Angst

Angst is no longer just a German phenomenon: A specter is haunting the world – the specter of angst*.
*A play on words based on the opening sentence of the Communist Manifesto

People are suffering from Weltstress (global stress) and feel they are losing control of their lives. They are at the mercy of climate change; as a consequence of senseless wars, they suffer from high prices caused by resource shortages; they hear AI predicting their imminent demise; and they feel lonely despite an oversupply of friend requests on social media.

Many people are overwhelmed by the fast-paced present and lament, “Everything used to be better in the past.”

They see decline on all fronts. Germans no longer trust the established parties to get their country‘s problems under control. Anger mingles with citizens’ angst for their future: “Those who govern us are incompetent; they can’t get things under control.”

Former East Germany is AfD land,
while in the West the Christian Democrats are still (?) dominant (©Deutsche Telekom).

People are looking for ways out of this threatening trend and seeking alternatives. Hoping to restore a predictable outlook to their lives, they vote for politicians or parties that cater to this longing.

Indeed, these parties offer simple solutions with slogans like socialization, expropriation, Tax the Rich, remigration, Dexit*, back to our national roots, and the DM. These catchwords will surely make life cheaper and foreign influence more bearable.
*coined after Brexit

Who will bear the costs? Tariffs*, the rich, and big tech.
*or another country: Mexico will pay for the wall

©Deutsche Telekom

Meanwhile, in Germany, a shrinking centrist bloc is fighting to keep its government afloat amid dwindling revenues. Social benefits, personnel costs, and subsidies rise; public spending on these items will climb to 52.0% of gross domestic product this year, and the trend is upward. Germany is not yet the European champion, with Finland (58.9%) taking the gold medal and France (57.4%) the silver.

Because the ruling parties are suffering one election defeat and one poll shock after another, they shower people with favors, even though there is nothing left to give. An economic expert called the second German fuel rebate - costing 2.5 billion euros - an “expression of political desperation.”

On Monday, Chancellor Friedrich Merz announced a lowering of the electricity tax to the European minimum for everyone, making German energy-hungry industry internationally competitive and easing the financial burden on private households. According to Merz, the government will use financial leeway in the budget to achieve this, but in reality these subsidies are paid for by increasing our national debt.

For decades, citizens should have realized that the state pension is no longer sufficient to maintain their standard of living when retired. Nevertheless, few did make provisions for the future. Only 48 percent of West Germans have a private supplemental retirement plan; in the East, the figure is a mere 27 percent.

When Merz plainly said in April that the statutory pension would serve only as a basic safety net in the future, there was an outcry. Citizens expect the state to rescue them.

Germany still enjoys a high standard of living. We remain the world’s third-largest economy. But the German economic model has limited long-term sustainability. The welfare state is severely overstretched, non-wage labor costs are high, and bureaucracy is enormous. If we do not address these problems, Germany’s economic performance will decline.

©NTV

89% of our citizens recognize the need for reforms, which will inevitably lead to sacrifices, but only 32% are willing to make them.

Germany is incapable of reform, and people’s angst will grow.
**

Kaub: - 2

©Wikipedia/Marion Halft

Today, the water level gauge in Kaub couldn't handle a negative value. At - 2 cm, the navigation channel on the Rhine River is a mere 111 cm deep.

The classic water level gauge jutted out as a “writing above the water” (©SWR)

After standing at four centimeters last Friday, the gauge level had already dropped to minus one centimeter by Saturday afternoon. This is a dramatic change from the gauge level of 24 cm I reported on August 5.

©SWR

At this new historic low, the Kaub Rhine ferry service, already suspended for ten days earlier this summer, once again came to a standstill, since it requires a minimum gauge level of 15 centimeters to operate regularly.

It is unclear when service can resume; substantial rainfall is not in sight. Today in Freiburg, it was 30 °C, with rain showers expected and a temperature drop announced for the coming Thursday.

Construction materials must be expensively transported by rail or road (©SWR)

Economists at the German Economic Institute estimate the overall economic damage from logistical shifts, production cutbacks, and lost cargo during the months-long low-water period is already at 18 billion euros.

