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The Fatal Flaw In Europe's Second "Bazooka" Bailout: 82 Million Soon To Be Very Angry Germans, Or How Euro Bailout #2 Could Cost Up To 56% Of German GDP
A funny thing happened in Euro spreads today. While the bonds of all PIIGS countries surged higher in price (and plunged in yield) upon the announcement of the second Big Bang bailout, the reaction in core Eurozone credit was hardly as exuberant, and in fact spreads of the two core European countries pushed wider by the end of the day, and over the last week. Why? After all the elimination of peripheral risk should have been seen as favorable for everyone involved, most certainly for those who had been seen as supporting the ever more rickety house of European cards. Well, no. Basically what happened today was a two part deal: the i) funding of future debt for countries that are currently locked out of the market (all the PIIGS and possibly core countries soon) or in other words the "liquidity mechanism" which is being satisfied by the EFSF "TARP-like" expansion, and ii) the roll-over mechanism for existing holders of debt which "allows" them to "voluntarily" transfer existing obligations into a "fresh start" Greece which can then emerge promptly from the Selective Default state that is coming from Moody's and S&P any second, and supposedly allow the country to access markets as a non-bankrupt country.
For all intents and purposes the second can be ignored, because as has been made clear over the past few days, and as will be demonstrated below, the actual rollover from non-Peripheral banks will be de minimis, the bulk of impaired debt being held by banks in the host countries as is, and used as collateral with the ECB in the form of par instruments for cash.
Now the second part of the mechanism was never an issue further demonstrated by the plunge in net notional in Greek CDS as core banks no longer needed to hedge exposure and instead opted to divest their holdings. This is merely a red herring that attempts to confuse the issues associated with the first, and far more important concept: the nuances of the EFSF and its imminent expansion. And expand it will have to, because in reality what is happening is that the net debt of the countries will end up growing even more over time for one simple reason: this is not a restructuring of existing debt from the perspective of the host country! Simply said Greek debt will continue growing as a percentage of its GDP, meaning it, and Ireland, and Portugal, and soon thereafter Italy and Spain will be forced to borrow exclusively from the EFSF. Therein lies the rub. In a just released report by Bernstein, which has actually done the math on the required contributions to the EFSF by the core countries, the bottom line is that for an enlarged EFSF (which is what its blank check expansion today provided) to be effective, it will need to cover Italy and Belgium. As AB says, "its firepower would have to rise to €1.45trn backed by a total of €1.7trn guarantees." And here is where the whole premise breaks down, if not from a financial standpoint, then certainly from a political one: "As the guarantees of the periphery including Italy are worthless, the Guarantee Germany would have to provide rises to €790bn or 32% of GDP." That's right: by not monetizing European debt on its books, the ECB has effectively left Germany holding the bag to the entire European bailout via the blank check SPV. The cost if things go wrong: a third of the country economic output, and the worst case scenario: a depression the likes of which Germany has not seen since the 1920-30s. Oh, and if France gets downgraded, Germany's pro rata share of funding the EFSF jumps to a mindboggling €1.385 trillion, or 56% of German GDP!
The Europarliament, ECB and IMF may have won their Pyrrhic victory today... But what happens tomorrow when every German (in a population of 82 very efficient million) wakes up to newspaper headlines screaming that their country is now on the hook to 32% of its GDP in order to keep insolvent Greece, with its 50-some year old retirement age, not to mention Ireland, Portugal, and soon Italy and Spain, as part of the Eurozone? What happens when these same 82 million realize that they are on the hook to sacrificing hundreds of years of welfare state entitlements (recall that Otto von Bismark was the original welfare state progentior) just so a few peripheral national can continue to lie about their deficits (the 6 month Greek deficit already is missing Its full year benchmark target by about 20%) and enjoy generous socialist benefits up to an including guaranteed pensions? What happens when an already mortally wounded in the polls Angela Merkel finds herself in the next general election and experiences an epic electoral loss? We will find out very, very shortly.
Here is Bernstein with the full breakdown:
Continuation of the current strategy with a materially enlarged EFSF and private sector participation in liquidity support
Despite the failure of the current strategy, there is still a theoretical option of an extension of the current liquidity support with a materially enlarged EFSF that would also be buying government bonds in the secondary market. We believe this is the least likely option given the size of the fund required to achieve the objective.
