Stefan Theil

Stories by Stefan Theil

  • German Car Stimulus Jumpstarts Demand

    With global banking bailouts still not working, it's nice to see a rescue plan showing its intended effects: Germany's scrapping bonus, which pays new-car buyers €2,500 to ditch their old banger, has raised sales so fast that companies are struggling to fill orders. Volkswagen just reported its best month since 1990. Ford Germany's sales of small cars like the Fiesta have quadrupled. Even Opel is back from the dead; to meet a five-year sales record last month, the GM subsidiary had to cancel a planned production shutdown.The program not only helps carmakers tide over the worst market collapse in years. Germany has also avoided many side effects of government money pumping. Of the 430,000 bonus buyers to date, some 80 percent weren't in the market for a new car, says the German Association of Auto Dealers, so the industry isn't hurting its future sales. Instead of giving subsidies directly to automakers—which rewards bad companies and perpetuates overcapacity—the bonus lets customers...
  • Despite Unrest, Europe's Center Is Holding

    It's easy to read the last few months as one vast refutation of self-regulating capitalism and the elites who nurtured it. Many observers have thus warned that Europe's voters will flock to far-left parties now loudly crowing "told you so." Or, in the opposite direction, to the populist right, whose xenophobic rants have taken aim at globalizing capitalists and immigrants.Instead, Europe's center has held steady, and possibly even gained in strength. In Germany, where the economy is fast declining due to an export implosion, polls show a steady slide in support for the left-populist Linkspartei, down from 15 percent in August to 11 percent last week. The Allensbach Polling Institute also has found that, for the first time since the 2005 election, a majority of voters now favor a center-right coalition between Angela Merkel's Christian Democrats and the pro-business Free Democrats in the upcoming September election. In France, a new Trotskyist party has drawn much attention but has...
  • Germany Suffers As Exports Implode

    If Americans are in shock over the economic plight that the collapse of the housing bubble has wrought, Germans are simply baffled. In their view, they seem to have done everything right—they have a high savings rate, a solid manufacturing base and no exuberance in their real-estate market, while profligate Americans binge-spent their way to illusory growth. Yet the crisis has hit Germany much harder than America—its GDP shrunk 2.1 percent in the fourth quarter of 2008, compared to minus 1.6 percent in the U.S., and the 2009 forecast is grimmer—minus 4 percent in Germany versus 2 percent in the U.S.The problem is that Germany is actually a lot like China. Its own conservative position as an export-driven surplus nation threatens to be its undoing, because it means other nations must act as a locomotive to pull Germany along. When they slow, Germany slows even more.There's actually a word for the model—Exportweltmeister, or world champion exporter. America was one back in the 1930s,...
  • Europe's Economic Crisis

    Once a growth engine, Eastern Europe has now become the continent's economic albatross.
  • Greenest Nation

    This is a trick question. What big country is, by most measures, greener than Japan and Germany and produces more geothermal energy than all of Europe combined? It might help to know that this nation is also a pioneer in environmental stewardship, having passed many of the world's toughest regulations on vehicle emissions, energy efficiency and nature conservation.
  • Hey, What Would Mr. Obama Say?

    America is back. That's the message the Obama administration is sending to foreign capitals. The new team has moved quickly to repair America's image abroad, promising to suspend torture, close Guantánamo and join the fight against climate change. Once again, the U.S. is ready to "engage, listen and consult," Vice President Joe Biden assured a high-powered security policy conference in Munich earlier this month, to much applause and relief among the assembled global leaders.One would expect America's position in the world to be much weakened by financial collapse, an unpopular war, and an eight-year withdrawal from international diplomacy under George W. Bush. Yet in Munich, it became palpably clear how much the world still looks to the U.S. to lead. Whether the issue was Afghanistan, the Middle East or re-engaging Russia with a new round of arms control talks, the question that American delegates (including National Security Adviser James Jones and Afghanistan envoy Richard...
  • Germany Does About-Face, Embraces Keynes

    Barely a month after German Finance Minister Peer Steinbrück blasted fiscal stimulus programs like Britain's cut in the value-added tax as "crass Keynesianism," he and Chancellor Angela Merkel cobbled together a €50 billion emergency spending package of their own last week. Why the sudden about-face? Besides rising clamor for Europe's largest economy to do more to stave off the drop in consumer spending and industrial investment, the crisis hit Germany full force in recent weeks. It turns out its trade-heavy economy (47 percent of GDP is exported) is particularly vulnerable in the crisis; orders for factory machinery, a mainstay of German industry, collapsed by 30 percent in November. But will Merkel's plan work? German GDP is expected to shrink by as much as 2.5 percent this year, suggesting the spending spree will be too little, too late.
  • Emerging Market Bail Outs

