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German unemployment rate falls to record low 'despite' budget surpluses

DA60

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'Germany's unemployment rate fell to a record low in May, while the jobless rate across the eurozone fell to 10.2% in April.
The unadjusted rate in Germany declined to 6% from 6.3% in April, the Federal Labour Office said.
That was the lowest level since German reunification in 1990.'


German unemployment rate falls to record low - BBC News


But, this cannot be as they are running fiscal surpluses:

germany-government-budget.png


Germany Government Budget | 1995-2016 | Data | Chart | Calendar | Forecast


Thoughts?
 

RabidAlpaca

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As someone living in Germany I can confirm. We are swimming in jobs, high-quality beer and fly-ass bitches.
 
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joG

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'Germany's unemployment rate fell to a record low in May, while the jobless rate across the eurozone fell to 10.2% in April.
The unadjusted rate in Germany declined to 6% from 6.3% in April, the Federal Labour Office said.
That was the lowest level since German reunification in 1990.'


German unemployment rate falls to record low - BBC News


But, this cannot be as they are running fiscal surpluses:

germany-government-budget.png


Germany Government Budget | 1995-2016 | Data | Chart | Calendar | Forecast


Thoughts?

The numbers could be correct, though, one would have to look at the definitions to be sure of what they mean. It is certainly right that they do not expect a deficit this year but foresee a possible surplus. There was a small surplus in the last two years. This is mainly due to a windfall of cheap money at ca zero percent as a consequence of cash that has left other European countries in search of relative safety. The impact of the flight is a grown volume of debt roles over in the last two years from paper with higher coupons.

All things considered, the unemployment is okay at 6%. After all, the number of immigrants entering unemployment is not negligible. On the other hand, the country is profiting from the insecurity in other EU countries and the improved competitive situation from the long stagnation prior to 2008 is still a factor, though, relative inflation rates for nontradables are such, that the fringe countries of the EU have gained competitiveness and continue to do so as their economic depression continues. As this advantage Germany still has evaporates, competition will become more real. That casts a less happy light on the 6% as it could turn out to be near the cyclical low.
 

Hawkeye10

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Official data for 2015 released by Germany's statistics office, Destatis, on Thursday, showed wages in Europe's largest economy rose 2.5 percent in real or price-adjusted terms last year - the biggest annual increase since 1992, according to a Destatis spokesperson.

Germans enjoy highest real-wage rise in decades | Business | DW.COM | 04.02.2016

Says a lot, but this sure will not help the Germans rep in Europe with so many people not going anywhere economically, and for at least the Greeks in reverse with no shift in sight. What are the Germans doing giving themselves so much money when there are EU bills to pay it will be asked. Increased EU income inequality is not good for the EU.
 
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joG

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Germans enjoy highest real-wage rise in decades | Business | DW.COM | 04.02.2016

Says a lot, but this sure will not help the Germans rep in Europe with so many people not going anywhere economically, and for at least the Greeks in reverse with no shift in sight. What are the Germans doing giving themselves so much money when there are EU bills to pay it will be asked. Increased EU income inequality is not good for the EU.

Actually, that is at the heart of the Euro problem. The inflation rates of non-tradables differ considerably from country to country and cannot be targeted very efficiently by fiscal policy. That leads to imbalances that tilt out of control from time to time. It took Germany about a decade to recover from the too high prices on non-tradables after entering the Euro. What we are now seeing is the reverse side of the penny.
 

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Just to get it out there explicitly and at the risk of being that guy, public sector budget surpluses do generally mean money is leaving the private sector.

That's what I figured the apostrophes on 'despite' were for, but DA60 having gone MMT was a little too far-fetched to leave it unsaid.
 

JohnfrmClevelan

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'Germany's unemployment rate fell to a record low in May, while the jobless rate across the eurozone fell to 10.2% in April.
The unadjusted rate in Germany declined to 6% from 6.3% in April, the Federal Labour Office said.
That was the lowest level since German reunification in 1990.'


German unemployment rate falls to record low - BBC News


But, this cannot be as they are running fiscal surpluses:

germany-government-budget.png


Germany Government Budget | 1995-2016 | Data | Chart | Calendar | Forecast


Thoughts?

