Ifo business climate index falls to record low

Berlin The mood in Germany’s economy is catastrophic. The most important leading indicator, the Ifo business climate index, fell from 85.9 to 74.3 points in April. This is the lowest value ever measured. There has never been a stronger decline. “This is mainly due to the massive deterioration of the current situation,” said Ifo President Clemens Fuest on Friday.

In addition, companies have never been so pessimistic about the coming months. “The corona crisis hits the German economy with full force,” said Fuest. The crisis is now affecting all industries. Even the main construction industry is now worried about the future. So far, together with consumption, it has been the pillar of the economy.

The fact that the effects of the corona-related standstill would hit companies hard in April had become clearer every day since Easter. On Thursday, the Ifo reported that the crisis had hit the labor market: in industry and service providers, one in five companies surveyed by the Ifo want to lay off employees or not to extend temporary jobs.

It is 15 percent in retail, and two percent on construction that has so far been little affected by downtime. In almost all industries, more than 40 percent of companies want to postpone investments – even 31 percent of them are in construction.

How deep the recession will become in 2020 is currently difficult to estimate. “We do not know how much we can start the economy up again without increasing the risk of infection,” Monika Schnitzer told the Handelsblatt. The situation is not comparable to any post-war recession. However, she is confident that Germany will get there in the next few weeks if protective measures are increased and tracing apps are increased.

The purchasing manager index of the IHS Markit institute also fell to a record low on Thursday. In this manager survey, 75 percent of service providers and almost as many industrial managers said that their sales had shrunk significantly. Service providers’ sales fell more than ever in the 20-year history of this survey.

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“Both domestic and export demand has collapsed,” writes IHS Markit economist Phil Smith. In the service sector, more jobs were cut than at the height of the financial crisis recession in April 2009, and in industry, too, the reduction in personnel accelerated – despite short-time work.

In any case, leading economists are starting to further lower their forecasts for 2020. The head of economic operations, Lars Feld, now expects that gross domestic product (GDP) will shrink by at least five and a half percentage points in 2020. It could shrink more than in the 2009 financial crisis recession.

Three and a half weeks ago, when the Economic Advisory Council for Economic Affairs Peter Altmaier (CDU) presented a special report on the corona pandemic, a minus of five and a half percent was still the worst-case scenario. However, the IMF expects German GDP to collapse by seven percent in 2020.

Even in the large economic research institutes, which predicted a minus of 4.2 percent for 2020 in their joint diagnosis two weeks ago, many expect that a five will be before the decimal point. The markets are therefore eagerly awaiting which recession forecast the Federal Government will commit to in the coming week.

However, Stefan Kooths, economic expert at the Kiel IfW, also warned that he would now outdo himself in horror scenarios: that April would be the low point of the year and that GDP would decline by ten percent in the second quarter, he said in early March already expected. The question now is how quickly a recovery can begin.

France: lowest since 1980

However, this also depends on how quickly the economy in the EU countries most affected by the pandemic can get going again, Italy, Spain and France. “As intertwined as our economy, for example, with that in Italy, we have to be very interested in the EU not breaking apart,” said Schnitzer. “It is not just about solidarity, it is in our interest if we help other EU countries,” she emphasized.

However, the prospects for the economy are currently catastrophic in all large EU countries. For example, the IHS Markit Purchasing Managers’ Index fell to a record low for the euro zone on Thursday. In Italy, the IMF expects GDP to decline 9.1 percent this year.

The mood in France’s economy also deteriorated massively in April due to the corona crisis. The business climate has dropped to the lowest level since the start of the surveys in 1980, according to data from the national statistical office Insee on Thursday. The index fell by 32 points to 62 points. There has never been such a sharp drop.

Economic activity in France was 35 percent lower in April than it was before the economy shutdown in March. Insee also does not expect the business climate to recover anytime soon. In this unprecedented environment, the behavior of companies and consumers can hardly be predicted. The French government expects gross domestic product to decline by eight percent this year.

More: According to the Ifo Institute, a fifth of German companies are planning to cut jobs due to the corona crisis.

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Economy warns of exaggeration in the fight against Corona

Dusseldorf The Chairman of the Council of Experts, Lars Feld, urges the Federal Government to take measures to fight the corona crisis. “Above all, what is currently being discussed is problematic. You get the impression that every industry wants specific support, ”Feld told the Handelsblatt.

The hospitality industry wants the reduced VAT rate that has now been decided. The auto industry is again asking for a scrappage premium, and retailing vouchers, says Feld. “You could go on almost any way – who doesn’t have one yet, who wants to do it again.”

“If you go this route, you will hardly be able to catch it afterwards in terms of fiscal policy,” warns the head of the Freiburg Walter Eucken Institute. This applies “also to social policy measures such as the increase in short-time work benefits or the extension of the duration of unemployment benefits”. “I’m more worried about whether we will be able to return to normal economic policy,” says Feld.

The economist also disapproves of the federal government’s policy on industrial policy: “If Corona is now used to quietly implement questionable industrial policy goals, I find that unacceptable.”

Specifically, it refers to the recent tightening of the Foreign Trade and Payments Act. “The goal of building a fortress Europe is definitely the wrong way to go,” said Feld. Germany in particular, as the largest economy, must speak out for openness. “We cannot leave the Dutch alone to stand up for a market economy policy,” he warns.

He expressly warns against the introduction of a property tax. “To talk about a property tax in this situation is insane. The best way to pay off the debt is with an intelligent growth strategy, ”said Feld.

Read the full interview here:

Mr. Feld, you are considered the nation’s regulatory conscience. The state experiences something of self-empowerment in corona times. What scares you more: the virus or the political measures against it?
“Fear” is the wrong expression in both respects. I know the medical problems abstractly, but I don’t feel any threat. Of course, this can change quickly if I experience illnesses in my personal environment. This is often the case. As far as the state measures in the fight against the crisis are concerned, I am not afraid either, I am more concerned that we will be able to return to normal economic policy.

The state intervenes massively in contract law, it relaxes bankruptcy law, it communitises risks. In your opinion, is that all still proportionate?
Overall, I think the aid package is proportionate. You can argue about individual measures, especially with tenancy law. However, one has to say that the state there has been massively interfering with freedom of contract for a long time: through the rent brake or the rent cover in Berlin, which is probably unconstitutional. I criticized that before Corona – and I’m also criticizing it now.

So you don’t see a new quality of state intervention?
But, above all, what is currently being discussed is problematic. One has the impression that each branch wants specific support. The hospitality industry wants the reduced VAT rate that has now been decided. The auto industry is again asking for a scrappage premium, and retailers are demanding consumer vouchers. This could be continued almost indefinitely: Who has not yet, who wants again?

If you go this route, you will hardly be able to catch it afterwards in terms of fiscal policy. Ultimately, this also applies to social policy measures such as raising short-time working benefits or extending the duration of unemployment benefits.

