Why the German Recession at this Point?

This is a curious essay to write, and really reflects over events of the past thirty-to-forty year period.

First, the manufacturing 'arm' of Germany (mostly all left over from the West Germany days prior to 1990)....had a tax base and relationship with the government that was built on stability.  The belief was.....if this base stayed stable....jobs would be plentiful and profits would be spread around. 

So these guys were consumed to export.  Not just to EU neighbors, but China, Russia, and the US.  As long as these relations were all lined up.....purchases of German products were made, and the profits fell into the German revenue pot.

Second, you can say in a remarkable way....that a perfect line-of-sight existed for at least twenty years in terms of trading partners.

Now?  The Trump effect is a problem.  BREXIT is a problem.  The embargo business with Russia is a problem.  And the trade-imbalance situation with China is now a burden. 

So what magic does Chancellor Merkel have left?  None.   She would have to talk with Trump (it won't happen), repair the BREXIT business (it won't happen), reshuffle the China trade situation (it won't happen), and improve it's trade relationships within Europe (this could happen but only if France agrees). 

So the recession has to arrive, and Merkel has to go.....for this to resolve itself?  Well, there's this other problem.  Let's say that Merkel doesn't see a need to exit until the fall of 2021 (the normal election period), and the Greens arrive to claim the Chancellor position.  Would Germans worry more about the climate change business, or in recreating trade-improvements?  That's a serious problem to ponder. 

Might this recession last more than a year or two?  That's part of the bigger problem.  One might look over the past recessions in Germany (at least after WW II), and say that slow periods come and go, usually lasting a year or two.  There hasn't been an extended three or more year recession to mess with.  For this to resolve itself.....you'd need the US trade picture to be clear, that a trade situation is developed for the UK, and German companies feeling no problem with taxes.  Right now....none of those elements exist. 

Is there added weight to this recession?  The German steel and coal industry are more or less....in decline.  It's been that way for a number of years. 

The collection plate for the EU?  Well, yes.....you have to add in the fact that the UK will leave the EU, and there is an expectation for 'someone' to help make up the loss of income. 

The odds that Merkel will exit in the next twelve months?  I would go and suggest extremely likely.  But who would replace her and guide the country through this recession?  That's unknown.