In Europe, 'Dire Straits' Is Not a Band

As if Friedrich Merz wasn't already knee-deep in cow patties no matter which way he turned (a fact that was brutally pointed out in a recent op-ed)...

Merz can look West, look East, or look at the moon, Germany is hammered

...That is an accolade indeed from any Jewish observer about a German chancellor. It is usually steps not bumps that most people refer to when ever talking about a goose and Germany. Moreover, one has to feel sorry for poor Merz: He has inherited a vast mess in whatever direction he looks. Upwards to the moon, from which a Chinese weapons station will probably be pointing its lasers on Berlin in ten years’ time. Eastwards towards Russia, enough said. Westward towards Brussels, the undemocratic home of a pseudo-democratic imperial union, and even further westward to Washington, which is rightly sick and tired of  Europe and its arrant, arrogant refusal to behave like adults. To the South he sees Israel and its endless war-or-survival, and beyond to the Arab countries, which also are the home of millions of “new Germans”, though as to whether that is what they will genuinely become is somewhere between marginal and net zero. So, a lot of juggler’s balls in the air….

Sorry. One further ball: The future, and the EU’s directive to end all combustion engines in vehicles by 2035, namely nine years from now. Or about the same amount of time since Manchester’s Ariane Grande massacre and the Grenfell Tower fire in London in 2017.  Within that tiny period, all new diesel and petrol engines will have vanished from Europe’s roads, which will then resonate with the virtually silent hum of electric vehicles. There is indeed no doubt that this will happen, just as NATO will re-equip its armoured forces with renewable sail-driven tanks made from shell-proof balsa wood. Meanwhile, the skies over Europe will be protected by the Israeli-made Hetz 4 exoatmospheric anti-ballistic missile, which will be propelled into space by a trebuchet made from seaweed, and woven by non-binary gender-neutral bees.  

...there's been a meeting of minds of German business types who decided there was no time to drop bad news on the chancellor like the present.

One of the largest of Germany's business associations - and they do love their guild sort of things there, still -  the Federation of German Industries (BDI) has told Merz that time has basically run out and he needs to do something, anything, or gird his loins for the worst. It doesn't sound as if the business community has much faith in Merz doing the former and is resigned to preparing for the latter.

The Federation of German Industries (BDI), one of Germany’s major business associations, has warned the government of Chancellor Friedrich Merz that the economy is facing its worst crisis since the end of the Second World War.

“The business location is in freefall but the federal government is not reacting decisively enough,” BDI president Peter Leibinger said today on the publication of its latest Industry Report.

“German industry is facing a dramatic low point at the end of 2025,” he added.

STRUCTURAL DECLINE

...The BDI expects industrial production to have declined by 2 per cent in 2025 – the fourth annual drop in a row. This is a revision downward from the previous estimate of only minus 0.5 per cent.

“This is not just a temporary economic dip but a structural decline,” Leibinger said.

German factory workers are oblivious to the pink slips that have been flying in their already decimated industry, and are pushing for a four day woorkweek while keeping the same wages.

And at the same time some left politicians and unions seriously request a move to four days workweek with no pay cut in German automotive industry.

Folks, if you don’t wake up and focus on innovation, productivity, and cost reductions you will get a zero days workweek soon. pic.twitter.com/TV0DknIQXF

— Michael A. Arouet (@MichaelAArouet) October 13, 2025

Manufacturers are staring at the teeth and fiery maw of a robotics-fueled, regulation-free Chinese dragon while fighting unionized mayhem on their own factory floors.

What Germany needs to do to solve this, it will not do.

Germany is in its worst crisis since WWII. It urgently needs to reduce regulations and lower taxes to attract investment & boost innovation.

The left in government does the exact opposite: they push "tax the rich" instead. Entrepreneurs & businesses will simply leave. Good luck pic.twitter.com/lgeldvFiXY

— Michael A. Arouet (@MichaelAArouet) December 2, 2025

The rate of deindustrialization is accelerating, and the finger-pointing can all be directed at the Energiewende or Green transition.

While the green grift has lowered Europe's carbon emissions by some 30%, it has come at the cost of the continent's standard of living and is now threatening economies.

The price businesses and households pay to implement utopian Green dreams is ruinous and ultimately unsustainable.