According to experts, it all began with the extremely dry and hot summer of 2018. Some shipping companies never recovered after the resulting extreme drought. It was a wake-up call, but as usual, nobody listened.

The water problem starts in the Alps, where winters bring little snowfall. Also, higher temperatures mean less snow remains on the ground in the low mountain ranges. Normally, this snowpack acts as a temporary reservoir: it melts slowly over weeks, and the water seeps continuously into the ground, replenishing groundwater and flowing into rivers. Everywhere snow is missing as a silent water reservoir.

A worldwide challenge. The same story at Park City Mountain Resort (©WaPo)

The Rhine River has another water source: melting glaciers in the Alps. Enno Nilson of the Federal Institute of Hydrology (BfG) says, “For now, glacial melt is still masking the effects of low water levels: During hot spells, up to one-fifth of the Rhine’s water comes from the glaciers, while normally, it’s only a small single-digit percentage.”

But we all know that this buffer is disappearing along with the glaciers. Climate change thus only temporarily offsets a problem that it causes elsewhere. This does not bode well for navigation on the Rhine River. Climate models show that in the second half of the century, low-water periods are likely to become even longer and more pronounced. With every additional year of drought, transport on Germany’s waterways becomes more uncertain and more expensive.

The mighty Colorado River suffers from lack of water too (©WaPo)

Authorities and companies are working to adapt shipping to low water levels. Low-water vessels are one way to adapt, and on the Middle Rhine, the federal government plans to ease the Kaub bottlenecks by dredging the riverbed and deepening the navigation channel. But that won’t make much difference if there is even less water to begin with.

October, often praised as the "golden month," is known for its low rainfall. Therefore, it is likely that the water level at Kaub will drop even further. 

Will the Rhine River eventually dwindle to a trickle or even dry up completely, and will weeping help?

Oh, tears are salt water.

**

40,047,425,768,420.22

In April 2025, POTUS announced that he will fight the U.S. trade deficit with tariffs: "We're going to be giving back refunds out of the tariffs because we've taken in literally trillions of dollars, and we're going to be giving a nice dividend to the people, in addition to reducing debt. As you know, I inherited a lot of debt, but it's peanuts compared to the kind of numbers we're talking about."

Yesterday a bomb exploded. In an AP article, "The US national debt now stands at $40 trillion," I read:

"The national debt surpassed a record $40 trillion on Wednesday, a staggering milestone as defense costs, social programs like Social Security and Medicare and interest on the burgeoning deficit make up an enormous share of federal spending."

Mr. President, the national debt is neither peanuts nor was it reduced. It actually rose more sharply than the government and experts had previously forecast. Originally, the debt was expected to reach $39.4 trillion by the end of fiscal year 2026.

 

©AP

One explanation of this debt explosion is the war with Iran, which has now been ongoing for nearly six months; 18 U.S. soldiers have been killed, and according to U.S. Secretary of Defense Pete Hegseth, the cost had reached $37.5 billion in July. There is no end in sight.

This record-high debt is even drawing criticism from within the ranks of Trump's Republicans, where Senator Rick Scott joined the protest of many lawmakers writing, "Americans deserve better." He called on Congress to "get spending under control and balance the budget."

Thomas Jefferson, one of the Founding Fathers of the United States, wrote in a letter: "I count frugality among the first and most important republican virtues, and public debt among the greatest dangers."

However, the Trump administration shows no signs of cutting back on spending. The tax bill known as the "Big Beautiful Bill," which Congress passed last year, will further destabilize public finances in the coming years.

Meanwhile, on Wednesday, an undisturbed POTUS unveiled a new construction project to a crowd of journalists: Replacing the White House driveway.

"This was always asphalt, which is very basic, not appropriate for a great house - for a great place like the White House," and Trump continued, "The driveway has been redone with a very special stone: California-mined white granite. "

"Without even having to go into the White House, they [his guests] get out of the car on the beautiful new roadway. They get out of the car, and they walk down this path onto that [new] helipad, and they can have cocktails and everything outside of the White House, and then they go into the ballroom. "

Trump's tour of the ongoing White House projects underscored how central construction is to his presidential legacy.