An extension of the EFSF to cover Italy and Spain would require a €790bn (32% of GDP) guarantee from Germany
This strategy is not only unlikely to succeed but would also run into some serious structural difficulties. To cover 100% of the roll-over for Greece, Portugal, Ireland, Spain, Italy and Belgium as well as an allowance for bank support at 7% of the banks' balance sheets until the end of 2013, the support mechanism(s), would need to be able to deploy a total of €2.4trn in available funds.
Assuming the Greek Loan facility and the EFSM remain in place, the EFSF would have to increase its deployable funds from currently about ~€270bn to €1,450bn.
Given the 20% overcollateralization requirement on the current EFSF structure and the fact that countries that receive EFSF support are not able to provide valid guarantees mean that in order to create a €1.45trn funding capacity, the total fund would have to be €1.7trn. The guarantees to be provided by Germany would have to be €791bn or 32% of GDP.
There is a legitimate question whether in particular Germany would see the point of committing that kind of support to a concept that has so far been extremely unsuccessful. It also would expose Germany to a worst case scenario of a French downgrade. Without France, the guarantee need would rapidly move towards the whole of the €1.7trn. As the market is getting increasingly concerned about France, the odds are heavily stacked against an extension of the EFSF as a pure liquidity support mechanism.
If Banks were to participate in a liquidity expansion their contribution would be minimal
Within the current strategy one of the open questions is whether or not the private sector can participate by providing liquidity to the periphery countries. We believe this to be a fundamentally marginal discussion despite its enormous political importance.
Based on the stress test data released on Friday, we find that whilst the banks account for the majority of the very short term paper, their total share of the funding requirement into 2013 is just 23% and 16% of the total EFSF.
The question is how big the private sector participation could be. Taking the "French proposal" as a guide, the private sector participation would reduce the size of the EFSF by €137bn or 9% of the €1.45bn EFSF funding, assuming 70% of the debt is rolled over, 30% collateralization and 75% of banks participate.
The problem with this private sector participation so far has been the risk that this may be regarded as a default by the rating agencies. As a consequence the banks would have to write down these exposures to market prices. This exercise would lead to reported write-downs for the European banking sector of €75bn, 0.55 times more than the liquidity support that the EU is seeking. And in particular in Portugal and Greece the fallout of the MTM losses far outstrips the increase in liquidity.
Even more importantly, more than half of these losses would occur in the banks of the periphery countries themselves. In the absence of an open market for these banks, the losses would have to be made up by the governments themselves and subsequently added back to the EFSF utilization.
And there you have it: the cost of the euro not plunging today as a result of the ECB not proceeding with outright monetization, is that Germany is now the ultimate backstopper of all of Europe's risk. And while before, when the EFSF was just over €400 billion or so, the market could largely ignore the risk, a €1.5 trillion "upgrade" certainly changes the equilibria dynamics. In an attempt to avoid the appearance of inviting inflationary pressures on Trichet's central bank, Germany has directly onboarded the risk associated with terminal failure of this latest and riskiest "bailout" plan and in doing so may have jeopardized anywhere between 32% and 56% of its entire annual economic output. One wonders if the risk of runaway inflation is worth offsetting the risk of a plunge into the worst depression in the nation's history? It sure isn't for the Fed.
The most ironic outcome would be if the eurozone, in an attempt to prevent further contagion at the periphery, simply invited the vigilantes to bypass Italy (recall how everyone was shocked that instead of attacking Spain, it was Italian spreads that got destroyed in a manner of days), and head straight for the country on whose shoulders lies the fate of the entire EUR experiment?
Is Atlas about to shrug and topple the entire oh so heavy house of cards?
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Well, if I'm a PIIG I start partying on the German dime like it's 1999. What can the German do?
The Luftwaffe has been permanently grounded and even when they team up with their cheese eating friends they still can't beat up Libya.
Work harder
Fuck Greece. The NFL owners just voted to end the lockout. See you suckas at ESPN.
Last comments of the night made by Jean-Claude "Credit Lyonnais" Trichet summed up todays events nicely...
