3 ms·

The auto industry has a huge amount of influence in Germany. Consumers are probably less bothered - all subsidy programs have an end, and people know this. Howe

The auto industry has a huge amount of influence in Germany. Consumers are probably less bothered - all subsidy programs have an end, and people know this. However, the auto industry claiming "woe is us, the economy will crash, because we are so important"? That's the backlash. Germany has a deficit problem. They are expecting to run a deficit of 4.25% this year, when 3% is the upper limit if there is no emergency. This is partly because the courts have prohibited them from basically stealing 60 billion euros (unneeded emergency Covid funding - no, you can't just add it to the regular budget). It's good to see them tightening their belt. Long-term, one can dream that they might streamline their bureaucracy. p.s. Since there are lots of USAians here: The USA is running the highest deficits of any developed country (including infamous Japan). See the latest IMF Fiscal Monitor, page 50 (https://www.imf.org/-/media/Files/Publications/fiscal-monitor/2023/October/English/text.ashx https://www.imf.org/-/media/Files/Publications/fiscal-monito...). Y'all might want to plug that leak...

generic92034 3y ago
> Since there are lots of USAians here: The USA is running the highest deficits of any developed country (including infamous Japan). See the latest IMF Fiscal Monitor, page 50 (https://www.imf.org/-/media/Files/Publications/fiscal-monito https://www.imf.org/-/media/Files/Publications/fiscal-monito...). Y'all might want to plug that leak... And while the USA is attracting a huge amount of investment with their IRA, Germany is losing parts of their industry (chemical industry and other high energy industries investing no longer in Germany) and is also jeopardizing their efforts to attract (for example) chip makers. I am not so sure your analysis is covering all the relevant points.
- dangus 3y ago
  Two countries on the top of the geopolitical power rankings have the most debt, and that seems expected and normal to me. Your ability to take on debt reflects other people’s willingness to lend to you, as well as your ability to turn today’s money into a larger amount of tomorrow’s money. Which governments are more reliable borrowers than the US or Japan? Is there a safer currency than US Dollars more likely to maintain its value that you’d rather be paid back in?
the-dude 3y ago
Just to add : the 3% limit comes from the Euro ( the currency ) agreement.
- ricw 3y ago
  That rule isn’t being enforced. The rule in question is a domestic German deficit limit that requires governments to only spend more during emergencies or recessions, which ironically Germany has just officially entered.
  - hnbad 3y ago
    The requirement also says nothing about not being allowed to raise taxes or reactivate the wealth tax so the problem isn't really that they need to "reduce the budget" just that they're not allowed to add debt and the tiniest coalition partner is threatening to jump ship if they raise taxes or cut subsidies to that party's donors (especially fossil, car manufacturers and air travel).
adamsb6 3y ago
One perspective I found illuminating recently: US debt in practical terms is financed by creditors showing up for treasury auctions. The biggest two holders of our treasury bills, Japan and China, are scaling down how much they’re willing to purchase. If the world appetite for these instruments dries up we’re in serious trouble, either we default or we print money and inflation takes off again. At the same time there are Thucydides trap advocates in DC that are bent on ensuring we remain the greatest great power, and are antagonizing China in an effort to keep America as the hegemon. China could just decide not to buy any more debt, or even worse, sell the debt it has and make the market for US debt even more unfavorable for the US. Economic forces are incentivizing cooperation but political forces are rejecting it.
- elzbardico 3y ago
  Political Forces: a.k.a., The Neocon Cabal and the revolving door of the Military Industrial Complex.
- borissk 3y ago
  The situation with the US debt is serious, but the way you present it - as just a matter of China decision to collapse US is not correct. There are very good reasons the vast majority of the world countries, companies and rich people invests in US government debt. China, Japan and the other investors will be hard pressed to find an alternative. Cooperation with a country like China is very hard and often impossible. The second they smell weakness in the West they'll start pushing smaller countries around, building military bases across the world, potentially invade Taiwan, etc.
  - mensetmanusman 3y ago
    Yeah, US is long strong. Perfect geography, energy and food independence, lots of space, high tech, reverse brain drain...
- rat87 3y ago
  Japan (an ally) and China may own most of America's foreign debt but the vast majority of US debt is owed by the US. And if China sells some of that debt other countries are more then happy to buy it. https://www.reuters.com/markets/us/foreign-holdings-us-treasuries-august-hit-highest-since-december-2021-data-2023-10-18/ https://www.reuters.com/markets/us/foreign-holdings-us-treas... The US would prefer to have a better relationship with China but Chinese threats to invade independent country of Taiwan make it very difficult
Log_out_ 3y ago
Car industry also tried to sabotage the 50€ bus ticket
thecodedmessage 3y ago
I am in favor of deficit spending. EU countries should be allowed to do more of it. I simply don’t believe that belt-tightening is “good,” both in general and especially as fighting climate is an important cause.