    No one has the money to rescue all the emerging markets, and the likely outcome is a steeper plunge.
  • Deficit Hawks Reemerge As Crisis Debate Rages On

    Remember the deficit hawks? The critics of blown-up government spending finally took center stage last week, after staying largely in the shadows as countries around the world threw hundreds of billions of dollars, euros and yuans at their banks and economies to help stave off the worsening recession. In Washington, fiscal conservatives in the U.S. Senate voted down a $15 billion bailout for Detroit automakers. In Britain, the opposition Tories unleashed fresh attacks on Prime Minister Gordon Brown for his $30 billion "fiscal stimulus." Shadow Chancellor George Osborne ridiculed the centerpiece of Brown's plan, a temporary 2.5 percent cut in the national sales tax, as an "expensive and ineffective" measure that would only leave British taxpayers with a "bombshell" of debt. The Tories took their cue from remarks made in this magazine last week by German Finance Minister Peer Steinbrück, that Britain—and, by implication, other big spenders around the world—was "tossing around billions...
  • Why Europeans Like Free Trade More Than Americans

    After decades of American support for the free movement of goods, services and capital around the world, the tables appear to have turned. Nowhere has public backing for free trade been shrinking as rapidly as in the United States. According to this year’s Pew Global Attitudes survey, only 53 percent of Americans agree that trade is good for their country, down from 78 percent in 2002. Contrast those numbers to the ones from Europe, where support for trade runs at 87 percent among Germans, 77 percent among Britons and 82 percent among the French. In countries like India, Korea and Nigeria, support for trade is even higher. Among the 24 countries surveyed, Americans lag behind everyone else in their support for continued free trade.Fears that international trade could be the next casualty of the economic crisis have some of America’s closest allies seriously worried. Already, canceled orders have sunk shipping rates to 21-year lows, and World Bank head Robert Zoellick says trade will...
  • Driven Into the Ground

    Auto manufacturers around the world are all looking for government handouts. But that does nothing to address their real problems.
  • Banking's Winners

    Failing banks have gotten plenty of ink, but there are a few that have managed to thrive amid chaos.
  • The New Investment Banking Power Players

    The market chaos has left no top investment bank standing. Of the Big Five, Lehman, Bear and Merrill are gone, while Morgan Stanley and Goldman are becoming commercial banks, which means they can no longer put up the house to borrow billions for high-stakes deals. They'll have to chop their leverage in half if they're going to meet current banking regulations.The new power ranking, however, will look suspiciously like the old one—except for names like Barings (which bought parts of Lehman), Bank of America (which now owns Merrill Lynch) and JPMorgan (which gobbled up Bear). That is because even as the markets force them to wind down their riskiest deals, the firms will remain the top players to provide the corporate underwriting by which investment banking is rated. But the regulation push will likely prevent the new titans from raking in profits the way the old did.
  • The Boom In Online Education

    New technology and higher gas prices are driving a boom in online education across the United States.
  • Europe Loves Obama But Would Never Vote For Him

    What was most interesting about the throngs who came to see Barack Obama in Europe last week was never articulated in public. It's that they adore him for America (the Bild tabloid called the German reaction "love at first sight") but would never get to vote for someone like him at home.To be sure, Europeans swinging American flags again instead of burning effigies of the U.S. president is a refreshing sight. To many Europeans, Obama feels like one of them—mildly left of center, talking about cooperation, promising that America will act on climate change. But Europe's adulation of the half-Kenyan senator has some observers asking an obvious question: he'd be a shoo-in if Europeans could vote in America, but would they pick him in Europe? Would a German Turk, a Dutch Indonesian or a Franco-Algerian stand a chance of making it up the ranks of the Continent's major political parties? "Absolutely not," says Jerome Mack, a London-based corporate diversity consultant.In the main, that's...
  • Europeans Go Back To Work

    A decade of labor reform is finally paying off, but now the politicians want to turn back the clock.
  • The Odd Couple

    Germany's unwieldy grand coalition is making for a confused foreign policy—and it could get much worse.