The European Union remains, at least in theory, a union of sovereign nation-states. Even within the nearly identical Eurozone, national budget sovereignty still prevails. But now, through a mix of war rhetoric and Putin panic, efforts are underway to consolidate national debts at the EU level.
Germany’s new Chancellor, Friedrich Merz of Merkel’s CDU, delivered his inaugural government address on Wednesday. The speech, held in the Bundestag, was dominated by talk of Ukraine and the Russian threat. Germany’s prolonged recession? Brushed aside with empty phrases. He spoke much of “Europe,” with vague hints at a paradigm shift. But no substance, no pragmatic solutions. Just political waffle. Hot air without traction in the real world. Today’s Germany is merely a symptom of the larger European disease.
When the Purse Is Empty, Beat the War Drum
Merz’s speech could serve as a textbook on how to repackage domestic failure as geopolitical urgency. Over half of his address was dedicated to foreign policy and the Ukraine war — despite Germany’s crumbling infrastructure, collapsing housing market, and a historic wave of illegal immigration that no politician dares address without being tarred as “far-right.”
His focus? Rearmament. A strong Bundeswehr. He promises to make Germany’s army “the strongest conventional force in Europe,” and proclaims that Germany is “not a neutral party” in the war. In other words: essentially a co-belligerent. That’s not accidental. The war narrative serves a dual function: to distract from domestic collapse and to justify the upcoming introduction of Eurobonds — joint debt instruments that are, according to the Maastricht Treaty, strictly prohibited.
But fear rules first. Once the invisible curtain of panic descends, old fiscal rules vanish. In the fog of war, the strongman prevails. What was once illegal becomes policy. War hysteria paves the backdoor to debt consolidation — something the ECB or the EU Commission would never admit openly. Taxpayers become the last collateral for an energy-starved Europe that can hardly hide its envious glances at Russia’s resource wealth.
The plan is simple: the European Commission issues debt, the ECB buys the bonds, and the growing debt pile remains liquid. Inflation? Blame “Putinflation.” In political newspeak, this is called “solidarity” — but it means that national fiscal discipline gets drowned in Brussels bureaucracy. Germany, knowingly or not, becomes the main sponsor. Get ready, fellow Europeans, for a hot summer: media heatwaves, war drums, and yet another debt acceleration in a stagnating Eurozone.
Merzonomics: Hollow Promises, Real Debt
Merz’s economic program is a patchwork of contradictions. He pledges tax relief for low earners — “if the economy allows it.” It won’t. He wants to cut bureaucracy — by creating a new ministry. Only a Prussian bureaucrat could come up with that. He promises to meet climate goals without offshoring industry — by tweaking the very CO₂ pricing system that already destroyed competitiveness. No mention of restarting nuclear power. No Russia diplomacy. No rollback of the destructive “Green Deal,” the crown jewel of globalist policy.
The heart of his stimulus plan? A trillion-euro investment and defense spending surge — financed through debt rule exemptions and a massive bond program arranged before he took office. For the rest, Merz hopes foreign capital will flood into Germany. That’s wishful thinking in a world where Trump sets a new benchmark with tax cuts, deregulation, and real political will. Merz flies abroad not to attract capital, but to distribute it — as climate reparations and development aid. It’s become tradition in a country that replaced rational policy with moralizing gestures and globalist soundbites.
Even his much-praised housing initiative rings hollow. A “building offensive” is promised — while the construction sector is in free fall. Red tape, high interest rates, and regulatory overload have paralyzed private construction. Like German industry, the building sector is in a deep depression. Nothing moves. Since 2022, half a million jobs have vanished — further straining Germany’s overstretched welfare system.
The deindustrialization of Germany — once the growth engine of Europe — is dramatic. Each year, Germany loses between €60 to €90 billion in direct investment. That’s capital that could build companies, jobs, and hope for a generation increasingly stuck in their parents’ homes. Dignity is vanishing. Three consecutive years of contraction have reduced the post-war “economic miracle” to a memory. Yet Merz dares proclaim that Germany will be Europe’s new “growth locomotive.” A bold claim from a man who couldn’t even secure full support from his own party in the first round of the vote.
Migration: The Crisis the Left Can’t Name
Where Merz becomes evasive, his rhetoric turns abstract. He talks about “renewing the promise of prosperity.” What does that even mean? Another five-year Brussels plan of Chinese inspiration? At least he admits that illegal immigration draws in unskilled masses — but refuses to even discuss cutting welfare entitlements like Bürgergeld. Instead, he declares that “Germany is and will remain a country of immigration.” Stubborn, unrepentant, EU-compliant.
This is no accident. Mass immigration serves a fiscal function: inflate GDP through debt-fueled government programs, fill low-wage jobs, and delay the pension implosion. But it comes at a steep price: social cohesion, internal security, and housing markets are buckling. Merz’s refusal to acknowledge this isn’t ignorance — it’s pure ideology. At heart, Merz is a Brussels bureaucrat, cut from the same cloth as von der Leyen & Co.
And these Europeans are broke. Not metaphorically. Not in the euphemisms of “fiscal headwinds” or “budgetary challenges.” They are structurally insolvent. The continent is sleepwalking into a sovereign debt crisis of historic proportions — masked only by central bank interventions and a stage-managed Cold War fear narrative.
The numbers? France’s national debt is nearing €3.2 trillion — 110% of GDP. Italy? Over 140% — beyond any reasonable boundary. For reference: just 15 years ago, a 143% debt ratio from Greece nearly brought the Eurozone to collapse. It took trillions in emergency measures and taxpayer bailouts to keep the rotten edifice afloat.
Across much of Southern Europe, fiscal discipline has evaporated. The ECB is expected to cover the shortfall. Inflation? Not Frankfurt’s problem — for now. Growth? Stagnant or negative. Private investment? Collapsing. Demographics? A disaster. Youth unemployment remains chronically high, and an aging population is now funded by a shrinking workforce. Social costs are borne by labor, and no one dares put the sacred cow of the welfare state on a diet.
Business Model Broken
Behind the theatrical language and smug tone lies a grim reality. Europe’s economic model — cheap Russian energy, open U.S. markets, and industrial strength fueled by an undervalued euro — is gone. The ECB is cornered: raise rates, and governments go bankrupt; print money, and the euro dies. Yet recessionary pressure will force the planners in Frankfurt to debase the currency. If not, pressure from the indebted capitals will mount.
President Trump is already capitalizing on Europe’s weakness. In the ongoing transatlantic tariff dispute, the EU stands as the last negotiator — economically stagnant, energy-dependent, and militarily reliant on Washington. Trump demands more defense spending, fewer industrial subsidies, and direct bilateral deals — not Brussels’ bureaucratic obstruction. In this setup, Europe isn’t a partner. It’s a bargaining chip.
The European political class — protected by EU governance from electoral consequences — seeks to preserve the system at citizens’ expense. Wrapped in the language of “solidarity,” but with a clear eye on private wealth. The planned EU asset register fits neatly into a digital euro regime: full control, full surveillance.
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Thomas Kolbe, born in 1978 in Neuss/ Germany, is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.