Germany: The Final Frontier... Whose True Debt/GDP Is Now 140%

Tyler Durden's picture


From Mark Grant, Author of Out of the Box And Onto Wall Street

Germany: The Final Frontier

“It always looks darkest just before it gets totally black.”


Data Mining

Over the last several weeks I have tried to bring a more accurate picture of the debts of a number of nations to you. There has been no bias and the figures have stood on their own merit. The statistical component of the European Union, Eurostat, is quite clear; they do not count guarantees or contingent liabilities as part of any nation’s debt. We might all note that if Nestle or IBM or General Electric did this they would find their senior executives jailed for Fraud but never mind; this is the methodology of the EU which quite obviously masks the truth. The problem then is not the simple math used to obtain a more accurate debt to GDP ratio but in digging out the various guarantees, contingent liabilities and obligations of any member nation of the European Union. “Time consuming” would be the accurate words because you have to sleuth around like Sherlock Holmes to come up with the data. Yes, it is all there somewhere or another but it is nowhere all together and so must be found.

In the case of all of the countries that I have examined to date it has been on a stand-alone basis; meaning NOT inclusive of their obligations for the EU, the ECB or various other European institutions which would only increase their actual debt to GDP ratios. For the nations examined to date I concentrated on their guarantees; bank guarantees, regional guarantees, derivatives guaranteed by the sovereign, the debts of various institutions with sovereign guarantees and so forth. Each examination has been country specific because each nation has different policies. Yesterday in Boston I met with the very bright folks at Standish Mellon and promised them a more accurate appraisal of not a troubled country but of the leading country in the European Union, Germany, and so I deliver as promised.

Here we find not the usual issues with the periphery nations but obligations and guarantees for the entire European construct. The analysis of Germany, past their stated GDP and their stated debt to GDP ratio is really a study of the EU/ECB themselves to determine the size and the liabilities that are born by their largest economic member so that we can fully assess the financial condition of Germany and not blindly accept what is officially put out in the Press.


German Gross Domestic Product (GDP):                                   $3.2 trillion

Official German Sovereign Debt:                                               $2.618 trillion

Percentage of Liabilities at the European Union:                          27%
Percentage of Liabilities at the ECB                                           18.94%

Germany’s Percentage of the ECB Debt ($4 trillion)                    $757.6 billion

German annual cost for the EU budget                                      $46.36 billion

German Guarantees for the Stabilization Funds                          $280.6 billion

German Guarantees for the Macro Financial Assistance Fund      $211.14 billion

German Target-2 Liabilities                                                     $656 billion

German Guarantee for the EIB Debt                                        $157.29 billion

Sovereign Guarantee for KFW                                                 $588 billion

Total German Sovereign Debt & Guarantees                             $5.315 trillion

Official debt to GDP Ratio                                                             81.8%

Actual German Debt to GDP Ratio                                            139.8%

So there you have it; place your bets.

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Tue, 03/27/2012 - 09:46 | 2294021 Zero Govt
Zero Govt's picture

the wrecking crew (politicians and bankers) of all nations have done it again to once prosperous Germany ..and the rest of Europe... and America... and Japan

what a 'surprise'

Politicians & Bwankers: no nation too big for these vandals

Tue, 03/27/2012 - 09:56 | 2294052 markmotive
Tue, 03/27/2012 - 10:02 | 2294070 Pinto Currency
Pinto Currency's picture


Federal Debt is not nearly the whole story - here is how countries stack up :

Tue, 03/27/2012 - 10:10 | 2294090 johnQpublic
johnQpublic's picture

We might all note that if Nestle or IBM or General Electric did this they would find their senior executives jailed for Fraud


substitute ' jailed for fraud' to promoted or just about anything else and you'd be closer to the truth

the big guys dont get jailed for fraud

bigger the better

example: corzine

you can add as many others as you feel nescessary

Tue, 03/27/2012 - 10:21 | 2294129 Doña K
Doña K's picture

Freudian slip of Merkel on her recent trip to Greece:


MERKEL: German


MERKEL: No. I am here for just a few days.

Tue, 03/27/2012 - 11:47 | 2294463 Ghordius
Ghordius's picture

LOL - really good one


btw, Target-2 liabilities? Eh? I was under the firm impression that the BundesBank had Target-2 Assets...

anyway, the quality of the article is visible in the fact that there is no comparison whatsoever with other countries...

Tue, 03/27/2012 - 13:54 | 2294964 kennard
kennard's picture

"here is how countries stack up"

Your linked article does not include T-bonds held by the SS "trust fund" in U.S. government debt. It also does not net out financial services assets from liabilities to get an accurate picture of UK debt, since the UK is a large financial cent(re).

