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Brad Setser
@Brad_Setser
, 3 tweets, 1 min read Read on Twitter
At least the downturn is in a country that has no shortage of fiscal space and a proven capacity to use it ...

"the German state managed to record a whopping budget surplus of 45.3 billion euros ($50.5 billion) from January to June ... that represents 2.7% of economic output."
Seriously, this is the time for Germany to use its fiscal space. A quick hitting rebate to help keep demand strong. And starting to rev up public investment to help manage a China 2025 shock to German manufacturing output
This isn't exactly a new argument, nor am I alone in making it ... see Jeff Frankel for example.

But it would be nice if Germany didn't keep surprising the IMF with larger than forecast budget surpluses even as its own economy slows.

seekingalpha.com/article/429434…
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Brad Setser
@Brad_Setser
Good column from Greg Ip. China's import slowdown is casting a broad shadow on the global economy. Export dependent Germany has been hit by weakness in global auto demand -- and its own reluctance to stimulate.

wsj.com/articles/for-a…
This is an underappreciated chart --

Auto demand in China peaked in early 18. And with enormous excess capacity in the auto sector, there is less investment.
If you set aside trade with the US, there has been a roughly $200b swing in China's trade balance in manufactures over the last 12-16ms, largely from weak demand. Partially from lower prices imported chips, but it still a huge swing, one with important global consequences
Read 6 tweets
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Brad Setser
@Brad_Setser
An obvious question given today's weak manufacturing survey data is how much of the weakness in U.S. manufacturing stems from China's retaliatory tariffs.

The answer is less than you would think. US exports of manufactures to China haven't wildly underperformed Chinese imports
To be sure, US exports to China have underperformed overall US exports (but that's true for most countries, China's imports of manufactures have been weak).

And yes, chips are obviously part of the story

(2/x)
But US exports of manufactures to China are only about 1/10th of total US exports of manufactures, so mechanically a 2-3% fall in US exports to the rest of the world delivers a bigger negative impulse than a 15% fall in exports to China

3/x
Read 7 tweets
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Brad Setser
@Brad_Setser
Very much appreciate the shout-out from the @TheEconomist / Free Exchange.

economist.com/finance-and-ec…
@TheEconomist Before the global crisis, Europeans banks borrowed dollars to buy securitized U.S. mortgages on a massive scale.

Today Asian insurers, in Japan and Korea, but in particular in Taiwan, buy US corporate credit and hedge the fx risk short-term.

cfr.org/blog/are-asian…
@TheEconomist I should also note that Japan's Postbank and Norinchukin (basically Japan's policy banks) do the same thing, it isn't just the insurers ...
Read 5 tweets

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Christophe Barraud🛢
@C_Barraud
🇩🇪 It confirms that German GDP likely ⬇ in 2Q while proxies pointed to the risk of another ⬇ in 3Q (technical recession).

This scenario would add pressure on #Germany to launch a stimulus package to support growth at both the national and 🇪🇺 level.

🇪🇺 Trichet Sees Next Crisis if #ECB doesn’t get Help - Handelsblatt
handelsblatt.com/finanzen/geldp…
🇩🇪 #Germany’s economy needs a fiscal boost - FT
ft.com/content/5ea7db…
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Shame
@ExpBusinessSA
@Wamagaisa 1/1Budget surplus should be achieved in periods of economic growth, not in periods of negative growth as in Zim's case. Cutting government expenditure reduces rate of growth, it means the economy is performing below it's potential.
2 Mthuli's targeting a budget surplus, and the austerity and fiscal tightening mean that the economy runs below full potential and leads to higher unemployment than otherwise. Also industry closures due to lack of demand.
3 Higher taxes,lower spending cuts, squeezes household disposable income&moreover in Zim the incomes have been eroded by inflation.Aggregate demand has fallen, industry had to scale back or close.A budget surplus takes money from elsewhere in the economy. It doesnt create money
Read 8 tweets
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Trippaddystudy
@TripPaddyStudy
#German Student Visa Interview Questions, Answers and Tips:

We can’t certainly conclude on the specific questions to be asked of the next German student #visa applicant,

Here are commonly asked questions to prepare for.

#TPStudyAbroad #StudyAbroad #Thread
These following questions matters:

1) Decision on why study in Germany.
2) Knowledge about Germany.
3) Information about future studies in Germany.
4) Current academic and work experience.
5) Blocked account and future financial status.
6) Common information about the study field.
7) Accommodation arrangement in Germany
8) Relationships with people living in Germany or #Europe maybe.
9) What you plan to do during Holidays and semester-break.
10) Your Plans of the future.
Read 14 tweets
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Susan ☆ Whitney ☆ E Pluribus Unum ☆ HugeBlueWave
@SMBWhitney
As the first CDU prime minister, Saxony's country chief Michael Kretschmer demanded an end to the sanctions against Russia on Friday. "We have to reduce these sanctions gradually," he said in an interview with the news agency dpa.
m.bild.de/politik/auslan…
An important issue in St Petersburg: The Gazprom pipeline "Nord Stream 2" , which arrives in Schwesig's state of Mecklenburg-Vorpommern in Germany; a large part of the gas should flow out of Germany by 2020 from Kretschmer's state of Saxony.
According to Gazprom, there were further discussions with the German company BASF, whose subsidiary Wintershall has invested almost one billion euros in the refinancing of the pipeline.
Read 4 tweets
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FLPolicyInstitute
@FloridaPolicy
THREAD: In honor of all our new followers, Florida Policy Institute brings you "2018 in 18 Graphs" - our most popular & favorite data visualizations from 2018 that illustrate how Floridians are faring coming into the New Year. #sayfie 1/
#18: "#CashRegisterJustice". Florida's Court System is financed mostly (94%) by fines, fees, and other legal obligations that create barriers to justice for low-income Floridians. #sayfie @FinesandFeesJC @splcenter @ACLUFL bit.ly/2R2ZMLK 2/
#17: Rural Florida relies heavily on state funding to support education & infrastructure in some of the most underserved communities. Cuts over time at the state level have disproportionately impacted rural school districts. #sayfie @FLSchoolBoards @PublicSchoolSup @FLPTA_Leg 3/
Read 21 tweets
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Alex Luck
@AlexLuck9
Article reinforces the new aim of part of government around vd Leyen, #Merkel to raise #German defence budget to 1.5% GDP by 2025. NATO "target" of 2% will likely not be doable with Social Democrats (and there is very much the question of how all that cash would be spent anyway).
A raise to 1.5 % GDP would be a very substantial move, moving the German defence budget to about 60 billion USD (51 billion Euros) and comfortably take it past both France and UK in absolute numbers (two nuclear weapons states with respective expenses).
I already see opinions popping up to the effect of "its not enough". I'm sorry, but with all due respect and seeing the reports I have seen, these assessments are not based in reality. Even a raise to 1.5% will be challenging to absorb into an actually useful force structure.
Read 6 tweets

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