generic92034 3y ago

> Since there are lots of USAians here: The USA is running the highest deficits of any developed country (including infamous Japan). See the latest IMF Fiscal Monitor, page 50 (https://www.imf.org/-/media/Files/Publications/fiscal-monito https://www.imf.org/-/media/Files/Publications/fiscal-monito...). Y'all might want to plug that leak... And while the USA is attracting a huge amount of investment with their IRA, Germany is losing parts of their industry (chemical industry and other high energy industries investing no longer in Germany) and is also jeopardizing their efforts to attract (for example) chip makers. I am not so sure your analysis is covering all the relevant points.

dangus 3y ago
Two countries on the top of the geopolitical power rankings have the most debt, and that seems expected and normal to me. Your ability to take on debt reflects other people’s willingness to lend to you, as well as your ability to turn today’s money into a larger amount of tomorrow’s money. Which governments are more reliable borrowers than the US or Japan? Is there a safer currency than US Dollars more likely to maintain its value that you’d rather be paid back in?

the-dude 3y ago

Just to add : the 3% limit comes from the Euro ( the currency ) agreement.

ricw 3y ago
That rule isn’t being enforced. The rule in question is a domestic German deficit limit that requires governments to only spend more during emergencies or recessions, which ironically Germany has just officially entered.
- hnbad 3y ago
  The requirement also says nothing about not being allowed to raise taxes or reactivate the wealth tax so the problem isn't really that they need to "reduce the budget" just that they're not allowed to add debt and the tiniest coalition partner is threatening to jump ship if they raise taxes or cut subsidies to that party's donors (especially fossil, car manufacturers and air travel).

adamsb6 3y ago

One perspective I found illuminating recently: US debt in practical terms is financed by creditors showing up for treasury auctions. The biggest two holders of our treasury bills, Japan and China, are scaling down how much they’re willing to purchase. If the world appetite for these instruments dries up we’re in serious trouble, either we default or we print money and inflation takes off again. At the same time there are Thucydides trap advocates in DC that are bent on ensuring we remain the greatest great power, and are antagonizing China in an effort to keep America as the hegemon. China could just decide not to buy any more debt, or even worse, sell the debt it has and make the market for US debt even more unfavorable for the US. Economic forces are incentivizing cooperation but political forces are rejecting it.

elzbardico 3y ago
Political Forces: a.k.a., The Neocon Cabal and the revolving door of the Military Industrial Complex.
borissk 3y ago
The situation with the US debt is serious, but the way you present it - as just a matter of China decision to collapse US is not correct. There are very good reasons the vast majority of the world countries, companies and rich people invests in US government debt. China, Japan and the other investors will be hard pressed to find an alternative. Cooperation with a country like China is very hard and often impossible. The second they smell weakness in the West they'll start pushing smaller countries around, building military bases across the world, potentially invade Taiwan, etc.
- mensetmanusman 3y ago
  Yeah, US is long strong. Perfect geography, energy and food independence, lots of space, high tech, reverse brain drain...
rat87 3y ago
Japan (an ally) and China may own most of America's foreign debt but the vast majority of US debt is owed by the US. And if China sells some of that debt other countries are more then happy to buy it. https://www.reuters.com/markets/us/foreign-holdings-us-treasuries-august-hit-highest-since-december-2021-data-2023-10-18/ https://www.reuters.com/markets/us/foreign-holdings-us-treas... The US would prefer to have a better relationship with China but Chinese threats to invade independent country of Taiwan make it very difficult

Log_out_ 3y ago

Car industry also tried to sabotage the 50€ bus ticket

thecodedmessage 3y ago

I am in favor of deficit spending. EU countries should be allowed to do more of it. I simply don’t believe that belt-tightening is “good,” both in general and especially as fighting climate is an important cause.