Extreme Keynesianism meets extreme green in Germany.


I read today of an extremely strange decision in Germany to shut down the largest single contributor to their power supply.

“Angela Merkel has committed to shutting down all of the country’s nuclear reactors by 2022, a task said by one minister to be as mammoth as the project to reunite East and West Germany in 1990.”

Nuclear energy in germany accounts for somewhere around 23% of their power supply, the single biggest component above even coal. Given that Gerbil worming is the “greatest threat to mankind”, evah!! how does it make sense to remove a non greenhouse gas producing asset?

 “It gives the country just over 10 years to find alternative sources for 23% of its energy.”

This has apparently been brought about by the Fukushima plants problems, which, to date havent killed anyone despite experiencing at least a partial meltdown. So the worst scenario possible, in a decades old plant, caused by a catastrophe well outside its design tolerances is reason to shut off 25% of a nations power?

It smells fishy, regardless of the power of the greens party in Germany (a major player there), so what could be driving this push into idiocy?

Greens mothership come to take them away??

The answer seems to be Keynesianism ratcheted up to 11..

The EU is currently experiencing a massive financial crisis, Germany, traditionally a modern bedrock of financial stability is lashed to the mast of the Euro, therefore exposed to the PIGS financial woes. At the moment they are bailing out the PIGS, but this seems top be staving off the crisis not preventing it from spreading.

Germany has done extremely well out of the Euro, in the past the Deutsche Mark would have appreciated hugely against the PIGS currency, severely hurting Germany’s export ability within the EU. As it stands they can “export” internally into the EU without worrying about currency fluctuations.

The PIGS get german goods, paid for by borrowing Euros from Germany, which then drives its own economy by selling products into its captive markets.

All nice an neat, until now…

Germany is preparing for 2 likely scenarios, both of which will potentially tip them into recession, the nuclear announcement is a call for stimulus spending on an unprecidented scale.

Scenario 1: The bailouts continue.

Germany continues to support the Euro, this requires austerity measures within Germany itself, and would be almost certain political suicide for Merkel, unless she can sell it as part of a “grand coalition” action supported by all parties.

Merkel presented the results to the center-left Social Democrats and Green Party on Sunday evening, in an uncharacteristic appeal for opposition support. But it remains unclear whether the opposition will back the new approach.

Scenario 2: The Euro is allowed to fail, national currencies re-emerge.

This would be the easy political fix, but the resulting strength of the new Deutsche Mark would effectively cripple the competitive advantage the Euro gave of a “captive market”, to Germany’s export sector.

Wheres Keynes come in?

“Energy firms warned that the decision – a total policy reversal – would require significant investment in energy infrastructure. Philipp Rösler, new head of the FDP party, which rules in coalition with the CDU, agreed, likening the task ahead to that which faced Germany in 1990 after reunification. A study in 2009 showed that €1.3 trillion (£1.1tn) had been transferred from the West to rebuild the East.”

Germany is considering bailing on the Euro, they have to find a way to prevent the mass layoffs which are sure to result. They have to find a way to soak up a few million people in their own internal economy.

The highly inefficient renewables sector is a way of employing a large number of people to generate the same amount of power as Nukes currently provide. In the meantime Germany will import power from France/Eastern bloc countries to meet any shortfall. This may actually be cheaper for Germany than the current arrangement, given the likely strength of a new Deutsche Mark.

All opinion and kite flying of course, but I can’t see any underlying logic behind this decision.

3 Responses to “Extreme Keynesianism meets extreme green in Germany.”

  1. bingbing Says:

    How bonkers is what they’re doing?

  2. Merilyn Says:

    Why on earth are they following so many of the Greens policies, they have been a failure and have ended up costing so much more then normal common sense policies.
    Above all their policies have caused misery wherever they have been in force.

  3. Winston Smith Says:

    They could send all their Guest Workers home. In fact they may have to – there won’t be any money to pay their benefits. And they could also send home all their Guest bludgers. For the same reason.
    Do I see a trigger for some very angry religious persons living off the public tit to get violent?
    And do I see an excuse for the Germans to chuck them all out, if necessary at gunpoint?
    What’s the level of private gun ownership in Germany? It looks like 30% http://www.gunpolicy.org/firearms/region/germany
    (I assume that’s how you do links, bingbing.


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