Euro Outlook appears bearish ahead of German IFO data. Euro Headlines appears to signal that the German industrial sector is experiencing some sort of shock. What are the implications of this?
German industrial sector appears to be a major player in the Euro outlook. This appears to be the story. Is it?
Germany is not only a major producer but has emerged as a major exporter of its goods and services. It also seems to be a major consumer of goods. For several decades now, the Germans have produced what we call “big goods”. The goods were sold in other countries, and manufactured goods were produced domestically.
But now the German industrial sector appears to be just a small player in the Euro world. Perhaps the major changes in German manufacturing are enough to explain why they are now a minor player in the Euro. So how should we read the Euro outlook now?
The Germans seem to be trying to avoid a recession this year, and even have the IFO data that appears somewhat bearish. We may be seeing the beginning of the contraction.
The consequences of a German industrial sector that is big but not growing in the Euro world is that there is no need for domestic industrial production. It would be quite simple to substitute the imported goods in the domestic production if the Germans could grow domestic production enough to buy what it was producing.
What will happen with the Euro if the Germans never grow their domestic production and always substitute imported goods? Will the Euro recover? What effect will this have on consumers? What effect on banks?
What if the German industrial sector never grows again? Will the Euro survive?
We are living in exciting times for the Euro. We may soon witness the ending of the European Common Market?
If this happens, and it appears likely, will the Euro survive? Will the world survive without the Euro?
We must remember that the Euro has been created to be a common currency. Not a global currency. If it fails to exist as a global currency, it will simply disappear.
Therefore we must prepare for the possibility that the German industrial sector never grows again. Otherwise the Euro will die. Please consider all this.