"Is Greece in [selective] default?
Trichet answers that he doesn't know!"
http://www.guardian.co.uk/business/2011/jul/21/european-debt-crisis-summ...
I thought it was fresh printed money, will not be repaid.
Some time ago, I woke up on a different planet.
Please, is this Earth?
Or has my mind been ZeroHedged?
Poor Germans. They seem to have a guilt complex.
They'll cough up the money and apologize for not doing it sooner.
From each, according to their ability...heh.
The Germans have always wanted to be back on top in Europe. Now's their chance. It isn't cheap, but anything worthwhile(?) seldom is. They can now boss around the Greeks and soon the Italians, maybe even Spain and France, again (who will not pay much attention to them).
They should be happy there isn't so much bloodshed as the last (unsuccessful) times around. Their cities aren't even getting bombed. What's not to like?
They don't have the military capacity to repossess anything.
They might be able to lease Greece to Turkey.
That would be a creative way to sneak Turkey into the EU.
Tyler & ZH- This is one for the history books! Great job reporting and using your crystal ball. I have saved this in my Google Docs. Time will tell, and I will tell time.
https://docs.google.com/document/d/1-a1qxD6MtyzPVq86N9Ck3A67STjQQU4QGxRD33rbrHc/edit?hl=en_US
Just think how bad Germany/France/etc would be if they were supporting a military establishment...
Consider the devastation if the ass-h--e Americans withdrew the troops and the fiat that supports them from all of those bases in Europe.
We are broke, bankrupt, busted...but still promoting the general welfare of Europe.
I hope that my fellow Americans will come to understand what a colossal bunch of fools we are. No wonder the Europeans laugh at us - you can bet they would not do it for us.
Would this be like how the falling Reichsmark stimulated the German economy to health back in the 1920s?
How gold has not gone straight to the stratosphere on this monstrocity I will never know. The selloff today in gold leads me to believe the weak hands were run out for the next big move up...because this EUR plan is another scam form of a Bernanke QE to the tune of trillions. No way gold should be selling off here...
The drama you see and hear is simply the Apollo lighting off the main engines and generating the thrust needed to lift itself upwards.
Fuck the atmosphere, target the moon. The key is patience./....
What I don't get is why these politicians did this? Did they REALLY think no one would notice? Someone always picks up the tab.
Also, they were talking about parliamentary descisions in the member states in the press conference. However, that's a diversionary tactic in that it doesn't diminish their failure to find some courage and monetize.
The whole thing is really based on deception again. They are unfit to govern:
You can't build empire during a crisis on deceiveing the populace!
Yes you can.
Especially when the populace is practically begging to be deceived.
It is has been a 30 year run of regulators turning into facilitators. Of all members of society being holding one another less accountable. In turn all of society is less accountable.
From September 2001 - 2008 all polticial policy was justified on protecting us from "them". All a politician had to do was say 9/11 and poof, the end justified any and all means. Now they just say LEH2.0 or jobs and poof, the ends justify any and all means.
Truth is the first causality of War. Perhaps when Jean-Claude Juncker said; "When it becomes serious, you have to lie", he was sending us all a warning about what was to come.
Generally speaking, you're right. But my neighbours in the east are a people that is proud, and the germans I met generally are very rational. If something doesn't make sense, they'll not readily accept it: Notable is the large percentage of small to medium businesses. So, that's quite a bit different from the USA at this moment in time. The level of education is very high, and importance of personal freedom as well as polite conduct is in equally high regard. Some of the comments above show how little some of our ZH friends actually know about Germany or the "secret of it's economic success". (Nonsense about WW2, really that's an old old pony) Gründlichkeit (attention to detail) instead. Despite the mounting debt, since the "Wende" it is still a highly organised, functioning society with high labour participation.
Dutch are generally less well informed about the state of the world, what's really going on, (they think they are, but the media has been coöpted in obscuring the truth), stubborn and don't change descisions lightly. However, just like germans, they don't accept corruption and shady tricks that cost them a lot of money.
