Saturday, October 11, 2014

Debate about investments: Schäuble insists on saving – tagesschau.de

Debate about investments: Schäuble insists on saving – tagesschau.de

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Date: 10/10/2014 09:33 clock

Given the demands for economic programs in the Euro Zone Finance Minister Wolfgang Schäuble has warned of a reversal of fiscal discipline. The most important prerequisite for sustainable growth in European economies is trust, Schaeuble said on the sidelines of the fall meeting of the International Monetary Fund (IMF) and World Bank in Washington. “We would be foolish if we would jeopardize that now.” With a stimulation of demand through higher government spending was “eh not much to get.”

Even Federal Reserve Chairman Jens Weidmann reiterated his rejection of debt-financed investments. “To promote sustainable growth, it is of little use to spark economic political flash in the pan,” he said. This applies especially “against the backdrop of historically high debt levels”. Only sound fiscal policy creates an environment that could arise in the investment and employment

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fear of relapse into recession

In Europe, pushing Italian Prime Minister Matteo Renzi and French President François Hollande it to postpone the consolidation of public finances in favor of stimulus programs. Also, IMF chief Christine Lagarde called for more government investment and warned of a relapse of the euro zone into recession.

In its autumn report also leading economists of the Federal government had accused too little to invest. They forecast for Germany this year, a growth of only 1.3 percent. The experts criticized the goal of “black zero” in 2015 to make the first time in more than four decades, no new debt, as a “status symbol”. For the inhibited corporate investment, economic researchers did also the minimum wage, mothers pension and retirement at 63 partly responsible.



Germany aims to boost economic

published in his early weeks World Economic Outlook, the IMF called on Germany specifically, to stimulate the economy with stronger public investments, such as in the transport infrastructure. Schäuble was open for investment, as long as this would not financed through debt. “We are in the medium term need to increase the resources,” he said.

Even with short-term needs, the federal government will raise the necessary funds in the budget. The challenge is, however, to find the right projects. “The bottleneck is not the funding,” said the Finance Minister, who also spoke out again for stronger private investment in infrastructure.



Public investment “improvable

Also Weidmann said the public investment were “improvable.” However, he warned about a case by case examination of projects in order to avoid bad investments. Moreover, the expenses would have to be refinanced in order not to compromise the objective of a balanced budget. Weidmann doubted, moreover, that increased investment in Germany large “spillover effects” would have to ailing countries in the euro zone

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