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.

[Jimbuna]

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

[STEED]

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

[AntEater]

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.

[Jimbuna]

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

Apparently drugs are still fetching a pretty price.

[Tchocky]

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.

[Tchocky]

Originally Posted by Skybird

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.

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.

[Skybird]

Originally Posted by Tchocky

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 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.

[GlobalExplorer]

Balanced budget for 2007 was more by accident. Drastic cutdowns on welfare + VAT raised by 3% + the first year where the tax income was higher than the predictions => balanced budget.

Generally German budget situation is improving, but the country is not at all healthy. Germany maybe an example for our American friends to look at how problematic overbounding deficit can be .. just for a smaller economy than the US it is felt more immediately, but also the smaller the better for recovery. In that context the current change of direction is remarkable - because in European context Germany is a juggernaut like the US compared to the world.