The current bailout package is well over a trillion euros, i.e. more than three times the federal budget – these are sums that recently seemed unthinkable. Will the state’s calculation work, so now to save jobs, will it cost what it wants? Otherwise, the state would have to pay for the millions of unemployed anyway …
Yes, the sums are big. However, many simply add up everything that is put in the shop window – loans, grants, guarantees and guarantees. You have to take into account that not everything has an impact on expenditure, loans are repaid and guarantees are not drawn. The decisive factor is whether the measures are targeted.

Where do you see the debt ratio in the medium term?
By the end of 2021, we will probably be back to around 80 percent of economic output, roughly the level we had at the end of the financial crisis.

Do you think politics and science still have an overview? When was it that the state had to keep thousands of companies alive – and probably for months?
I don’t think the state will be able to maintain this for months. It can mitigate the consequences, but it will not be able to save all companies and jobs. We will have bankruptcies. Ultimately, it’s about helping companies that have a viable business model over this cliff. It should not be forgotten that companies are in this situation because the state massively restricts our freedoms during the pandemic. If there were a claim for compensation from the state, the whole thing would be more expensive.

Who pays the bill in the end? There is already debate about balancing the burden …
There is, of course, this debate, but it is a harmful one, with a particular focus on the ideological interests of the parties. To talk about a wealth tax in this situation is insane. The best way to pay off your debt is to use a smart growth strategy.

What do you think of the fact that the private banks are now providing KfW loans with a volume of up to 800.000 euros no longer have to assume any liability, so get a 100 percent guarantee from the state?
If you bear in mind the Federal Government’s goal of mitigating corona-related defaults with liquidity aid, that makes perfect sense. Of course, it is cleaner from a regulatory perspective to take the banks at risk. But then the measure would not work. Even with a liability of only ten percent, banks are very hesitant to grant loans in this difficult situation. Of course, we cannot grant such KfW loans on a permanent basis.

We cannot leave the Dutch alone to stand up for a market economy policy.

But isn’t that a disguised bank bailout program?
I would not say that. It dissolves the risk aversion of privately liable bank executives. Ultimately, credit-based liquidity support is hardly an option for many companies currently affected, provided they would become excessively in debt.

Another instrument that is often mentioned is government participation. Will it happen?
I cannot imagine that we can do without state participation in certain industries – for example, with airlines. Until the Lufthansa back to pre-crisis levels, it may take a long time. The decisive factor is whether they are silent participations or whether the state wants to exercise control rights. I prefer the former because with a stock package it usually takes longer for the state to withdraw.

The bank bailouts during the financial crisis in the USA are always considered exemplary, although there were equity investments …
Yes, that’s right, but the state quickly withdrew there. The following applies: If the control function, then please use the exit scenario.

They probably refer to Commerzbank, where the state is still involved after more than ten years.
Yes, it would be even more serious with massive industrial holdings like we used to have.

Now there was a trend towards industrial policy even before the corona crisis. The economics minister tightened the foreign trade law – and added again during the corona crisis: are we experiencing a turnaround?
Unfortunately, there is a turnaround. If Corona is now being used to quietly push through questionable industrial policy goals, I find it unacceptable.

Now this policy is being carried out by the CDU-led Ministry of Economic Affairs. Are we threatened by French conditions?
The goal of building a fortress Europe is definitely the wrong way to go. Germany in particular, as the largest economy, must speak out for openness. We cannot leave the Dutch alone to stand up for a market economy policy.

Isn’t there a good reason to protect some industries – when it comes to security, for example in the case of the Chinese network supplier Huawei?
Of course, the state has to look when a state investor from China is investing in critical infrastructure. But now that doesn’t just apply to China. American investors are now being looked at just as critically. A systematic foreclosure strategy threatens. What is considered “safety-relevant” must therefore be clearly defined.

The law speaks of an “expected impairment” of public order or security. There seem to be no limits to arbitrariness, right?
The Ministry of Economy is now keeping everything open to prevent any takeovers. The whole thing is also enriched with a participation facility and the economic stabilization fund. It is a very unfortunate combination.

Even mouth protection and protective clothing are considered to be safety-relevant. They may be relevant to health, but they do not have to be produced in Germany. In this case, the state must create strategic reserves.

Back to the economic risks again. If the lockdown has such devastating consequences in Germany, what about countries like Spain and Italy that are already heavily indebted?
There is no way around these countries pursuing an expansionary fiscal policy and driving up debt levels. There is no alternative in the face of this great crisis.

Aid programs such as those in Germany cannot be afforded by these countries, which have been hit much harder by the corona crisis …
I wouldn’t say that in general. Spain and France have enough leeway with a debt ratio of 100 percent. I think 120 percent would be possible without them being in the focus of the financial markets.

Italy, which has a debt ratio of almost 140 percent, financial market players have long had their sights on them. Only thanks to the massive intervention of the ECB has interest rates dropped to a tolerable level again …
Yes, Italy is the real problem. The government debt there is moving towards Greek dimensions in terms of economic performance – and this is about a G7 country.

As far as the corona pandemic is concerned, Italy is not in debt to this crisis. Regulatory policy or not: Do you understand Italy’s prime minister, who vehemently demands the solidarity of the strong countries?
I differentiate between understanding and acceptance. I understand that Italy needs support given the many deaths. And I understand that the Italians are now doing everything they can to protect themselves against possible distortions in the financial markets with external help. What I cannot accept is Premier Conte’s blackmail strategy, which is unique in its sharpness.

Isn’t this attitude due to sheer misery?
That may be the case, but the extortionate approach could end up being counterproductive. The government cannot credibly threaten to exit the euro because the economy would collapse completely.

But the Italians know very well that an exit from Italy would very quickly result in a collapse of the monetary union, which the rest of Europe can hardly afford …
This may be. Nevertheless, Conte’s strategy is questionable because Italy would suffer much more. In Italy, therefore, there is rightly a debate as to whether the prime minister does not overdraw. Italy is well supplied with the funds that have been made available – i.e. the scarcely conditioned loans from the ESM rescue fund with the possibility for the ECB to buy unlimited government bonds (OMT).

I reject joint and several liability. That would be a fall for me.

Italy insists on corona bonds, i.e. the joint borrowing for this crisis. Wouldn’t that be an important symbolic signal for Europe’s cohesion?
No, I’m completely the politician of order. I reject joint and several liability. That would be a fall for me.

But isn’t it the more honest way in the end? A communitization of risks has long been taking place through the ECB’s balance sheet, an institution that is not at all legitimized for such a redistribution policy …
Again, joint and several liability between states is out of the question for me. Other forms of joint liability, such as joint liability or guarantees for debt, can be discussed.

Discussions about a fund at EU level – possibly parallel to the ESM – that is financed by bonds guaranteed by member states and from which transfers are paid – all of this is conceivable. The problem with joint and several liability: Here the creditor can pick out the most solvent country – and force it to be repaid.

The crisis could hit the emerging markets even more severely than Italy. We are obviously experiencing a crisis of a whole new dimension. Not only almost all industries are affected, but also all regions of the world – at the same time. Some already compare the economic consequences with the Great Depression in the 1930s. Do you think this is alarmist?
No, I don’t think it’s alarmist. There are parallels as to the dimension of the economic downturn; but not on the job market. In addition, the reasons are completely different. The current crisis cannot be compared with the Spanish flu either. At that time after the First World War, the economies were very weak.

