A Visit to das Schlaraffenland

Let's check in on that German supply-side experiment that we highlighted back in March. Courtesy of Bloomberg, we get news that the tax revenue has been flooding in due to robust economic activity that was 'brought forward' from 2007 to 2006 via tax policy, just as supply-side theory predicted it would. Of course, very few in officialdom actually believe in supply-side theory, so they fail to see the little pothole that Germany has created for itself and are proclaiming Germany das Schlaraffenland. Thus begins the mad rush to spend it all based on the false rosy projections. The article points out that the Great Wurst Factory has proposed 50 billion new Euros of social spending, which, if passed, will throw the budget back into disarray when the German economy runs over the pothole in 2007. We'll stay tuned so you can pay attention, after all the US will go through the same thing roughly around 2011.