Coalition finances / Joshua Kimmich

Dear Reader,

Today’s newsletter is being written from my sick bed so I will keep it brief. Please keep sharing it with any expats you know.

How to finance the green revolution?

The coalition negotiators have promised to build the next government around massive investments in green technologies and digitization. At the same time they’ve promised not to raise taxes or fiddle with the Schuldenbremse, a clause in the constitution that limits new public debts to 0.35 percent of GDP.

That gives them around €12 billion to play with but not much more. Since industry representatives have said that the transition to renewables will cost €100 billion every year until the end of the decade, there’s quite a large hole that needs filling.

Where will the rest of the money come from?

Green co-leader Robert Habeck is a well known fan of loosening the purse strings. He advocates making use of historically low interest rates in order to borrow money at low costs, what he has referred to as a “unique chance.”

The way he sees things, a rigid insistence on cutting public debt is ensuring that “liberal democratic Europe is going to pot,” as he put it in an interview with the Frankfurter Allgemeine Zeitung this weekend.

The only problem for Habeck is that he needs to make a deal with much more cautious men in FDP leader Christian Lindner and Olaf Scholz of the SPD.

Scholz might be the representative of a party associated with public spending programmes but he is well known for his personal preference for cautious fiscal policy. 

Lindner meanwhile likes to see himself as the man to bash some economics 101 into the heads of Greens who think Germany can be run like a village in an Astrid Lindgren novel.

In the end, events may overtake more theoretical discussions on public debt ratios.

If inflation continues to rise - driven by bottlenecks in global production chains and rising commodity prices - the European Central Bank may see the need to push interest rates back up, which would mean Habeck has missed his one-off chance to rip up the Maastricht rules.

Going off script

When I grew up footballers were, by general consensus, people whose opinions were sought when it came to matters of placing a piece of leather between a 24ft-by-8ft metal frame.

These days though, they are expected to have opinions on, and solutions to, all types of societal ills, from inner-city poverty to racism and homophobia. Almost as important as their function as entertainers is their political function as ambassadors for progressive values.

That’s quite the responsibility. It means that they don’t just have to fear bad headlines if they have a bad Saturday afternoon, but also if they say something that veers wildly off script.

This weekend, Bayern Munich star Joshua Kimmich told a TV reporter that he hadn’t been vaccinated against Covid-19 because he would rather wait for the result of studies into long-term side effects.

A day later every newspaper in the country was running front-page headlines debunking Kimmich’s statement, in apparent terror that he might have single handedly brought the vaccine roll-out to a halt.

Even the head of the German vaccine authority got involved. Thomas Mertens, chairman of the Stiko, assured people that any side effects would already be apparent within days or weeks of the vaccination and thus fear of long-term damage was baseless.

It has been pointed out that Kimmich fronted a fundraising campaign called We Kick Corona in which he said that “because health comes above everything else, we need to show solidarity however we can. Everyone can help.” At the same time, he isn’t prepared to be vaccinated as an act of solidarity himself.

If even footballers are capable of such rank hypocrisy, does decent society have anyone left to turn to?

Last week’s articles:

On the fall of Germany’s tabloid supremo

Why German economists fear a European debt trap