German Finances Not As Solid As Advertised

Der Spiegel (h/t nc links):

But it is debatable how much longer Germany can be seen as a refuge of stability and security. In reality, German government finances are not nearly in as good shape as the chancellor and the finance minister would have us believe. The way that certain important indices are developing suggests that Germany may not retain its position as a role model in the long term. Government debt as a percentage of GDP is already at more than 80 percent, which compared to other European Union countries is by no means exemplary, but in fact average at best.
When it comes to their debt-to-GDP ratios, even ailing countries like Spain are in better shape, with values significantly lower than 80 percent. Critics, irritated by Merkel's and Schäuble's overly confident rhetoric, are beginning to find fault with Europe's self-proclaimed model country. "I think that the level of German debt is troubling," says Luxembourg Prime Minister Jean-Claude Juncker, whose country has a debt-to-GDP ratio of just 20 percent.
Despite the nascent criticism, Merkel and Schäuble will be patting themselves on the back once again at this week's final debate on the 2012 federal budget in the Bundestag, the German parliament. They will point out that Germany is in much better shape than its partners in the euro zone, not to mention the United States. They will also praise conditions in the labor market, rising tax revenues and the declining budget deficit.
It is certainly true that Schäuble expects the German deficit to decline from 1.3 percent of GDP this year to less than 1 percent next year. But it's none of his doing. In fact, he wants to incur more debt next year than in 2011. It is only state and local governments that are slated to borrow less next year, thereby helping to reduce Germany's deficit. In contrast, Schäuble expects €26 billion ($35 billion) in net new borrowing in 2012, an increase of several billion euros over this year.

The coming austerity will make things worse.  2012 is going to be a really bumpy ride.