German Factory Orders Drop Most in Nearly 3 Years

Mike Shedlock
Posted: Jan 08, 2012 12:01 AM
It is amusing to see how other writers portray a story vs. what I would say about the same data.

For example, Bloomberg columnist Rainer Buergin reports German Factory Orders Declined Most in Almost Three Years.

Please consider Buergin's interpretation of the story vs. mine. Both follow.

Bloomberg: German factory orders dropped the most in almost three years in November as the euro region economy edged toward a recession and global demand weakened.

Mish: German factory orders dropped the most in almost three years in November as the European recession deepened.

Bloomberg: Orders, adjusted for seasonal swings and inflation, slipped 4.8 percent from October, when they surged a revised 5 percent, the Economy Ministry in Berlin said in a statement today. That’s the biggest drop since January 2009. Economists forecast a decline of 1.8 percent, according to the median of 25 estimates in a Bloomberg News survey.

Comment: That paragraph is fine.

Bloomberg: While the euro region’s sovereign debt crisis has clouded the outlook and cooling global growth is hurting export orders, Europe’s biggest economy may still avert a recession. 

Mish: The euro region’s sovereign debt crisis, coupled with austerity measures and rising taxes in Greece, Spain, Italy, France has clarified the outlook, and it's not pretty. The European recession will be extremely harsh and Germany will not escape.

Bloomberg: Unemployment at a two-decade low is helping to bolster consumer sentiment, service industries expanded in December and business confidence unexpectedly rose for a second month.

Mish: German unemployment at a two-decade low has temporarily helped boost consumer sentiment. In addition, service industries expanded in December and business confidence unexpectedly rose for a second month. However, do not expect those conditions to last. Any notion that Germany will escape a brutal European recession is complete silliness. Indeed, Germany and the entire Eurozone is already in a recession. Conditions will worsen as tax hikes and austerity measures take an enormous toll. Fundamentally, hiking taxes in the midst of a recession is the worst possible thing to do, yet various officials, including Nicolas Sarkozy, the president of France are clamoring for still more tax hikes.

Escalating trade wars between France and Spain are icing on the recession cake. For details please see ...
"Social VAT" Trade Wars Heat Up Between Spain and France

Brussels Recommends Sucking Spain Dry with Increased VAT; France to Raise Sales Tax to Protect Jobs; Is There Any Point or Reason for the Eurozone?

Trade wars are on the horizon everywhere I look. Election politics have brought them to the forefront in France.

Via somewhat choppy but understandable Google Translation, please consider 
France to Increase the 'Social VAT' Before the May Presidential Election

The French government intends to implement the so-called 'social VAT' levied on products imported from countries with low production costs in order to apply a reduction in social contributions, before presidential elections next spring, as confirmed Budget Minister and government spokesman Gallo, Valérie Pécresse.

"The social tax to create jobs in France and to prevent imported products sold in our country at low cost is going to apply, and we will do before the presidential election," he said Pécresse told France Info.

The minister also said that this Budget proposal will be discussed with the French unions in the social summit is scheduled to be held on 18 January at the Elysee Palace.

In this regard, Bertrand defended the implementation of this measure by the "general interest" of employment and the country, and stressed that in France there are "too many burdens on the job." As an example, said that for every $ 100 of gross wages, account charges 39 euros in Germany, while France is 50 euros.

"I prefer to penalize imports, which have long criminalized the financing of social protection is now to finance social protection", had an impact.

Opposition criticism

Sarkozy's proposal to establish the social tax, announced in his speech on December 31 has been widely criticized by the opposition, including the Socialist Party, which sees as a "social and economic mistake."
Social and Economic Mistake

The interesting thing is the Socialist Party understands the proposal to be a "social and economic mistake" (which of course it is).

When attempting to buy votes, no one cares about mistakes of any kind, and unfortunately private citizens (not politicians) suffer the consequences. Mike "Mish" Shedlock