Germany and Europe Need a Crisis
German car manufacturers just had their worst quarter since 2009 and the dark days of the euro crisis. Combined, the earnings of Volkswagen, bmw and Mercedes-Benz fell by 76 percent for the third quarter of 2025. Financial consultancy EY labeled Germany the worst-performing car-manufacturing nation.
Germany’s chemical industry is operating at only 70 percent capacity, its lowest level since 2002, according to figures from industry group vci earlier this month. The industry is sending out an “sos signal,” according to vci’s president Markus Steilemann. The EU’s share of the global chemical industry shrunk from 33 percent in 2002 to 13 percent in 2023.
Overall, Germany’s industrial production is down 10 percent from its peak in 2018. Only one sector is growing: arms. Companies that once made car parts are starting to make weapons. That is huge news from a military perspective. But the German arms industry generates around €50 billion (us$58.6 billion) in revenue a year. Its car industry generates €500 billion (us$586 billion). The rise of the German war machine can’t make up for the all the bad news everywhere else.
But this is not just a temporary hiccup. All Europe has major, long-term economic problems.
Perhaps its biggest is its inability to create start-ups. The value of every EU company founded in the last century is dwarfed by just one of America’s many successful start-ups.
https://twitter.com/R_G_Palmer/status/2001619134900240774
No European company founded in that time is worth more than €100 billion (us$117 billion). Over the same time period, six companies founded in the United States are now worth over €1 trillion (us$1.2 trillion).
“When you look at the U.S., most of their top companies didn’t exist 30 years ago,” said Xavier Niel, one of France’s most influential businessmen. “When you look at France, all of ours already existed back then.”
“Europe is stuck in a static industrial structure with few new companies rising up to disrupt existing industries or develop new growth engines,” warned Mario Draghi in a landmark report on European competitiveness published last year.
It’s not because Europeans are less smart or less entrepreneurial. Europe’s regulations are so stifling that many companies move abroad. From 2008 to 2021, almost a third of European start-ups that went on to be valued above $1 billion moved to the U.S.
In 2008, before the financial crisis, the European Union’s gross domestic product was about the same as America’s. Now America’s is 50 percent bigger. And that’s not just because Britain left the EU—America’s economy is growing steadily while the EU’s barely grows at all. Thirty years ago, the EU made up 27 percent of the world’s gdp. Today it is 17 percent.
China is also a serious competitor: More patents are filed in China than Western Europe and the U.S. combined.
Why? There are a number of obvious causes, including:
Regulation: In just tech alone, the think tank Bruegel estimates there are 100 laws and regulations administered by over 80 agencies. The EU leads the world in regulating tech industry. In one of the most dynamic sectors, it is far easier to set up shot abroad. The EU also leads the world in Environmental Social and Governance (esg) regulations.
Green policies: Standard business energy costs in the U.S. are half of what they are in Germany—largely due to environmental regulation and fees.
The Ukraine war: Germany’s manufacturing model was sustainable when it was getting cheap gas, raw materials and chemicals from Russia. But after Russia’s invasion of Ukraine, that has been cut off.
Donald Trump’s tariffs: These have been a double whammy for Germany. Germany is selling less to the U.S., as is China. China is trying to make up for its lost customers by selling more to Europe at prices domestic firms cannot match.
The result is an economic collapse that would be a “crisis” if it had happened overnight. Unlike the 2008 crisis, this isn’t caused by banks, trading or hedge funds. It’s entirely political.
This means the solution must be political too. And politics aren’t going too well in Europe right now. France has gone through seven governments in the last three years. Germany is stuck with one unpopular, unstable coalition after the next. Spain’s prime minister has no majority in parliament. Under Spain’s constitution, he can’t be ousted unless parliament agrees on a replacement. So he continues in office, but not in power.
Reform would also have to happen at an EU level—and things don’t look good there. This week, it failed to approve a free trade deal with the South American trade bloc mercosur—kicking the can down the road again and prompting disgruntled nations like Brazil to threaten to pull out. The €100 billion flagship Franco-German military project, the Future Combat Air System, is on the brink of collapse as nations squabble about who gets to make which part of it. And the EU’s plan to fund Ukraine by confiscating Russian assets has fallen apart because Belgium doesn’t want to risk being forced to pay back the €200 billion sitting in Belgium financial institutions, if the program later gets declared illegal.
Is there a way out for the EU? “Only a full-blown crisis can save it now,” declared the Telegraph over the weekend.
“The Continent loves a good crisis,” it wrote. “Jean Monnet, the man dubbed ‘the father of Europe’, famously declared the bloc would be ‘forged in crisis, and will be the sum of the solutions adopted for those crises.’”
Former German Finance Minister Wolfgang Schäuble said in 2011, “[C]risis represents an opportunity. I’m not saying that I enjoy being in a crisis, but I’m not worried. Europe always moved forward in times of crisis. Sometimes you need a little pressure for certain decisions to be taken.”
Many see that a sudden, urgent threat—as opposed to the steady decline of the last decade—will turn the EU around.
“The way Europe behaves is that it takes really crisis events to force change,” investor Lord Jim O’Neill said. “I know some people of my generation who sit in the middle of all of this in Europe, and they pray there’s going to be a crisis so they can do it all.”
“Europe needs to see more pain in order for politicians to perceive that they have a mandate to do what needs to be done,” said Bank of America’s chief economist Claudio Irigoyen.
Herbert W. Armstrong also forecast it would take a crisis to forge Europe into a superpower. In 1984, Mr. Armstrong warned that a massive banking crisis “could suddenly result in triggering European nations to unite as a new world power larger than either the Soviet Union or the U.S.” (co-worker letter, July 22, 1984).
Mr. Armstrong also warned that an empowered Russia would spur Europe to unite. In his Jan. 23, 1980, co-worker letter, he warned that fear of Russia “will be the spark to bring the heads of nations in Europe together with the Vatican to form a ‘United Nations of Europe.’”
Germany and the EU is feeling the pressure from this and more. Once shocked by a crisis, expect massive reforms to overhaul government, politics and military.
Mr. Armstrong’s forecasts were based on Bible prophecy. Revelation 17 prophecies a union of 10 leaders under a strongman. World events are forcing Europe in this direction.
“We are now at the point where Europe as a whole must decide what it is to be,” wrote Geopolitical Futures founder George Friedman. “Now that U.S. interests have changed, Europe faces the crisis it has tried to evade for the past 80 years. I suspect that the Europeans will deny that there is a crisis or, in acknowledging it, insist there is nothing to be done about it.”
America is leaving an economically weak Europe to fend for itself. That “could force the Europeans to do something unlikely: rationalize their own situation by uniting.”
This is exactly what the Bible says Europe will do.