On Friday, there I was telling you all about the European Union taking their best shot at showing Trump he wasn't the boss of them by pinkie-swearing to spend somewhere in the neighborhood of €800B to beef up Europe's defense and security posture. €700B+ of that would come from the various EU member states themselves, while the Brussels Brahmins would kick in another €150B or so from their excess cash cookies jar to help out with 'military purchases,' whatever that covered.

...EU president Ursula Von der Leyen, everyone's favorite Disney witch, got to talk tough and lead the European Trump resistance. A resistance that is only reluctantly physically transitioning from Euro-trash talk from the peanut gallery to brass tacks because Trump told them to go pee up a rope. So they were forced to do something.

 European Union leaders are trumpeting their endorsement of a plan to free up hundreds of billions of euros to inject into their defense budgets after the Trump administration warned that the continent must look after its own security, including Ukraine, in future.

After more than 12 hours of talks on Thursday, the 27 leaders signed off on a scheme that would ease budget restrictions for defense spending, funnel some of the EU’s unused funds toward security priorities and provide 150 billion euros ($162 billion) in loans for military purchases.

The EU heads also urged governments that have constitutional or legislative impediments to just spending money willy-willy overlook, aka ignore, those in the spirit of the joint effort.

One of those governments is Germany, which does have a constitutional 'debt brake,' as they call it, and it has raised Cain with plans in the country before. 

Two years ago, Chancellor Olaf Scholz's planned €60B Green bailout, accomplished by a clever end run around the debt brake - using leftover pandemic funds to plug a big budget gap - was crushed by their high court.

...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.

The government wanted to help Volkswagen out of its darn near terminal slump, but a year later, the damage from the debt brake decision had already fractured the government beyond repair, and Scholz's coalition had finally collapsed.

...Helping former automotive juggernaut VW out of their self-inflicted Euro-misery is part of the grift. 

The clueless, helpless grift that has left the German government flailing and impotent to do anything to forestall an industrial catastrophe.

...As Volkswagen threatens to shutter German plants for the first time in the company’s 87-year history, politicians who have for decades protected workers from mass layoffs are struggling to come up with answers amid rising labor frustration and the threat of massive strikes.

...The challenges come at a time when Germany’s government is unable to act following the collapse of the three-party ruling coalition earlier this month. It could be several months before Germany has a new government, as negotiations between the parties could drag on well after the Feb. 23 election. Even then, the country’s constitutional debt brake, which restricts spending, is likely to limit the new coalition’s firepower.

The elections were held last month. Christian Democrats and their leader Friedrich Merz emerged as the winners. They are working to form a coalition with Scholz's Social Democrats (SDU) along with another, smaller party - probably the Greens - in order to ice out the second place finishing Alternative for Germany (AfD) party.

They finally got around to negotiating the terms of this ruling coalition two weeks after the election.

Then Trump rattled all their cages last week and jolted the EU bunch into an emergency meeting. The result of this was this big plan, Von der Leyen's gentle nudging to get moving and not-chancellor-yet CDU head Friedrich Merz declaring that he would 'circumvent the debt brake' to spend the money on defense. Merz then got Scholz to buy in on it.

The two political parties expected to form the next German government have agreed to loosen the country’s constitution restrictions on borrowing, enabling 1 trillion euros ($1.08 trillion) or more in spending on defense and infrastructure.

It’s a major change in Germany’s debt-averse political culture, rejecting conventional economic wisdom that long dominated Europe’s biggest economy and one of the world’s wealthiest countries.

...The reformed debt brake would remove the constitutional ceiling when it comes to defense spending. That would support efforts to build up Germany’s own defenses and its ability to further support Ukraine. Germany is already a leading backer of Ukraine, sending 60 Leopard tanks and 175 Marder infantry fighting vehicles as well as 27 air defense systems, including three of its U.S.-made Patriot missile batteries.

