Aug 26 2025

Germany Reconsiders Welfare State to Fund Ukraine

Posted originally on Aug 26, 2025 by Martin Armstrong |

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German Chancellor Friedrich Merz does not have the ability to manage Europe’s top economy. “The welfare state that we have today can no longer be financed with what we produce in the economy,” Merz said in a recent meeting. At the same time, Merz agreed to begin sending Ukraine 9 billion euros annually in addition to all other aid.

Merz tried to claim there would “not be any increase in income tax on medium-sized companies in Germany with this federal government under my leadership.” SPD Vice Chancellor Lars Klingbeil disagrees, and said that middle and high-income citizens could race an increased tax burden. “I’m not satisfied with what we have achieved thus far,” the chancellor said. “It has to be more.”

Merz campaigned on a platform of fiscal responsibility. Then he left Germany’s borders open and worked to find a loophole in the Constitution to fund Ukraine endlessly without any caps. The German welfare state cost taxpayers €20.2 billion ($23.6 billion) in 2024. Public spending accounted for 49.5% of all economic output in 2024.

Lars Klingbeil stated that Germany’s federal budget will face a €30 billion shortfall by 2027. His solution is clearly to increase taxes. “Especially people with high income and high net worth have to ask themselves: What am I contributing to make this country fairer?” He added: “Most of the time, I see people with very high incomes and very large fortunes making a strong appeal to the whole country that everyone should work harder and longer. But I don’t think that does justice to the pension debate that we really need to be having in Germany.”

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Germans have one of the highest tax burdens in Europe. Yet, by 2029, Germany is expecting to take on €851 billion worth of new debt. The war on the energy sector, perpetual spending on Ukraine, and open borders are crippling the German economy. German lawmakers would like to cut back on payments for citizens who spend a lifetime paying into the system. Germany spent 14.8% more in 2024 on an annualized basis on basic income support and nursing health care to the tune of €20.2 billion. Around €11.4 billion of those funds were spent on pensioners and those unwilling to work. In 2025, the nation will spend €43 billion on the citizens’ stipend or Bürgergeld scheme that provides basic income for the unemployed (not including pensioners or those with disabilities).

Merz plans to cut spending for the Bürgergeld scheme. He plans to increase taxation on pensions, although over half of German pensioners currently receive payouts below the poverty line. Merz will place a cap on the amount welfare recipients can use toward housing. While some of these cuts are necessary, Merz fails to acknowledge the elephant in the room—YOU’RE SENDING BILLIONS PER YEAR TO A FOREIGN GOVERNMENT!

Why should the German people be forced to send 9 billion euros to a foreign government annually? The people have been forced to send public funds and soon the people will be forced to send their sons and daughters to fight a unwinnable war. Germany’s leaders have put domestic policies last in favor of globalist neocon ambitions. The nation is already in a recession and the government continues to implement policies that are pushing the nation further into ruin.

Aug 26 2025

German Chancellor Merz Says Entitlement Programs No Longer Sustainable

Posted originally on CTH on August 25, 2025 | Sundance

CTH noted several months ago, end the Marshall Plan for Europe and things will change quickly.

Germany is in a tight economic place as a result of: (1) former leftist Chancellor Olaf Scholz alignment with climate change policy, radically changing the German energy base and driving up costs; (2) the financial support for Ukraine; (3) the financial burden of mass African/ME migration, and (4) the new Trump-era EU tariffs that effectively end the Marshall Plan.

Put all four elements together and the German economic contraction is only forecast to worsen. This is the reality that current German Chanceller Fredrich Merz is facing. Thus, as a non-pretending former businessman, Merz recently told his party and the German electorate that current financial conditions no longer support the expansive entitlement state.

Pensions, benefits and even healthcare are potentially going to be impacted. Germans are not happy.

GERMANY – The German welfare state is no longer financially sustainable, Friedrich Merz said on Saturday. The chancellor argued for a fundamental reassessment of the benefits system as spending continues to soar past last year’s record of €47bn (£40bn).

In a state-level party conference meeting on Saturday, Mr Merz said: “The welfare state as we have it today can no longer be financed with what we can economically afford.”

Once the export champion of Europe, Germany’s economy has slowed dramatically since 2017, with GDP growing by only 1.6 per cent since then versus 9.5 per cent for the rest of the eurozone.

Germany’s economy shrank by 0.2 per cent last year following a 0.3 per cent dip in 2023 – the first time since the early 2000s the economy has retreated two years in a row.

Industrial production fell under the Left-leaning “traffic light” coalition of Olaf Scholz and continues to slide under the new government, with GDP declining by 0.3 per cent in the second quarter of 2025.

Meanwhile, spending on social welfare has exploded, and is set to increase further this year as Germany’s population ages and unemployment rises. Although the majority of benefit recipients are German, large numbers are non-German citizens.

[…] Germany has in place a so-called “debt brake”, which limits how much the government can borrow to fund its spending plans.

Mr Merz’s views on the welfare state are likely to provoke discontent among his Social Democratic Party (SDP) coalition partners, whom he relies on for a thin majority in the Bundestag.

[…] Lars Klingbeil, the SPD leader and vice-chancellor, hit back at Mr Merz’s announcement with calls for increased taxation on top earners. He called for a summit focused on helping industry leaders respond or adapt to US tariffs and said “no option is off the table” when it comes to plugging the 30-billion-euro gap in Germany’s budget. (more)

A note of caution. Historically speaking, when the German economy gets bad enough, Europe ends up in a war.