Sectoral balances means that (net govt. spending) + (net private domestic sector) + (net foreign sector) = 0. It's an accounting identity, so there should be no argument about that much.

Meaning, if the government runs a balanced budget ($0), then any money coming in from net exports can be saved by the private sector. This is Germany's case. in our case, if we ran a balanced budget, any money leaving through net imports would have to come out of private sector savings, or increased indebtedness.

The other wrinkle with Germany is that they are one of many countries that use the euro, so all they have to do is run a trade surplus within the Eurozone, and extra euros keep on pouring in - no conversion necessary. It's like California sucking dollars out of Mississippi.

You will also note that accounting holds true for the Eurozone as well - Germany's gain of euros is France's loss of euros.
 

Hawkeye10

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Actually, that is at the heart of the Euro problem. The inflation rates of non-tradables differ considerably from country to country and cannot be targeted very efficiently by fiscal policy. That leads to imbalances that tilt out of control from time to time. It took Germany about a decade to recover from the too high prices on non-tradables after entering the Euro. What we are now seeing is the reverse side of the penny.

Thanks, I try to have a clue. What I find interesting is the German elite are telling the people " see we were right, this is your reward for following the plan all these years, for giving some stuff up and changing, GOOOO GERMANY!" but what we are watching is the EU come apart, the glue is getting so very weak.
 
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joG

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Thanks, I try to have a clue. What I find interesting is the German elite are telling the people " see we were right, this is your reward for following the plan all these years, for giving some stuff up and changing, GOOOO GERMANY!" but what we are watching is the EU come apart, the glue is getting so very weak.

The EU elite is good at the game of deception, smoke and mirrors. And those guys have been know to lie.
 
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Hawkeye10

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The EU elite is good at the game of deception, smoke and mirrors. And they have been know to lie.

Well that and rigging 100% votes so that they can tell the little people that there is no doubt about the wisdom of their plans, so little people shut up and do as you are told, hollering from the peanut gallery from the ignorant is not helpful.
 

joG

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Well that and rigging 100% votes so that they can tell the little people that there is no doubt about the wisdom of their plans, so little people shut up and do as you are told, hollering from the peanut gallery from the ignorant is not helpful.

I am pretty sure that votes are mostly not rigged in the EU, though, the Austrian one recently might have been. But you are right that the manipulation is rather thorough and works well. That is why they are so upset that Poland should make medial dependence on government wishes so obvious. The old EU members have spent much effort and money to obfuscate the fact of the level of manipulation and hate the Poles for being honest.
 

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I am pretty sure that votes are mostly not rigged in the EU, though, the Austrian one recently might have been. But you are right that the manipulation is rather thorough and works well. That is why they are so upset that Poland should make medial dependence on government wishes so obvious. The old EU members have spent much effort and money to obfuscate the fact of the level of manipulation and hate the Poles for being honest.

Oh please, it has long been SOP that no vote will be taken till it can be assured that the vote will be 100% consensus. This has broken down some of late, but the desire is still there. Never let the peasants see that the nobility dont agree.

In recent years, media reports about how the EU is trying to tackle the financial crisis have often given the impression that EU policy is dictated by a few large member states. This picture is quite a misrepresentation of how the EU actually works. When it comes to the adoption of new laws, the Commission and especially the European Parliament play a significant role in the decision-making process; and decision-making amongst government representatives in the Council is much more equitable than often suggested. In fact, one of the major puzzles about Council decision-making is the high rate of consensual decisions even in areas where the formal rules allow for the adoption of law by a qualified majority of member states. Every year, about 75 to 85 per cent of the Council’s legislative decisions are made without negative votes or abstentions.
EUROPP ? Decisions made by consensus in the Council of the European Union emerge from the coalition-building behaviour of individual governments.
 

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so you mean that the theory that the government has to print trillions of dollars and spend it is not as great as we thought?
that by promoting strong business growth in developing job sectors and promoting strong job demand that wages
and pay rise thereby increasing government revenue?

wow who would have thought here I was almost fooled into thinking that it was government that created jobs
and they had to spend trillions of dollars to do it.
 

