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Germany led by Merkel has set itself up for trouble. Cyprus and Greece have created a precedence for creditor bail-ins. Public finances are stretched due to re

by chvid 11y ago

Germany led by Merkel has set itself up for trouble. Cyprus and Greece have created a precedence for creditor bail-ins. Public finances are stretched due to refugee inflows and opposition to Merkel is growing even internally in her massive coalition government. This setup may lead to something not predicted (ie. DB not getting the guarantees it needs or even a creditor bail-in) or more predictively the rise of left or right-wing non-established / populist politics.

emptyfile 11y ago
>Public finances are stretched As others have pointed out https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html https://www.cia.gov/library/publications/the-world-factbook/... https://en.wikipedia.org/wiki/List_of_government_budgets_by_country#cite_note-cia.gov-1 https://en.wikipedia.org/wiki/List_of_government_budgets_by_... The only two countries in the world which have a higher surplus than Germany are Norway and Qatar
DangerousPie 11y ago
Public finances are only stretched because the German government (and the electorate) has a weird aversion to taking on new debt. If she wanted to, Germany could essentially borrow money for free thanks to extremely low or even negative interest rates.
- chvid 11y ago
  The money still would have to be paid back. Secondly interest rates are low due to low inflation masquerading a higher real interest.
- tomp 11y ago
  However, Merkel also pushed new EU legislation, so the government cannot help the bank (even if it has unlimited money) until depositors are bailed in. Currently, however, Italy is trying to find a loophole, that Germany might use as well later.
- kriro 11y ago
  1) I'd hardly call them stretched. 2) I wouldn't call it a "weird aversion". Weimar Hyperinflation (and the consequences) is still in the public's heads. Compared to other places I have lived people in Germany are indeed more reluctant to debt-finance things in general and "save before buying". I think it's a fairly healthy base attitude (but I'm probably biased being German). It's less valuable currently with near 0% credits everywhere but as a base mindset it helps avoid the trap of not finding a way to generate the expected revenue streams eventually.
sveme 11y ago
Public finances are not stretched at all - Germany is currently running a budget surplus. But apparently that does not fit your narrative.
creshal 11y ago
> Public finances are stretched due to refugee inflows Pfft. Get real. Germany has survived an influx of 10 million refugees in the immediate aftermath of WW2 and created the Wirtschaftswunder in passing while rebuilding the whole country. Germany has survived the reunification and integration of 16 million communists (going by the right-wing, the only worse subhumans than foreigners) with a dead industry, and became the economic powerhouse of and dominating power in Europe while eating up the reunification's 2 trillion Euro cost. Half a million refugees are a rounding error in our budgets.
chvid 11y ago
I am sorry; what I wrote was not correct. What I meant was: The influx of refugees will strech the public finances. How much and whether "welcoming refugees eventually will turn out to be a good investment" is deeply controversial and so politicized that it is very hard to have a reasonable conversation about it. However I think it is fair to say that taking in refugees costs money in the short term.
- morsch 11y ago
  Merkel buying new shoe laces costs money in the short term. You have just repeated your claims from the original post without clearing up what you mean by stretching public finances and documenting it with numbers. Everybody else is basically saying that the refugees aren't expensive enough to warrant this language on the balance sheet of one of the richer economies in the world.
  - chvid 11y ago
    I really was biting my tongue to write this as dry and neutral as possible. I am from Denmark and in many ways we are similar to Germany. But we are different in that we have taken in a relatively small number of refugees (around 25.000 pa. excl. family reunions, population 6 mio.) and yet the subject number 1 in Danish politics is how to handle the strech on public finances it creates. This may be due to two things: 1. Denmark is more generous to refugees and/or integrates them more poorly. 2. Denmark has different politics where it is okay to talk refugees as expenses. (Whether they are or not is another question - my point is that our politicians talk about it in this way.) What I wrote would absolutely not be controversial to say in Denmark but I can see from the downvotes that it is different elsewhere. Which I think underlines my point that this subject really is too touchy to have a good conversation about.
    - creshal 11y ago
      > But we are different in that we have taken in a relatively small number of refugees (around 25.000 pa. excl. family reunions, population 6 mio.) and yet the subject number 1 in Danish politics is how to handle the strech on public finances it creates. How much of that stretch is real, and how much is fear-mongering to influence upcoming elections? Do you have hard numbers?

