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Corona economy: first the vaccination, and then ...


Recent history shows that crises usually occur more frequently. Even after the Covid pandemic, there are some nasty surprises.

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Further crises loom after the corona pandemic

Photo: ANDY RAIN / EPA-EFE / REX / Shutterstock

A crisis seldom comes alone.

A shocking event is followed by further faults - like an earthquake that causes aftershocks a little later.

This creates chains of crises: Developments that are somehow connected to one another, but how and when they will occur cannot be said in advance.

Insecurity is uncomfortable.

And radical insecurity is extremely uncomfortable.

We are currently experiencing it.

To the author


Institute for Journalism, TU Dortmund

Henrik Müller

is professor for economic journalism at the Technical University of Dortmund.

Before that, the graduate economist worked as deputy editor-in-chief of manager magazin.

In addition, Müller is the author of numerous books on economic and monetary issues.

Every week he gives a pointed outlook on the most important economic events of the week for SPIEGEL.

The curves that draw common indicators of economic uncertainty look like they came from a seismograph.

Long periods of calm are followed by sudden, violent eruptions: foreshocks, main tremors, aftershocks - the world trembles and it takes some time for it to calm down again.

No event in the past few decades has caused such strong fluctuations as the corona crisis.

What's next?

What do we have to prepare for?

It is possible that the pandemic will result in further crises: inflation, debt crises, international conflicts.

Many scenarios are plausible, not all are likely to become reality;

more on this below. 

So much can be said for the near future: the upturn will be delayed.

Companies in Germany have become more pessimistic again in autumn, alarmed by renewed lockdowns, as the deterioration in business expectations since October shows (watch

the Ifo Institute's current business climate index on



Due to slow Covid vaccinations and the occurrence of highly infectious mutations, it is to be expected that the uncertainty will drag on a little longer.

A pandemic of money

A look at recent economic history reveals several waves of crises.

From 1997, the emerging Asian countries were first hit by financial and currency crashes;

In 1998 it was Russia's turn, Brazil in 1999, Argentina in 2001.

For years, emerging countries around the world have been shaken up.

There was a lot of talk of contagion back then - a kind of financial pandemic.

After a period of relative calm in which the West was preoccupied with the aftermath of the terrorist attacks of September 11, 2001, the next economic shocks came.

The wave began in the USA, initially gently and barely audible to ordinary Europeans.

The foreshock started in late summer 2007 when the money markets in Western countries gradually froze.

The main quake followed in September 2008. One of the largest US investment banks, Lehman Brothers, collapsed and carried away half the financial world.

It was the starting point of the Great Recession, the worst economic slump in the post-war period to date.

Some shock waves hit the markets for European government bonds back then.

But the situation seemed stable enough again, in Europe and elsewhere - which turned out to be a mistake.

"Radical Uncertainty"

While the global economy recovered rapidly, from the beginning of 2010 Europe was hit hard.

One euro state after another tipped over like dominoes: Greece, Ireland, Portugal ... Large countries like Spain and Italy also wobbled.

For several years the euro crisis kept the world in suspense.

Several states were on the verge of bankruptcy.

Time and again, the eurozone was on the verge of breaking up.

Protests in front of the Greek Parliament in May 2010

Photo: Simela Pantzartzi / dpa

The financial markets eventually stabilized, sedated by the money the central banks were loosening in unprecedented amounts.

But uncertainty shocks always come from unexpected directions.

And since we live in an era of "radical uncertainty," as the British economists John Kay and Mervyn King postulate in their book of the same name, we are never safe from surprises.

Very few people are prepared for the next seismic event.

After a few years of relative calm, the uncertainty came back with power.

However, the epicenter had shifted - from financial markets to politics.

The mildew on souls

The new variety of national populism, which had established itself in many Western countries over the years, resulted in two votes in 2016 that were to remain permanent sources of unrest: the Brexit referendum and the election of Donald Trump as US President.

Hardly anyone had both events on their radar - too far-fetched, too crazy - all the more so from then on they shook the framework under which citizens, companies and states operate. 

The exit of the second largest EU state from the European single market and the loud withdrawal of the USA from its global leadership role heralded the end of the western international order.

Two major events of enormous symbolic power - after all, the locations were the two oldest Western democracies, for centuries a role model, inspiration or at least a fixed point of thought for the rest of the world.

Trade policy skirmishes instigated by the USA were particularly affecting the export-heavy German economy.

A recently published analysis by our DoCMA research center in Dortmund shows that the shaky geopolitical constellation is the uncertainty factor that has weighed heavily on the German economy in recent years. 

Political uncertainty settles like mildew on souls.

In the surveys by the Ifo Institute, the managers initially rated the current business situation as excellent, but expectations clouded noticeably from 2017, especially in German industry.

Poison for companies' propensity to invest.

Long before the Covid shock, the largest ever recorded outbreak of economic uncertainty, triggered the deepest recession since the Second World War, the consequences of the upheavals in trade policy had already reached the real economy.

And now?

A quake rarely comes alone

So far, Covid-19 has measurably triggered two shocks.