"One thing I know how to do is build … I love construction, I love seeing things properly taken care of. The projects will be here long after we're gone."

Financially, POTUS's construction frenzy is peanuts compared to the unprecedented $40 trillion figure of national debt, but it is politically hazardous.

The $40 trillion includes not only defense spending in the almost-6-month-old war in Iran but also government efforts to lower the cost of gas and groceries for U.S. citizens.

As explained by a White House spokesman, "The Trump administration has been focused on slashing waste, fraud, and abuse in federal spending while accelerating economic growth to get America's debt-to-GDP ratio trending in the right direction."

U.S. National Debt as a Percentage of GDP (©NZZ)

The trend goes the opposite way.

In 2025, the U.S. federal budget deficit stood at $1.8 trillion, which equaled 5.9 percent of GDP. In the EU, a budget deficit of more than 3 percent of GDP is already considered unacceptable.

The development of national debts as a percentage of GDP
for the USA, China, Germany and Switzerland.
For Germany, the effect of the Schuldenbremse and the Corona pandemic
on the curve's shape is clearly visible (©NZZ)

Michael A. Peterson, CEO of the Peter G. Peterson Foundation, stated, "If we want to improve our living standards, today and for the next generation, now is the time for lawmakers to put our nation on a more affordable and sustainable path."

 
Do I read correctly? I think we would be lucky if we could keep our present standard of living.

Indeed, Margaret Spellings, president and CEO of the Bipartisan Policy Center, countered, "The federal debt is already raising the cost of living and choking out other spending and investment, threatening our economy and Americans' long-term prosperity."

And Mr. Peterson, please don't just write, but show the direction to the U.S. lawmakers to put your nation on a more affordable and sustainable path.

Here are two letters to the editor on the AP article:

One pragmatic: "Cut the Defense budget to $250B (same as China who has 4x's the population) and then tax the rich at 1950's levels (90%)."

One radical left (?): "… we seem to have mountains of money to be spent on war and killing; military contracts funneling tax dollars to corporate cronies and members of the Trump family. Our historic landmarks in the Capitol city that were once examples of a dignified Puritan heritage have now been flounced out in gold with Trump's name pissed all over them, and the middle-class that is supporting this excess is rapidly disappearing under a tax burden that the wealthy are exempted from. Fiscal conservatism is no longer embraced by the GOP … Hoarded wealth seems to be the goal, and if the economy crashes, we've already seen that the rich will be first in line for their bailout, while the rest of us deal with the consequences. The wealthy are rarely touched by the 'Hard Choices' that will be made."
**

The Debt Turn: The Missteps of Fiscal Policy

Is economics a science? My late son, who had studied economics at the HSG in St. Gallen, would have answered in the affirmative, arguing that Adam Smith had established economics as a science with his book "The Wealth of Nations". Andreas had not only read this seminal work but had actually studied it.

The book

Prof. Lars Feld’s lecture on “The Debt Turn, Missteps in Fiscal Policy” last Monday at the Museumsgesellschaft nearly convinced me, although, as in physics, calculations of future developments in an economic system - i.e., predictions - are impossible, particularly given the current global and economic situation.

Furthermore, much of what used to be part of the Standard Model of economics no longer applies. In the past, when inflation in an economy became too high, central banks countered it with higher interest rates.

However, rising prices amid the current oil and gas shortage cannot be offset by homeopathic increases in interest rates from, say, the Fed or the ECB.

As a physicist, I sit on the sidelines and can only watch the prevailing chaos. I will limit myself to reproducing some of the impressive slides Prof. Feld presented in his lecture and commenting on the graphs.

The chart above shows the national debt of various countries as a percentage of their GDP. Japan stands out, but this is a special case that will not be examined here.

Of the remaining countries, Italy has the highest national debt at 150%. Switzerland has the lowest, with hardly any change observed in time. The debt ratios of all other countries have been rising over the years, with the United States starting from a relatively high level. Germany is doing rather well. China’s rapidly rising debt is striking. The effect of the coronavirus epidemic on national debt is clearly visible.

