The German coalition negotiators from the SPD, FDP and the Greens have a big plan and a small problem; And regardless of how the whole thing ends, both will have considerable consequences not only for Germany, but also for Austria and all other EU states in the gravitational field of the German giant.
The big plan: the would-be coalitionaries want to spend zillions of euros in the next government period to bring the country’s infrastructure up to date, i.e. roads and rails, tunnels and ports, bridges and school buildings and so on. And in addition, the conversion of the Berlin Republic into a kind of grassland from the North Sea to the Alps is to be completed by another zillion, plus, because this is particularly chic today, digitization is to be pushed further. Fiber optic cables for every dump and such.
The small problem with this: the unbelievably large amount of money that all of this will cost is not there. On the contrary: after the economic devastation of the corona, the German state is in debt like a player after a streak of bad luck and should actually start reducing its debts instead of throwing money around again.
In addition, and this is particularly tough: the potential coalition parties have agreed not to introduce any new taxes, not to increase existing ones, not to take on new debts and not to solve the debt brake in the constitution, which successfully protects the German state from over-indebtedness. You don’t have to be an economics professor to come to the conclusion: somehow that can’t work out if you want to cope with huge expenses at the same time.
But this logic that what doesn’t work applies to us ordinary mortals. The coalition forces, on the other hand, are forging a plan that provides for the abolition of economic gravity, so to speak. Accordingly, the state should not take on the insane new debts, but some straw man or a straw company, for which the state is of course liable, but which still does not have the debts on its own books. A state-affiliated or even state-owned bank is suitable for this; It is also conceivable that an EU financial vehicle assumes this debt on a pro form basis. That would have the charm that all other EU states could also benefit from the windy bypass construction.
Although this is as serious as the business conduct of a shell player, it has the advantage that hardly any voter understands what is happening and will only marvel at the blessings of this flood of money. It couldn’t be nicer for a politician; and that’s why I would bet that the SPD, Greens and FDP will snap something in that direction.
The problem with this form of vodoo economy: you can just as little undermine the laws of economy as those of physics; and also painted green and debts hidden under the bed remain debts; And the more of it the eurozone countries take up in whatever sham – at some point it is payday, be it in the form of tough austerity measures, massive tax increases or exploding inflation or everything together, there is no getting around it. The case of Greece only showed what that looks like a few years ago – and Greece had an EU that helped with tens of billions; the EU, on the other hand, will not have an EU to help.
So it is quite possible that the German coalition negotiators will soon present us with a package that will be teeming with terms such as future investments, green deals, digital billions – and all without new taxes and debts. However, you, dear readers, know: in truth, we are mainly dealing with imposture and a business at the expense of third parties – the children who will one day have to straighten out these debts.
