Massive Change In Germany & Europe !
Huge Implications. 10 points.
1. For 15 years or more, Germany (the lynchpin for Europe) has seen poor growth (eg, 0 growth in 2024), been tightfisted in spending, followed America's lead in foreign policy (for much much longer), antagonized China, spent very little on it's own defense & so and so forth..
2. Last night, it looked like Germany took the first steps to break out of this stupor ! Germany green lighted massive defense & infrastructure spending.
3. Basically, Germany is heading not only for a massive U-turn on fiscal policy but also for a very strong response to the new defence & security challenges
4. Events @ the Munich Security Conference & in the Trump White House have clearly had a huge impact on the thinking of German leader Friedrich Merz, who until recently was still adamant that all challenges could be met within the existing debt limits !
5. Remember, what was agreed last night exceeds the reforms that the SPD had been calling for and by quite a margin
6. Highly symbolic that German leader Merz is using Draghi's "whatever it takes" phrase. Ten years ago, the German Constitutional Court was ruling against Dragh's phrase. Today, Merz not only used that phrase but did so with purpose.
7. Big question is if the the can-do attitude shown last night lifts sentiment & pulls in private investment, even before fiscal policy gets going
8. Further reforms by end-2025 - Plan is to reform the federal part of the debt limit/brake so that it does not overly restrict investments
9. A special session of the German Parliament is proposed for next week. Additional parliamentary procedures etc will be required before a final vote
10. These changes need to be watched carefully ! But they do feel very material. If all this clears, it will mean significant changes in foreign policy attitudes, defense alliances & should help European equities do very well as well !
Huge Implications. 10 points.
1. For 15 years or more, Germany (the lynchpin for Europe) has seen poor growth (eg, 0 growth in 2024), been tightfisted in spending, followed America's lead in foreign policy (for much much longer), antagonized China, spent very little on it's own defense & so and so forth..
2. Last night, it looked like Germany took the first steps to break out of this stupor ! Germany green lighted massive defense & infrastructure spending.
3. Basically, Germany is heading not only for a massive U-turn on fiscal policy but also for a very strong response to the new defence & security challenges
4. Events @ the Munich Security Conference & in the Trump White House have clearly had a huge impact on the thinking of German leader Friedrich Merz, who until recently was still adamant that all challenges could be met within the existing debt limits !
5. Remember, what was agreed last night exceeds the reforms that the SPD had been calling for and by quite a margin
6. Highly symbolic that German leader Merz is using Draghi's "whatever it takes" phrase. Ten years ago, the German Constitutional Court was ruling against Dragh's phrase. Today, Merz not only used that phrase but did so with purpose.
7. Big question is if the the can-do attitude shown last night lifts sentiment & pulls in private investment, even before fiscal policy gets going
8. Further reforms by end-2025 - Plan is to reform the federal part of the debt limit/brake so that it does not overly restrict investments
9. A special session of the German Parliament is proposed for next week. Additional parliamentary procedures etc will be required before a final vote
10. These changes need to be watched carefully ! But they do feel very material. If all this clears, it will mean significant changes in foreign policy attitudes, defense alliances & should help European equities do very well as well !
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