Bottom line IMO:
Pulling a stunt like the Troika just did, and being found out, means it's simply not going to fly. It was a nice ploy, a lie packaged in a complicated package, but alas someone has to pay. The European Commission is not regarded that highly in Germany, not like the president and his administration. They have solid laws and generally live by those. Of course people are people, but I'm talking about the average Hans und Gretel attitude towards life, as I've encountered it. The variable is if the newspapers are able to figure this out in time. I think they will.
Update: critisism on the bailout (and some whining of Deutsche Bank)
Der Spiegel (Germany): http://www.spiegel.de/politik/ausland/0,1518,775858,00.html
De Telegraaf (Holland): http://www.telegraaf.nl/binnenland/10237796/__Euroredding_kost_burgers_1...
lizzy,
"Yes you can.
Especially when the populace is practically begging to be deceived.
It is has been a 30 year run of regulators turning into facilitators. Of all members of society being holding one another less accountable. In turn all of society is less accountable."
Thumbs up!!!
should we call it 'creative corruption'?
OUCH.
DavidC
To quote Mr. J.D. Salinger:
"I have a feeling that you're riding for some kind of a terrible, terrible fall. . . . This fall I think you're riding for-it's a special kind of fall, a horrible kind. The man falling isn't permitted to feel or hear himself hit bottom. He just keeps falling and falling."
Once you reach terminal speed the falling is only relative.
We in the USA did nothing when the government gave the TBTF that bail out, when the TBTF were the reapers of the mortgage con. The Germans will do the same.
It's not the citizens, its the governments, I suspect that all the governments around the world have essentially betrayed the trust of their citizens so that their friends and bankers could essentially pillage and plunder entire societies.
Re: "While the bonds of all PIIGS countries surged higher in price (and plunged in yield) upon the announcement of the second Big Bang bailout, the reaction in core Eurozone credit was hardly as exuberant, and in fact spreads of the two core European countries pushed wider by the end of the day, and over the last week."
Bond buying was well orchestrated and coordinated to make the announcement more effective. EU officials have been threatening for weeks that they would squeeze the shorts. This operation started last night when they leaked "harmony agreement" between Germany and France.
A global ponzi scheme. Makes you wonder when the TPTB are going to have the so called "moment of clarity." I guess mainlining fiat currency is so addictive that the cure rate, given a long enough timeline, drops to zero.
whole thing is a scam, but it has been for a year or two :(
Hm. Blueberry girl must have been greek. "Daddy! I WANT YOU TO BUY THIS FOR ME NOW!!!!! NOW!!!!! NOW!!!!
But child, willy is not selling...
Foot stomp, "I DONT CARE! BUY IT!"
You know the rest of what happened to her.
Chuckle. ++
Meet the incredible, real 'blueberry girl', whose parents dropped 250k on a few treehouses (plush treehouses, though):
Child’s Play, Grown-Up Cashhttp://graphics8.nytimes.com/images/2011/07/21/garden/21playhouses-span/...
Snap shot of EU intellects pissing in the Kool-Aid bowl back in 2008
Tyler, based on the new EU proposal. Can you show how many debt slaved Euros it will cost for every euro spent?
Oh and anyone who thinks the EUR will be continuously bid is smoking crack with Merkel and Suckscockzy...for one thing, what ZH is pointing out is that the Germans, damn even the French (bless them) lawmakers will play havoc with this mega tax and the indefinitely bailout of Greece - supported by the German taxpayers.
The whole thing will flop again redux.
Market digest on the 48hr timer, then sell.
Not just Greece - Portugal, Spain, Italy, Ireland and possibly the UK as a whole (the UK economy is in dire condition) - and the French economy ain't exactly on solid footing, to complete the list.
This is why the 'pledge' that Sarkozy & Merkel gave yesterday is an express announcement that they are going to take the path of the Bernankean Way, as unbelievable as that may be to some here, who see what a disaster Bernankeconomic policy is.
Print, print, print, buy toxic garbage from zombie banks for 5x to 50x what that crap is worth, pledge backstops in the trillions of euros for bad loans or loans that will go bad...
...this is not a EUR positive movement (just the opposite) from any possible angle.
ich bin ein Berliner
We are all Berliners now. Step two is debt cap raise and step three is QE3 / Operation Twist 2.