The fact is: A crisis as we are now experiencing it is unique. It is not only the slump in the economy as a result of the lockdown, but also the interruption of the international supply chains.

How do you explain that the markets are still reacting almost moderately?
The markets are still assuming that the gigantic rescue packages will help to overcome the liquidity problems. Whether this will really be the case depends on the further development of the pandemic. I would therefore not rule out further slumps in the financial markets.

The Ifo Institute anticipates a 20 percent drop in GDP in the worst scenario. Do you think such a scenario is conceivable?
I’m not that pessimistic. The 20 percent of the Ifo Institute is an annual projection, not an annualized quarter. This means that the relatively robust first quarter is included, so that the economy would not get on its feet in the third and fourth quarters.

At the moment, almost all countries except Sweden are pursuing the same corona strategy: lockdown, bans on contacts and so on. There has never been an experiment like this. Could this strategy turn out to be a global mistake in the end?
Afterwards we’ll be smarter. Yes, there are voices that can be taken seriously and say that we unnecessarily stall the economy. Only: If we look at the infection curves and compare them with other flu waves, we see that the rise at Corona is much steeper. If we let it go, significantly more deaths would be unavoidable. So I think trying to flatten the curve so as not to overload the health system is the right strategy.

Finally, a personal question: It was not long ago that your colleague Peter Bofinger from Würzburg was the last Keynesian. But now conservative economists are also calling for massive government intervention. Ifo boss Clemens Fuest, for example, or IW boss Michael Hüther, who most recently spoke in favor of corona bonds. Do you sometimes feel like the last politician in the country?
Do not worry. There are still a large number of economists who think in terms of regulatory policy. In addition, I am just as pragmatic as my colleagues in this unique crisis that we are currently experiencing.

Mr. Feld, thank you very much for the interview.

More: EU summit: These are ideas for financing the EU reconstruction funds

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Almost a fifth of the companies want to cut jobs

Berlin Daimler– HR Director Wilfried Porth didn’t gloss over anything: “Obviously something is breaking away at the moment that no one knows if it can be caught up,” the manager said last week. The carmaker had to accept a drop in profits of almost 80 percent in the first quarter, sales of the core brand Mercedes decreased by 15 percent. “The fact that we will need to adjust is obvious,” said Porth. He didn’t say the word job cuts. But even before Corona, Daimler had decided to cut up to 15,000 jobs.

The fear of jobs is back in Germany and the virus pandemic will leave deep marks on the job market. Every second company is already doing short-time work. According to a survey by the Ifo Institute, almost a fifth of the companies want to lay off employees or not to extend temporary jobs.

“The fear of jobs seeps in,” says Ifo economist Klaus Wohlrabe. The job cuts plans are apparently based on the concern of many companies that the restrictions on public life in the corona crisis will not end in May.

On average, the companies surveyed expected four months of partial standstill. 84 percent feel a drop in sales due to the corona crisis, only four percent register a growing business. According to the Federal Employment Agency (BA), almost every third of the 2.2 million companies with at least one employee who is subject to social security contributions have registered short-time work.

Previous employment forecasts are becoming more and more waste every day that the corona crisis continues. “For the labor market, we expect unemployment to rise sharply over the next few months. But many companies keep their people, you can see that from short-time work, ”says Enzo Weber from the Institute for Labor Market and Vocational Research (IAB).

BA boss Detlef Scheele expected a rise in unemployment by 150,000 to 200,000 people in April a month ago. The Nuremberg authorities will present the current data next Thursday.

Domestic demand collapses

There is hardly any improvement in sight if you look at the economic development: the purchasing manager index of IHS Markit has plummeted. In the survey, 75 percent of service providers and almost as many industrial managers said that their sales had shrunk significantly. Service providers’ sales fell more than ever in the 20-year history of this survey. “Both domestic and export demand has collapsed,” writes IHS Markit economist Phil Smith.

“Demand levels will not return to pre-crisis levels anytime soon,” says Sascha Haghani, head of the global restructuring practice at management consultancy Roland Berger. That’s about it GfKConsumer barometer, which measures consumer mood, plummeted to a record low.

“Sooner or later the companies will have to adjust their costs accordingly,” Haghani expects. Probably also through job cuts: According to the IHS, more jobs were cut in the service sector than at the height of the financial crisis recession in April 2009, and the reduction in personnel is also accelerating in industry.

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The Ifo survey also shows how wide the shock waves are spreading in the economy: in industry and service providers, almost every fifth company wants to lay off employees or not to extend temporary jobs. It is 15 percent in retail, and two percent on construction that has so far been little affected by downtime. Leading economists such as the head of business practices, Lars Feld, are starting to adjust their forecasts for 2020 downwards.

After Chancellor Angela Merkel and the Prime Ministers decided a slow restart of the economy last week, he expects gross domestic product (GDP) to shrink by at least 5.5 percentage points in 2020. Even in the economic institutes, which predicted a minus of 4.2 percent for 2020 in their joint forecast two weeks ago, it is now expected that a five will be before the decimal point.

The IAB had anticipated a 4.7 percent decline in GDP in March, when the economy largely stands still for two and a half months and only normalizes by the end of the year. In this case, the number of unemployed could temporarily rise from the current 2.3 million to more than three million, the Nuremberg researchers predicted at the time.

A well-known restructuring expert expects Corona to increase unemployment to as many as four million people. Especially badly hit sectors such as tourism and gastronomy are affected, but also important branches of industry such as the automotive suppliers.

The government is obviously also assuming a long period of weakness on the labor market. For example, for all unemployed people who would slide into Hartz IV between May and December, the duration of the unemployment benefit will be extended by three months. “Those who are just becoming unemployed or who have recently become unemployed currently have little chance of finding a job again,” said Labor Minister Hubertus Heil (SPD).

In order to counter the allegations made by the unions, in particular, that politicians are more concerned with companies than with employees, the coalition committee also decided on Thursday night to increase the short-time work allowance – staggered according to the duration of benefits.

It is currently 60 percent of net income and 67 percent for employees with children. From the fourth month in Corona short-time work, employees whose working hours are reduced by at least half are now to receive 70 or 77 percent. From the seventh month, the rates increase to 80 to 87 percent.

In addition, short-time workers who take up another job can earn up to the amount of their previous monthly income. So far, this was only true for “systemically relevant” activities such as care or agriculture.

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The gradual increase in short-time work benefits has met with criticism: “I would have preferred a faster increase, especially for low-wage earners,” said Sebastian Dullien, head of the Institute for Macroeconomics and Business Cycle Research (IMK). In a survey, 40 percent of employees who were on short-time work said that they would get by with the money for a maximum of three months.

Employers see “contribution club”

The decision met with a mixed response among the unions, which had hoped for a general increase to 80 or 87 percent from the start. “This protects many employees from existential hardships,” praised IG Metall boss Jörg Hofmann. On the other hand, the chairman of the Food, Beverage and Catering trade union (NGG), Guido Zeitler, declared that the increase was correct, but was too small and too late.

