The other big story of today is rocking Germany, the car industry, millions of car owners, millions of other people who’ve been breathing unnecessary nitrous oxide in diesel car fumes, Volkswagen shares and — who knows? — even the stock market itself. In the course of today VW might even be the trigger that causes the next financial collapse — something that more than a few central bankers are fearful of.
It has already caused VW’s shares to slide 20% and is going to cost at least $20 billion in fines, it is estimated. My guess is that there’ll be more than a few class actions by the relatives of the additional thousands of people who’ve died prematurely. I wouldn’t be surprised if it ends with the closing down of Volkswagen as it now stands — at least the forced sale of some or all of its luxury brand car firms.
Above all else, much more diffusely, but importantly, is that VW’s criminality in falsifying its exhaust tests will badly affect Germany’s reputation in the world. Ever since the Second World War, Germany’s politicians have worked hard to redeem Germany’s reputation from the guilt of its systematic slaughter of European Jewry. In PR terms, in keeping away from American, British and French interference in the Middle East, topped up by Angela Merkel’s recent welcome to Syrian refugees, it has pretty well succeeded. No longer. Germany’s reputation has been dragged low by the senior people at Volkswagen — unbelievable, considering previous attempts by car firms to avoid recalls.
Germany’s reputation in engineering is indisputable. But the way it has handled the Greek problem and, more recently, the refugee problem has cast doubt on its political/managerial competence. This Volkswagen episode will set the seal on this for some time to come. Germany’s politicians will lie low now.