Germany becomes Pay-Master of Europe with Mega-Debt-Deal. Europe and Finance Industry applauding.

Who will profit from the Mega-Debt-Deal decided by Germany today?
The huge money flush to come – all debt financed – will be directed into 1. Infrastructure projects, 2. military spending, 3. Green climate change projects.

The money to be spent will make some people rich, many poorer. Weapons producers have seen enormous increase in their share prices – a big win for a specialized industry. Infrastructure investments will flush money into construction companies – but the newly built assets are generally non-productive and a minimum need for a functioning society and economy (a must be). Green climate change projects are generally destructive for other wealth and assets and are non-productive. Green climate change projects will bring nothing for economy and society and make only a small specialized industry a little richer – and their impact on climate change cannot be quantified or proven. Money sent to Ukraine will have no direct social or economic effect for Germany – except an increased feeling of safety and morality.
Military and infrastructure investments will mainly benefit German and also European providers. Industries in the rest of Europe will receive hundreds of billions from Germany, for the delivery of goods and services, for military equipment, for technology and many other elements that Germany will need to purchase from EU countries as well as from the US and China. Germany will also need additional energy and natural resources products, such as oil and gas or metals, for the chemical and transformational industries – such purchases of additional energy and natural resources will benefit energy and natural resources exporters like Russia.

As result, the huge amounts to be spent will create only little wealth, and only transitional extra-income for some specialized industries. Where will the money come from? Of course, the Government will issue debt instruments which shall be offered to the markets. Such instruments will need attractive conditions – so that investors will divert their investments from less attractive investment possibilities into the new German instruments. These debt instruments will be suitable to be discounted at the European Central Bank, i.e. to be exchanged against cash, if decided by the investor – which means printing extra-money.

The immediate result may be that investors may divert cashflows to German debt, at the expense of other countries. The UK has already experienced more difficulties to raise debts – as other countries may as well. Interest rates will rise globally, of course, mainly in Germany. The immediate reaction of current German bondholders on the German interest rise is divesting and directing their cash to other investments. German bonds have been sold increasingly, foreign investors are leaving old bonds – with a push against the EURO. While the new, better German bond conditions will attract new foreign investors, the EURO will rise and get stronger, equalizing or outperforming the EURO’s decline. The Raising EURO will be positive for European importers (resources, energy), but negative for European exporters (industrial goods).

But who pays the bonanza? The German Government has no answer on how and by whom the mega-debt will be reimbursed at the end. As well, the mega-debt will demand mega-interest payments: this will increase the annual budget enormously. As consequence, it is the tax payer who will be held responsible – and this for generations. It is, therefore, a generational redistribution project which has no planned solution.