The German economy is sinking – and the stock market is reaching a record high. This impression currently shapes many public debates. Many attribute the “downfall” to the fact that Miele, an icon of “Made in Germany”, announced mass layoffs. At the same time, the Dax, the most important German stock index, reached a record high of a good 17,049 points. For critics of capitalism, doomsday apologists of all stripes and cynics, the past week seemed to provide the perfect confirmation of their respective worldviews. So it’s time to dispel a few myths about the crisis and the stock markets and clarify why prices are as high as they are – and could even rise further.
Let’s first stick with Miele, a symbol of the fact that things are not going well in the world’s third largest economy. It is well known that digitalization, infrastructure, education, decarbonization and thus competitiveness are stalling in Germany. There are also external factors, i.e. Putin’s war against Ukraine and China’s weak growth, as well as the insecurity in the area between the Suez Canal and the Indian Ocean, which is apparently being fueled by Iran.
The result is high energy prices and thus stagnation in the German economy, which shrank by 0.3 percent last year and which the International Monetary Fund only expects to grow by 0.5 percent this year. This would mean that Germany would be at the bottom of the list among the industrialized nations. The supposed crisis is more of a blip at zero.
The Miele case is, on the one hand, a symbol and, at the same time, a completely normal piece of structural change that has always existed. If it didn’t exist, many of us would still be working at the loom with our children at home – just not in Silesia – and would be much poorer. Today the question arises: Does Germany’s future depend on the production of washing machines?
On the one hand, structural change is bitter for those affected, but it frees up the resources to generate new growth and achieve higher productivity. The latter is the prerequisite for greater prosperity. Any convinced liberal would sign that – at least unless the Greens are in government.
So what does this have to do with the stock market?
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