Germany balances budget for the first time in 38 years
 

That is nice and reasonable, but I fear it will not last for too long.

The economy is more and more damaged by the unhealthy american finances and the ill dollar. The Fed's decision to decrease interest rates and the high output of dollars from pr9inting machines does not help to stop dollar inflation.

Energy prices are coinstantly growing, faster than ever, which again is not a burden for households only, but for the economy as well.

Car production will need to expect serious impacts in it's bilance soon. Traditionally, german car makers are successful on the intenrnational market mainly with huge cars with (by European standards) high PS. The EU has set it's sights on this vehicle class for environmental reasons. The Germans so far only very slowly adapt, if even that.

At the same time, Germany lives from it's spectavcular exports, while local demand of consumers is low, and even declining in many areas. Last year, 10% less cars where sold - which translates into a financial desaster for car makers on the German market. A turn of the trend is not to be seen at the horzion. german households become poorer, not wealthier. The number of households getting into finacial troubles is in steep growth.

The German state (on national, federal and communal level) has debts of 1482 billion euro. While that is by far not comparable to the six times as high deficit of the US (9203 billion), it nevertheless is high, and makes for roughly 66% of the yearly GNP. The constitution only allows 60% at max. A balanced budget only means you do not add new debts for the given year. It does nothing to reduce existing debts. (Note that these debts in both nations EXCLUDE debts of the economy and private households. Here again we need tp speak of high negative, and no positive values).

Nevertheless, local comunities and ministries as well as other parties demand to be given mor more money becasue of the balanced budget. that of course is illogical. A baöanced budget does not only mean there is no surplus that could be spend, it also means that the debts remained untouched. You would need a budget priducing a surplus in order to reduce the debts. when the debts are gone and you have a budget with surplus - than youa ctually have just started to prtaicall own and have money. Until then, you live on tic.

the pressure from low wages-countries will not decrease, but increase.

Taxe incomes from private households will fall, because like in the US many additonal jobs are no fulltime jobs, but only mini-jpobs with minimum incomes that produce almost now tax income. at the same time, a good portion of these jobs get even subsidised by the state, it pays part of the employee's incomes. But the field of minijobs is increasing, with lowered or no significant tax income at all, so - the downward spiral is winning in pace.

the built bubbles at stpckmarkets sooner or later needs to blow up. the fallpout of that will effect everybody, massively - so German economy as well. I see the US in a trend of recession, and the global developement heading for that direction as well. Again, this will have serious effects on german export-depending economy.

as I see it, germany will become more and more a country producing lesser for the loca demand, and more for the intenrational demand. We alrraedy see poverty rising since years, and this trend will continue, due to the mentioned and other factors like unregulated migration of unqualified people. Low wage jobs will beocme the standard of the future. The gap between the rich and the poor will widen, and more and more welath will be accumulated in few and fewer hands. germany will become increasingly unable to afford producing for the local national demand, but will increasingly focus on producing for th einternational market.

If that is not absurd: you produce expensive items for foreigners in other countries, and from other countries you get the same items (that you could produce yourself as well) - often in lower quality - in their cheaper versions. That is lack of logic at it's best. national industries should be focussing on serving the local national demand first before serving the demands of international customers. wpudl save us a lot of traffic and energy wasting and pollution. t reminds of Iriosh farmers who keep sheep - but eat sheep from NZ because irish sheep are more expensive and get exported, while NZ sheep are the ones they could afford to eat themselves. that is artificial madness.

:roll: .....not a lot of take up :hmm: ....perhaps if you put a corruption slant to it ;)

Maybe Germany can tell the EU how's it done, as they have not signed of there books for nearly 14 years now.

Hmmm, compared to countries like Russia or Norway it is quite puny, but a nation without oil and a balanced budget is something quite rare, I think.

Oh, I don't know :hmm: Just look at Afghanistan for example :lol:

Apparently drugs are still fetching a pretty price.