JohnfrmClevelan

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so you mean that the theory that the government has to print trillions of dollars and spend it is not as great as we thought?
that by promoting strong business growth in developing job sectors and promoting strong job demand that wages
and pay rise thereby increasing government revenue?

wow who would have thought here I was almost fooled into thinking that it was government that created jobs
and they had to spend trillions of dollars to do it.

You first need to understand some basics about growth and how money is created before you can figure out how to manage an economy. You apparently think that dollars spring out of nowhere when there is a simple transaction.
 

ludin

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You first need to understand some basics about growth and how money is created before you can figure out how to manage an economy. You apparently think that dollars spring out of nowhere when there is a simple transaction.

Please you are in no position to lecture anyone on anything in this subject.
nor are in a position to tell anyone else what they are or are not arguing.

I know plenty about growth. I know how money is created. unlike you which you have proven that you have a very sketchy knowledge and think you know a lot.
prove where I have said that money springs out of no where.
you can't because I have never said that. this is why you are dishonest.
 

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Please you are in no position to lecture anyone on anything in this subject.
nor are in a position to tell anyone else what they are or are not arguing.

I know plenty about growth. I know how money is created. unlike you which you have proven that you have a very sketchy knowledge and think you know a lot.
prove where I have said that money springs out of no where.
you can't because I have never said that. this is why you are dishonest.

no it doesn't. it grows on economic demand which can be had with little to no deficit spending. deficit spending should only be used when there is an emergency need in the economy. even then it should go to people and businesses in the form of tax credits.

It took me about two minutes to find that.

Here's another beauty:

You really don't know how investments work do you? that doesn't surprise me.
I give someone 10k. that person takes that 10k and generates 20k with it. they pay me back 12k my investment plus interest.
they made 8k.
 

ludin

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It took me about two minutes to find that.

yep you are dishonest.

this is what you said.

You apparently think that dollars spring out of nowhere when there is a simple transaction.

I said please show me where I have ever said that. you fail.
so either please post to me where I said this or admit your failure.
 

JohnfrmClevelan

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yep you are dishonest.

this is what you said.



I said please show me where I have ever said that. you fail.
so either please post to me where I said this or admit your failure.

You really don't know how investments work do you? that doesn't surprise me.
I give someone 10k. that person takes that 10k and generates 20k with it. they pay me back 12k my investment plus interest.
they made 8k.

No credit, no outside injection of money - no new money.
 

DA60

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The numbers could be correct, though, one would have to look at the definitions to be sure of what they mean. It is certainly right that they do not expect a deficit this year but foresee a possible surplus. There was a small surplus in the last two years. This is mainly due to a windfall of cheap money at ca zero percent as a consequence of cash that has left other European countries in search of relative safety. The impact of the flight is a grown volume of debt roles over in the last two years from paper with higher coupons.

All things considered, the unemployment is okay at 6%. After all, the number of immigrants entering unemployment is not negligible. On the other hand, the country is profiting from the insecurity in other EU countries and the improved competitive situation from the long stagnation prior to 2008 is still a factor, though, relative inflation rates for nontradables are such, that the fringe countries of the EU have gained competitiveness and continue to do so as their economic depression continues. As this advantage Germany still has evaporates, competition will become more real. That casts a less happy light on the 6% as it could turn out to be near the cyclical low.

Actually, their seasonally adjusted unemployment rate is only 4.2% (remember, the U.S. official unemployment rate isxseasonally adjusted as well). I am not sure why the OP article uses another rate. Nor am I familiar with German employment statistical calculation techniques.

Germany Unemployment Rate | 1950-2016 | Data | Chart | Calendar | Forecast


The conclusion from this is clear...the idea that a country must go massively into debt to get low unemployment is totally false.


And before JohnfrmClevelan chimes in and says: 'they have a trade surplus...that is where they get the money.'

Check America in the late '90's. They ran fiscal surpluses AND a trade deficit AND had low unemployment (lower then now).

Again...the notion that you must run a massive fiscal deficit to have solid employment is totally wrong and proven by both today and history.
 
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JohnfrmClevelan

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Actually, their seasonally adjusted unemployment rate is only 4.2% (remember, the U.S. official unemployment rate isxseasonally adjusted as well). I am not sure why the OP article uses another rate. Nor am I familiar with German employment statistical calculation techniques.

