Second of all, German bondholders would be more than happy to sell their Spanish bond holdings to China.
In this connection, remember the nightmare of a balanced budget
A decision was taken recently in Berlin to introduce a balanced-budget law in the German constitution. It was a hugely important decision. It may not have received due attention outside Germany given the flood of other economic and financial news. From 2016, it will be illegal for the federal government to run a deficit of more than 0.35 per cent of gross domestic product. From 2020, the federal states will not be allowed to run any deficit at all. Unlike Europe's stability and growth pact, which was first circumvented, later softened and then ignored, this unilateral constitutional law will stick. I would expect that for the next 20 or 30 years, deficit reduction will be the first, second and third priority of German economic policy.
What is the rationale for such a decision? It cannot be economic, for there is no rule in economics to suggest that zero is the correct level of debt, which is what a balanced budget would effectively imply in the very long run. The optimal debt-to-GDP ratio might be lower for Germany than for some other countries, but it surely is not zero.
Asdf is probably familiar with this, as Colorado is one of the more amusing offenders (and if you listen closely, all the way from Ohio you can still hear my former colleague shouting, "How can you report no fucking debt?!?!"). Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
