intervened so quickly and deeply in public life and thus in the economy. After the financial crisis, German government debt rose by 315 billion euros in one year. The value of the federal, state and local governments will be far exceeded in this crisis. “I am worried whether we will be able to return to normal economic policy,” says Lars Feld, Germany’s top economy.
The measures to protect health are understandable. But the question increasingly arises: what side effects do the multi-billion dollar rescue programs have? The free market is disturbed, competition is distorted, prices lose their signal strength.
“As much market as possible, as much state as necessary”, the famous words of former Federal Minister of Economics Karl Schiller lose their meaning every day.
There is a risk of higher prices, inefficient companies and loss of wealth. It is significant that more and more companies are turning to the Bundeskartellamt during the corona crisis in order to be exempted from cooperating with competitors. The new spirit of state economy speaks.
Spend as much as you can. The year 2020 will be disastrous. Kristalina Georgiewa (IMF chief)
Certainly, help for companies with no fault of their own must be provided. But with the flood of support funds, the risk of misallocation is high. Capital and labor are tied up in companies with below-average productivity, less investment and innovative strength.
A few weeks ago, after a parliamentary request from the FDP for possible support from zombie companies, the Federal Ministry of Finance had to admit that “necessary market processes of creative destruction are hindered”.
The concern is justified that the state is eating itself too deeply into the economy, throwing privacy and data protection partially overboard and that the influence on the market will not be reversed after the end of the crisis.
A look at history suggests little good. The federal government is still 25 years after the IPO Deutsche Telekom still the largest single shareholder.
Fundamentally, there is a problem that is known in the economy as moral hazard: companies and citizens behave irresponsibly or carelessly due to existing false incentives. The news of fraudsters sneaking up subsidies is increasing.
“The state is a lousy entrepreneur”
The appearances of Altmaier and Scholz are characterized by superlatives. At the federal press conference, they will be presenting the rescue packages worth billions to the public with great regularity. “This is the most comprehensive and effective guarantee that there has ever been in a crisis,” said Altmaier in mid-March. “This is the bazooka, we’ll look for small arms later,” the Federal Minister of Finance said at the appearance.
The small arms that have now been added are quite large-caliber. Scholz announced a debt-financed supplementary budget of 156 billion euros. This includes an emergency fund with a volume of 50 billion euros, which is aimed at the self-employed and small businesses with up to ten employees.
The federal guarantee for the state bank KfW is increased by up to 450 billion euros. And then there is an Economic Stabilization Fund (WSF) with a volume of 600 billion euros. The majority is earmarked for government guarantees to keep companies liquid.
100 billion euros are reserved for possible investments, i.e. partial nationalization of companies. The battered Lufthansa is already holding talks about state participation.
You can still hear Altmaier’s words: “The state is a lousy entrepreneur.” The Federal Minister of Economics at least dedicated the most beautiful hall in the ministry to Ludwig Erhard. But he is currently just as far away from Erhard’s mantra as the Germans are from summer leaves in Mallorca.
Minister of Economics Peter Altmaier (standing) and Minister of Finance Olaf Scholz (front)
The father of the “German economic miracle” throbbed to measure, he remembered sentences, the state should not be a player, but an arbitrator in the economy. Now the state is preparing to take over the entire football club.
No other industrial country is helping its economy with such large sums as the Federal Republic. This shows a new evaluation by the International Monetary Fund (IMF). He does not criticize Germany, on the contrary. “Spend as much as you can,” advises IMF chief Kristalina Georgiewa. The economic situation is too depressing.
The Council of Experts is now assuming that the economy will decline by more than 5.5 percent this year. This is the case that was previously treated as a worst-case scenario. The economic downturn would be worse than in the global financial crisis. 725,000 companies have registered financial difficulties and short-time work.
Including: hospitals. Health Minister Jens Spahn ordered them at the beginning of March to postpone all planned operations. For the hospital operator, this means severe revenue losses. More than a third of the intensive care beds are not occupied. With the Hospital Relief Act, the federal government created a regulation to compensate the clinics for the failures. But that’s far from enough.
This is the bazooka, we’ll look at small arms later. Olaf Scholz (Federal Minister of Finance)
Some private organizations have registered short-time work, including the Schön-Klinik group. The head of the German Hospital Society, Gerald Gaß, sees the time for a “careful, gradual resumption of regular care”.
Spahn also said last week that clinics could “gradually return to normal”. “We do not want to keep 40 percent of the intensive care ventilation beds in Germany permanently”, said the minister.