In the hospitality industry, employees could probably only expect 80 percent of normal net wages in October 2020. According to the NGG calculations, according to the new plans, a cook in Berlin will have around 1,070 euros instead of around 920 euros and short-time work from around 1,220 euros from the seventh month. “For hundreds of thousands of people with low incomes, the only thing left to do is to apply for Hartz IV,” said Zeitler.

IAB labor market expert Weber also criticizes the fact that the planned changes will not benefit employees in the low-wage industries in a very targeted manner. “In the end, industrial sectors that have long been in recession could benefit in particular.”

For Holger Schäfer from the employers’ institute of the German economy (IW), it is not at all clear which problem the government wants to solve with the compromise: “In the end, a lot of money is spent on a purpose that is not clearly defined.” According to Schäfer’s calculations, the BA would need 24 billion euros to send 4.5 million full-time average earners without children on short-time work for three months. The employment agency’s reserve is just under 26 billion euros.

The criticism from business was correspondingly harsh. Employer President Ingo Kramer praised coalition decisions such as help for restaurants and the easier return of losses for companies. But they would be overlaid by “spending money with a watering can”.

The employers’ association Gesamtmetall criticized that the decisions on short-time work were expensive and caused an enormous additional administrative effort at the BA: “There is great concern that when the economy restarts, the tax and contribution club will fall on the employees and companies,” said CEO Oliver Zander the Handelsblatt. BA boss Scheele said that he would have liked a “simpler regulation”.

Monika Schnitzer, a new member of the Council of Experts, told Handelsblatt that she could understand that the government wanted to expand short-time work benefits. “But I think the chosen way of increasing is problematic.” After all, many employers voluntarily increased to keep their employees. I am afraid that it will have a high share of deadweight effects. ”

Ifo President Clemens Fuest believes the decisions will stabilize consumer demand. They are therefore also “a suitable economic policy measure”. The same applies to the extension of the period of unemployment benefit

More: Tax cuts, premiums, aid: Germany’s economists argue about state aid

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The world needs female leadership, not egomaniacs

Erna from Norway, Mette from Denmark, Angela from Germany, Tsai Ing-wen from Taiwan, Jacinda from New Zealand and Foreign Minister Kang Kyung Wha from South Korea: In times of Covid-19, who reveals himself for the new reality and the time after Corona is best prepared.

If a natural selection takes place after the pandemic, a radical “survival of the fittest”, then this is the beginning of the end of humanity. Solidarity, love and empathy cannot be enforced, both must be exemplified.

Instead of being a reality show, the Norwegian prime minister addressed the young children on television, following the Danish prime minister Mette Frederiksen, who had given a three-minute press conference in which only children were allowed to attend. During the corona crisis, women in particular show what is important in leadership.

To bet on the team thatWE“And to take everyone with you, especially those who don’t have the easiest way to come along and understand what it’s about.

Speak the truth

The bottom line is that hamster purchases of toilet paper in affluent regions have little to do with inadequate supplies – and if there were, there would be numerous other ways of getting your butt clean. No, the now declining hamster purchases show the fear reaction of people: “If everyone else is also afraid and think that they have to shop a lot, then maybe I should do it too.” “Fear of missing out” is the name of the phenomenon, the fear of missing something.

In this way, the feeling of fear is reinforced and every shopping center, however full, is transformed into a real battlefield. It’s okay to be afraid, the female leaders say, while their male counterparts rely on strength. “It’s nothing, I have everything under control,” US President Donald Trump said, while Prime Minister Jacinda Ardern of New Zealand introduced self-isolation after six cases of Covid-19 and Angela Merkel addressed her compatriots in her own quiet way . The media followed with the headline: “It is serious, take it seriously”.

Upgrade and preparation are everything

While the United States is betting trillions on new weapons, the American people cannot even afford to go to the doctor. And all protective clothing is in short supply. In the richest country in the world? How could it come to this? In Europe, one or the other weakness in self-sufficiency has been discovered, but the comparatively high investments and reserves put the health systems of Germany, Denmark and Norway in a strong position.

It is so strong that these countries accept patients from Italy, Spain and France even during the crisis. “Is the German healthcare system a model for the United States?” Is the title of the US broadcaster NBC News and recognizes: “Germany has the oldest healthcare system in the world. And it works.”

Sanna Marin, Prime Minister of Finland, falls back on hidden emergency supplies and bunkers from times of war that hardly anyone knows. “Due to the proximity to Russia and its geostrategic position ‘in between’, Finland has always had to prepare,” said the politician. Although the masks were no longer “state of the art” and were not purchased under the leadership of the young Finn, female leadership also shines in the land of a thousand lakes and saunas when it comes to clear skills.

Thanks to the warnings from pandemics and crises of the past decades, the East Asian countries were able to react quickly to the crisis anyway, but here too the female leaders are “winners”. With Foreign Minister Kang Kyung Wha from South Korea and the President of Taiwan, Tsai Ing-wen, whose crisis management describes the media as “world class”. Taiwan reports six deaths in just under 24 million people, an exceptional number even for an island that has good opportunities for shielding. The country was even able to export millions of masks to the West early on and make its contribution to global aid.

Economy, wealth and femininity

In four of the five Nordic countries, women are at the top, and only Sweden has chosen its own path and relied on herd immunity according to the principle “We have no wealth through oil, we have to go on, we have to get it over with quickly”.

Even though we may be facing the mother of all recessions, the end of decadence society has come and definitely other times ahead, it is important to understand that we have a world society. In the long run, it turns out that the economy, prosperity and women in leadership are not mutually exclusive, although some men still believe this. The countries mentioned have strong positions in technology, medicine and health as well as successful economic years.

Future wars cannot and should not be waged between countries, but against external forces such as a pandemic and the eco-collapse or against ourselves. The crisis manager from South Korea, for example, relies on cooperation with surrounding countries such as Japan and China as a recipe for success, striving for global goals and strengthens communication with counterparts around the world. With the future use of technologies and global surveillance, it can only be possible to protect humanity better with mutual trust.

If we compare the reactions of the female leaders with the reactions of Trump, Orbán, Putin, Netanyahu, Bolsonaro and many other men, one thing becomes clear: The time of self-proclaimed sages and wise old men is over.

You have to make room for a new generation. Grandpas like them belong to the risk group and should not waste their last days with self-centered games on the world stage, but rather play with their grandchildren and spend their time in countries where you can afford to take care of everyone properly.

It’s time to clear the space! We are facing extremely challenging times, which many still underestimate. Now we need leadership. Dear women, please show us how!

More: Beginning of a technocracy – Life after Covid-19.

Anders Indset, referred to by the media as “Digital Jesus” or “Rock’n’Roll Plato”, is one of the leading business philosophers and is considered a trusted sparring partner for international CEOs and leading politicians.