Hmm, ideally, Germany shouldn't be balancing its budget quite yet, at least not the current account. The resurgent economy isn't quite strong enought yet, IMO.
It doesn't hurt too much to borrow, the problem these days is trying to borrow and avoid using the dollar.

plus with the new whining from israel for MORE ********* reperations, the german government will go into a deficit again...:shifty:

Leave it out

Can you figure the yearly interests for 1.4 Trillion? It's the second highest item in your yearly budget. Germany pays more than 20% of the yearly GNP - for interests alone. Interests only! This reduces the existing debts in no way - it just maintains them on their current level.

By numbers for 2001, in order to bring federal debts to nill, the total federal tax incomes of four years would be needed to spend exlusively for discharge of federal debts - with not one Euro left for any other purpose.

Needless to say that such financial dependencies of nations and governments make them extremely vulnerable to pressure and blackmailing. By banks, for example. No bank has an interest to see state freeing themsleves from the embrace of the kraken, it gives babks enormous political influence over foreign as well as interior policy and economy, and supplies them with a never failing source of huge incomes.

With a debt level of over 9 trillion, the US currently is spending over 250 billion per year for interests alone.

In several years since the mid-90s, Turkey payed over one third of it's GNP for interests only.

The ICF also uses this dependency. Under the alibi of wanting to activate the economy wehre it wishes to bring it under foreign control, new credits are given only when being designed for serving the interests of foreign "investors". By that, the debts of that country get increased constantly, which means a vicious circle of growing debts and higher interests and more credits and deeper dependency and a take over of national economy.

It does not hurt too much to borrow...?


However, as several commentators already have figured pout over here, the budget balance is a singular event only, because it is not really the result of planned action, but a chain of (sometimes random) lucky developements that went better than projected. when hearing on TV that citigroupo today has admitted to have another 10 billion, with a need to write off another 20 billion, I was convinced (again) that the stockmarket troubles are far from being over, and this as well as certaion national trends, energy prices, and the ill dollar will bring the budget into red numbers again this year.

It's quite difficult to address this without making trade worthless for both sides. Goods will follow demand and pricing, be it abroad or domestic.
Globalisation has it's good and bad sides, one of which is that it's very hard for governments to control where domestic goods go, and any controls can be legally fought through free trade laws and common markets.
Example - there's plenty of food grown here that gets exported, and we eat vegetable flown from Cyprus. Most consumers will follow prices rather than nationalities, and it's almost impossible to effectively switch demand without artificially messing with prices, or changing the quality of the product.

I'm in agreement with you regarding pollution.

Australia has had a buget surplus for the last five to six years, but will still have a trade deficit!

I wasn't aware that debt was so high in Germany. I suppose with the relatively high tax rates didn't cope well with unification. The 90's weren't exactly a shining economic decade for Germany.
I still believe that with a rather uncertain economic future, infrastructural & capital borrowing should be encouraged for two reasons. In time, if properly used, it will pay for itself, and it can help the economy ride out hard times, enabling it to pay back when growth is higher. Capital borrowing is sustainable, current account borrowing is not.
Sadly, that's quite theoretical, and today we see many governments continuing to borrow when logic and a healthy economy dictate otherwise. The UK shouldn't be borrowing right now, it's debt is climbing faster than ever.
Your caution on borrowing is well-placed, uncertain borrowing can create a self-sustaining debt cycle, continuation of borrowing to pay the interest.
The US, I believe, is currently suffering from a mismanaged debt circle that has its roots in profligate defence spending. Whether it was worth it isn't a question i'm going near.
I don't know if/how it will break.
Oh, very true. (do you mean the IMF?)
In the late 1980's the IMF were about six weeks away from taking over Ireland's economy, so badly was it managed. Thankfully cooler heads prevailed in Dublin.
No, it does not. Unfortunately governments are not very good at it, and the terrible beauty of representative democracy means that it is political suicide to be good at it.
On the face of it, a budget deficit may look troublesome. It well may be, and this depends on the composition and management of such a deficit.
In a shaky economic climate, if a government can run a deficit, it should. To be returning more money to the economy than you are taking out of it encourages investment and general economic activity, creating capital that can boost the economy into a situation where repayment is possible without being punitive.
Paradoxically, borrowing for capital now could create a situation where realistic debt management is possible.
however, you're more au fait with the German economy than I (think I've got a couple of German Euro coins here though, love those eagles :)), so after the picture you've just painted I ain't so hopeful.