The pressure on the companies is huge, the need for help is great. This year alone, the federal government is raising 156 billion euros in new debt. The federal states are also preparing an extensive flood of money for pumps.
According to a survey by the Handelsblatt newspaper among the 16 state finance ministries, they are currently planning 65 billion euros in new debt to fight the crisis. In addition to the federal government’s huge € 1.2 trillion rescue package, the federal states are also helping their companies and the self-employed. Bavaria alone has launched a fund with 60 billion euros.
The IMF chief not only welcomes the gigantic aid package in Germany, the monetary fund also calls for thorough control. “Keep the bills,” said Georgiewa. Transparency and accountability should not be put off in the face of the crisis. Whether Germany is world champion in this discipline, doubts are increasing.
Risk zombie company
The financial crisis shaped a saying by the former head of central bank in Europe, Mario Draghi: “What ever it takes”. In this crisis, it becomes a “Whatever, take it!” Aid is mostly spent without checking, the money cannot be distributed quickly enough.
According to an overview by the Ministry of Finance and the Ministry of Economics, over 26 billion euros were applied for by KfW Hilfen. Almost 13,000 of the more than 13,200 applications were approved. In other words, almost anyone who wants help gets it, most likely companies that didn’t have a working business model before the pandemic.
This easily creates zombie companies that are only alive because of generous state aid. After all: With the large sums, the KfW steering committee seems to be examining it more closely. So far, around 8.5 billion euros have been approved. So it takes a little longer for the large-volume applications.
In contrast, the self-employed and small businesses with up to ten employees are suspiciously fast. So far, according to the overview of 1.65 million applications, around 1.1 million have been approved and more than nine billion euros paid out. These are not loans, but aid that does not have to be repaid.
“Speed and thoroughness go hand in hand: it is carefully checked who receives the money,” Finance Minister Scholz promised. But is that true? North Rhine-Westphalia and Berlin were even recently forced to suspend immediate payments because large-scale fraudsters wanted to get to the pots.
There are also problems with honest entrepreneurs. In North Rhine-Westphalia, for example, the self-employed and small businesses are always granted the maximum amounts of EUR 9,000 and EUR 15,000 – regardless of need. This practice is not well understood in the Federal Ministry of Economics. Because a flat-rate payment of maximum amounts was actually not intended.
The aid should amount to up to 9,000 euros for companies with up to five employees and up to 15,000 euros for up to ten employees. The emphasis here is on the “up to”. According to the Ministry of Economic Affairs, the actual amount should be based on sales and operating expenses for the next three months. An entrepreneur with zero euros turnover and 1000 euros costs would be entitled to 3000 euros in emergency aid.
But these details were lost somewhere in the confusion between the federal states and the federal states. The up to 50 billion euros are provided by the federal government. Although federal money is at stake, it is up to the federal states how much they scrutinize companies. In Hamburg, for example, a liquidity check is required. Other countries are significantly less strict so that aid can flow as quickly as possible.
In Berlin, more than a billion euros were paid out to solo and small entrepreneurs within days. And the Berlin Senate also admits behind the scenes that surely there are also deadweight effects. Since no examination was carried out, almost everyone received 14,000 euros in a combination of federal and state funds. These include the self-employed, who normally have annual sales that are significantly lower, they say.
Some recipients are now voluntarily repaying the aid for fear of sanctions. But whether a subsequent thorough examination is possible to convince fraudsters is skeptical in financial management.
Dangerous false incentives
The economic nonsense, which is operated partly in the name of Corona, is great. Governments in the federal and state governments are increasingly creating the illusion that they can regulate everything with state trillions. And more and more, government intervention and expansion is creating false incentives in all areas of the economy, which can be revenged bitterly.
Take the housing market as an example: the Federal Minister of Justice, a woman from the SPD, wanted to protect the tenants. The result is a half-baked law that gets small landlords into trouble. The law was so badly made that solvent companies like Adidas or Deichmann used the gaps and simply suspended the rent payments. Only after a storm of indignation did Adidas row back.
Take the example of KfW loans: After the institutes hesitated to pass on the subsidized loans from the Staatsbank KfW to companies because they still had to bear ten percent of the default risk, the state assumed full liability. With the danger that house banks will now be able to provide loans to companies that have long been bankrupt.
The banks don’t care, they are released from any liability, but of course they still make good money from their business. The fool is the taxpayer who has to answer for the defaults.
Example of short-time work: Short-time work allowance is a tried and tested crisis instrument. The state replaces up to 67 percent of net wages. However, the SPD was not enough. In the coalition committee on Wednesday, she pushed for an increase to 80 percent.