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Angela Merkel announces cautious opening

Berlin Schools will remain closed, as will most of the shops and businesses, but the shutdown is about to end: measures to combat the corona virus are to be gradually relaxed at the beginning of May. Chancellor Angela Merkel and the heads of state have agreed on this. There should be no “rushing ahead,” Merkel said: “We have to ensure the successes we have achieved.” That is why politics has to be extremely careful.

In recent weeks, Merkel has consistently avoided questions about easing the social and economic standstill in the corona crisis. The Chancellor urged patience, even as the opening debate before Easter grew stronger. Now Merkel is looking ahead, albeit with caution.

“What we have achieved is an intermediate success,” she said in a press conference on Wednesday evening. “And I emphasize: It is a fragile interim success.” Merkel agreed with the Prime Ministers of the federal states during the day: Most of the drastic restrictions in everyday life and with fundamental rights remain in force at least until May 3. But economic life is slowly starting up again, and many retail stores will soon be able to open again.

The Chancellor and the Prime Ministers had to make a difficult trade-off decision. There was no shortage of advice from experts. On the one hand, the Robert Koch Institute (RKI) and a number of epidemiologists warned against loosening the measures too early – even though the number of new infections registered is falling noticeably. However, the RKI sees a risk of relapse: the coronavirus could spread faster again and overload the hospitals.

Many patients then threatened to die from severe respiratory illness. On the other hand, the social and economic consequences of the lockdown, which has been going on for a month, have increasingly come into focus.

“Economic power costs every week”

At the request of the government, professors from various disciplines at the National Academy of Science Leopoldina looked beyond the epidemiological perspective. They recommended a “gradual return to normal”, especially schools should reopen as soon as possible.

The report had fueled expectations among entrepreneurs that the shutdown could be eased more quickly. The federal government is reluctant to open it too much. “We have to live with the virus as long as there are no drugs and, above all, no vaccine,” said Merkel. One wants to “allow more public life” again in small steps, but one has to “exercise extreme caution”.

Economists fear an additional burden on the economy. “Every week, further restrictions cost economic strength,” said Lars Feld, head of the business operations, the Handelsblatt. With the extension of the contact bans, the gross domestic product will probably shrink by more than five percent in 2020.

In recent days, the federal and state governments have been struggling over what should happen after April 19. So far, the coming Sunday has been the preliminary end date for many of the measures taken in the corona crisis.

On Tuesday Chancellor Minister Helge Braun (CDU) advised the heads of state chancellor of the federal states on the basis of which the Corona Cabinet in Berlin then drafted the resolution. The plans were changed in a few points in the more than three-hour video viewing by Merkel and the Prime Minister. The measures are to be reviewed every two weeks, the next deadline is April 30th.

The Corona timetable for the next few weeks now looks something like this:

Contact restrictions remain

The contact restrictions that have been in effect since mid-March should now apply at least until May 3. “The most important measure remains in the coming time, to keep your distance,” says the decision. Citizens must keep a minimum distance of 1.5 meters. More than two people may not be together in public – unless they belong to a family household.

Merkel made it clear: “Violations of this will continue to be punished by the regulatory authorities.” The Germans must continue to refrain from private trips and visits, including from relatives. In addition, the federal and state governments recommend wearing face masks in local public transport and in retail. There should not be a general nationwide mask requirement. Major events are to be prohibited until August 31 because of the corona pandemic.

School lessons from May at the earliest

School operations in Germany will gradually resume on May 4th. It starts with graduation classes, classes that will take exams in the coming year, and the top elementary school classes. The Kultusministerkonferenz der Länder (KMK) is to work out a concept “how teaching under special hygiene and protective measures, in particular taking into account the distance requirement due to reduced learning group sizes, can be resumed overall”.

In addition to the lessons, the breaks and school bus operations should also be taken into account. The emergency care in the daycare centers is to be expanded to include other professional groups to enable parents in central economic areas to return to everyday work. Merkel said that she understood the difficult situation of many parents. However, infection protection must be observed in order to save lives.

Retail perspective

The federal and state governments have agreed that shops up to an area of ​​800 square meters can open again next Monday. The opening is tied to requirements for hygiene, to control access and to avoid queues. Regardless of the retail space, car dealerships and bookstores could open. According to the ideas of the federal government, cultural institutions such as libraries and archives as well as zoos and botanical gardens should be accessible again under certain conditions. Hairdressers could offer their services again from May 4th if they comply with protective regulations. Restaurants, bars and pubs should remain closed as before.

Start up the economy slowly

The Federal Government’s goal is to enable industry and small and medium-sized companies to “work safely as far as possible” even in the pandemic. However, economic activities with considerable public traffic should remain excluded. Employers would have a special responsibility for their employees to protect them from infections. That is why every company in Germany should implement a hygiene concept based on an adapted risk assessment and company pandemic planning.

Businesses are encouraged to enable homework wherever possible. In addition, the federal and state governments want to support the economy in restoring disrupted international supply chains.

Affected companies should contact contact points that will be set up by the federal and state ministries of economy. “At the political level, these are intended to help ensure that the manufacture and delivery of the required supplier products, where possible, is smooth again,” says the draft resolution.

Nicola Leibinger Kammüller, head of the mechanical engineering company Trumpf, feels the compromise between maintaining the protective measures and gradually returning to normal is “right and responsible”. “The federal and state governments do not make it easy for themselves when making their decisions, but try to take many aspects and social groups into account,” she told the Handelsblatt. Restoring parts of the economy would be important to mitigate the “already singular consequences of the standstill”.

Prepare for the next pandemic period

Germany has to learn to live with the virus. Because it will probably take a year before a vaccine is available. Continuing the shutdown for so long would risk a collapse of the economy and society – a scenario of this kind has been played out by the Federal Ministry of the Interior. In the house of Interior Minister Horst Seehofer there is therefore talk that Germany urgently needs to develop “pandemic resilience”, that is, resistance to the wave of diseases.

However, the structures required for this are still under construction, which is one of the reasons why the corona barrier cannot currently be loosened. A gradual normalization of everyday life requires that new infections can be quickly identified and contained.

  • First, they should local health authorities will be strengthened. In the future, a team of five people per 20,000 inhabitants should take care of Corona patients and follow up their social contacts. In particularly affected areas, “the Bundeswehr can also help with trained personnel”, the Federal Government offers in an internal resolution proposal. The aim of the federal and state governments is to “understand all infection chains every day and to interrupt them as quickly as possible”.
  • Second, the federal government and the federal states Tracing technology compliant with data law. In future, citizens should be notified via cell phone if they are or were at risk of infection. However, a finished program that could be installed on the smartphone is not yet available. It should not be ready until the end of April.
  • Third, they should Test capacities of currently 650,000 are being expanded. The federal government promises to purchase additional test equipment. However, since the world market is fiercely competitive and the necessary reagents could become scarce, test materials are also to be increasingly produced in Germany.

The same applies to the manufacture of medical protective equipment. In Germany, “production capacities for the corresponding products are being built under high pressure,” emphasizes the Federal Government. The overriding goal is “to provide the health care facilities with full care and medical protective masks that protect the wearer from infection”.

