We did promise it after Putin blew up his own pipeline supplying cheap energy to Europe, but the implosion of European auto companies is really something to behold. The effects of Capital flight in the industry are stark and widespread.
Consider this:
VW’s profits dropped by 64%. Audi’s profits dropped by 91%. BMW’s profits dropped by 84%. And Mercedes-Benz’s profits dropped by 54%.
German carmakers are in trouble. Their business model was based on two things: cheap Russian energy powering the German engineering coupled with sales in China subsidizing antiquated, overblown unions protecting their cost structure at home. The first pillar collapsed and the second is now under severe pressure.
China now builds its own decent cars. There’s no need for the Chinese to buy anything other than Chinese cars which accelerates capital flight.
Now, let me show you something else. The flow of trade, of course, is seen in the currency markets.
Hellbound and Down 