So the U.S. should move up your list and the U.K. should move down.

All of which is academic, of course, since unfunded liabilities are staggering in both of those welfare states.

Tue, 07/31/2012 - 07:26 | 2664423 weltysparrow
weltysparrow's picture

I would have thought that's because once this all plays out those financial assets will be worth something close to zero yet the liabilities will still be 100%.

Tue, 03/27/2012 - 10:23 | 2294141 francis_sawyer
francis_sawyer's picture


Yeah... & consider all of that is basically while in ZIRP... IOW ~ We're fucked...


Tue, 03/27/2012 - 16:42 | 2295566 MiddletonRobert3
MiddletonRobert3's picture

my roomate's sister makes $85 hourly on the computer. She has been fired from work for 6 months but last month her paycheck was $16158 just working on the computer for a few hours. Read more here .....

Tue, 03/27/2012 - 09:59 | 2294061 Oh regional Indian
Oh regional Indian's picture

Germany is in debt only because it has to give loan money to people to buy their machines. Otherwise this most prudent of nation-states should never have been in this position in the first place. You should see Deutsche Bank's mortgage arm in India, you'd think they learned their lesson? Nope. Likewise, Mercedes Benz on Benz credit? Sure..... three payslips... approved.

Of course, doesn't help that the Vatican is still after Germany's ass for being so protestant, so end game Germany will suffer again. 

Germany/Japan/China/US: Posterchildren for a supply-side construct gone wild. Can/will not end well.



Tue, 03/27/2012 - 10:03 | 2294073 GeneMarchbanks
GeneMarchbanks's picture

Nice to see you around ORI, there is a hierarchy among the nations you mentioned ORI. I guess you can imagine that the 'victors' have set up game rules via BWIs after WWII.

Germany is and has been in self preservation mode for some time.


Tue, 03/27/2012 - 10:11 | 2294099 Zero Govt
Zero Govt's picture

to be fair to "fiscally prudent" Germany twas they that 'missed' the 4% budget deficit rules of the EU that let all the other scamps of Europe through the gate

Germany has in fact recently passed a number of budgetary rules for their own national and regional Govts which if applied (in 2012-2014) will be the end of funding (pissing away) more money on Europe

Tue, 03/27/2012 - 10:31 | 2294170 GeneMarchbanks
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Name a 'fiscally prudent' nation? Ok, now.

Stay on topic schizo.

Tue, 03/27/2012 - 11:45 | 2294447 Gavrikon
Gavrikon's picture

Thst is an AWFULLY big "IF".

Tue, 03/27/2012 - 10:27 | 2294158 francis_sawyer
francis_sawyer's picture

 "Germany is in debt only because it has to give loan money to people to buy their machines. Otherwise this most prudent of nation-states should never have been in this position in the first place"

Pffft... So let me understand that... The ONLY reason I'm in bad shape is because I have to give other people money to buy lemonade at my lemonade stand?


Tue, 03/27/2012 - 15:05 | 2295163 JPM Hater001
JPM Hater001's picture

"Otherwise this most prudent of nation-states should never have been in this position in the first place."

Agreed.  We should have just let them keep making planes.  We'd have a flying saucer by now if we did.

Tue, 03/27/2012 - 10:08 | 2294087 Stoploss
Stoploss's picture

Whoop's there goes the apple tree!!

Tue, 03/27/2012 - 10:13 | 2294104 battle axe
battle axe's picture

Germany was such a nice country, oh well another log on the fire of Government Stupidity....

Tue, 03/27/2012 - 10:18 | 2294117 Gully Foyle
Gully Foyle's picture

Zero Govt

It's all of the plan moving toward one world government.

Every state has to be roughly at the same level for it to work.

Tue, 03/27/2012 - 10:19 | 2294118 rsi1
rsi1's picture

as if debt/gdp was a meaningful ratio? its useless, it doesnt look at the assets side, its just to make it simple for average joe to believe he understands something, but really it doesnt mean anything without the remaining data of a country.

Tue, 03/27/2012 - 11:18 | 2294329 Nussi34
Nussi34's picture

Bomb ze PIIGS!

Tue, 03/27/2012 - 09:47 | 2294023 I am a Man I am...
Tue, 03/27/2012 - 10:42 | 2294210 Schmuck Raker
Schmuck Raker's picture

Thanks for keeping us all informed on this critical issue.

We're all counting on you.

Tue, 03/27/2012 - 09:47 | 2294026 Zgangsta
Zgangsta's picture

But what if you price it in gold?