by chvid 11y ago

emptyfile 11y ago

>Public finances are stretched As others have pointed out https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html https://www.cia.gov/library/publications/the-world-factbook/... https://en.wikipedia.org/wiki/List_of_government_budgets_by_country#cite_note-cia.gov-1 https://en.wikipedia.org/wiki/List_of_government_budgets_by_... The only two countries in the world which have a higher surplus than Germany are Norway and Qatar

DangerousPie 11y ago

Public finances are only stretched because the German government (and the electorate) has a weird aversion to taking on new debt. If she wanted to, Germany could essentially borrow money for free thanks to extremely low or even negative interest rates.

chvid 11y ago
The money still would have to be paid back. Secondly interest rates are low due to low inflation masquerading a higher real interest.
tomp 11y ago
However, Merkel also pushed new EU legislation, so the government cannot help the bank (even if it has unlimited money) until depositors are bailed in. Currently, however, Italy is trying to find a loophole, that Germany might use as well later.
kriro 11y ago
1) I'd hardly call them stretched. 2) I wouldn't call it a "weird aversion". Weimar Hyperinflation (and the consequences) is still in the public's heads. Compared to other places I have lived people in Germany are indeed more reluctant to debt-finance things in general and "save before buying". I think it's a fairly healthy base attitude (but I'm probably biased being German). It's less valuable currently with near 0% credits everywhere but as a base mindset it helps avoid the trap of not finding a way to generate the expected revenue streams eventually.

sveme 11y ago

Public finances are not stretched at all - Germany is currently running a budget surplus. But apparently that does not fit your narrative.

creshal 11y ago

> Public finances are stretched due to refugee inflows Pfft. Get real. Germany has survived an influx of 10 million refugees in the immediate aftermath of WW2 and created the Wirtschaftswunder in passing while rebuilding the whole country. Germany has survived the reunification and integration of 16 million communists (going by the right-wing, the only worse subhumans than foreigners) with a dead industry, and became the economic powerhouse of and dominating power in Europe while eating up the reunification's 2 trillion Euro cost. Half a million refugees are a rounding error in our budgets.

chvid 11y ago

I am sorry; what I wrote was not correct. What I meant was: The influx of refugees will strech the public finances. How much and whether "welcoming refugees eventually will turn out to be a good investment" is deeply controversial and so politicized that it is very hard to have a reasonable conversation about it. However I think it is fair to say that taking in refugees costs money in the short term.

morsch 11y ago
Merkel buying new shoe laces costs money in the short term. You have just repeated your claims from the original post without clearing up what you mean by stretching public finances and documenting it with numbers. Everybody else is basically saying that the refugees aren't expensive enough to warrant this language on the balance sheet of one of the richer economies in the world.
- chvid 11y ago
  I really was biting my tongue to write this as dry and neutral as possible. I am from Denmark and in many ways we are similar to Germany. But we are different in that we have taken in a relatively small number of refugees (around 25.000 pa. excl. family reunions, population 6 mio.) and yet the subject number 1 in Danish politics is how to handle the strech on public finances it creates. This may be due to two things: 1. Denmark is more generous to refugees and/or integrates them more poorly. 2. Denmark has different politics where it is okay to talk refugees as expenses. (Whether they are or not is another question - my point is that our politicians talk about it in this way.) What I wrote would absolutely not be controversial to say in Denmark but I can see from the downvotes that it is different elsewhere. Which I think underlines my point that this subject really is too touchy to have a good conversation about.
  - creshal 11y ago
    > But we are different in that we have taken in a relatively small number of refugees (around 25.000 pa. excl. family reunions, population 6 mio.) and yet the subject number 1 in Danish politics is how to handle the strech on public finances it creates. How much of that stretch is real, and how much is fear-mongering to influence upcoming elections? Do you have hard numbers?