It is the most comprehensive and effective guarantee that there has ever been in a crisis. Peter Altmaier (Federal Minister of Economics)
However, a general increase would have significant deadweight effects: Many companies are already increasing short-time benefits from their own resources. Apart from that, the short-time work allowance is not meant to secure the standard of living, but rather to ensure the survival of companies and thus avoid unemployment.
In other areas, the federal corona strategy is rather arbitrary. The craft complained that the vehicle registration offices were closed. There is also much discussion about opening shops up to the limit of 800 square meters. This border was communicated at least improperly and caused confusion and indignation among the shopkeepers.
Now a Hamburg administrative court has declared the 800 square meter rule to be illegal. The court could not understand why opening larger sales areas alone should attract more people to the city center. Necessary infection protection measures could be followed at least as well in larger stores as in smaller facilities.
Whimsical and impractical was initially the requirement that repair shops were allowed to remain open, but the sales rooms had to be closed. Many craftsmen wondered if they could lead the customers through the sales room into the workshop. Another detail from this series of undesirable side effects of the rescue policy.
The border closures, for example with the Czech Republic, mean that the bricklayers are missing in the construction industry and the harvest workers in agriculture from Romania. The state decides a lot, but the consequences are borne by the entrepreneurs and their employees.
The argument for the state’s rapid generosity in the crisis is: rather spend more now to prevent the economy from crashing and millions of jobs be lost than have to finance mass unemployment for a long time. This approach is absolutely correct. But it also remains true: somehow the state rescue billions have to be financed at least in the medium term if the next generations are not to be overwhelmed.
Currently this is done through the use of reserves and debts. Germany certainly has scope. The Federal Republic had just pushed the debt level to below 60 percent, thereby meeting the Maastricht criteria for the first time in many years in 2019. But that will be the last time for a long time.
As a result of the corona crisis, the federal government expects a general government deficit of 7.25 percent of gross domestic product (GDP) this year. The debt ratio as a share of all debts in GDP is estimated at 75.25 percent, as can be seen from the German Stability Program 2020.
“The projection is currently subject to very high levels of uncertainty,” says the current report. In other words, the debt level could be even higher. This mainly depends on how high the losses are that the federal government will incur from its guarantees and sureties.
Given the huge commitments, some in the grand coalition are trying to put the brakes on. “I don’t like the fact that we almost always get new suggestions every hour, what else can you do,” said Union leader Ralph Brinkhaus. “All of this must also be paid for.”
In a crisis, the state’s money is loose. Some sense their chance to finally implement long-held plans.
Dhe railway union EVG loses its chairman. Torsten Westphal, who led the largest German rail trade union since November last year with 188,000 members, surprisingly resigned his position on Tuesday “for personal reasons”. The EVG confirmed this without explaining the background. The 54-year-old Westphal only moved to the Supervisory Board of Deutsche Bahn as deputy chair at the end of March.
Born in Rostock, Alexander Kirchner had followed there, who headed EVG for eleven years. Westphal’s waiver hits the union, which has been in competition with the smaller train drivers’ union GDL for many years, in the middle of the corona crisis. Over the past few weeks, the board of directors and the unions had made initial agreements to deal with the slump in demand for passenger and freight transport.
Actually, the EVG is to be managed by Klaus-Dieter Hommel, longtime vice-chairman, until a new chairperson is elected; the former SPD member of the Bundestag Martin Burkert remains his deputy. In view of the restrictions on major events in the corona crisis, it is expected that an extraordinary TOE union day will not take place until the end of the year at the earliest.
SCoronavirus has been paralyzing Germany for more than a month. Many companies had already sent their employees home in mid-March, shortly afterwards politics closed shops and restaurants and prohibited all private travel. Even if the restrictions are now loosened somewhat, small and medium-sized shops are reopened, and the first young people are allowed to go to school – there will be no return to normal quickly. And in some areas, economic life could change permanently – for good and for bad. An outlook.
Holidays only where you can come back by train if necessary
In Corona times, the train is superior to the plane: Deutsche Bahn still runs three quarters of the ICE and IC. However, the number of passengers has shrunk to 10 to 15 percent of the normal level. Air traffic, on the other hand, has come to a complete standstill. Will travelers return to old ways after the Corona crisis? Federal Transport Minister Andreas Scheuer (CSU) is convinced that the behavior of business travelers will change fundamentally, so that more appointments will continue to be handled via telephone or video conferences.