The intensive care beds in hospitals are also to be expanded. Ultimately, the federal government is clear that the corona crisis can only be overcome if vaccination protection is in place. “A vaccine is the key to a return to normal everyday life,” she emphasizes. The state wants to support pharmaceutical companies, health start-ups and international organizations in the development.

More: “It is a significant step forward that there is now a broad debate,” said Ifo boss Clemens Fuest.

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The federal government and the states advise on how to proceed

Berlin The signal for the opening comes from Halle an der Saale. The “National Academy of Sciences Leopoldina” resides in the city in Saxony-Anhalt. The most traditional German scholarly society is the academic anchor of the federal government in the corona crisis.

She advises: “Although the pandemic will continue to determine economic and social life for months to come, it is important to develop criteria and strategies for the gradual return to normality beyond the acute restrictions of fundamental fundamental rights such as freedom of movement.”

Schools should be reopened as soon as possible, albeit initially for certain age groups. Retailers and the hospitality industry could soon start operating again with restrictions.

The Germans should be allowed to travel again in the foreseeable future, on business and privately. In addition, the Leopoldina experts recommend: “Depending on the possible spatial distance and the contact intensity of those involved, social, cultural and sporting events should gradually be made possible again.”

However, a prerequisite for the gradual opening is that hygiene and protection rules are still observed. The requirement to keep your distance in everyday life remains. In addition, “in certain areas such as public transport” it could become mandatory to wear a mouth-nose mask.

Countries have different ideas

The Federal Government’s Corona Cabinet meets on Tuesday. On Wednesday, the federal and state governments will discuss how long the most drastic restrictions on social and economic life in the history of the Federal Republic are to continue.

At their last phone call in early April, Merkel and the prime ministers agreed to extend the strict ban on contact until April 19. Now they could sketch a way out of the standstill and use the Leopoldina’s report as a scientific basis.

However: The countries have different ideas about how quickly the steps into normality should take place. There is also no consensus within the federal government regarding the pace.

Even in pre-Easter times, politicians had made calls to show the population and companies a way out of corona rigidity. The Chancellor disliked this. Merkel feared that the debate might raise false hopes or create a deceptive feeling of security.

The driving force behind the opening faction is Armin Laschet, the Prime Minister of North Rhine-Westphalia. Last week, the CDU politician in the Handelsblatt interview argued for a flexible easing of the lockdown.

At the weekend, he sent the recommendations of his own expert council to Merkel and the other prime ministers, the paper is headed “Ways into Responsible Normality”. The suggestions from NRW read similarly to the concept of the Leopoldina. “One possible way can be to gradually re-allow individual areas of public life,” says the paper that is available to the Handelsblatt.

Schools and shops would have priority, and restaurants could also reopen if the number of guests was limited and table spacing requirements were met. “Major events such as Bundesliga soccer games with spectators, but also trade fairs and congresses will not be possible in the foreseeable future.”

In a cover letter, Laschet asked the country colleagues and the Chancellor to take into account the “transparent and comprehensible criteria” of his experts when advice is given on a gradual lifting of the measures this week.

Söder dampened hopes

However, other prime ministers are not in such a hurry as Laschet, who is applying for the CDU chairmanship and thus the next candidate for chancellor of the Union. Bavaria’s head of government Markus Söder (CSU) dampened hopes that the contact restrictions would be removed shortly.

Söder warned: “Even after the Easter holidays, things will not just go on as before. If you loosen too soon, you risk a relapse. ”Prime Minister of Baden-Württemberg Winfried Kretschmann (Greens) made it clear in the“ Frankfurter Allgemeine Sonntagszeitung ”that the easing of the measures depends on the number of infected people, test capacities, medical personnel and the number of free intensive care beds depend.

And the head of government of Rhineland-Palatinate, Malu Dreyer (SPD), said in an ARD interview rather cautiously: “Of course, you can gradually relax. But they have to be very balanced, and you really have to be able to make it clear that we need a new hygiene offensive. ”

Malu Dreyer

The Rhineland-Palatinate Prime Minister Malu Dreyer (SPD) was cautious about a possible easing.


(Photo: dpa)

In the past few days, Federal Minister of Health Jens Spahn (CDU) in particular has spoken out in the Federal Government for an opening perspective soon. Federal Minister of the Interior Horst Seehofer (CSU), on the other hand, is seen as a supporter of the strategy to contain the spread of the virus for as long as possible by taking tough measures.

Defense minister and CDU chief Annegret Kramp-Karrenbauer warned over the weekend of a patchwork for the normalization of public life in Germany. “It is important that we have rules that are as uniform as possible. Everything else raises additional questions, ”said Kramp-Karrenbauer of the German Press Agency. There was a firm agreement at the Prime Ministers Conference to present a “good overall package” with the Federal Government for a possible opening after the Easter holidays.

And this overall package could be based on the Leopoldina’s report. The Corona Crisis Working Group has 26 professors, including lawyers, sociologists, doctors, educators, philosophers and psychologists. The chairman of the economy, Lars Feld, also worked on the recommendation catalog.

Right from the start, the scientists made it clear that the prerequisite for “gradual relaxation” is that new infections stabilize at a low level and the health system is not overloaded.

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In this way, “necessary clinical reserve capacities would have to be built up”. They are also calling for the corona tests to be expanded and for people with infection to be tracked better using smartphone apps.

The education sector could kick off a return to normality. In this way, teaching could initially be resumed at primary schools and at lower secondary level – i.e. at secondary schools, junior high schools, comprehensive schools and high schools up to tenth grade. In contrast, daycare centers are said to remain largely closed until summer.

The scholars point out that early easing is also required under constitutional law: “Restrictions on fundamental rights must not only pursue a legitimate aim – which is beyond doubt in the current situation with the protection of the life and health of the population”, says the report. The measures taken should also be appropriate. “The unquestionability of the right purpose does not automatically lead to the admissibility of the funds taken.”

The report also contains a number of economic policy recommendations to cushion the consequences of the lockdown. In order to revive the economy in the short term, there must be a number of tax reliefs. The experts also bring the complete abolition of the solidarity surcharge into play. In addition, massive public investments are necessary, for example in the health sector.

After the crisis, however, the measures would have to “be reduced or adjusted as soon as possible in favor of sustainable management within the framework of a free market organization”.

RKI numbers should be used with caution

This includes an end to crisis-related government holdings in companies as well as a reduction in government debt. The debt brake must be maintained.
Germany has so far been spared dramatic conditions in the corona pandemic, such as in Italy or New York.

Spahn had told the Handelsblatt that there was a “positive trend” that had to steady over the Easter days. That seems to be the case: the number of new infections registered by the Robert Koch Institute (RKI) has been declining in recent days. As of Monday, around 123,016 people in Germany were demonstrably infected with the coronavirus, of which more than half have recovered.

So far, 2799 patients have died from a corona infection. However, the official information provided by the RKI should be treated with caution: Not all cases are reported immediately to the Federal Institute by the health authorities.

Because of the incubation period of up to two weeks, the numbers reflect the infection process from the past. And the statistics only record cases that are confirmed in tests. Virologists suspect a high number of unreported cases of people who carry the pathogen but who show no or only very mild symptoms of the disease.

