Armstrong Economics Blog/Germany Re-Posted Nov 27, 2022 by Martin Armstrong
The Greens & the Socialists have taken control of Germany and in the process, the strongest economy of the EU has taken a decisive directional change here in 2022 that will not merely set in motion the decline and fall of Germany, but that of the European Union as well. Once again, the Berlin Senate will discuss the issue of Bürgergeld (citizen’s allowance), which is to replace the current social benefit program Hartz IV.
The new Government has proposed reforming the support for the long-term unemployed – currently known as “unemployment benefit II” (Arbeitslosengeld II) or Hartz IV. The proposed new system scheduled to roll out in early 2023, will be called Bürgergeld, or “citizen’s allowance.” This will increase in the basic monthly benefit from €449 to €502. Additionally, the Bürgergeld will reduce sanctions for those who are avoiding employment and training meetings, which appears to have emerged since the COVID lockdowns around the world. Many appear to have enjoyed free money to stay home under COVID restrictions and have been reluctant to return to any employment. After the first six months, the benefit can be reduced by up to 30% if they refuse to take courses or work.
Clearly, COVID has altered the labor market worldwide. In Germany, the employment profile differs from that of the early 2000s, when there was mass unemployment from the 2007-2009 Economic Crisis. That is when Germany drafted Hartz IV. Germany is facing labor shortages much as we see around the world leaving many unfilled jobs. In Germany, the estimates are about 1.8 million in the third quarter of 2022 of still unfilled jobs.
Strangely, the current situation regarding the arrival of refugees in Berlin is also a serious topic. The accommodation of the refugees is becoming an increasingly difficult crisis in itself. This has only added to energy security in Berlin. Tensions are quietly rising between the Germany population v the refugees. Unlike the mass migration of Europeans that set sail to America, there were no social programs so the migration was for a better life and America was viewed as the “land of opportunity” whereas the migration into Europe and that being allowed by Biden in the United States, have been motivated be free benefits – not opportunities to work.
Our model has targeted that the German elections and the rise of the the Greens and Socialists are not concerned about the industrial production of Germany, which has been the backbone of the entire EU economy. The are far more concerned about ending the Industrial Revolution for climate change and that is fundamentally undermining the very foundation of the entire Germany economic model from post- World War II that created Germany. We must understand that Germany’s economic policy was that of the old Mercantile system meaning that they focused on producing products to sell to other countries.
Kohl denied the German people the right to vote on even joining the Euro. He insisted that there would be no consolidation of debt for that would be seen as a bailout for the irresponsible Greek, Italian, and Spanish governments. The entire German foundation was built on hard work and conservatism. But they never sought to build a domestic consumer base. They wanted to sell to the rest of Europe, which was the entire purpose behind the Euro to eliminate foreign exchange risk that would expand German production for export.
The move to end Climate Change is fundamentally driving a stake through the very heart of the German economy. The mercantile economic model will continue to collapse under Climate Change. The Greens and Socialists are moving forward blindly without even understanding the very core rise of the Germany economy and in the end, this will further reduce the economic footprint of the EU in the post-2024 era.