This chart shows the national debt of individual EU countries. Greece had the greatest difficulty meeting the EU’s financial criteria, but was expected to join as the cradle of Europe. The Greek government has made every effort, and as a result, Greece is one of the few countries that has reduced its debt in recent years.

It is striking that the new EU members have lower debt ratios than the founding members, Italy and France. Germany ranks in the middle.

The creditworthiness of individual countries is reflected in their debt levels. As a result, yields on Greek government bonds are particularly high, and U.S. Treasury bonds also stand out. Germany, as a safe-haven issuer in Europe, has the lowest yields. It is interesting to note that most European countries follow the German yield curve, albeit at a higher level. Well, it's all in euros. 

Debt must be serviced, and the higher a country’s debt, the greater the interest burden.

The United States stands out in this regard due to its high national debt, with 18% of its budget going to meet interest payments. In Germany, debt service has increased slightly in recent years due to new borrowing.

It will increase dramatically in the coming years if our government follows through with its financial planning. Given rising government spending and lower tax revenues due to Germany's economic stagnation, is there any other option?

 

The holy grail for escaping this predicament is economic growth. But the forecasts are bleak. As a layperson, Red Baron has always believed that with resources dwindling and thus becoming more expensive, there will be no more growth.

So the only easy way to balance lower revenues against higher expenditures is by increasing government debt.

But then the borrowed money should be used for investments, as these boost productivity, benefit the economy, and generate higher tax revenues. Yet public investment in Germany has been stagnating at a low level for years.

The hardest way to get government spending under control is through budget cuts. Every government struggles with this.

The chart shows, for simplicity’s sake, four main categories of spending: 

 - social programs (government subsidies for Germany's deficit-ridden insurance schemes such as pensions, healthcare, and long-term care) 

- defense (currently with no budget cap due to the war in Ukraine: “It takes what it takes”)

-  debt service (according to Prof. Feld, the amount will rise from 20 to 40 billion euros in the coming years). 

- others.

Budget consolidation for the coming years envisages cuts in "others", with the key words being "Abbau der Bürokratie" (cutting red tape).

As already mentioned, particular attention is being paid to the defense budget. While Europe felt secure under the United States' nuclear umbrella in recent decades and allowed military spending to decline, NATO countries are now rallying in the face of the Russian threat to meet the 5% defense spending target in the (distant ?) future. The Trump administration’s urgent and ultimatum-like warnings contributed significantly to this turnaround. 

Will the government-financed-on-credit spending on defense stimulate the German economy? Prof. Feld expressed his strong doubts.

**

Out from the Shadows into the Light

Germans are humorless, according to a well-known stereotype. Well, humor is a tricky quality, but Red Baron is convinced that my compatriots are not without it.

On the other hand, Germans are notorious Nörgler (grumblers). They bitch and moan about everything, usually adding that everything used to be better in the past.

Yes, some things were better in the past, and will get worse in the future, when Chancellor Friedrich Merz declared in August that Germany's social welfare programs were unsustainable and needed an overhaul. "We simply can no longer afford the system we have today," he said in a speech, adding, "This will mean painful decisions. This will mean cuts."

A declining number of young people has to support a growing number of elderly people.

The Washington Post addressed the issue and titled an editorial "The decline of the welfare state has boosted the rise of the far right."

The fact that cuts to the social safety net will be necessary in the future is grist to the mill for those who know how to deal with it.

For the right (AfD), the problem is solved by deporting lazy foreigners who are a burden on the German social system.

And for the left (Die Linke), it's even simpler: Tax the rich.

These solutions appeal not only to right- or left-wing voters. They are, however, too simplistic.

But is it really so bad in old Germany?

At the turn of the year, Deutsche Telekom News' editorial team published a list comparing Germany's economic and political situation with those of other countries.

I have reorganized the list, added some graphics and personal comments, and I want to share the results with my readers.

The global crises are also affecting all people in this country, and do not suggest that world peace will arrive any time soon. Politically and economically, 2025 was unfortunately not a year that gave much cause for confidence and hope.