The Leopoldina experts therefore urge urgently to improve the data basis for the political decisions: “The data collection, which has so far been largely symptom-based, leads to a distorted perception of the infection process.”

More: Comment: The prime ministers of the countries vie for the fastest exit. However, caution is required in the scenarios.

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Expert council from North Rhine-Westphalia presents guidelines for easing

Dusseldorf A group of experts set up by the state government of North Rhine-Westphalia has presented measures and proposals for easing the strict corona restrictions. The paper of the interdisciplinary team states that easing can only be considered if it is clear that the health system “is not likely to be overwhelmed in the foreseeable future” and that conditions are in place for better “monitoring” of the crisis.

Then, however, the return to normality could be “gradually pushed”. The paper is available to the German Press Agency, the “Frankfurter Allgemeine Sonntagszeitung” had previously reported. In an attached letter to Chancellor Angela Merkel and the heads of government of the other federal states, North Rhine-Westphalia’s Prime Minister Armin Laschet (both CDU) emphasized that “an open, transparent debate about the way out of the crisis and a road map to responsible normality are needed”.

The expert paper and a study on the district of Heinsberg, which is particularly affected by the coronavirus epidemic, should “contribute to the substantive basis for our joint consultations next week.” The group of experts includes Bonn’s virologist Hendrik Streeck, the former Federal constitutional judge Udo di Fabio and the director of the Cologne Institute for Economic Research, Michael Hüther.

The federal and state governments have decided to take drastic measures to curb the spread of the coronavirus. On April 15, advice will be given on how to proceed. At a further Merkel switching conference with the Prime Minister on April 19, a decision will likely be made as to whether parts of the restrictions can be lifted or changed.

The expert paper states that one possible way could be to “gradually re-allow individual areas of public life”. This included schools, universities and retail. At schools, there should be time-shifted lessons and differences depending on age. First of all, teachers who do not belong to risk groups should work in daycare centers and in “classroom instruction”. Childcare in daycare centers and the “(partial) opening of schools” could give employees and the self-employed freedom again.

Four criteria are crucial

Test procedures should be expanded when the infrastructures are ready. People with symptoms and confirmed contacts should always be tested. The infection chains should also be traced as completely as possible.

The specific steps and the speed of opening should be based on four criteria. First, it had to be determined where the risk of infection was particularly high and where less. Secondly, the question was: “Who would be particularly dangerous for an infection?” These groups need further protection.

Third, it depends on what is “particularly important for the economy and society”. Finally, it must be considered how well protective measures can be implemented in the respective area. In the 15-page paper entitled “Towards a Responsible Normality”, the priority was to expand medical capacities as quickly as possible. A better control of the capacities is necessary, especially with intensive care beds with or without ventilation options. These would have to be recorded in real time.

In addition, better access to the health offices and better information distribution between them is necessary. The aim is to increase the number of tests for the corona virus up to 500,000 per day. For this purpose, a rapid setup of the test infrastructure, including other laboratories, and the establishment of mobile test stations with the support of the Technical Relief Agency, the Bundeswehr and the Red Cross are necessary.

The experts assume that the old freedoms can only be slowly regained. It must be clear that there will be setbacks. It is very likely that the country will be faced with repeated increases in the number of infections. Every new wave of infection will require taking steps back.

Start up economy with protective measures

At the same time, the infection chains should be able to be traced as seamlessly as possible. This would require a rapid increase in personnel at the health authorities, for example through the support of medical students or the Bundeswehr. Economic activities would have to be permitted again as soon as possible and as far as responsible. Protective measures such as masks, spacing or partitions would have to be taken.

Retail stores could, for example, “reopen earlier than discotheques, in gastronomy, strict guidelines may be conceivable (distance between tables, limited number of people)”. The paper also states: “Major events such as Bundesliga soccer matches with spectators, but also trade fairs and congresses will not be possible in the foreseeable future.”

Approval for the plan came from FDP chairman Christian Lindner. He called for the NRW plan to be made a “blueprint for all of Germany”. “Restrictions on freedom are only justified as long as there is no better alternative,” Lindner told the German press agency in Berlin on Sunday.

Obviously, the current state of health protection is no longer absolutely necessary, a gradual opening is possible. “With responsible steps for health protection, life can and must be slowly started up again after Easter”, Lindner demanded. In everyday life, distance is also possible without a complete ban on contacts.

“On the basis of the proposals of the largest federal state, the federal government and the other states should decide this week on a common path for the slow return to normal,” Lindner said.

More: Armin Laschet argues in the Handelsblatt interview for a flexible relaxation of the lockdown. The crucial question for him is: can rules for the correct distance be observed?

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Equities are becoming even more attractive than government bonds

There is often only a fine line between fear and hope. Historically, the price declines at the beginning of the Corona outbreak in Europe were not the strongest, but they were by far the fastest. Fell within eight trading days the Dax by almost 33 percent. After a short breather, the prices climbed by 23 percent in just five trading days. The US stock exchanges followed this pattern.

At this stage, as an investor, you could do more wrong than right with actionism. Measured against the MSCI World Index, shares have suffered a loss of around 20 percent since the beginning of the year. Significantly less than during the financial crisis between June 2007 and March 2009 and during the bursting of the technology bubble in the period from June 2001 to May 2003. Both events resulted in share price losses of around 50 percent, calculated in euros, taking the dividends into account.

In view of the fact that the economy has largely come to a standstill over a month or two, combined with considerable income losses due to short-time work and unemployment, the price losses that shareholders have had to pay as a tribute to the corona crisis appear rather small.

This stems from the fact that many countries with unprecedented budget deficits absorb the costs and loss of income. This can also be justified, since this time it is not a self-inflicted crisis in the economy or the capital markets, but rather force majeure. Consequently, the state steps in by communitating the damage in the form of debt in order to minimize the negative consequences for individuals and for companies.

However, the rescue measures are not financed through the free capital market, but through the major central banks such as the Federal Reserve, the European Central Bank or the Bank of Japan. These buy up the debt – in the case of the United States, even unlimited – and use it to print money. This compensates for liquidity bottlenecks and enables an exploding national debt at falling interest rates. There is probably no alternative to this approach by the states. However, it should be clear that we will face considerable costs in the future.

Money and public debt are two sides of the same coin

The following scenario is conceivable: The level of public debt increases massively in relation to the gross domestic product. Without lasting support from the central banks, interest rates would rise to an extent that would jeopardize the debt sustainability of the states. To prevent this, the central banks keep interest rates close to zero by buying government bonds.

This would not be a problem if inflation remained at the currently low level. Should this accelerate, however, the central banks would have their hands tied. After all, an increase in interest rates would not only drive the economy into a severe recession, but would also call the states’ debt sustainability into question.

A haircut would pose a risk to monetary stability in this scenario, since money is largely covered by the government debt bought by the central banks. In this scenario, money and public debt are two sides of the same coin. For investors, this means that government bonds, especially those with longer maturities, are not a suitable means of investing assets.