Exit fiat asap.
Actually the correct form is "Ich bin Berliner." But the Germans forgave Kennedy the faux pax. They were just so happy to see him.
What I want to know is how ZH remains up, strong, uncompromised and effective? Look at the precursors like simple Craigslist R&R and Digg and reddit, blogger, many others. Stripped, flagged, swamped and other wise overtaken.
Sacrilege, you have my deepest respect
They can't answer the captcha questions involving positive/negative integers :-)
Bauhaus - Party of The First Part
http://www.youtube.com/watch?v=9lwQRpBzbxg
http://www.waste.org/bauhaus/l/partyofthefirstpart.html
I seem to remember, not one week ago, a thread postulating how the USD would expire but the Euro would survive the apocolypse because the ECB wasn't tied to any one nation. Hey, how's that prediction looking today?
Forest fires don't give a crap about logic, they burn everything in their path, just like central bankers.
All the lifeboats are chained together, the pathetic flailing victims will swamp them all. Good luck dreaming about a safe place in a global economic meltdown. The Swiss Franc is not a safe harbor, the Austrailian currency, Singapore dollar, nor the Norway whatever. There is no hiding from this forest fire.
Today, my ZH friends, I bought another $xx amount of PMs, purchased a HUGE amount of emergency candles, and laid away still more food. I sleep well at night. I don't care what Uncle Ben does. All is well with the world.
If the world as men know it came to an end, and you had bullets, food, water, energy and enough books to last you to the end of your days, would your standard of living increase or decrease?
The US is fifty nations in one, by European standards.
And I'd really miss air conditioning. Other than that, sure, burn it.
franzpick,
in my country if i ever decide upon one, we are going to declare our debt 'odious' and refuse to pay. we made that argument in ecuador a decade ago and the world rushed to re-finance us before anyone heard the word 'odious'. now, we are back in the soup again, or nearly so under dolarization, waiting to see how we fall out of this.
of course, since the dollar is collapsing because of 'odious debt'----we could play the same game over except for----our having to get in the back of a long line. That's why I like doing-nothing-----none of this shit is mine.
corrption/special interests/uninformed or lied to populace odious fuck'em om
germany
is not money
I totally agree with you, I also wondered by Italy instead of Spain was hit so hard. Germany will come under major attack once this deal is okay'd. Remember one of Germany's banks (the second largest) is down by 50% stock price wise and 20% happened in one month. I think Merkel will destroy Germanys economy and your correct, instead of rampant inflation they are playing with a massive depression. No one wins in the game of debt upon debt upon debt. Because in the end, someone has to lose and it's usually the one holding all the debt or guarantees (Germany for the EU).
Keep your eye on Unicredit Bank in Italy. That is their ticking time bomb.
The question then is who will be backstocking it, Italy or the Eurozone??
No problems... Germans won't runs through the streets like Greeks, and Germany will never be allowed a real ruler again.
To the population of Germany:
Time to lynch your government before it destroys you again. Understand? Better act on it soon, before it is too late.
To the population of the USSA:
Ditto.
on wires now, the EU lunatics are trying to set up a "short term" Greek default, 2-3days they claim. Lets see if these a-holes can stop the rest of the PIIGS yields from going into a "short-term" default trigger.
gets better by the minute
So existing bonds can traded in for full value while newly issued bonds will be at a guaranteed fixed cost to the issuing country?
I get that continued depreciation will lead to an ever greater depression than just fixing it once and for all, but will inflation be any better? If the Germans will be mad when they find out they have to backstop a majority stake, it's just paper and doesn't hit them in the pocket until it fails. However, if inflation causes the 10year Bund to even appear to be on a path to parity with the guaranteed rate of a Piigs, then aren't you talking about something like an "inflationary collapse" as Germans abandon productivity and embrace the lifestyle? Is there even such a thing?
Germans never abandon work.
Work is good. Brat and Beer eveb better, eases the aches and makes better work tomorrow.
The Germans will not go for this deal and if this what Merkel agreed to then it's goodbye Angela.
Mathematically this whole thing cannot and will not work.
As soon as the bond market wakes and smells the coffee those PIGS bonds will hitting the price lows and yields will be off the charts.
