Should the Corona vaccination be mandatory?

The Corona Incidences are rapidly rising in Germany and also the hospital capacities are almost depleted completely. While a few months ago leading politicians clearly stated that there will not be a vaccine mandate, by now some politicians already withdrew their previous statements and highly advocate a compulsory vaccination in order to finally go back to normality. This shift of opinion can also be observed among entrepreneurs and managers of huge German companies. During this summer many entrepreneurs still viewed the vaccine mandate as a tremendous restriction of everyone´s personal freedom but during the last weeks more and more opposite statements occurred. Especially many entrepreneurs and managers of the commerce and gastronomy sector endorse the rising demand for a compulsory vaccination as their companies vastly had to suffer due to the Corona restrictions and many companies would go bankrupt if tougher restrictions or a complete lockdown were reintroduced. As Austria already announced a rigorous vaccine mandate it is not that unlikely that Germany will follow their lead and establish this measure as well.

Written by: Thomas Hoffjan

Source:

Handelsblatt

Mannheim Alumni vs Nobel Laureate Joseph Stiglitz: Inflation, Debt, Fiscal and Financial Policy

Many of you will know him: Hans Werner Sinn, ex-IFO president and one of Germany’s best- known and most renowned economists. After his basic training in economics in Münster, he came to Mannheim, where he earned his doctorate and eventually his habilitation.

The debates about inflation and the correct interest rate, and fiscal and financial policies are experiencing a boom. While many – ECB President Lagarde, for example – assume that the current increase in prices is only a transitory event, others like Sinn believe in massive and lasting inflation. Joseph Stiglitz, a professor at Columbia University in New York and Nobel Prize winner, recently intervened in the battle for the German finance ministry. He spoke out in favour of Robert Habeck and against Christian Lindner because he is convinced that debt must be taken on to make investments in the future and thus innovate society. Clinging to the black zero, on the other hand, he considers making little sense. In doing so, he complied with the asset managers BlackRock and State Street, who are also critical of the Lindner personnel for the Ministry of Finance. Hans Werner Sinn took up the cudgels for Christian Lindner’s ordoliberal principles. The following summarises some key points from an interview with Hans Werner Sinn in the Handelsblatt. Rating: enlightening. And for all supporters of the market economy: reassuring.

Point 1: The ECB should ensure wider interest rate spreads so that those states that are getting further and further into debt (Italy, Greece, for example) have to pay higher interest rates to their creditors and thus receive clear incentives to reduce their debts.

Point 2: The Maastricht treaties may not even be worth the paper they are printed on. These treaties contain, for example, the 60 per cent clause, which states that the states in the Eurozone should have a debt ratio of no more than 60 per cent of total economic output (GDP). These are (actually) criteria for admission as well as for remaining in the EU. Germany has adhered to it for a whole four years in the last 21 years, some countries never have, and in 2020 only 13 of the 27 states had remained faithful to this principle.

Point 3: The current inflation dynamics are comparable to the first oil price shock 50 years ago. Sinn believes that inflation will come in waves, similar to a pandemic. This art is mainly due to the many disruptions, which act as inflation catalysts one after the other and somehow simultaneously. First, there is the energy transition with the phase-out of nuclear power and all fossil fuels. According to Sinn, this will exert considerable cost pressure on all production processes. The second disruption is demographic change, i.e. the ageing of society. Here the effects are barely noticeable, as the entire baby boomer generation will only retire in the next few years up to 2030. Supply bottlenecks, material shortages and special effects due to pandemics, natural disasters and the like are on top of that.

Point 4: According to Sinn, anyone who rejects Christian Lindner’s commitment to the black zero and to orderly and frugal politics in today’s times as an arch-capitalist society, as BlackRock and State Street as asset managers and financial investors are, can no longer be an advocate of the market economy. According to Sinn, the FDP is the most liberal and free-market party in Germany. Suppose American asset managers now speak out against Lindner as finance minister. In that case, this allows only one conclusion, according to the economist: all these companies no longer have any interest in the market economy at all, but only an interest in more and more money flooding the markets and in being able to speculate with ever-higher sums. Profits would be privatised here, and losses (mainly well seen in the measures taken after the

financial crisis of 2007/2008 (*own comment)) socialised. What makes Sinn particularly angry is that these investors can cover themselves with more promissory notes for which they are not even liable at the same time. The community of states does this – and so ultimately, the taxpayers.

Even if the interests of US economist Joseph Stiglitz are undoubtedly different from those of BlackRock and Co., the result is still the same: Lindner should not become finance minister, and the black zero should be buried.

Point 5: Interest rate hikes will and must come. According to Sinn, the inflation situation in the EU has long since overheated. One should not pour more oil on the fire but instead, take the fire extinguisher in hand before it becomes uncontrollable.

