The times, in Europe, they are a-changin’

From The Hill

afd_germany_1The German elections are over, and for a brief moment, it looks like all is stable. But make no mistake, this is only the eye of the storm. Germany has already shifted away from the current leadership.

German Chancellor Angela Merkel stated that she has done nothing wrong. While that is true, there are many things she hasn’t done right. Society and its problematics around the world have moved on, circumventing traditional politics and politicians.

From a long-term analytical business perspective, politics requires a new direction. The parties in power may elegantly gloss over losing 10 percentage points in voter support. They talk about how the voters have made a mistake; how all it takes are better explanations and how all these inequities will be rectified shortly. How wrong they are!

Perceptions change. Research by Mintel reports that many consumers now judge soap bars to be a haven for bacteria. Similarly, voters now judge political insiders to be parasites to progress. Our work, which systematically tracks business behavior and expectations over the past 30 years, indicates new core values for voters.

Traditional dimensions of politics and individuals have four key dimensions, illustrated by the four legs of a stool. First is competition, which determines the approach to progress — one party achieves “the winner takes all,” others meekly fall in line for the droppings from the table.

Second is the establishment and management of risk, where steely nerves and occasional disasters determine lifestyle. Then comes profit, which accounts for success in tangible form. Finally, the fourth leg of the stool is property rights, which assure innovators of their return on investments. There now is a simultaneous splintering of all four legs, which inhibits successful conduct of direction.

A new stool with new legs has recently emerged, these changes are crucial in understanding society. First is truthfulness. Firms and voters detest fake news, insincere excuses and thoughtless comments. When the shadows of unreality obscure one’s outlook, exposed people extract a penalty.

Second is simplicity. Employees and citizens want to understand how relationships work and interact. Without that, it is hard to provide or accept truthfulness. Then there is participation, permitting insight beyond simple observation and offering an active role in shaping the conditions which confront one’s life.

The fourth leg is responsibility — going far beyond customary short memories and the traditional pleading of ignorance. The new drive says: “We are here and, if not, we are coming.”

Just as in America, European voters are beginning to be energized by the new legs of the stool and their new criteria. They expect new directions that negate tradition. Judging by shifts in Britain and Spain, stability in Germany may not be that assured.

It’s also not just the money or even economic growth that matter most. Known quantity may give way to even more quality and a rise of local criteria. “Merkelism” will be substituted for Mercantilism. German economic power may be repulsed by regions seeking to regain their cultural self-determination.

The U.S. emphasis on re-shoring, and the enhancing and encouraging of local production is likely a portent of the new Europe, which perhaps reduces Germany from the “King of Exports” to a mere prince. More export-supporting banks will permeate Europe, accompanied by increases in protectionism.

There are still many options for tariff and non-tariff barriers. Within, but particularly outside of the EU, one can expect growing restrictions in both capital and labor flows and a rise of sanctions. Vested interests will become more visible, and provide new decision frameworks.

All that requires a new team. Low-profile politicians will inexorably move onto the new pedestal. Andreas Pinkwart (FDP) and Karl-Theodor zu Guttenberg (CSU/CSIS) are two who get it. Bob Dylan may have written the song half a century ago, but now more than eve,r we get key guidance from, “The times, they are a-changing.” The change is with us already — the new stool will give us new rules of success and new directors.

Michael Czinkota (czinkotm@georgetown.edu) teaches international business and trade at Georgetown University’s McDonough School of Business and the University of Kent. His key book is “International Marketing” 10th ed. (with Ilkka Ronkainen), CENGAGE.

Spain Exits Recession, Job Losses Ease: Central Bank

Spain escaped from its two-year recession in the third quarter of this year with timid growth as job destruction eased, the country’s central bank said on Wednesday.

After nine straight quarters of contraction in the second trough of a double-dip recession, the euro zone’s fourth-biggest economy grew by 0.1 percent, the Bank of Spain said in a report.

The rate at which jobs were being destroyed in the recession, which has thrown millions out of work and increased poverty, eased to its slowest rate since the start of the crisis in 2008, it added.

“In the third quarter, the Spanish economy extended the gradual improvement that it has been observing since the start of the year,” the bank wrote.

Wednesday’s data came in an economic climate “characterized by a certain easing of financial tensions and improving confidence”.

for more go to: http://www.globalpost.com/dispatch/news/afp/131023/spain-exits-recession-job-losses-ease-central-bank

image from http://www.rte.ie

Global Update: Retail Sales on the Rise in the EU

Consumer spending may be on the rise in the Euro-zone as indicated by the increase in retail sales this year, and more specifically this August. Sales rose by 0.7% from July but were still 0.3% lower than last year. It is evident that the financial crisis is still luring but these figures indicate a sign of slow but steady recovery.

Consumer spending had been declining since mid-2011. The July and August 2013 figures suggest further recovery in the future. However, retail sales are still below the rates seen before the 2008 financial crisis hit.

Without a doubt Germany has had the fastest growth with Italy notably accounting for its fastest growth in two years. On the other hand, Spain’s economy contracted.

What does the contracting of Spain’s economy signify? Post your comments below!

 

Source: WSJ

Recession Deepens in Spain

An article in The New York Times highlights how Spain’s economy shrank in the final months of 2012 at the fastest pace since its recession began, data showed on Wednesday, pummelled by falling domestic demand and with no return to growth on the horizon.

The Bank of Spain said gross domestic product (GDP) contracted 0.6 percent in the fourth quarter from the third, compared to a drop of 0.3 percent in the July to September period.

The forecast in the central bank’s monthly economic report precedes preliminary growth data from the National Statistics Institute on January 30.

“These numbers are slightly better than we thought, but it is a confirmation the economy is in a very bad state,” said Silvio Peruzzo, economist at Nomura.

For more information visit: http://www.nytimes.com/reuters/2013/01/23/business/23reuters-spain-growth.html?ref=global