But humans would not be humans if they did not manage to strive for the light even in dark times. Because, viewed sine studio et ira, things are developing better in this country than the daily barrage of bad news would suggest.

Germany undoubtedly faces significant problems and must overcome many challenges simultaneously. However, there are only a few countries in the world that are better equipped to tackle those than the Federal Republic, as ten facts may show:

World ranking in 2024

1. Germany still has the largest gross domestic product in the EU, but, as the third-largest economy in the world, it cannot really compete with giants such as the US and China.

 

2. The standard of living is exceptionally high by global standards; Germany ranks in 7th place on the UN Human Development Index.


3. Life expectancy in Germany at 81.7 is also well above the global average of 73.5 years. Still, it is 4.1 years lower than the number one, Hong Kong, and 2.5 years lower than the European forerunner, Switzerland. Note that Red Baron is now at 90.5

4. Germany's unemployment rate is well below the EU average and one of the lowest in Europe, even among young people; the dual education system is considered a guarantee of success.

5. Because German companies invest heavily in research and development, their innovative strength is not only well above the EU average, but also above the European Commission's target.

    

6. Germany has been consolidating its position as a leading export nation for years; customers all over the world are clamoring for many German products. Still, my country looks poor compared with the ten times smaller Netherlands.

7. Despite huge debt packages that were recently voted in the Bundestag, public finances remain comparatively stable in my country. With a debt ratio of less than 65 percent, Germany is in a much better position than Japan (230 percent), Italy (137 percent), and the US (125 percent).

 

8. According to an OECD study, Germany is particularly attractive to highly qualified professionals.

9. The Federal Republic also ranks among the best internationally in terms of the rule of law, performing particularly well in categories such as "order and security" and "civil justice."

10. Despite all the doom and gloom and criticism from the US, freedom of expression and freedom of the press are well established in Germany. While Scandinavian countries and Switzerland have a GxR Score of freedom of expression and information above 90, Germany is on par with the US at 86. The UK, strangely, scores only 79.

Without sugarcoating the situation, these are good conditions for not necessarily increasing prosperity, but for maintaining it and ensuring a free, stable society in Germany.

Out of the shadows and into the light. That should be an apt headline for the political program, economic initiatives, and social impulses for the coming year. All it takes is enough people to get involved to overcome the current challenges.

My country fellows should not dwell on grievances and abuses, but clearly identify problems and seek solutions. Since these solutions are not easy, our government has referred the issues to mandated committees with clear deadlines.

Looking at all this, Germans must not forget their humor, which brings us back to the beginning of the blog.

Happy New Year, Everybody

**

It’s All Exponential

Prof. Emanuel Deutschmann had made the long journey from Flensburg to Freiburg to present and sell his book "Die Exponential Gesellschaft, Vom Ende des Wachstums zur Stabilisierung der Welt" (The Exponential Society: From the End of Growth to the Stabilization of the World).

One of humanity's most significant weaknesses is its inability to understand exponential functions (Al Bartlett, 1976).

It is undoubtedly the most important function in mathematics (Walter Rudin, 1970).

Has its relevance in sociology been underestimated until now?

The lecture hall was well-filled. Prof. Deutschmann had divided his talk into three theses.

1. Today's society is characterized by exaggerated exponential trends that cause fundamental problems. 

2. These problems make stabilization a central issue of social order.

3. This constellation gives rise to new social conflicts.

In a double logarithmic scale, exponential functions are presented by a straight line.

Indeed, the economy and global production have grown exponentially with the industrial age. 

As early as 1848, Marx and Engels warned of "a continuous revolution in production, which will cause an uninterrupted upheaval of all social conditions."

 Here are some graphs:

The money supply in various countries is growing exponentially with a doubling time of 8.5 years.

The consumption of various building materials follows an exponential trend.

An exponential function represents a straight line in double logarithmic representation.

The number of scientific publications and the production of microprocessors increase exponentially over time, whereas AI grows even faster.

World tourism, the number of students studying abroad, and road traffic follow the trend.

