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German analysts warn there is ‘great danger’ of recession

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Germany’s leading economic think tanks warned on Thursday there was a “great danger” that Europe’s top economy could fall into recession, as they slashed their growth forecasts for next year in half.

The four institutes — Ifo in Munich, IfW in Kiel, IW in Halle and RWI in Essen — also lashed out at the European Central Bank, saying its latest anti-crisis measures risked fuelling inflation in the 17 countries that share the euro.

“The euro crisis is negatively impacting economic activity in Germany,” the institutes wrote in their joint twice-yearly forecasts, published here on Thursday.

“Should the situation in the eurozone continue to deteriorate, this will also impact the German economy. Over the forecasting period as a whole the downside risks prevail and there is a great danger that Germany will fall into a recession,” they warned.

While Germany clocked up growth of 0.5 percent in the first quarter and 0.3 percent in the second quarter, “there are currently a large number of signs that overall economic expansion will weaken towards the end of the year,” they wrote.

As a result, gross domestic product (GDP) was projected to grow by 0.8 percent overall this year and by 1.0 percent next year.

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That marked a downgrade from the institutes’ previous spring forecasts when they had been pencilling in growth of 0.9 percent for this year and 2.0 percent for next year.

Furthermore, the latest projections were based on the assumption that the situation in the euro area, currently grappling with its worst-ever crisis, would stabilise.

If it did not then Germany, which has held up much better to the long-running crisis than its eurozone partners, could find its economy going backwards, they said.

Reacting to the report, Economy Minister Philipp Roesler warned of “considerable risks” to the German economy which, he said, “could not be immune forever to the crisis in partner countries and a worldwide economic cool-down.”

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“Our economy will therefore only grow at a moderate pace,” he cautioned in a statement.

Turning to the ECB’s controversial decision to buy up the sovereign bonds of debt-wracked countries under its so-called OMT programme, the experts said such measures risked fuelling inflation in the single currency area.

The institutes “see the risk of a mid-term rise in inflation,” they said.

“This process could be triggered by the ECB effectively providing monetary financing for states. Europe’s citizens and players in the markets may lose trust in the ECB’s ability to ensure long-term price stability as a result,” the report said.

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The ECB’s Outright Monetary Transactions programme, as well as its predecessor the Securities Market Programme (SMP), have frequently come under heavy fire in Germany as being a covert way for the central bank to pay off countries’ debt by simply printing money.

“In the longer term there is a great danger that the ECB will continue to purchase bonds and provide excessive monetary policy stimulation even if states deviate from the adjustment programmes, which could drive up prices and lead to an increase in inflation expectations,” the institutes warned.

Inflation in Germany slowed slightly in September, according to official data published earlier Thursday, but remained at the European Central Bank’s target rate.

The German consumer price index (CPI) rose by 2.0 percent on a 12-month basis this month, according to final cost-of-living data.

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Trump introduced his family at his official campaign kickoff — including ‘my late brother Fred, Jr’

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President Donald Trump introduced a long-deceased sibling moments after officially announcing his re-election bid during a campaign rally in Orlando, Florida.

"And I am profoundly thankful to my family, I have a great family. Melania, Don, Ivanka, Eric, Tiffany, baron, Lara, Jared, Robert, Marianne, Elizabeth and my late brother, Fred, Jr." Trump said.

Fred, Jr. was Trump's older brother and died of a heart attack almost four decades ago, passing in 1981.

"In a telephone interview last week, Mr. Trump said he had learned by watching his brother how bad choices could drag down even those who seemed destined to rise," The New York Times reported in 2016. Seeing his brother suffering led him to avoid ever trying alcohol or cigarettes, he said."

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Commentary

I don’t feel bad for Kyle Kashuv losing Harvard: He gets a glimpse of what it’s like to be black

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Kyle Kashuv losing his admission to Harvard is the dose of reality that America needs now.

Public opinion, at least on the internet, appears to be split over Harvard’s decision to disinvite Kashuv from joining its incoming freshman class. Kashuv, 18, rose to prominence as a young conservative star after he survived the Parkland shooting at Marjory Stoneman Douglas High School in 2018. While many of his other classmates used the media attention to advocate for gun control, as they fought to deal with the trauma of seeing their classmates murdered, Kashuv did the opposite, becoming the high school outreach director for the conservative group Turning Point USA, lobbying for more guns in schools, and even meeting President Donald Trump.

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2020 Election

Trump un-ironically worries a presidential candidate who refuses to concede and then shreds the constitution

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President Donald Trump officially kicked off his re-election campaign at a campaign rally in Orlando, Florida -- the 60th campaign rally of his presidency.

During the speech, Trump offered a good deal of projection as he made baseless accusations against Democrats -- on the same exact topics where he has been credibly accused.

"This election is a verdict on whether we want to live in a country where the people will lose an election, refused to concede to spend the next two years trying to shred our Constitution and rip your country apart," Trump argued.

Watch:

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