Germany Unemployment Rate | 1950-2016 | Data | Chart | Calendar | Forecast


The conclusion from this is clear...the idea that a country must go massively into debt to get low unemployment is totally false.


And before JohnfrmClevelan chimes in and says: 'they have a trade surplus...that is where they get the money.'

Check America in the late '90's. They ran fiscal surpluses AND a trade deficit AND had low unemployment (lower then now).

Again...the notion that you must run a massive fiscal deficit to have solid employment is totally wrong and proven by both today and history.

...and we ran up massive personal debt during that period, too (which is unusual). And it led us into the 2001 recession.

The money has to come from somewhere. And the worst possible scenario is that it comes from increased consumer debt.

deficitsurplus.jpg
 

DA60

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...and we ran up massive personal debt during that period, too (which is unusual). And it led us into the 2001 recession.

The money has to come from somewhere. And the worst possible scenario is that it comes from increased consumer debt.

View attachment 67202255

That is not true.

Look at the charts below. The surplus ran from 1998 to 2001.

During that time, household debt to GDP was relatively stable.

It was only after 2001 that household debt rapidly accelerated.


united-states-households-debt-to-gdp.png


United States Households Debt To Gdp | 1952-2016 | Data | Chart | Calendar

united-states-government-budget.png


United States Government Budget | 1948-2016 | Data | Chart | Calendar


Of course, you will now probably invent/create yet ANOTHER excuse why your theories on this must be correct.

I got news for you man...a TON of 'new' money in America comes from fractional reserve banking.


(German video - same principle exactly)



It is becoming painfully obvious that no matter how much evidence is piled up against your theory - you just dig in your heels deeper.

No offense, but you seem totally incapable of an open minded discussion on this subject.


Good day.
 
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austrianecon

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Just to get it out there explicitly and at the risk of being that guy, public sector budget surpluses do generally mean money is leaving the private sector.

That's what I figured the apostrophes on 'despite' were for, but DA60 having gone MMT was a little too far-fetched to leave it unsaid.

No, in this case it's not. Germany is borrowing at negative rates which has driven down their interest rate payments as % of revenue and expense down in the high 3% low 4% range. And they aren't even running surplus at the end of the day as that excess revenue is being used to fund the "refugee" crisis.. so they are net 0.
 

austrianecon

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...and we ran up massive personal debt during that period, too (which is unusual). And it led us into the 2001 recession.

The money has to come from somewhere. And the worst possible scenario is that it comes from increased consumer debt.

View attachment 67202255

And we ran up MASSIVE personal debt during Bush spending years. So you proved nothing.
 

Absentglare

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Actually, their seasonally adjusted unemployment rate is only 4.2% (remember, the U.S. official unemployment rate isxseasonally adjusted as well). I am not sure why the OP article uses another rate. Nor am I familiar with German employment statistical calculation techniques.

Germany Unemployment Rate | 1950-2016 | Data | Chart | Calendar | Forecast


The conclusion from this is clear...the idea that a country must go massively into debt to get low unemployment is totally false.


And before JohnfrmClevelan chimes in and says: 'they have a trade surplus...that is where they get the money.'

Check America in the late '90's. They ran fiscal surpluses AND a trade deficit AND had low unemployment (lower then now).

Again...the notion that you must run a massive fiscal deficit to have solid employment is totally wrong and proven by both today and history.

It would be erroneous to argue that it's impossible to decrease unemployment without running public debts. There are three sectors, the public sector is only one. In the private sector, borrowing or spending out of savings can provide unsustainable growth. In the trade sector, net exports bring cash into the domestic private sector.

It would be equally erroneous to argue that the United States, today, could run a public budget surplus and still have a sustainably growing economy. It's almost impossible by the numbers. Money is hemorrhaging out of our country. The private sector could borrow or spend out of savings in the short term, but that potential is limited by both savings and future income.

If the government started pulling money out of the economy, which is what a budget surplus is: taxation greater than spending, it would reduce private sector growth directly, by definition. I don't see how it can be helpful in our situation. I don't have a problem with that policy under a different context, but i am confident that it would be an error to switch over in our current environment.
 
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