Despite many international efforts to reduce greenhouse gas emissions, their levels continue to rise. Due to thawing permafrost, methane emissions have increased sharply in recent years.

Here is the verdict. Measured global warming and sea levels continue to rise exponentially.

An ever-rising global population is accelerating climate change.

All curves have a universal mechanism in common: More brings more, or growth is the basis for further growth in a positive feedback loop.

To stabilize the world economy, Justin Connolly "had a dream" of a donut-capped economic limit, i.e., a humanity living in a safe and just space with a regenerative and distributive economy.

In our world, two extreme attitudes clash: further expansion into space as Mother Earth's resources near exhaustion, with the opposing view that there is no planet B.

Prof. Deutschmann was clear: Ad astra expansionism a la Musk is a castle in the air, and metaverse expansionism a la Zuckerberg is a pipe dream.

The balance of power between the two extreme camps is uneven and one-sided.

The stagnant German economy must grow again, while the US breaks every record on GROWTH.

Since long, Red Baron has believed that the global economic pie has reached its maximum size and that growth is only possible when the pie is sliced differently, with one nation's gain being another nation's loss.

Whether a green economy will drive economic growth remains a subject of debate. The Camino Real is the decoupling of resource use from economic activity.

However, here is a caveat: the rebound effect known as the Jevons Paradox. Technological progress that enables more efficient use of a resource ultimately leads to increased use of that resource rather than to its reduction.

Here are Prof Deutschmann's conclusions:

The task: Crafting stabilizing utopias.

The goal: A good life for all within planetary boundaries, what Ernst Bloch called: "Optimism with a black ribbon."

Lagniappe: 

The other night, Red Baron attended the annual meeting of the Association Supporting the Freiburg Documentation Center on National Socialism. The president presented the growth in membership as a bar chart, with an exponential function superimposed. When will all Freiburg citizens be members?

**

A Black Wednesday for the World Trade

Bye-bye Toblerone

Day of Liberation, so-called by Trump. The European translation reads Day of Despotism.

Trump's tulips are watching their master's ceremony

The tariffs announced in the Rose Garden of the White House will restrict exports to the US and make imported goods more expensive. The logical consequence iś that consumer prices will increase in the United States.

Most economists predict the new tariffs will lead to more bankruptcies and rising unemployment figures in many countries. The tariffs could plunge the world into a dangerous trade war that leaves everyone losing.

This view is not shared by Ms. Miller Wellington, who sells candies in Delta, a village of around 3000 people, less than 100 miles south of Detroit. She is unfazed by the possibility of price increases predicted by most economists. "Sometimes you have to walk through fire to get to the other side," she says, echoing the president's main argument: "If tariffs bring companies and business back to hard-working people like the ones who live here, then it's worth it."

The Washington Post writes," Wall Street worries Trump tariffs could wreck the souring economy." 

Let Stephen Colbert enlighten us: 

"And Trump's toadies are out there defending the tariffs. Here's Louisiana Senator John Kennedy on FOX Business arguing that ultimately nothing is knowable: 'The truth is that nobody knows. I've listened to economists for the last month. Some say this will cause a recession; his tariffs will cause a recession. Others say it will cause growth. In my eight years in Washington, I've learned that for every economist, there's an equal and opposite economist.'"

(Laughter from the audience) And Stephen continued, "Sounds crazy, but it is actually true. For example, Milton Friedman was always opposed by the equal and opposite economist Friedmil Manton."

"Most experts dispute the idea that these tariffs would lead to any growth at all. Instead, they say we could be looking at a prolonged recession, higher prices, and higher unemployment. Okay, a little more practice. Man, awww, damn, these grapes smell like wrath."

The Dow Jones Industrial Average plunged 2,200 points, and the S&P 500 tumbled 6% as Wall Street's worst crisis since the COVID crash deepened after China matched President Donald Trump's big tariff increase announced earlier this week. 

Still, leaving Washington to watch a golf tournament at Mar-a-Lago, the "stable genius" claimed in one of his chopper talks:

Like this?

To be continued ...

**