They are related to the lockdowns in the wake of the pandemic waves in spring and autumn.

But the numbers also show a certain habituation: The first outbreak of the pandemic was the main quake - those first weeks when it was unclear how the virus would work, how governments, central banks, companies and each and every one of us would behave under lockdown conditions .   

The longer this phase lasted, the more it became clear that the world would not collapse after all, but that private engagement, civic consideration and state institutions knew how to adapt to the new threat.

As early as May 2020, there was astonishing optimism in German industry.

The second shock that the pandemic wave triggered since autumn was therefore smaller.

But, as I said: an earthquake rarely comes alone, often not just in pairs - and mostly from surprising directions.

Here is a crisis scenario:

The impending inflation shock

The chain of crises of the past decade and a half has left cracks and breaks that can break open as the corona crisis progresses.

In particular, interest rates are historically low, debt is historically high, and global goods markets are increasingly fragmented.

This constellation will trouble us for an upswing after the vaccination campaign. 

If, after the hardship-ridden lockdowns, the citizens let it rip again and reduce their savings, this demand impulse will meet with a limited supply.

Harbingers are already visible at the moment: While private demand is picking up surprisingly strongly in China, car manufacturers around the world are cutting down production because the chip delivery is not coming.

In logistics, too, capacities are becoming scarce, as is reflected in a rapid rise in shipping freight prices.

Such supply bottlenecks are likely to increase in a global economy whose production options are increasingly being hindered by tariffs, sanctions and embargoes.

All of this speaks for a heated upswing - with significantly increasing inflation rates.

This scenario is also pushed by the enormous spending packages of the states: The Biden government has launched a 1.9 trillion dollar package and wants to top it up again soon.

The EU is running a 750 billion euro special program from summer, even if the outflow of funds is likely to drag on.

That leaves the central banks, whose real job is to keep inflation in check.

Since the financial crisis, they have flooded the world with liquidity without consumer prices rising.

However, given the structural changes in the global economy, this phase is likely to come to an end.

The European Central Bank (ECB), the American Fed and other central banks are sitting on the breaking points that have left behind previous crises.

Given the high levels of government and corporate debt, they would risk a series of bankruptcies if they push interest rates up to curb a surge in inflation.

When in doubt, they will choose against the collapse of the system - and in favor of inflation.

The Fed has already geared its strategy towards this.

The ECB is unlikely to risk Italy or Spain going bankrupt - especially since the still rampant national populism gives rise to fears of political upheaval towards authoritarianism, especially in times of economic crisis.

Given these prospects, inflation would be the lesser of two evils, at least as long as the price increase remained in the single-digit range.

But that too would be an enormous trend reversal for which very few are prepared.

Sure, inflation is old hat.

Sounds like the nineties.

German politicians, economists and journalists in particular have long been predicting - I admit that I am no exception in this regard - a significant increase in the rate of price increases.

Without it getting that far.

But the absence of inflation in the past says little about the future - especially in a time of upheaval like the present. 

The twenties can still be a golden decade - but also one of rapidly rising prices.

Icon: The mirror

The most important business dates of the week ahead

Monday Up Arrow Down Arrow

Munich - up 

and down

 - publication of the ifo business climate index.

Probably the most important leading indicator for the German economy slumped dramatically in the spring, but then initially recovered surprisingly quickly.

Davos - 

At the summit, at least virtually 

- start of the World Economic Forum meetings, this time online.

Reporting Season I

 - Philips Business Figures.

Tuesday Up Arrow Down Arrow

Reporting Season II

 - Financials from LVMH, UBS, Novartis, Microsoft, GE, Lockheed Martin, Texas Instruments, Johnson & Johnson, Starbucks, American Express, Verizon, AMD.

Wednesday Up Arrow Down Arrow

Reporting season III

 - Business figures from Software AG, Sartorius, KPN, Apple, Facebook, Tesla, Boeing, Corning, Whirlpool, AT&T.

Thursday Up Arrow Down Arrow

Washington - 

American Carnage

 - New figures on new unemployment benefits claims in the US.

Berlin - 

Mr. Braun and Bavaria

 - Meeting of the Wirecard investigation committee of the Bundestag.

This time the focus is on the role of the Bavarian state government. 

Reporting Season IV

 - Financials from Anglo American, Samsung, Southwest Airlines, Mondelez, Dow, Mastercard, Visa, McDonald's, Northrop Grumman, American Airlines.

Friday Up Arrow Down Arrow

Wiesbaden - 

Interim balance

- The Federal Statistical Office presents the first figures on the development of the German gross domestic product in the fourth quarter of 2020.

Nuremberg - 

Still a lot of short-time work

 - New figures from the labor market from the Federal Employment Agency.

Paris - 



- The French rail manufacturer Alstom completes the takeover of the train division of Bombardier.

Reporting Season V 

- Business Figures From

SAP, BBVA, Eli Lilly, Colgate-Palmolive, Caterpillar, Chevron, Ericsson.

Source: spiegel

All business articles on 2021-01-24

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