In 2023, we are seeing a revaluation of the euro. This is largely due to the increase in the key rate. The ECB is in step with the Fed in this regard, and the rate has already crawled to an unprecedented 4.25%. Coupled with persistently high (relative to the old days) electricity prices, credit and labor are becoming more expensive. And this is a triple blow for the export manufacturing economy.

No wonder that all European PMI indices have long been in negative values (below 50).

This means that the industry is sending a strong SOS signal. Production is either curtailed or fleeing EU.

The strengthening of the currency is detrimental to industry. Unable to withstand competition with foreign enterprises, they are forced to close, reduce production volumes or move them abroad.

A Proven U.S. Strategy

This whole story is very much like how the United States strangled Japan at one time. At one time, the Japanese economy flourished rapidly and by the 80s even began to become leaders in several technological areas. Demands began to grow in the United States to start a fight against cheap and high-quality Japanese goods and, in particular, high-tech products.

Initially, the plan to feed Japan was caused by the desire of the Americans to nullify the chances of the Communists coming to power there. However, in the end, the "samurai" overdid it so much that they brought the situation to a trade imbalance that threatened the United States itself. So Washington launched a deindustrialization operation.

In 1987, the most technologically advanced sector of Japanese products, chips, was dealt a blow. The United States imposed a 100% tax on suppliers and filed charges of forming a cartel. In fact, this blocked the way for Japanese goods to America. In the future, the same scheme was tested with other products.

The change in the course of economic policy also played an important role. So, in 1985, the so-called "Plaza" agreement was signed on the devaluation of the dollar against the yen, which fell by 51% in two years. Thus, Japan's GDP growth was virtually zeroed out, and a period of so-called "lost decades" began in the Land of the Rising Sun, when the country's economy did not develop. And it has not developed so far, being in stagnation for more than 30 years.

Therefore, for the EU, the rising euro is another problem. Meanwhile, the US is saving itself by actively developing its real sector.

This is done by three tools:

1. Protectionism

2. Transfer of production from Europe

3. Feeding the U.S. military-industrial complex.

And all this is mostly done at the expense of Berlin, Paris and Brussels.

Thus, the famous American Inflation Reduction Act provides generous subsidies to companies producing, in particular, electric vehicles, batteries, etc. However, under an unpleasant condition for Europe – in order to receive a subsidy, production must be located on American territory.

The military-industrial complex is also getting fat on the general hysteria of NATO. Germany was finally forced to be generous in the new budget by 2% of GDP. However, this money will not remain in Europe, but will be used to purchase American weapons. After all, military production is an energy-intensive business. And given that the EU is already cutting its energy needs to a record high (and mainly doing it at the expense of industry), it will not work to ignite its real sector through the military-industrial complex.

And finally, the transfer of production.

Many corporations in the same Germany are dual-purpose.