Signed,
A. Theoretician. :p

Ship me a VW Polo with a diesel that gets 75 mpg. Might be less chance of recession here if "they" had something I wanted to buy. A laptop with XP would be good too! ;)

I'd much prefer a Golf GTi ;)

I am crtitical of totally unrgulated trade. Also, there is no thing like unregulated trqade in the modern time. Unreguölated, liberal trade leads to an economy that acts without any national o social responsibility. I accepts national aide ti get it raised, then turns to international focus, and feels no longer bound to the nation that once raised and nursed it. Being an international corporation then, it can avoid a lot of legal regulations affecting its business in an unwanted way, and can choose to no longer feed back to it's further nurse by prioviding it with taxes. Globvalisation has massively speeded up this process. One example from the EU: yester, nokia in Germany announced to shut down a huge fatcory over here, 2500 jobs are lost. but in the past years it enjoyed financial aide and subsidies from the german tax payer in the range of high two digit millions - profit for them, loss for us. It now can expect to get even more german subsidies for it's shifting of production to romania or the Czech Republic - ion form of EU subsidies that pay for companies shifting their producion locations: german tax payers come up for a total of one quarter of the complete EU budget. So, we pay for our jobs getting lost, and loosing tax income that with the leaviong of the company no longer is produced for our budget. Nice. It is not the first time it went like this.

Obviously, a controlled economy like they had in the Warsaw Pact states also does not work well.

Fact is we need both: as little regulation as possible, but as much as needed to make sure that corporations do not become political actors of themselves and do not avoid the social responsibilty towards those who originally have raised and supported them. Of course, investement fonds do not like this. and I do not like investment fonds. The whole system imo borders to the realm of economic crime. The negative sides of globalisation imo by far outshines the positive gains. And even many former adviocates for glpobalisation - have fallen silent in the past three or four years now that the massive blowback to western societies has become evident. Fact is that the states who had a solid currency and a more or less functioning economy - are the loosers of it. the biggest ,loosers are germany and america. Germany for having lost the parade example of a solid, trusted currency: the D-Mark, and america for having suffered a massive loss of fulltime jobs to foreign countries, that it miserably tries to compensate for by inferior part-time and mini-jobs. such jobs that often do not secure the existence of those doing them, and minimize the tax income for the state, form the lion's share of the "job miracle" in the US. In other words: it is a self-deception. The situation is slightly difrferent in Germany, but follows this trend from America: although specialised workers are being sought, the lion's share of the jobs being created in the past 24 months are again no healthy fulltime jobs, but minijobs, payed with wages that often get subsidised by the state, means: by the German tax payers. This is no self-supporting a system, of course. Also, more and mor eoften new companies get build, like the german oprivate mail "PIN", that from the very beginning calculate with insufficien wages at the extreme and insufficient minimum of the scale, in ordert to come up with an economical scheme by which they want to survive. But I think to build a new company that needs unhealthy cost calculations and systematical abuse of the weakness of unemployed crowds, should not be built at all. It is cynical, at best. It means for employees to live just from one day to the next, withoiut any chance for build reserves to secure their high age, or support raising families.

There is this cliche especially in america of the europpean and german nanny state that shoves milk and honey into people's butts all for nothing. Haha, you guys do not know what really goes on here. These are exceptions form the rule. The harsh reality for the majority of families is a very more grim one. and almost all statistical markers indicating a worrying raise of social-related trends towards the unwanted extremes and a threatening worstening of the social situation of many people - are climbing, fast. Children, old ones and pensioneers, working class, increasingly middle class, and families with children are the ones being affected the most.

You better don't raise a family, and you better do not wish to become old anymnore these days. Statistically, in Germany, having children is the - by far - greastest risk to suffer existential economical collpapse and become poor and dependant. What this means for the future chances of a national community you probably can imagine. This index category of having a family outclasses any other risk index - in rich Germany! ;)

Da steckt der Wurm drin, ganz ganz tief innen drin, und er nagt und frisst und hört nicht auf.