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Fast Eddy's avatar

A Closer Look At Germany's Death Spiral

Subscriber Bill G responded to yesterday’s post on Germany’s financial/cultural death spiral by asking:

“And when did debt to GDP cease to be a good measure of economic health? https://countryeconomy.com/countries/compare/germany/usa?sc=XE02”

His point is that if Germany’s government debt is only 65% of GDP, that country is — by definition— in way better shape than the US (debt 120% of GDP).

This is a reasonable question with an interesting answer. So here goes:

Vendor Financing

In the business world, there’s a semi-sleazy practice in which a company lends money to its customers who then use that money to buy the company’s products. This boosts sales and profits, making company managers seem worthy of big year-end bonuses.

Assuming the debtor/customers can pay off their loans, this practice can continue, unbeknownst to outsiders, for a long time. But if customers start defaulting, the “vendor financing” scheme unravels.

Germany has been running the government version of this scam.

With the introduction of the euro as a common currency in 1999, it became clear that eurozone members had wildly differing financial profiles. Greece and Italy, for instance, were bankruptcy candidates who, in a rational world, would have to pay way up to borrow money. But high interest rates would render their debt prohibitively expensive, forcing them out of the eurozone.

So the currency union cooked up the following scheme: The European Central Bank (ECB) would buy non-German government bonds at prices that equated to extremely low interest rates. And Germany would guarantee the solvency of the ECB.

For long stretches, most eurozone countries were able to borrow at lower rates than the US government had to pay, since their bonds were de facto German (i.e., “investment-grade”) paper.

Now here’s where “vendor financing” comes in. Italy, Greece, Spain, et al used some of the money they borrowed to buy German-manufactured goods. As a result, Germany’s economy grew, its trade balance was positive, and its government deficits were modest (when they weren’t actual surpluses).

It’s easy to view the resulting chart as a picture of a financially sound entity.

https://rubino.substack.com/p/a-closer-look-at-germanys-death-spiral

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Dee's avatar

How long does it take to test a vaccine? Well after they do their best to get people sick, I would say zero time to minimum three months. They plan the death shots at the same time they plan how to get people sick and instill fear in them. So it doesn't take long at all. LOL

I was talking to a stranger on a recent trip. I timidly brought up the death shot issue as you never really know where people stand on that issue. He informs me he told all his children not to take the shots and they didn't and he was very happy about that. His reason was that they have not found a cure for cancer or HIV but they found a cure for covid in three months. Something wasn't right about that. He also said that his healthy 21 year old brother had to take the shot for his job. He was upset about that of course. Of course he told his brother not to. After taking one shot to keep his job, when his brother had sex with his girlfriend, a bunch of blood clots came out. His brother was horrified and took pictures of it and sent it to him and he said he never seen anything like that in his life. His brother believes this was from the shot and agreed not to take anymore. His brother went to the doctor and the doctors were baffled. Couldn't figure out why a young healthy man would have such blood clots after sex. He said things did go back to normal eventually with his brother.

And no one goes to jail. And there is no Epstein client list. And Diddy gets a slap on the wrist. And.....

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