Germany: Could Fund 45 Iraq Wars

How to bankrupt an economic giant? Here is some advice from Norbert Walter, chief economist of the Deutsche Bank Group.

Washington Times:

A chafing social bind in Germany

Germany currently budgets military expenditures below the percentage of gross domestic product (GDP) required of new members of the North Atlantic Treaty Organization. That and the rising cost of generous social benefits hinders significant projection of German power. ...

Germany's current economic growth of about 11/2 percent yearly is "Barely above the water line, and

nothing to write home about," Norbert Walter, chief economist of the Deutsche Bank Group, told an audience hosted by the American Institute for Contemporary German Studies last week. ...

Low growth is coupled with high debt projections due to Germany's generous social obligations and German labor participation far below that of the United States. The German population is aging and, as elsewhere in Europe, reproduction rates are well below replacement levels. These facts require a number of basic changes, Mr. Walter said. ...

Mr. Walter said the German standard of living is barely better today than 10 years ago, compared with 50 percent improvements in Britain and the United States. ...

In addition to prodigal social benefits, the west German economy has donated about 5 percent of its GDP — "or 1,000 billion euros" — to rehabilitating the economic ruins of former communist east German states after reunification. He noted this investment was fifteenfold the U.S. contribution to the 2003 Iraq war. "Since the German economy is one-third the size of the U.S. economy, you could at that [German] rate fund about 45 Iraq wars." ...

Mr. Walter said there is a pentup demand in Germany to replace consumer durables. "We have never had such an old fleet of automobiles," and he also said refrigerators and other household durables too expensive to repair need replacing.

Mr. Walter said Germany has benefited more than any other older member of the EU except Austria from expansion eastward. He cited the newly admitted states of Eastern Europe as a fertile source for affordable, highly trained workers: "In the current hiring of [EU] positions in Brusssels, if we did not have quotas for the older member states, probably all the new hires would have come from the East, so superior are the qualifications of their applicants." ...

Germany's economic position (with a higher debt rate than countenanced by EU policy) means Germany has been in no position to offer significant support to the U.S. Iraq war, irrespective of the Schroeder government's sentiment.

Germany probably could just about handle an attack by the renowned Austrian army, though I'm not even sure about that...

Comments

[Erik]

Perhaps Germany could withstand the Austrian army, but the Swiss Navy would make short work of them.

-- Erik

[Sandy P.]

You will only hear good things about the German army from me, their support has been stellar w/in the parameters of their mission.

[Joe]

If you read the entire article it really does not deal with the state of the military in Germany but with the economic problems Germany faces. As I have been told this is old news to Germans and they all know this.

[Mathesar]

For some americans it may be a new concept: The germans wount (not longer) rule the world, so we never mind about the strengh of the Bundeswehr.

[Col. Klink]

Mathesar wrote:
For some americans it may be a new concept: The germans wount (not longer) rule the world, so we never mind about the strengh of the Bundeswehr.

Yeah, Americans should be proud that they turned many Germans into notorious pacifists - their fault afterall! *g*

But I agree with Joe that our Army is a joke - how we are already at our limits with only a few thousand troops abroad. Hilarious. (While even the Government acknowledges this by now as a problem, they cite economic problems as reason to postpone - and here the circle turns, as the same Government isn't doing anything reasonable to turn our economy around)

[Ben]

What is necessary to turn the German economy around is for Germans to swallow a bitter pill that no politician wants to serve them: lower taxes, cut benefits drastically to balance the budget, eliminate regulations and taxes that hinder business (e.g., reduce unemployment & workers compensation benefits, eliminate plant closing regulations, curtail environmental regulations, etc.). Germany can sink a lot lower before it hits a crisis point, and I am betting that nothing significant will happen until it does.