Tue, 03/27/2012 - 09:49 | 2294031 SHEEPFUKKER


Tue, 03/27/2012 - 09:49 | 2294032 francis_sawyer
francis_sawyer's picture

 "The Wealth of Nations" is overdue for a re-write...

Tue, 03/27/2012 - 09:49 | 2294033 Thamesford
Thamesford's picture

Deutschland uber phallas-ee

Tue, 03/27/2012 - 09:50 | 2294034 Tom Green Swedish
Tom Green Swedish's picture

Who gives a shit?

Tue, 03/27/2012 - 09:55 | 2294050 Zero Govt
Zero Govt's picture

the Germans will once they realise the politicos and bwankers have wrecked their industrious country for the 3rd time in under a century

Tue, 03/27/2012 - 10:41 | 2294211 PY-129-20
PY-129-20's picture

This is really the only thing that I fear.  We don't have that anger culture like the French. Blood will be shed. And everything we had achieved since WWII will be blown away. Berserker mode.

Tue, 03/27/2012 - 11:34 | 2294383 Nussi34
Nussi34's picture

I will vote for the NPD (Nazos) in all elections until the Euro is abolished!

Tue, 03/27/2012 - 11:49 | 2294481 Instant Wealth
Instant Wealth's picture

They also could channel the public anger by scapegoating capitalism itself via MSM, then install a multi-party crypto-commie regime (Regierung der Nationalen Einheit/Sozialen Gerechtigkeit or ...).

Sometimes it feels, like the show has already begun. 

Freiheit oder Tod, bitchezz.

Tue, 03/27/2012 - 12:33 | 2294679 noses
noses's picture

ROTFL. Germans are special: They weren't even able to have a proper revolution. Not once. If you've ever been looking for trusty sheep who will never put up real resistance, look no further.

Tue, 03/27/2012 - 09:51 | 2294040 Thamesford
Thamesford's picture

We should try this for the U.S.

Tue, 03/27/2012 - 09:56 | 2294051 Zero Govt
Zero Govt's picture

you have ...just replace Merkal with Barny Frank

Tue, 03/27/2012 - 09:52 | 2294042 francis_sawyer
francis_sawyer's picture

 "We might all note that if Nestle or IBM or General Electric did this they would find their senior executives jailed for Fraud"


Well, "IBM & Nestle" anyway... GE is in bed with OWEBAMA so they'd get a free ride...


Tue, 03/27/2012 - 10:05 | 2294080 Global Hunter
Global Hunter's picture

1 out of 3, Buffet took about a 5% interest IBM late in 2011 :) 

Tue, 03/27/2012 - 10:18 | 2294116 francis_sawyer
francis_sawyer's picture

Yeah ~ & I think Nestle is a Swiss based company anyway, so it looks like we're SOL...

Tue, 03/27/2012 - 09:54 | 2294049 Subliminal messenger
Subliminal messenger's picture

The entire western world is fucked. Verify that your physical gold and silver is still there, shut down your computer and enjoy life.

When the SHTF, you will be notified.


Tue, 03/27/2012 - 09:57 | 2294057 GeneMarchbanks
GeneMarchbanks's picture

'There has been no bias and the figures have stood on their own merit. The statistical component of the European Union, Eurostat, is quite clear; they do not count guarantees or contingent liabilities as part of any nation’s debt.'

There really is no 'objective' view on these matters. By and large it's all open to interpretation. Also, since politics is basically synonymous economics there isn't really much use in looking at the figures and pretending that it is a mathematical matter mostly.

Tue, 03/27/2012 - 09:58 | 2294058 Mongo
Mongo's picture

To boldly go... where no debt slave has gone before... or whatever

Tue, 03/27/2012 - 09:59 | 2294063 HD
HD's picture


Tue, 03/27/2012 - 09:59 | 2294064 chinaboy
chinaboy's picture

All road leads to The Fall of Frankfurt

Tue, 03/27/2012 - 10:01 | 2294068 Oh regional Indian
Oh regional Indian's picture

All roads lead to Frankfurt in the Fall? For Oktoberfest?


Tue, 03/27/2012 - 10:09 | 2294088 HD
HD's picture

Germany's gift to the world - Beer, brauts, and breasts.

Tue, 03/27/2012 - 10:15 | 2294110 battle axe
battle axe's picture

Thank you HD that post put a smile on my face...

Tue, 03/27/2012 - 10:19 | 2294122 HD
HD's picture

My pleasure mate.

Tue, 03/27/2012 - 11:21 | 2294339 Nussi34
Nussi34's picture

The Oktoberfest is in Munoch, not Frankfurt.

Do NOT follow this link or you will be banned from the site!