Monday. The baker thinks that the bearded men develop into long-haired shaggy animals. Attempts to cut your own hair ended in self-mutilation. She had had enough of the bad news and wanted a week of good news. That’s okay.
Business editor, responsible for “Technology and Engine”.
Tuesday. Lions take over the golf club in the Kruger National Park. Nobody travels anymore. Germanwings is closed, 87,000 Lufthansa employees work briefly. Security at Frankfurt Airport is already running smoothly, zero waiting times. A dream.
Wednesday. Deutsche Bahn runs on empty trains and is asked by the head of the Robert Koch Institute to run even more empty trains. The punctuality increases because nobody gets on or off. Go then.
Thursday. Jam is only at the recycling center. No freight orders, no trucks, no rush hour, no block handling. Radio stations replace traffic jams with music. As soon as the auto industry comes to a standstill, the highways are empty. And German Environmental Aid hadn’t had to sue anyone for four weeks. Brilliant.
Friday. The closed retailers in town make a virtue of necessity and do not grieve about the slump in sales. You just renovate the store. And enjoy unlimited solidarity. The municipal housing association, for example, is happy to pay the rent to businesses and is only charging 9 percent interest on arrears. Thank you.
Saturday. The baker says she didn’t imagine my list. At the ruined IAA there was this activist group “Sand in the gearbox”. Are they satisfied now? She, the baker, wants oil in the transmission.
Wunleashed, companies secure liquidity in the corona crisis in order to prepare for difficult times. While states such as Germany are opening up rescue packages on a gigantic scale to protect SMEs and companies, there is an astonishing development on the bond market. New issuance records for corporate bonds are set almost every week. Last week European companies with good investment grade credit issued 42 billion euros in new securities. In the two previous weeks, it was around 30 billion euros each.
The companies have also been very active in recent days: nine addresses, including Toyota, Akzo Nobel, Veolia and Deutsche Bahn, issued titles worth almost 8 billion euros on Tuesday. Deutsche Bahn, controlled by the federal government, placed a 20-year bond with a volume of 750 million euros. The coupon is 1.375 percent. On Monday, Sanofi, Repsol and Holcim took advantage of the good mood. The analysts of the Bayerische Landesbank (Bayern LB) counted issues of more than 4 billion euros at the start of the week. The flood of emissions can be observed not only in Europe, but also in the United States. Demand is not always high, but sales are generally not a problem after the risk premiums have increased significantly as a result of the upheavals on the financial markets and have thus become attractive again for investors. Although the market is primarily open to large, well-known companies, there are also addresses that occasionally make it, whose creditworthiness is rather moderate. The European Central Bank (ECB) also supports with its corporate bond purchases.
But for Commerzbank bond strategist Marco Stöckle there is no reason to give the all-clear. “The corporate bond market is still in intensive care,” he told F.A.Z. Although the ECB’s extensive purchases would have contributed to stabilization, unlike the credit default derivatives, the risk premiums had not really been reduced yet. “A sustained recovery is also not yet to be expected because the creditworthiness of many companies will be downgraded in a recession and we are only at the beginning of this wave,” feared Stöckle.
He points to the hunt for liquidity, which has led to the surge in emissions of new euro corporate bonds. In the past two weeks, these would have amounted to 75 billion euros alone. For Stöckle, this is an enormous volume that the market would have to digest even in good times. This wave of emissions therefore also superimposed the effect of the ECB purchases. The central bank bought corporate bonds worth a good € 10 billion in March. Last week it was almost 2 billion euros. However, it is not known how many corporate bonds were bought under the pandemic program, which totaled € 750 billion. The ECB only shows the total volume of the bonds purchased. That was a good 30 billion euros last week. The analysts at DZ Bank assume that the pandemic program “undoubtedly has also bought large corporate bonds”.
Investors are currently watching the consequences of the economic standstill and the inevitable recession with great suspense. On the bond market, the focus is on the rating agencies, which are downgrading more and more credit ratings from companies. On Wednesday it hit Swiss technology group ABB, whose rating lowered Moody’s from “A2” to “A3”. ABB does not have to worry about the investment grade rating that many institutional investors such as insurers or pension funds have to look out for in corporate bonds. Because this status requires a rating of at least “Baa3” for Moody’s or “BBB–” for Standard & Poor’s. ABB is separated from the junk status by four levels. The steel group Arcelor-Mittal, on the other hand, lost its investment grade rating at Fitch because the creditworthiness examiners expect a decline in steel demand despite a good liquidity situation.