The Art of the Squeal - on Trump’s orders, Germany re-arms
Eugyppius is out with an interesting article today - and more detail tomorrow.
From here:
This is what caught my eye:
“… a proposal to amend the constitution and dismantle our strict debt brake…”
“… Over the next twelve years,
“… 100 billion Euros of debt will be funnelled to states and municipalities, in part to ease the financial pain of mass migration.”
“… 100 billion Euros will be poured into the dubious project of achieving “climate neutrality” by 2045.
“… 300 billion Euros will go towards a nebulous and relentlessly undefined “infrastructure”.
So that is 500 billion Euros to start with,
From here:
“Germany only met the NATO requirement to spend 2% of GDP on defence through a €100bn special fund exempted from the debt brake in 2022 - but that fund will run out in 2027.”
Back to the Eugyppius article:
“All defence spending in excess of 1% GDP will be exempted from the debt brake,”
“… the present deficit spending package has no upper limit …”
“… It might be a mere 1.5 trillion Euros, it might be 1.8 trillion Euros, and it might even be more. “
Making a total of around 2.3 tr8llion Euros.
And now for the kicker:
“… at least as much debt as Germany has taken on over the past 60 years.”
Germany has been one of the few countries in the EU that has stuck (somewhat) to the original founding document of the EU - the Maastricht Treaty - that set limits on fiscal prudence that would ensure the stability of the EU - 3% maximum fiscal deficit and a maximum of 60% government debt to GDP.
These two “markers” of rectitude are arbitrary and do not adjust for need (stimulus spending) or ability (larger deficits to propel an economy forward) - but they are what was agreed and what is “honoured in the breach”.
How big is the breach?
We can put Germany’s position in a global context, using world debt clocks here:
https://www.usdebtclock.org/world-debt-clock.html
Germany is the third country on the list, behind the US and China - there is no ranking o any indicator, it is just a list.
One of the key indicators is “External Debt to GDP” as opposed to “National Debt” and its percentage of GDP.
Germany’s government debt to GDP is 73% of GDP - 25% lower than that pf the US - but its external debt, at 158% of GDP, is 76% higher than that of the US!
Explanation needed!
From Brave AI:
“External debt to GDP is a critical metric for policymakers, investors, and economists to evaluate a country's financial stability and growth prospects.”
Ok, so it is “critical”!
“Germany’s gross external debt was reported to be €6.4 trillion at the end of the third quarter of 2024, an increase relative to GDP in the period under review.”
In the ballpark of the “Debt Clock” numbers.
Let’s go deeper:
“Gross external debt represents the total debt a country owes to foreign creditors, including amounts owed to private commercial banks, foreign governments, or international financial institutions such as the International Monetary Fund (IMF) and the World Bank.
It includes liabilities that are owed by residents of a country to non-residents, regardless of the type of payment or repayment involved, and it does not consider external assets in debt instruments.”
So, it is not necessarily Government debt - but it is still borrowing other people’s money - whilst not reflecting the assets that the borrowed money purchased or even where those purchased assets are,
It represents money borrowed by German companies and residents from “investors“ outside GerScooting down the list from the “Debt Clock” page, there is whole lot of government debt out there - well over 100 trillion bucks! That’s a lot of other people’s money - parked in central banks via “monetary policy easing”, high street banks, pension funds and in repo markets, etc.
Germany borrowing around 2.5 trillion Euros over 12 years is significant, but not terminal - certainly not compared to the idiot profligate spending of countries like Japan, the US, the UK, Italy, Belgium, Spain et al.
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Onwards!!!
Germany mortgages it's future. For what?