Aug 25 2025

Ukrainian Man Arrested for Nord Stream Pipeline Attack

Posted originally on Aug 25, 2025 by Martin Armstrong |

A 49-year-old Ukrainian man was arrested in Italy after authorities linked him to the Nord Stream pipeline attack. Authorities believe the man and his accomplices rented a sailing yacht from a German company in September 2022 and managed to detonate a portion of the pipeline. No one has ever taken responsibility for the attack. Sweden closed its investigation in February 2024 after determining “insufficient grounds to pursue a criminal case,” and Danish prosecutors also ended their investigations that same month, although they acknowledged there was “deliberate sabotage of the gas pipelines.” Germany is the last remaining European nation continuing the investigation.

The world initially blamed Russia for the attack, believing Moscow would actively detonate its own pipeline to prevent its top buyer from accessing oil. The motive never added up. Gerhard Schindler, former head of Germany’s Federal Intelligence Service (BND), suggested that Russia sabotaged the pipeline to halt gas exports. President Zelensky’s advisor Mykhailo Podolyak said that Russia wanted “to destabilize economic situation in Europe and cause pre-winter panic.”

Russia accused Western actors of destroying the pipeline. “It is evident that executing such a terrorist act required a directive from the highest levels…for the West, that highest level is undoubtedly Washington,” Russian Foreign Minister Sergey Lavrov stated. Russia’s defense ministry accused the British navy of orchestrating the attack with the support of its US ally.

Putin called the idea of a pro-Ukrainian group orchestrating the attach “nonsense.” “An explosion of this kind, with such power, at such depth, can only be carried out by specialists, and supported by the entire power of the state, which has certain technologies. … The fact that this is a terrorist attack is no longer a secret to anyone, I think everyone has already recognized it. Moreover, the terrorist attack, quite obviously, was committed at the state level, because no amateurs can commit such actions,” Putin stated.

Former President Biden plainly stated that the US “would bring an end” to the Nord Stream pipeline if Russia invaded Ukraine.

The pipeline was Putin’s last and strongest bargaining chip with Europe. In fact, he agreed to lift sanctions ahead of the explosion. The sabotage of the Nord Stream Pipelines was most likely accomplished with US intelligence. There is no possibility that Russia would have destroyed its final lifeline to the European economy. There is a possibility, however, that Europe would have caved and continued purchasing Russian energy. Neocons like National Security Adviser Jake Sullivan, Victoria Nuland, the Undersecretary of State for Policy, and Secretary of State Tony Blinken openly stated that they did not approve of the pipelines and wanted them gone. The Biden Administration was also keen to carry out the net-zero program and eliminate the world’s dependence on fossil fuels.

Germany consumed just under 20% of all Russian gas exports in 2020. About 50% of all of its gas was coming from Russia. Germany was clearly Russia’s #1 customer. That was why the United States may have taken the initiative to simply blow up the Nord Stream Pipeline without consulting Germany.

“If Russia invades, that means tanks and troops crossing the border of Ukraine again, then there will be, there will be no longer a Nord Stream 2,” Biden stated in February 2022 during a joint press conference with former German Chancellor Olaf Scholz. “I promise you, we will be able to do it.” Radek Sikorski, Poland’s former minister of national defense and EU Parliament member, posted an image on Twitter of the leak with the caption, “Thank you, USA.”

The destruction of Nord Stream came 51.6 years on target with the frequency of the Economic Confidence Model. Could a group of men create an explosion so powerful that it registered as a 2.3 magnitude earthquake? Evidently, this Ukrainian man was selected as the unfortunate scapegoat. It is overtly apparent who had the motive and incentive to eliminate Russia’s top export and bargaining chip.

Aug 25 2025

Germany is in a Recession

Posted originally on Aug 25, 2025 by Martin Armstrong |

The German economy contracted 0.3% on a quarterly basis, according to the Federal Statistics Office. Germany’s stronghold on manufacturing is at risk. The government implemented new provisions to bypass the constitution and spend in perpetuity on the incoming war. Spending is up, revenues are down—the German economy is in a recession.

Annual GDP reached 0.2% in Q2, a 0.1% decline from Q1. Around 10% of all German exports are sent to the US, and some are blaming tariffs for the downfall without seeing that the trend was already in motion. Germany’s economy has been in a multi-year downturn caused by ignorant economic policies that directly damaged Germany’s mercantile stronghold in Europe.

Politicians suffocated automobile manufacturing through net-zero regulations. Sanctions on Russia caused Germany to lose 50% of its oil imports. Its willingness to bend to Brussels has reshaped the demographic landscape with a spike in the population due to migration. Lawmakers have adopted a war posture and are pushing to increase military spending while abandoning their austerity policy. Germany may be the wealthiest nation in the European Union, but individual households are not experiencing any benefits. In fact, the average German has far less than those living in countries with a smaller GDP. The cost of living has never meaningfully dropped since the pandemic and lockdowns.

Germany has not experienced such economic weakness since post-World War II. Estimates believe that the economy will decline 0.3% for the year or remain stagnant at best. Manufacturing has dropped 10% below pre-pandemic levels. Construction has shrunk by around 3% in recent quarters due to high costs. Exports, which are 34% of Germany’s GDP, are down as demand from the US and China wanes. If Germany tanks, then the entire European Union will sink, as Germany alone comprises nearly a quarter of the Union’s entire GDP.

I discuss Germany’s significance to the entire bloc, as well as Socrates’ analysis in the report “Germany a Threat to the EU?”