Who is fooling who with this Bilge Crap?
yeah it's toast, all the PIIGS debt (Greece primed first) getting rolled over to long dated bonds, with the Germans underwriting the whole thing = fail.
The EUR is closing under the 5MA, closes under the 20MA we got a bear signal. Looks heavy.
EZ banks get off the hook sans the selective default, German media will tear this whole thing apart.
Moving risk from one place to another only infects the recipient and helps the contagion effect, it does nothing to solve the real debt problem.
This will just bring down Germany, and probably that much more quickly. Common sense tells you that it'll do no good.
Paper isn't actual economic output. You can play the accounting games all you want but the sheeple are going to get pissed when there are no actual goods/services to put themselves deeper into indentured servitude. It's a lot harder to max your credit card out at Central Planner mart because it's the equivalent of shopping at Chuck E Cheese to cash in your tickets. I don't need a pay day loan to buy two kid's sized left shoes and a mustache comb.
Malta, Cyprus , Luxembourg, Slovenia on that exhibit 7/ chart !?
Thats like Germany opening up the Autobahn to ( Scoda and Diahatsu)... Someone fast track me to ARMAGEDDON...
So far the Germans have been so, so....well, so Stoic....wait a second, isn't "stoic" a Greek word?
First Known Use: 14th century
Belarus will save the EU if Germany & France can't.
I can feel it.
Belarus | Country profile | Eurovision Song Contest - Düsseldorf 2011Socialism es Muerte ;)
Socialism delenda est.
82 million angry Germans, LOL! Change we can believe in! LOL!
Name 'Germany' and tadaa:
- Holocaust discussions
- Discussions about WW II
- Discussions about WW III
- How angry is the average German person?
That's what most average people think. Can't blame them. But love your great president Jackson (Indian removal act). History seen to the eyes of an average person must be a sick joke.
We are not 'huns' by the way. Most of you probably have Germanic roots. How ironic.
Thousands of years of history and you remember 12 years - I am not saying they were not important - they were. And I am not saying there isn't a terrible guilt involved. We have suffered for that guilt. Rightfully so.
Why would you feel guilt for something you didn't personally do?
The Libs are using the inherited guilt crap to destroy the west.
broadcasting the fact that you still buy into the left vs. right false dichotomy LIE only discredits whatever point you were trying to make.
If it is false, then why do I find that I disagree with Libs on so many things?
like what? abortion? gay rights?
Meanwhile, he's using a tank as his avatar... Scroll up, check it out!
Yes, it's part of the joke (terrible joke - but then I am German). 8 weeks ago I had the avatar of a German-jewish 20th century philosopher that probably only 2 people here were able to recognize - but I changed it. So what?
It's a Panther btw. I am proud of our engineering and the extraordinary skills of my countrymen. And I always said here that one day, I will use that old Panther in the backyard to drive to the ECB building in Frankfurt.
+1
+1
And, luckily for us, you have a bag over your head.
Great president Jackson- Stopped deposit of Gov't funds into Nicholas Biddle's 2nd Bank of the United States.
I just wanted to show you that history is a complex matter. Jackson made definitely some good decisions. But he is also responsible for some horrible decisions (from our viewpoint in time). Davy Crockett for an example was an enemy of the Indian Removal act.
Like emperor Tiberius - you know I always admired this man. A great, noble spirit in his youth, almost idealistic that became a cruel and cold-hearted old man.
..
