The Cold War In The European Core: Luxembourg Wants Eurozone Bonds; Germany Says Drop Dead

Tyler Durden's picture

Last night, in a less than surprising Op-ed in the FT, Jean-Claude Juncker and Giulio Tremonti, prime minister and treasury minister of Luxembourg and Italy’s minister of economy and finance respectively, once again floated the idea that the time has come for a joint European bond issuance mechanism, because apparently lack of individual monetary policy is not enough, European countries now have to surrender their fiscal decision making to a bunch of dogmatic bureaucrats in Brussels. The desperate duo, which knows all too well, that they could well be next on the bond vigilantes radar, write: " The European Council could move as early as this month to create such an agency, with a mandate gradually to reach an amount of outstanding paper equivalent to 40 per cent of the gross domestic product of the European Union and of each member state." We ridiculed the idea last night, noting that this proposal would only happen over Germany's dead body, which already sees as contributing far too much to keeping the European experiment alive and getting only dirty looks from its voters. Today, Germany steps up and confirms: "Germany on Monday rejected the idea of increasing the size of the European Union's safety net and ruled out a proposal to issue a joint euro zone bond." And additionally recent pressure to hike the rescue fund by the IMF and internally were also promptly shut down by Germany, which as we pointed out last week threatened to pull out of the Euro if the political wrangling by pathological liars such as the Greek elite continued: "We see no
reason at all at the moment for an increase in the size of the
euro rescue shield -- no reason at all." Which means that with no recourse to do anything structural, the ECB is back to buying up Portuguese bonds in a fake bid to create a sense of normalcy in the bond market, which everyone with half a brain knows will collapse the second the ECB pulls out or runs out of paper.

More from Reuters:

Chancellor Angela Merkel said Europe needs the euro and that Germany would do everything to ensure the single currency was strong and safe. Government spokesman Christoph Steegmans echoed her comments.

"Germany feels committed to the euro, like all member states," Steegmans told a regular government news conference. "In a nutshell, if the euro fails, then Europe fails -- that is the position of the whole government."

"The government stands squarely behind the euro and its stability, we have never let there be any doubt about that," he said, adding: "I want to stress that Germany has a great interest in the stability of the euro growing."

Euro zone finance ministers, who meet in Brussels later on Monday, face pressure to increase the size of a 750 billion euro ($994.5 billion) safety net for debt-stricken members in order to halt contagion in the single currency bloc.

Steegmans rejected this idea, telling reporters: "We see no reason at all at the moment for an increase in the size of the euro rescue shield -- no reason at all."

Steegmans ruled out the "E-bond" idea.

"The government rejects euro-bonds not just on economic grounds but also because that would require considerable treaty changes," he said.

So what should one expect out of today's meeting aside from nothing? "The meeting of the Eurogroup today ... will give a joint
signal for more stability and confidence." In other words expect more lies that all is good, that Trichet is not buying bonds even as he is buying bonds, that Greece's numbers are finally correct after one million consecutive downward revisions, and that the BLS may soon be appointed as third party data processor of European economic data. And other such lunacies.

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Mercury's picture

LUX to GER: If you guys could just give us more control over your wallet, that would be great.

And I'm going to need that on my desk by Monday morning...Ummmm-Kaaaaaay?

So what's the thinking here? - although Germans are getting sick of bailing out weaker EU members after they go belly up, they shouldn't have a problem with being on the hook for the debt of others' the moment it's issued?

hugovanderbubble's picture

This is one example of the market manipulation made by the Central Banks... Time to fight´em

They are trapped:)

M.B. Drapier's picture

I don't like EUbonds and fiscal union any more than most Germans, but under the present arrangement Germany is being bailed out by weaker EU members.

squexx's picture

2 Euro zones, Northern Euro including Germany, the Nordic countries with participation by Russia. A Southern Euro, mostly PIIGS countries. France could go either way.

Mercury's picture

[insert tasteless joke about the French here]

Shameful's picture

Why?  Why would the nations decide to use a 2 Euro system after the one Euro system fails?  Will Germany really think that A Nordic euro is in their interest more then a new DMark?  Will the PIIGS really want to be tied to each other rather then to go back to their devaluation ways?

From over here it looks like if the Euro fails then the nations will go to national currencies.  Fool me once shame on you, fool me twice shame on me.

morph's picture

Waits for Sovereign CDO's rated at AAA consisting of 99% Greek and Irish bonds and 0.1% German with a random mix of the rest to fill the tiny gap.

unum mountaineer's picture

OT: you've been up alln ight haven't you TD?  watching and waiting for Ag to cross over that $30 mark.  It's like $3 gas psych-wise.

mean while;

maybe i'll go down to my bank tomorrow and withdraw $200 and ask for it in nickels..nah, that shit'll be too heavy to carry

Crisismode's picture

TD was up all night trying to recover from watching that cathartic interview with the Bernank the Skank.

squexx's picture

The 7th is going to be an interesting day!