The Fed is already reducing its bond purchases, and at the same time, it is also holding out the prospect of potential interest rate hikes next year. This policy is still different at the ECB. Lagarde recently met with the outgoing head of the Bundesbank, Jens Weidmann, at the European Banking Congress. The latter stands for a policy entirely in the sense of our Mannheim alumni and, in his position, always drew attention to the debt excesses and the resulting economic consequences. Maybe Lagarde took one or another enlightenment from this meeting. The problem in raising interest rates: Countries like Italy would hardly refinance themselves if interest rates were raised. A debt cut would be necessary, which is known not to be the most pleasant thing in the world. Whatever the ECB decides, it will have a massive impact on the EU as a business location and the euro. One way or another.

Written by: Maurice Frings

Source:

Handelsblatt

Black Friday Sale: -2.3% on Wall Street

Wall Street’s S&P 500 index dropped by 2.3 percent on Friday. As if we hadn’t seen enough of the color red on billboards and social media in the past few days in connection with Black Friday promotions, the new coronavirus variant has also caused red on the stock market.  Omicron is the name of the new variant from southern Africa, which once again creates uncertainty for investors and has led to a considerable sell-off on Friday in companies most exposed to the pandemic after the WHO has designated the strain a “variant of concern” on Thursday. Not exactly the kind of Black Friday sale we’re used to.

Among the biggest losers Friday were travel stocks – shares of cruise companies such as Carnival Corp. or Royal Caribbean Group, airlines and hotel companies slumped around 10% against the backdrop of multiple countries around the globe such as the US, UK and EU imposing or planning to impose travel restrictions and lockdowns again. Treasury yields and oil – (just three days earlier Joe Biden announced to release emergency oil reserves in order to bring oil prices down!) – have seen declines as a result of the new variant as well.

Some examples for winners are communications technology company Zoom, internet-connected fitness equipment company Peloton, meal kit subscription company HelloFresh, online retailer Zalando and of course vaccine makers – Moderna rose 21 per cent, BioNTech gained 17 per cent and Pfizer was up 7 per cent.

While investors have for the most part remained rather positive concerning economic growth despite the record numbers of infections in European countries, Omicron seems to mark a turning point as investors wait for new data to reassess their decisions.

The new Covid variant, which has already found its way to Belgium, Hongkong and Isreal, has more than 30 mutations to the spike protein which could critically impact the effectiveness of vaccines.

Written by: Sisi Liu

Source:

FT

JP Morgan challenges domestic banks over German Mittelstand

While many banks started moving assets and employees to Frankfurt after the Brexit, JP Morgan has a special status. Not only has it moved its headquarters in continental Europe to Frankfurt. Additionally, the US-American bank will be part of the five largest banks operating in Germany by assets from next year onward. For decades a strong foothold in areas like equity capital markets and M&A has been a constant for the firm. In the past, companies like the SAP-spinoff Qualtrics or the online fashion retailer Mytheresa conducted their IPOs in New York with the help of JP Morgan. Jamie Dimon, CEO of JP Morgan, wants to use this international expertise to win over the German Mittelstand for its Corporate Banking division now. This is part of a broader initiative to serve European companies in their home countries as well. At the start of 2019, JP Morgan hired over 60 bankers for this task and a special team was created. It has to be seen whether they can succeed over Deutsche Bank and Commerzbank on their home turf.

Written by: Moritz Icking

Sources:

Handelsblatt: “Die Bankensysteme warden überall kleiner – Jamie Dimon stimmt Banken auf mehr Konkurrenz ein” (November 2021),

FAZ: “Frankfurt ist auf jeden Fall ein Gewinner” (March 2021)

2021-11-28T20:30:06+01:00November 28th, 2021|Business & Finance, Business Review, Europe, Trends|

Telekom Settled

After 20 years Telekom decided to settle with their petitioners, over 16.000 in number. Surprisingly, the amount that Telekom offers each claimant is almost identical to demands of the original 12.000 suits, only a small part of the interests will not be paid back. As even the legal fees will not have to be covered by the petitioners, the chief judge of the Higher Regional Court Frankfurt recommended to agree with the settlement offer. Until the 30th of June 2022, the settlement will be submitted so that the suitors can decide whether to take the deal or not, eventually, everything depends on the vote of plaintiffs. However, if the suit will be prolonged, it is possible that it will not come to an end in the next 5 to years. In retrospect, this suit shows, how unsuitable the current state of the “Kapitalanlegermusterverfahren” (KapMuG) is for such an incident, in comparison, in the USA Telekom settled after a mere 5 years for about 150 million dollars. The German association for protection of investors hopes, that this suit will be a signal for other major firms caught up in “KapMuG”s to approach the petitioners in order to settle more quickly than in the past.

Written by: Tobias Bernhard Steiner

Source:

WiWo

 

2021-11-28T20:23:16+01:00November 28th, 2021|Business & Finance, Business Review, Europe|