http://www.youtube.com/watch?v=YLEPGDNtS4I
This New World Order 911 Global Grounds for Zero Interest Greek Tragedy Call of The Beast ...is meant to combined with a global sovereign debt repudiation call http://www.washingtonsblog.com/2011/07/economics-professor-well-have-never.html from the squawking nightmare Big Black Swan Dive ''crisis resolution'' ...due to that voodoo ''they'' do do and we all know (some of us) so well, http://abcnews.go.com/WNT/video/terror-alert-nuclear-plants-14120161 which has risen straight out the black hole of the Hell Spawn's Final Jihad & Oklahoma Knights of the Secret Circle ...those Siriusly fallen angelic hosts of the Illuminati Wisenhopper's wicked world that brought us the likes of those rascal Skull and Bones Masonic Nimrods nutballs that put the pyramid on the world reserve currency and entombed labor with worthless fiat Federal Reserve Debt Notes, after erecting the largest phallic on Earth in D.C., with a reflecting pool for their ''as above so below'' Antichrist host image, of their fraternal brother President George Washington, and claiming the corner stone ritual act of their own will and claim of dominion on Earth, as they conduct war upon Earth and against the Holy Spirit of Heaven ... while they proclaim ''order out of chaos'' and ''do what thou will thus be the whole of the law'' which they have establish through craft like; bets against the clients like the PIIIGS etc... they have entered into agreement with through deception and the offer of temptation, like a deadly global Swine Flu Debt Virus killing the global free market system by causing chaos in order to establish their new world order of total global control. http://www.youtube.com/watch?v=Flv3pVRCkUc
...or not, could be just ''ironic timing'' with geopolitical cartography and ancient monolithic clock-work with the stars and the pyramids below the ocean water and above it. http://www.youtube.com/watch?v=75jRNqsDcs8 ...that just gave me a Cramp, Saddle Up A Buzz Buzz.
http://www.dailygrail.com/Alien-Nation/2009/7/Buzz-Aldrin-and-Monolith
Within that new terror alert at nuclear plants is the serf defining statement...
If you are disgruntled, you are a suspected terrorist.
In other words, if you aren't happy in your job (in spite of pay, hours, management bullshit, government inspectors, babe repulsion job title, unhappy spouse, etc), you are an official suspected terrorist.
Shouldn't be too long before other sectors are defined as critical with the same definition applied.
Next, Health Care, Education, Municipalities, Police, Fire, Unions... further out, accountants, tellers, private business owners...
Okay, let's get a handle on this.
What's so hard about that to understand? Time to re-write the entire article with those two fundamental FACTS in mind?
So, what are the German newspapers saying? The first response this morning was one of anger from a coalition leader. And the wise men think there was not enough debt writeoff. And then, by the time they read Bernstein's analysis, I think the Bundestag will be on its feet asking Merkel what the hell she was thinking... well.. Let see what the Bild and De Spiegel have to say in the next few days. IF they fail to pass on the EFSF changes, what is next?
Merkel is out to garnish her legacy; if she had of stuck to her guns and the Euro had of broken up, then perhaps somewhere down the line the Euro countries' start some kind of war...she would go down in history as the tight-fisted German bitch who broke up the Euro, hence sowed the seeds of disunity. Fair play to her, she has balls, respect her for that, it was a situation of “fucked if you do, damned if you don’t”, she did the right thing but she’s still fucked.
No invasion of Poland this time: rather Greece buyout at the bankrupcy sale... and all further ripe piigs falling in its basket.
If I were German I wouldn'be that angry, after all.
german ifo idex falls in july. great ready for the backlash...merkels cheque book will be ripped up. b
Even more importantly, more than half of these losses would occur in the banks of the periphery countries themselves. In the absence of an open market for these banks, the losses would have to be made up by the governments themselves and subsequently added back to the EFSF utilization.
Perhaps this is one of the short term goals of this current experiment. A forced liquidation of the sov paper held in Greece, Ireland and Portugal making up the vast bulk of "voluntary" rollovers. Then the EFSF and ECB can continue on as always. No small wonder the ECB stated that it would continue to accept defaulted Greek paper. This also postpones the final day of reckoning in the core money center institutions, and as the author notes, the downgrade of France. This must have been the stick wielded by Nickolas Sarkozy in his meetings with Merkel yesterday.
No wonder the ECB is reportedly looking for ways to mitigate the follow on effects in Ireland as the whole process of "ring fencing" reaches new levels of absurdety...
http://www.independent.ie/business/european/ecb-stays-tightlipped-over-m...
This isn't a done deal until Germany's constitutional court comes back with it's ruling on sovereignty in September.
you are genius thanks for a must reading article
Great article TD
"...the Guarantee Germany would have to provide rises to €790bn or 32% of GDP."
Well bailouts are illegal under the EU Constitution, has the German Govt not checked with their legal team? And soon to be illegal under German Law too so may as well roll the boat out all the way up Shit Creek if your politicians are becoming lawless anarchists (standard practice in Govt isn't it?)