However, shorter-running government bonds from the USA or Germany, for example, are not meant to deny their quality as a liquidity reserve. In the future, investors should measure the stability of money as a reflection of public debt above all by its equivalent in gold, since gold is an object of value that is independent of debt and largely stable in terms of the amount available, which at least in the past was also important by central banks Part of the cash coverage was seen.

Alternative route from Japan and Switzerland

It is interesting in the current environment that some central banks – above all the Swiss National Bank and the Bank of Japan – are taking an alternative way of financing government debt, which at least reduces the risks to monetary stability: In addition to bonds, they mainly buy shares, i.e. shares to companies.

Companies are – even if their debt has increased more in recent years – productive assets. As a source of wealth for every state, they generate income and wealth. Even if they make losses in the current crisis, they are the substance for a future upswing. The relative strength of the Swiss franc and the yen seems to confirm the strategy of the two central banks.

Investors should use the share price declines in the corona crisis as an opportunity and do the same to the central banks in Japan and Switzerland. While companies create added value, government bonds are assets in which you are not only a creditor and a debtor at the same time, but are also not even rewarded with interest.

More: These companies are the big winners and losers of the corona crisis.

Klaus Kaldemorgen, born in 1953, is one of the best-known stock exchange strategists in Germany. He has worked as a fund manager for DWS for over 35 years, where one of the investment funds even bears his name.

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France and Germany remain guilty of a joint corona strategy

Both countries have adopted a purely national package to save their own economy. Subsequently, dangerous symbolic policies were pursued, such as closing the borders, which further hampered the supply chains. In some ways things are currently going worse than during the euro crisis: France is pulling out protective masks to which Sweden is entitled. The Saarland Interior Minister barricades the borders to the west, as if the hereditary enemy were there again. In the state capital, French cars are scratched and shopping is denied. One could sink into the ground with shame, but the responsible politicians seem to be leaving it cold.

In 2010 Angela Merkel and Nicolas Sarkozy worked together at the European Council and on the beach in Deauville to find solutions that went far beyond the existing rules and instruments. Today the crisis is more extensive, it affects every country. The euro crisis caused risk premiums to skyrocket, Covid-19 the death toll. But France and Germany react as if they only had to regulate the current course of business.

“Hundreds of people die every day in Italy and Spain, while the Berlin Chancellery thinks of German bank accounts,” writes bitterly Italian journalist Roberto Brunelli. The death toll in the south is also higher because the health sector shrank after the euro crisis. Germany and France pursued this policy together at the time, the greater their responsibility today to do it better.

Sure, the French finance minister Bruno Le Maire and his German colleague Olaf Scholz often talk to each other, their closest employees practically every day. But this collaboration has no ambitions. The greatest feeling: Loans from the European Stability Mechanism (ESM) may be agreed earlier this week without the usual requirements for structural reforms.

Get through the economic crisis together

There are no longer convincing reasons for this pettiness. Majorities in Germany have changed. The Germans know that they don’t live on an island. Europe has become the second skin for doctors, entrepreneurs and economists. We want to get through the epidemic and the ensuing economic crisis together with our European neighbors. German doctors fight for the lives of French patients with the same dedication as for Germans. Companies want to intensify the cooperation, understand that help for the neighbors is in their best interests, because otherwise we will not have an upswing.

During the euro crisis, many Germans feared that they would have to be held responsible for the slackness of the southern countries. Today one has to fear that Germans, Italians, French and Spaniards will be liable for the slickness of government and a tired EU commission who think within national borders or get lost in legal finger exercises.

This has a lot to do with the fact that the crucial conversations are conducted by a dozen people who have been reluctantly connected for years. The debt is evenly distributed: the German ministerial bureaucracy repeats its mantra “no communitization of debts”, even though we have had it long ago via the ESM, the European Investment Bank and the EU. The French Ministry of Finance and Treasury can think of nothing more than to break into the rotten taboo of European bonds. The two governments have not even convened the joint council of economic practices: they are sleepwalking.

Fast and pragmatic approaches to how protective clothing, tests, and respirators can be manufactured across borders remain by the wayside. This also applies to planning, how to find and coordinate the exit from the phase of curfews and the artificial coma of the economy. And even more so for the considerations that should be made now with a view to the necessary changes in the supply chains, for greater autonomy for Europe not only with medical devices and pharmaceuticals, but with everything that is vital for Europe.

At the moment, citizens are rushing ahead of largely national politics. This is reassuring when it comes to the state of public opinion. But it can drive one to despair because this is the hour of the executive and it decides what happens in Europe. Or rather, it doesn’t happen.

More: No European country will come out of the crisis alone. Germany should now go ahead and participate in an EU aid program for particularly affected countries.

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The economy could collapse more than in the financial crisis

Peter Altmaier

The economics minister commented on the economic consequences of the corona crisis.


(Photo: dpa)

Berlin The corona pandemic could hit the German economy harder than the financial crisis eleven years ago. This is what Federal Minister of Economics Peter Altmaier (CDU) expects. “We have to expect deep cuts in economic growth,” said Altmaier on Thursday in Berlin. The cuts would be “at least as strong, if not stronger than in the 2009 financial crisis”. At that time, gross domestic product (GDP) had dropped by 5.7 percent.

Altmaier assesses the situation a little worse than many economic researchers. For example, the economists in their forecast last Monday assume that the German economy will shrink between 2.8 and 5.4 percent this year – depending on how long the standstill will last. In the better scenario, the wise men assume that the ban on contacts will be relaxed after five weeks.

Altmaier does not expect the crisis to peak until April and May. In individual months, the gross domestic product could decline by up to eight percent, he said. But there is hope that the situation could normalize again in the second half of the year.

The minister did not give a specific figure for GDP for the whole year; the official new government forecast is not expected to be released until the end of the month. The five major economic research institutes plan to present their joint forecast next Wednesday.

The union-affiliated Institute for Macroeconomics and Business Cycle Research (IMK), with its forecast, is of a similar magnitude to that of the economies and Altmaier. Provided that the ban on contacts is relaxed in May, the IMK expects gross domestic product (GDP) to shrink by four percent. If it takes longer, the slump could become deeper.

The Kiel Institute for the World Economy (IfW), in turn, anticipates a recession depth between minus 4.5 and minus 8.7 percent, also depending on the length of the downtime. The Munich Ifo Institute, on the other hand, recently published 18 scenario calculations, according to which the economy could collapse by 5.4 percent if the standstill quickly ended, but in the worst case of a three-month lockdown, it could even drop by up to 20.6 percent.

Altmaier rejected double-digit burglary rates. The economies also emphasized that they consider a three-month standstill to be rather unlikely. Likewise, it is not to be expected that up to a third of all industries will really come to a complete standstill: restaurants, for example, opened delivery services, stationary factories begin to supply protective clothing.

The Economics Minister spoke of a crisis that has never existed in the history of the Federal Republic. Health protection is an absolute priority, so there should be no premature lifting of the restrictions.

More: The Economic Advisory Council assumes a significant decline in GDP in Germany. However, the forecast is less pessimistic than that of the Ifo Institute.

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