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7 Factors form the perfect storm, writes the FOCUS:

Novelist Sebastian Junger landed a world bestseller and director Wolfgang Petersen repeated this on the big screen: " The Perfect Storm " is the story of a fishing boat that gets caught up in a weather phenomenon off the east coast of the USA that occurs at most once every 100 years: a low-pressure area moves from the mainland to the sea, a high pressure system from Canada pushes cold air southward and Hurricane Grace swirls warm and humid remnants across the ocean. The men on the boat "Andrea Gail" fight the forces of nature and lose. For George Clooney, it was one more tragic hero role. The fascinating thing about the title is its contrariness: even evil can be perfect.

The result of many ingredients brewing in the financial markets

Economists have therefore adopted this title when describing the result of many ingredients brewing in the world's financial markets so uniquely that more than one ship can sink. The perfect storm they mean can make people poor and drive them into the street, it can push companies to the wall, it can drag entire economies into the abyss. And of all things, there is now talk of such a perfect storm. U.S. star economist Kenneth Rogoff already has it on his radar. He speaks of the danger of a simultaneous recession in Europe, China and the USA. Economics Minister Robert Habeck (Greens) is warning of a global recession. He says there are currently several interconnected crises: "The high inflation, the energy crisis, the food shortage and the climate crisis." In addition, he said, "the world is in danger of disintegrating into power blocs."

Bleak forecast from star investor George Soros

Observers will never forget the appearance of 91-year-old star investor George Soros at the recently concluded World Economic Forum in Davos. With heavy steps, he made his way to the lectern. His often rather bleak predictions - they have all come to pass, some worse than even Soros could have imagined. In hushed tones, he addresses the threat of totalitarian regimes like Russia and China. He, who survived the Holocaust, addresses his world audience in a brittle voice: What is coming now "may not survive our civilization."

Seven ingredients for the perfect storm

Unlike in the novel, the "perfect storm" that Rogoff and Habeck are worried about and that makes Soros look black has not three but seven ingredients, which are currently intertwining with varying degrees of force. They are:

1. pandemic

It was at the beginning of the hot phase of the storm. The world had not experienced anything like it since the Spanish flu more than 100 years ago. In the age of MRIs and heart transplants, people around the world were once again dying from a virus. The enforced lockdowns weakened economies and government coffers. New variants of the virus keep getting ahead of the vaccines, causing renewed lockdowns at neuralgic points of world trade like Shanghai. The danger has not been averted; it has merely slipped to the periphery of perception. Already, infection rates are rising again. Popular virologists such as Christian Drosten are warning of the next wave of coronas after the summer vacations.

2. war

Unimaginable for most people living in the European Union and dreaming of perpetual peaceful coexistence on their continent since the fall of the Berlin Wall, Russia invades Ukraine on February 24, 2022, unleashing not only a military but also an economic war. At stake are energy deliveries to the West and grain shipments to the entire world, which suddenly come to a standstill coming from Russia.

Germany, one of the main consumers of Russian energy supplies and one of the few countries in the world to have scrapped its nuclear power plants, is sliding unprepared into an energy crisis the likes of which have not been seen since the oil price shock of 1973. The German government has sounded the alarm for gas supplies. If even less gas comes from Russia in the next few weeks, businesses will have to close, and homes will remain cold in the winter. The high energy costs are hitting Germany particularly hard, Europe a little less so, and the rest of the world hardly at all. Europe is losing out in international competition.

3. inflation

More than ten years ago, when the high debt levels of some countries in the EU threatened to blow up the euro, the then central bank president Mario Draghi announced his "Whatever it takes" policy. The intention behind this was to rev up the printing press until there was enough money in the market to finance government debt.

This, together with energy prices and the consequences of pandemics, has driven inflation to a record high of currently more than eight percent. This means that on a salary of 50,000 euros net per year, the purchasing power for a family is reduced to 46,000 euros within a year. If they want to compensate for this, summer vacations, for example, fall flat. Dissatisfaction grows.

4. interest rates

Directly related to inflation is what the central banks prescribe as an antidote: rising interest rates. Not a bad idea in itself - but it comes too late.

The consequence: Either central banks raise interest rates as hesitantly as in the EU, in which case the remedy does not work against inflation. Or they will be more aggressive, as in the U.S., in which case the interest rate hike will strangle economic growth because loans for investments will become too expensive. In the USA, there has never been a phase of rising interest rates that did not lead to a recession after twelve months at the latest.

5. labor market

Companies have long since noticed what is coming. Some can no longer afford the cost of energy, others are short of materials for their products, and sales are faltering. As a result, the labor market is turning. The labor shortage is turning into a labor surplus, at least in terms of what companies can still afford to hire during the crisis. The head of the German Federal Employment Agency, Detlef Scheele, warns: If Russian gas supplies were to fail, the risk with regard to jobs in Germany would be "currently very high".

The inflation rate in Germany is the highest it has been in 40 years. FOCUS Online therefore asks: Your everyday life consists only of saving? Do you really have to turn over every penny and are constantly on the lookout for ways to make a living more cheaply? We want to tell your story. Please write to us at mein-bericht@focus.de. Please briefly describe your situation in an email and also write us when we could contact you by phone regarding this in the next few days. Thank you very much.

He then believes that short-time work and a sharp rise in unemployment are likely. Things are also looking bleak on the other side of the Atlantic. Prominent investor and stock market expert Dirk Müller analyzes: "People, especially in the low-wage sector, are being laid off by the dozen. This comes in a situation where they are highly indebted and the interest on their debt is going through the roof." At the same time, there is still a shortage of skilled workers. Germany produces high school graduates on an assembly line, but craftsmen, IT specialists and technicians are lacking. Orders are left undone because no one can take care of them.

6. material bottlenecks

New cars from German manufacturers are still lined up on unused parking lots, missing a chip at a crucial point to get the electronics working. The delivery is stuck. The same picture elsewhere: the real estate industry, which has been spoiled by success for years, is suddenly feeling that no one wants to build anymore.

One reason: No one can calculate when and at what price building materials can be found. Either they are stuck in containers that cannot be unloaded in time due to the pandemic, or they have become so expensive due to the rise in energy costs that they are throwing every construction calculation out of kilter.

7. geostrategic danger

Russia's regime has become the enemy, and many are realizing that totalitarian and thus unpredictable structures like those in Moscow also prevail in Beijing. The leadership there is embroiled in a trade dispute with the U.S., pursuing a zero-covid strategy that is clutching the economy and dimming its decades-long prodigious growth rates to normal levels.

At the same time, it suppresses rebellious peoples in its giant empire, such as that of the Uyghurs, and shows the cruelty of which it is capable. All of this is leading to the greatest dislocations in its own country: The real estate market has collapsed. The two largest real estate developers in the giant empire are surviving only thanks to state aid. China is one of Germany's most important trading partners. So far, companies have been able to rely on it: If things don't go so well here in Germany, they'll go like hot cakes in China. But this is a thing of the past.

In the book "The Perfect Storm," which is based on true events, it is said that such a rare combination of factors created a situation that "could not possibly have been worse. The storm created waves ten stories high and wind speeds of 190 kilometers an hour. It whipped the sea to unimaginable heights, the likes of which few people on earth have ever seen." The next day, the haunting was over. The "Andrea Gail" and its crew, however, had disappeared from the surface.

Translated with www.DeepL.com/Translator (free version)