Namely Germany passed strict Laws in 2010 for its States and Govt regards running budget deficits limited to no higher than 2-3% of revenue by 2013-2014. So any of these Euro debt (money) guarantees that are called due will in effect 'pop' their budgets and 'ping' their new Laws. Good thinking Batman!
"The most ironic outcome ...the vigilantes ..head straight for the country on whose shoulders lies the fate of the entire EUR experiment.."
Irony or hilarity? Politicians heading to a train-wreck of their own making, thinking more debt solves the problem of too much debt. The Govt and public sector collapsing under yet another orgy of Suicide Socialist spending. Pass the popcorn I'd like to enjoy every minute of irony
"Germany is now the ultimate backstopper of all of Europe's risk.."
More good thinking Batman. The Mansion, Batcave, Batcar, Batboat, Batcopter and Batbike are now all leveraged to the hilt to 'save' the crooks running amock in Gotham City (Brussels). Thought Batmans job was to clear Gotham of riff-raff not finance them no?!!
Well batty bitch, Angela Merkel, has hooked-up her solvent nation to all the Euro-trash: the drunken Irish Banker-Property Gang, the fraudsters in the Papaparasite Cooked Books Greek Goon Squad and the Sangria-soaked Spanish Suicide Socialists.. Robin is going to piss his tights when he hears about this!!!
What is a highly educated, industrious and (was!) wealthy country once again being brought to wrack and ruin by its delusional idealogy-chasing politicians and banksters (see Germanys history books for previous text-book examples of oblivion)
Maybe German people and business will learn something this time, that Govt and Banking will ruin all your good work, piss away all your wealth and drive you off a cliff if left un-checked.
Solution: zero Govt
This should go over like a lead zeppelin.
Folks its just promises on fiat money just to keep things going for a while. What is important is that Germany can not be blamed to have triggered the final melt down of the financial system. Because then Germany would have received pariah status among the "civilized and democratic nations". There would be a battle cry throughout these "civilized and democratic nations": "Germany again! They have to be isolated so that they can no longer be a danger for the "civilized and democratic world".
This would have been much expensiver on the long run for Germany, given its dependence of its export driven economy. Damned Merkel she is slicky like an eel.
Everybody is waiting for the US to collapse and this will be the decisive moment. This can happen anytime but it may take another 10 years down the road.. Its only sure that it is going to happen at least from what we know today. Then everybody gets new cards and I dont think the PIIG debt issue is then of further importance. And the German debt and obligations who cares then. It cant be paid back either just like all other souvereign debts in the world.
Germany has only one advantage. It is the ability to compete technologically with other mayor players. The German economy is quite fit and capable at present in the non military sector. And this is the difference between Germany and the US for example. Presently the US and UK is wasting their money and their brainpower for the wrong sectors. Finance Industry and Military Industry! This is were the problems sits. The solution is quite simple but the transition time will be very painful. But this is unavoidable. Nobody can take away the pain involved in giant ecomomic restructurings. And it will take time!!
I spell FIAT money as follows: Failure In All Territories!!! The collapse of the Dollar is going to be the Death Bell of the bloated banking industry which is financing the Military Industry. Hopefully the world stays then away for a while from such wonderful wealth producing financial innovations like, MBS, CDS and so on. And hopefully the banking sector is chained and cut back to the purpose of financing real world civil projects and real innovations. And it should be outlawed that governments can get credit because such credit is just an additional tax which has to be paid later on through increased taxes.
WTBFD ? (What's the big feckling deal ?) "Social Engineering" by Socialists has always been giving away OPM (other peoples money) then feeling noble, altruistic, pompous and pretty about it ! Phonier, lying scum bags you'll never find in any other profession ! They know no other thing but stealing, lying about it and feeling good about themselves ! Our budget crisis will end the same way ! Shocked that gambling is going on at Rick's Cafe Americain ? Monedas 2011
Germany.... Cut your loses and let them sink!
Genius.
Forcing Germans to pay off onerous debts that they feel morally outraged to pay.
This has never caused any adverse historical effects.