German Munis Are In Big Trouble

From the article:

“It is just amazing who disconnected government are from the reality of the economy. Everything is geared to move toward the confiscation of wealth not reforming the system. These people are just brain-dead.”


German Municipals In Trouble (Armstrong Economics, July 10, 2014):

Part of our job is monitoring everything everywhere. We are gathering data om whatever moves on a global basis. I have stated numerous times, it is IMPOSSIBLE to forecast a single market in isolation because the wildcard comes from contagions set in motion elsewhere. It is like sunning on the beach and there is a tidal wave coming because of an earthquake you didn’t know happened. Unless you monitor the world, you cannot even forecast the weather for tomorrow. It would all be just dumb-luck and chance.

I have been warning that about 50% of the municipal governments in Germany are on the verge of bankruptcy.

I have warned that about 50% of the German municipalities are on the verge of bankruptcy. The pensions have been unfunded and are absorbing everything. As we saw in Detroit with more than 50% of current revenue going to pensions, taxes either rise, the borrow more, or they are out of business. We are in a giant bull market for taxes increases on every level. This is the real downside of Marxism – they theory that just keeps taking.

The German municipalities currently need more than 100 billion euros to renovate their dilapidated infrastructure. Government has been mismanaged on a grand scale and all politicians can do is think it is the public’s fault for not paying more taxes. They refuse to ever look at how they are running government on every level. It would be nice if there really were smart elite people in charge for only someone without any common-sense would have designed a political system that currently rules the world.

God never promised honest politicians nor did He promise qualified ones. Society votes for people who smile nice and we think that there is an honest politicians in the every corner of the world. The problem is, God made the world round and he has been laughing ever since.

German municipalities face rising debt levels that mimic Greece. They cannot afford the investment to even maintain schools and roads any more. We are headed into an economic abyss beyond contemplation.

This is part of the reason they are looking for bail-ins and even Merkel has determined they cannot allow any referendums fearing the people will vote against the EU.

The Bremen state government has now imposed a spending freeze today. The reason has been the unexpected expenditure and revenue shortfalls in the total amount of 60 million euros. The Hanseatic city must therefore finance until further notice only mandatory tasks.

Politicians cannot see that this system is doomed. They keep looking for everything possible to raise more and more taxes. They only see what they need, not what they are doing in the total destruction of the economy. Around 350 German companies have to pay back discounts on green electricity. Corresponding changes in the German Renewable Energies Act, the European Commission has confirmed. Compared to the rebates granted by a total of 10 billion euros but the repayment of 30 million euros are required.


Meanwhile, German highest Constitutional Court criticized the applicable tax privileges for corporate inheritances. So far heirs get the tax completely canceled if they continue the inherited company. Heirs of private assets, however, have to give a large part of the state. Moving in this direction wiped out small farmers in the USA forcing them to sell land to pay the taxes. When applied to productive business, applying inheritance taxes forces companies to close and reduce employment. It is not the same as just inheriting money or assets. An ongoing business is the economic engine of the economy.

It is just amazing who disconnected government are from the reality of the economy. Everything is geared to move toward the confiscation of wealth not reforming the system. These people are just brain-dead. Unemployment among the youth if over 60%. In American over 60% of students have been defrauded by telling them they need a college education, saddle them with huge debts that are NOT dischargeable even in bankruptcy, and they cannot find employment based upon the education they just paid for. That is fraud. If I sold you a trading program and it didn’t work, isn’t that consumer fraud? Not if you are a school.


3 thoughts on “German Munis Are In Big Trouble”

  1. There is now a large muslim population there. If you cut the welfare they will riot.
    Look at what is happening in Israel now. That is what will be happening in Germany. These “new” people will be a huge problem for these bankrupt places.
    This is actually demographics. The baby boomers are dropping out and retiring by the millions. Without a police force its going to be bad.

  2. Germany is considered the strong economic power of the Eurozone. The Germans did not realize how many of the weaker nations were practicing Enron Accounting, and their first mistake was to believe their numbers.
    When these nations, such as Greece, came to them for help, they looked at the numbers, and believed they could help Greece, plus strengthen their position in the Eurozone. Their idea in loaning money to these weaker countries was to gain financial power, and become the leader of the Eurozone.
    Never has a nation made a worse mistake……Enron accounting is the most deceptive on the planet. Even worse, much of the world now practices it.
    Germany’s debt level skyrocketed as they loaned money to these bottomless pits until it was 2-3X their GDP. At this point, Germany pulled in their horns, and stopped lending on such grand scales, but it was too late. They loaned to the wrong people, and instead of becoming the strong man of the Eurozone, it now sounds as if they have become part of the problem.
    Had the other nations been honest, the Eurozone would have dropped them, and been much better off. Instead, all the Euro nations are now in trouble. If Germany is in trouble, they all are in bad shape.
    The Germans have been the strong point. Without their being a strong player, the entire Eurozone is in jeopardy. Should the Euro collapse, so will go the US dollar. It will be a big mess for everyone.

  3. Looks like Dad & Marilyn have hit it bang on the head.

    Nothing more to add except, move out of the cities while you can.


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