“The extra room for defence spending sends a clear signal to Vladimir Putin and Donald Trump as well as to Germany’s European friends that Germany is serious about defending itself and helping Ukraine,” said Holger Schmieding, chief economist at Berenberg bank.

“Germany is finally taking on the leadership role which, given its size and its fiscal space, it should have assumed years ago.”

Germany traditionally, thanks to the brake, has had a super-low national debt, and in normal boom times, a move like this wouldn't worry anyone. However, Germany's economy is sliding, and their industrial output is vanishing, so financial analysts were taken aback by former debt brake defender Merz's laissez-faire dismissal of the requirement.

...It was a sharp turnaround for Friedrich Merz, who as Union leader is the likely next chancellor after his party came in first in national elections on Feb. 23. His party program rejected changes to the debt brake, though he had indicated he might be open to negotiation on that point.

The move “follows the old political principle: if the facts change, I change my mind,” said Carsten Brzeski, global chief of macro at ING bank.

To change the debt brake requirement, Merz needs two-thirds of the Bundestag to vote with him, and he now has plenty of fierce opponents on the far left and right. His only hope is the Greens, who are talking tough right now but could just be looking out for a payday.

Germany’s Greens may refuse to back plans by likely next chancellor Friedrich Merz for a massive increase in state borrowing with a party source, on March 10, warning “approval is becoming less likely with each passing day”.

The Greens’ refusal to back sweeping debt reforms and a special €500 billion infrastructure fund would derail a borrowing bonanza that had excited markets last week on hopes of reviving growth in Europe’s largest economy.

...After winning elections last month, Merz wants to unshackle Germany’s tight state borrowing limits to fund growth and revamp the military, warning that a hostile Russia and an unreliable US could leave Europe exposed.

But Merz and his likely coalition ally, the Social Democrats (SPD), need support for the Greens to pass measures in the outgoing parliament.

In the new parliament that begins on March 25, the measures could get even harder to pass, with an enlarged contingent of far-right and radical left lawmakers threatening to block them.

The Greens want more measures for climate protection included in Merz’s plans, and at the state level, they have called for a greater slice of the money from the €500 billion fund to go to states, to €200 billion from the planned €100 billion.

The Greens will be agitating for more than a third of the money freed up by a debt brake change that was meant to be for defense.

Classic.

There is also the issue of Merz getting a reputation as quite the slippery character and being a master of The Old Magoo.

During the campaign, in order to be able to answer AfDs appeal to Germans who wanted the borders closed, illegal immigration stopped, and the immigrants already in the country handled appropriately, Merz became an immigration hawk, talking tough on every issue, including closing the borders.

That didn't last twenty-four hours after his victory before he said, 'No one was ever talking about closing the borders.'

...For survival's sake, he had to buy into a palatable enough version of their schtick to attract voters who were squeamish about voting for the 'extremist right-wingers' but damn sure wanted something done about the illegal immigrants knifing their neighbors and using all their tax money up.

So he did.

And won.

Until he didn't.

Less than 24 hours after winning.

Merz pulled the old Magoo on the German electorate like he was born doing it.

That's now the case with the debt brake. Merz was an ardent defender of the status quo during the campaign - until he won, and now he's not. And he's also going to try to pull this constitutional razzle-dazzle off before they seat the new parliament, which, again, is heavier on his political foes and would make for a much tougher sell.

...It clearly states that they are committed to the 'debt brake' and to fiscal responsibility. You can support that or oppose it, but you have to acknowledge it is what they used to convince voters. 

Within days of the election, they completely reversed this. They plan to change the constitution to effectively abolish the 'debt brake' and they plan to raise $1tn (!!!) in debt, equivalent to 2 years of ordinary gross government spending. 

And what's more, they plan to get this done with the old parliament before the new one meets for the first time. (because they won't have enough votes to change the constitution afterwards) 

@_FriedrichMerz, this is the most outrageous example of voter betrayal I have ever seen. And I have lived for 13 years under Angela Merkel.

I guess Herr Magoo changed his mind again.