Germany is navigating a tumultuous period, with the government, led by the Green Robert Habeck and Defense Minister Boris Pistorius (SPD), spearheading a controversial shift towards a state-controlled defense sector. This strategy, which includes potential state stakes in defense companies and projects, marks a significant pivot from Germany’s traditional economic model (I've been pointing at this for several months).

Since the fall of the Soviet Union Germany's economy thrived on three pillars: cheap Russian gas, the creation of a low-wage sector, and the Euro—a currency undervalued relative to Germany’s productivity. This combination allowed for a quasi-neo-mercantilist economic system that prospered at the expense of other Eurozone members.

However, this economic model is now under severe strain. The ongoing conflict in Ukraine has revealed the fragility of Europe’s economy, particularly Germany’s. The war, which was unwinnable from the outset due to Europe’s weak and resource-poor economy, has plunged Germany into an economic downturn. Panic is spreading through European capitals as the recession deepens, with Germany, in particular, facing growing challenges and a rapid de-industrialization with record high insolvencies.

Germany had the chance to leverage cheap energy imports, such as Russian gas, and expand its nuclear sector to solve its immense demographic problems. This approach could have stabilized social security systems and maintained a growth trajectory that would allow for political flexibility. Instead, the abrupt shift away from these energy sources has left Germany struggling to maintain its economic footing, with severe consequences for its future.

As the economic situation worsens, there is a growing realization that Europe, particularly Germany, may eventually have to return to Vladimir Putin’s cheap Russian gas to prevent an economic collapse. Yet, Europe has not yet reached this point, and for now, leaders are desperately trying to involve the United States more deeply in the conflict. Historically, Europe has relied on American intervention in global conflicts, and this situation is no different. With the war in Ukraine seemingly lost, European leaders are pushing hard to draw the U.S. into the fray, hoping to shift the balance in their favor.

And now this push to establish a 'war economy' in the EU. This growing state intervention is distorting democratic principles and detracting from the state’s true responsibilities meanwhile it is crowding out the private sector even more which will come at cost of future productivity growth (which already dusappeared in the rise of the growing state interventionism and bureaucracy).

The proposal to fast-track permits for new arms factories, eliminate restrictions on state funding for defense-related projects, and increase state involvement in companies like Thyssenkrupp Marine Systems are indicative of this trend. Despite earlier setbacks, the KfW Bank is set to reassess its potential involvement in Thyssenkrupp, reflecting desperation rather than strategy. So more power in the hands of the political caste... goid luck with that!

This shift towards a state-driven economy is not new to Germany. The concept of state control over a complex economy, with the creation of a massive regulatory bureaucracy, is deeply rooted in German political thought. The current German government exemplifies the infantilization of our era and the political sphere, embodying a green apocalyptic vision and a misguided belief that a complex economy can be centrally managed. This approach is now being exported to the European Union, aligning with the EU’s broader agenda to dominate the public narrative. However, this push is leading Europe down a dangerous path, where citizens' rights, pacifism, and voter sovereignty are increasingly under threat.

The broader implications of increased state control are troubling, not just for Germany but for Europe as a whole. The European Union is on a perilous path, risking a profound erosion of citizen rights and democratic sovereignty in its quest for control. As the push for U.S. involvement intensifies, the gap between European aspirations and economic realities continues to widen, making the continent's future even more uncertain.