Sunday, January 18, 2015

....and a lot of BS - since the "FED" pumped trillions of dollars in the Bundesbank in the last 3 years

Germany has balanced its budget for the first time in more than 40 years, and pressed eurozone partners to follow its austere example rather than try to stimulate their stagnant economies with borrowing or central bank money-printing.   Berlin had aimed to achieve the so-called "schwarze Null" (zero deficit) this year, but strong tax revenues and lower debt service costs due to rock-bottom interest rates helped it meet the goal a year early in 2014, the finance ministry said.   It is the first time Germany has balanced its budget since 1969 .  Chancellor Angela Merkel's government has rebuffed calls from EU partners, led by France and Italy, and international organizations such as the IMF and the OECD to spend some of the fiscal windfall on growth-promoting public investment.   Germany's announcement came nine days before the European Central Bank (ECB) may decide to launch large-scale purchases of eurozone government bonds in an effort to boost growth and avert deflation in the 19-nation currency area. The European Commission set out detailed rules on Tuesday for a planned €315bn investment programme over the next three years, involving no new public money in deference to German objections.  Public investment and structural reforms could win limited leeway for countries breaking EU budget rules, it said. That reduces the likelihood of tough penalties on France or Italy, the eurozone's second and third largest economies, when their fiscal plans are reviewed again in March.   Countries that put capital into a proposed European Fund for Strategic Investment would not be penalized if it tips them over the EU's deficit limit of 3pc of gross domestic product. However, those that already have an deficit in excess of the ceiling would win no indulgence.  The mood of self-congratulation in Berlin over the balanced budget made any easing of fiscal policy seem unlikely, even though the German economy is expected to slow this year. 
Far from using the leeway to invest more in creaking public infrastructure or cut taxes to stimulate weak domestic demand, politicians in Ms Merkel's conservative CDU party said the government should now focus on paying down the country's debt.

No comments: