Germany's Debt-Fueled Illusions: Merz Humiliated, Economy In Freefall

Germany's Debt-Fueled Illusions: Merz Humiliated, Economy In Freefall Submitted by Thomas Kolbe The year 2025 ends for the slap-prone German Chancellor with a resounding smack in Brussels. After the failed raid on Russian assets at Euroclear, Berlin now turns its gaze to the hoped-for comeback of the German economy. Yet here too awaits the next bitter realization for naïve statisticians: wealth cannot be printed with debt. Whether the Chancellor finds any sense of fulfillment-or even joy-in his current job is difficult to discern. Not that Friedrich Merz, with his numerous political sleights of hand, has preserved any claim to professional happiness. And yet curiosity remains: what must the psyche of a man be like, who for nearly eight months has been led by social-democratic buccaneers such as Lars Klingbeil and Bärbel Bas by the nose through the political circus-exposed, humiliated, and repeatedly made ridiculous? March into Command Economy Merz’s grandiose promises of cutting bureaucracy, unleashing the economy in a vitalizing fall of reforms, and his bizarre economic patriotism à la “Made for Germany” evaporate at the slightest breeze of intra-coalition opposition. It reads like a naive comedy: the CDU and SPD camouflage reform policies, only to steer the central plan of transforming society and the economy into a green command economy with a military-industrial complex through increasingly rough seas to a safe harbor. The good old Erich-what would he have thought of what the old “FRG” has become? The ongoing public humiliation of former BlackRock breakfast director Friedrich Merz reached a temporary peak on Friday in Brussels. At the EU summit, he received a resounding slap from the small Visegrád coalition led by Hungarian Prime Minister Viktor Orbán, ultimately preventing the expropriation of Russian assets at Euroclear. For those who understand the significance of Euroclear and even vaguely grasp what it means to damage a pillar of the trust-based international financial market architecture, a sigh of relief was inevitable. What threatened here was nothing less than a reckless kick against a system’s foundation-whether from ignorance, political incompetence, or an almost manic denial of reality regarding the long-lost war in Ukraine. Panic replaces reason, EU-Europe digs deeper into the spiral of debt and recession, whose accelerating spin now lifts once-prosperous cities like Stuttgart and Wolfsburg off their fiscal saddles. In Brussels, Merz and his allies were shown a boundary-unmistakably. Thus, the circle closes on a disagreeable year 2025 for him. And everything suggests the coming year will offer little cause for optimism. Toward the Sunset The German economy alone ensures that 2026 will seamlessly continue the disaster of 2025. An honest economic assessment requires a willingness for an honest inventory. The state’s share of German GDP has long surpassed the magic mark of 50 percent. New borrowing next year-adjusted for the federal government’s accounting tricks-will amount to roughly 5.6 percent. Merz’s relentless fight against the debt brake now forces even Bundesbank economists to a sober assessment. For the coming year, they forecast an official budget deficit of 4.8 percent-a figure indirectly...

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