...Europe has succeeded in slashing carbon emissions more than any other region—by 30% from 2005 levels, compared with a 17% drop for the U.S. But along the way, the rush to renewables has helped drive up electricity prices in much of the continent.

Germany now has the highest domestic electricity prices in the developed world, while the U.K. has the highest industrial electricity rates, according to a basket of 28 major economies analyzed by the International Energy Agency. Italy isn’t far behind. Average electricity prices for heavy industries in the European Union remain roughly twice those in the U.S. and 50% above China. Energy prices have also grown more volatile as the share of renewables increased.

...It is crippling industry and hobbling Europe’s ability to attract key economic drivers like artificial intelligence, which requires cheap and abundant electricity. The shift is also adding to a cost-of-living shock for consumers that is fueling support for antiestablishment parties, which portray the green transition as an elite project that harms workers, most consumers and regions.

...“We are hemorrhaging industry,” said Dieter Helm, an economic policy professor at Oxford University who has advised U.K. governments on energy policy. 

British chemical company Ineos said in October it would close two plants in western Germany because of high energy costs. In recent days, Exxon-Mobil said it would close its chemical plant in Scotland and threatened to exit Europe’s chemicals industry, saying green policies made it uncompetitive.

In Germany, once the mighty industrial center of Europe, as the rest of the continent ekes out modest gains in production, the Germans fall further behind.

...“The sharp rise in energy costs has left a clear mark in Germany’s industry,” the BDI researchers point out.

“While in the EU industrial production was on average 1 per cent higher in Q3 2025 than in 2021, Germany’s industry was producing 5.4 per cent less in the same period.”

Not only are they hobbled by the volatile, expensive electrical pricing, but also by the unreliability of their power generation. Long dunkelflautes (wind droughts) and sunless days wreak havoc with renewable power sources, and for new tech industries that gobble continuous, massive amounts of power, like data centers, Germany and the European continent at large are non-starters.

...In any case, absent huge changes, Europe has permanently excluded itself from the entire data center and AI industry boom. Why are all the data centers in the western world being built mostly in the US? Just look at the chart above. A massive cost to data center operators is the extremely electrical demand of their server racks and their cooling systems. They can pay over 25 c/kWh in some European countries, or they can come over here and pay as low as 8 c/kWh. The difference is an immediate deal breaker.

In some cases, it’s not even the prices turning off the data centers: European infrastructure industry just can’t handle it. “Jerome Evans, the CEO of a German data-center operator, sought to expand his two data centers in Frankfurt, Germany’s internet crossroads. The local power provider told him he would have to wait a decade, until 2035, for the energy to power them.”

The German malaise is spreading.

Euro zone business activity surged to a two-and-a-half-year high with services leading the expansion while factory output growth slowed and new orders declined https://t.co/xlEFw4OxHt pic.twitter.com/u6ccNvcuQM

— Reuters (@Reuters) December 3, 2025

The service sector will not sustain an entire continent.

...Manufacturing showed signs of struggling, however, with factory production growth slowing to a nine-month low and new orders declining marginally.

Employment across the euro zone continued to increase in November, though the pace of job creation slowed to only a fractional rate. The services sector maintained hiring momentum, while manufacturing firms reduced staff at the sharpest rate since April.

Business confidence improved slightly but remained below its long-run average, suggesting companies remain cautious about future conditions.

On the inflation front, input costs rose at the fastest pace in eight months, driven by renewed increases in manufacturers' purchasing costs and accelerating service sector expenses.

At least one fellow in the UK was being honest.

...“Very clearly the cost of the transition has never been admitted or recognized,” said Gordon Hughes, a professor at the University of Edinburgh and a former adviser on energy to the World Bank. “There is a massive dishonesty involved.” 

And the head of Thyssenkrupp flat-out called BS on 'affordable renewables.'

...Some prominent economists and industry executives have recently cast doubt on whether renewables will ever be cheaper in places like Germany and the U.K. that aren’t blessed with abundant sunshine and have bet big on wind. Onshore wind turbines in Germany produce around one-fifth of their total theoretical output. Solar panels in Germany and the U.K. use only around 10% of their total theoretical output. 

“I have not seen any plan that facilitates green electricity in central Europe at competitive costs,” said Miguel López, CEO of German industrial giant Thyssenkrupp.

Dire straits.