New Year, New Purposes

The example of Norway with its Oil Fund is showing the world one responsible way to respect future generations. The recent announcement by Mt. Schauble, confirming the German will to pay back the national debt could look like following the same logic, is it true?

The unexpected wealth coming from the North Sea Oil is evidently belonging to the Norwegian population and its descendants, the negative rates offered today to any duration on the German public debt are a public good? Will they happen again soon?

When the world is happily accepting a tax to finance your country (a large chunk of the German public debt is in the hands of non German investors), should you pay it back, and give up the spontaneous contribution to the country whose interest you should defend? Mr Schauble believes this is his duty, he believes more so as he is going to face elections soon. We will soon understand if the German people is so stubborn too (fiscal surplus in Germany is about 0,6% of GDP today, all the yield curve could show negative real rates very soon if inflation projections are reliable).

If you are really so allergic to spend part of the taxes you collect, one question that an elector could rise is: why do you collect taxes? a second and more educated one could suggest the accumulation of this sudden bonanza into a sovereign fund (on the Norwegian example), to be used in future years, if you really lack ideas about how to invest to the benefit of your citizens, at least pay back your debt at some cheaper prices. After Christmas season you often enjoy the sales one, on the Bunds we still need to see it.



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