Oofa!

The color of government faces in Germany right now is looking more of a Baby Puke Pickle shade vice the brilliant Gaia Green they prefer. It surely seems as if my favorite Bond villains – Chancellor Olaf Scholz and Vice-Chancellor Robert Habeck – can’t catch a Green grifting break on their march to destroying their country. From nothing but bad news about the state of German industry to being the only G-7 country forecast to be in negative economic growth territory, with all their home grown energy struggles in-between, they have to be wondering what hit them.

Shoot. Times are hard and no one is more invested in Green scheming than the Germans. Just last month I told you how the government was handing out billions of euros to German wind manufacturer Siemens Gamesa to keep them afloat during this sudden Green downturn.

…The company announced a lifeline from the German government last week.

…Those losses will doubtless grow, and anyone who thinks Washington won’t give auto makers another bailout should think again. Last week Munich-based Siemens Energy, one of the world’s top wind manufacturers, said the German government is prepared to extend as much as €16 billion (or $16.9 billion) in state guarantees to rescue it.

I hate to break it to the folks at Siemens, but if you haven’t got the check yet? Don’t go looking for it. And if you did, don’t spend a dime of it because it might not be in your account for long, even if it cleared.

There’s been a bit of a funding glitch.

German court deals 60 billion euro budget blow to Scholz government

The German government froze major spending pledges focused on green initiatives and industry support on Wednesday after a constitutional court ruling on unused pandemic emergency funds blew a 60 billion euro ($65 billion) hole in its finances.

The decision threw into disarray budget negotiations taking place this week within Chancellor Olaf Scholz’s three-way ruling coalition, whose popularity has slumped as Europe’s biggest economy teeters close to another recession.

YOICKS

…The 60 billion euros had been earmarked for initiatives such as making buildings more energy efficient and subsidising renewable electricity and chips production, as well as supporting energy-intensive companies.

It’s panic time amongst the three parties who form Scholtz’s coalition, as if they weren’t worried enough already considering the shellacking they’ve been taking in recent regional elections.

What happened here was that those three partners in ruling crime had been living large off of the pandemic era suspension of Germany’s traditional national debt brake (Sound familiar?). They had some €60B in pandemic-era funds laying around they were already spending in their heads for pet projects. Then the opposition Christian Democratic Union (CDU) party noticed there was no pandemic, so why hadn’t the brake come back on?

And they filed a lawsuit. CDU caught a constitutional brake in the decision.

…“This is probably the deepest shock that the Federal Constitutional Court has ever caused in a federal budget,” said Friedrich Merz, the CDU leader. “We have a veritable further crisis in this government.”

…Martin Kaiser, the managing director of Greenpeace Germany, attacked the “traffic light” coalition of Mr Scholz’s SPD, the pro-business FDP and the Greens. He said the coalition, which has been riven by infighting, was paying the price for trying to pay for the decarbonisation of Germany’s economy with financial “sleight of hand”.

Winning it has felt like delivering a well-earned, long overdue come-uppance to the ruling Greens, which will engender it’s own crisis. Can the ruling coalition hang together and hang on? Doubters are legion at this juncture and it’s early yet!

…The Eurasia Group, the political risk analysis and consulting group, said in a note: “This ruling will come as a massive setback to the government. The practice that was now dismissed by the court had allowed the government to forge policy compromises that kept all three parties in Scholz’s coalition satisfied.

“Spending cuts now look unavoidable and Eurasia Group believes that the bulk of the cuts will likely hit climate-related projects.”

“The traffic light was built on a violation of the constitution, The FDP didn’t want any debt, the Greens wanted money for the climate and the Socialists wanted money for “their” citizens’ money,” said Jens Spahn, a CDU MP.

“Solution: 60 billion special debt. But they were obviously unconstitutional. This already fragile coalition now completely lacks any basis.”

Politico EU put it less politely and I’m dying.

The accounting error that could kill Germany’s coalition
Doubts over the survival of Germany’s three-way alliance after €60 billion rebuke.

When Germany’s Social Democrats formed a three-way coalition with the Greens and the conservative Free Democrats in 2021, they sold the unconventional alliance as a progressive ménage à trois that would transform German politics.

Two years later, it looks more like a clusterf**k.

It’s always about massaging your buddies and the monies…until you get caught.

…Spanning the ideological divide between the hawkish FDP — a party that rejects tax increases and repealing the debt brake — and the leftist Greens has proved particularly challenging for Chancellor Olaf Scholz. His efforts to resolve the tensions in recent months have led to temporary truces without resolving the underlying conflicts.

The plan to use the COVID money, originally devised by Scholz, was essential towards marrying the fiscal demands of the FDP with the environmental priorities of the Greens when the coalition was first formed.

That’s why compensating for the €60 billion shortfall looks next to impossible. The only options to do so are tax hikes, which the FDP rejects, substantial spending cuts, which neither the Greens nor the SPD will support, and repealing the debt brake, for which the coalition lacks the requisite two-thirds super majority (even with the FDP’s backing).

As far as the German effort to fight creeping deindustrialization, this little slush fund of theirs was also meant to finance corporate sweeteners like the handouts BASF and Intel were on schedule for.

…Unless they score that Green green…

…German industry isn’t abandoning Deutschland altogether. They’re happy to stay — as long as the government pays them off.

BASF opened a plant near Dresden that makes cathode materials for electric-car batteries just two weeks ago and has pledged to keep investing in its home market. To secure such commitments, however, local and federal governments have been forced to offer generous incentives. BASF will receive €175 million in government support for its new battery operation, for example.

Similarly, in June, the U.S. chipmaker Intel secured an eye-watering €10 billion subsidy for a massive new factory in the eastern city of Magdeburg. That translates into €3.3 million for each of the 3,000 jobs the company has pledged to create.

I wonder if they’ve cashed those checks yet.

Heck. At the rate things are going in Germany, the fellow who signed them may not be around long enough to explain why they bounced.

We’ve got the vegetable-in-chief here and the ruling coalition is blowing apart over there.

The world’s in great hands.