Germany balances budget for the first time in 38 years

[Skybird]

Germany balanced its budget in 2007 for the first time since 1969, the Federal Statistics Office announced Tuesday. The development is thanks to an economic recovery in which German gross domestic product grew 2.5 percent last year.

The statistics office reported that the three tiers of German government -- federal, state and local -- had a tiny surplus of €70 million in 2007, a turnaround from a deficit of €36.96 billion in 2006.
The balanced budget marks a strong improvement in Germany's budget performance after it broke European Union rules on budget deficits four years running, from 2002 through 2005.
The statistics office said economic growth was driven by heavy corporate investment and by exports, with the latter growing by 8.3 percent. Domestic consumer spending remained weak, however, falling 0.3 percent.
Economic growth last year was slower than the 2.9 percent rate achieved in 2006, a boom year for Germany, and the government has recently lowered its forecast for 2008 growth to less than 2 percent. Record oil prices, the strength of the euro against the dollar, and concern over the global impact of the US subprime credit crisis are expected to take their toll this year.
The government expects a small budget deficit in 2008.

http://www.spiegel.de/international/...528642,00.html

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.