Shameful's picture

Smooth, and of course a central bond mechanism will invariably lead to a central treasury that will set the taxes and budgets in the member states.  The centralization of power leads to the further centralization of power.

Azannoth's picture

Long live Angie !

duo's picture

I say the 7th and 8th are mini stock crashes to scare money back into bonds.  GS just went bullish on the economy, which means they're short again (like '08).  The Bernank can blame the Europeans for crashing the market.

I don't think the EE can crash metals without crashing the market as well, and this may be the week.  Gotta keep silver under $32.

hugovanderbubble's picture

Look Spanish Banks.... -3%

mick_richfield's picture

Mick to WilliamBanzai7 --

There is only one man in the world who can save the European Experiment -- who can make the serfs^H^H^H^H  voters understand the the Experiment in the way that it truly deserves to be understood. 

That man is Saeed al-Sahaf, the former Iraqi Information Minister!

And if he is not immediately available, I'm thinking that only WB7 can simulate him with the style, tact, and grace that both the InfoMin and the EuroEx truly and richly deserve.

Just sayin.

------------------------------------ Mick .


edmondantes's picture

The German public have always struck me as particularly obedient lemmings... who fall over themselves to tug their forelocks at the first mention of European brotherhood, solidarity, fraternity.... they can be persuaded to go along with even the most absurd policies...

the UK public are equally stupid (though less polite) viz the total lack of reaction to putting up £7bn for the disgraceful Irish 'rescue'

These credulous fools will be slaughtered by the thieving conniving coterie of (mostly French) crooks in Brussels

BeeTee's picture

What are you talking about?  This is great for the Brits.

They put up 7 billion sterling and safeguard 150 billion EURGBP bank loans.

Seems like a win-win to me.

David99's picture

China is going to raise interest rate by 0.25 basis points this week, metals down

knukles's picture

In for a penny, in for a pounding.

gloomboomdoom's picture

Stanley Fischer (Bernanke's mentor) head of ISraeli CB.

"He became Governor of the Bank of Israel on May 1, 2005, replacing David Klein, who ended his term on January 16, 2005. Fischer became an Israeli citizen, the aforementioned action being a prerequisite to this appointment. He has been involved in the past with the Bank of Israel, having served as an American government adviser to Israel's economic stabilization program in 1985. On May 2, 2010, Fischer was sworn in for a second term."

Fischer has earned plaudits across the board for his handling of the Israeli economy in the aftermath of the global financial crisis. In September 2009, the Bank of Israel was the first bank in the developed world to raise its interest rates.

Bernanke was educated at East Elementary, J. V. Martin Junior High, and Dillon High School, where he was class valedictorian and played saxophone in the marching band.[18] Since his high school did not offer calculus, he learned it on his own.[19][20] Bernanke achieved a SAT[19][21] Bernanke attended Harvard University, where he lived in Winthrop House and graduated with a B.A. in economics score of 1590 out of 1600.summa cum laude in 1975. He received his Ph.D. in economics from the Massachusetts Institute of Technology in 1979. His thesis was named "Long-term commitments, dynamic optimization, and the business cycle" and his thesis adviser was Stanley Fischer. - cite_note-21


Mike Pence (friend of Israel) is attempting to "modify" the FED mandate to ignore FULL EMPLOYMENT!!! HELLO!

Once inflation gets above 2%, interest rates go up, dollar goes up, gold collapses. Got it?

Fed Charter expires in 2012. (Think that might be renewed in Bill's Fine Print)

Ron Paul isn't going to get anywhere, thanks :)

Warren Buffett is correct.

No double-dip recession. No Hyper-Inflation Either.

(Unless you can convince enough people no intrinsic value exisists between a 1-note and a 100-note) GOOD LUCK, folks.

No money printing is going on. I have never seen a Federal Reserve note with Timothy Geithner's name on it. Stops at Paulson.



taraxias's picture

Really !?!?

Interest rates go up = banks go boom again and we're back where we started.

It ain't happening, period.

Gold has got TheBernank by the throat this time, those betting for a gold price crash any time soon are on the wrong side of the trade.

Got it???

unum mountaineer's picture

No double-dip recession. No Hyper-Inflation Either.

Once inflation gets above 2%, interest rates go up, dollar goes up, gold collapses. Got it?

exactly, it's a depression. and i absolutely love how people still look at a government chart with it's officialdom bullshit and believe there is no inflation when it doesn't even care to measure the stuff you need to live..yeah, inflation reads are the fake tits on this VD-ed abomination.

CrashisOptimistic's picture

Don't you need housing to live?  You got a housing boom in your area?

TheSettler's picture

I have a $100 right here signed by one Timothy Geithner

jmc8888's picture

Wow. You know it's coming, the desparate attempts to gain control, in the a futile attempt to stop the end of monetarism, but it's just so funny to actually see it.  Sad, more than funny of course.  Completely expected by the fascist monetarists. We're going to see soon if they have any muscles in brussels.  Good thing I know they are the skinny dorky kid who always brings on his troubles himself by opening his retarded mouth.