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Germans Turn Sour On Greece, As Majority Now Against Bailout, Force Merkel To Commence Political Concessions, Tax Cuts

Tyler Durden's picture




 

That Greeks are massively against being "bailed out" in a circular process whereby Europe's bankers rescue Europe's bankers, using Athens as an intermediary is no surprise. What is perhaps also not surprising is that German, or the citizens of the country to truly benefit the most from the "rescue" are also very much against this bailout. According to Goldman's Dirk Schumacher, a poll published in FAS newspaper this Sunday showed that a majority of the surveyed were against any further financial help. Back in May, a slim majority was still in favour of additional support for Greece. The poll also asked how the Euro's future would be assessed: some 71% voiced 'doubts' or 'no trust' or 'no future' for the Euro. Meanwhile, the discussion between the finance ministry and banks about a roll-over of maturing debt continues. The German finance ministry expects banks to make specific proposals during the course of the week. Finance minister Schäuble rejected again the idea of any financial incentives for banks to participate in a roll-over, arguing that banks would have a strong interest themselves to stabilise the situation. The finance minister also said that governments would take preparations for the case of a Greek default if the Greek parliament were to reject the new austerity package this week: "We need to make sure that the contagion risk for the financial system and other Euro-area countries remains low".

As a result, the continuing erosion of Merkel's political base resulted in the first "gift" for Merkel's coalition partners. Per Spiegel, "just a few short months ago, the Free Democratic Party's insistence on pushing through tax cuts -- even as Germany's deficit rose quickly as the country responded to the global economic crisis -- contributed substantially to a worsening of relations with Chancellor Angela Merkel's conservatives in her governing coalition. Now, though, with the German economy moving ahead at full steam and tax revenues rising, the issue is back on the table. And this time it looks like the FDP's wish of tax relief could soon come true."

More:

The German government will approve tax cuts for people with low and medium-sized incomes within this legislature period," Merkel's spokesman, Steffen Seibert, said on Thursday. "It goes without saying that the kind of reductions we are able to provide to people will be contingent on budget developments." Seibert played down speculation of a swift move on tax cuts, saying there was no way they would be agreed by January. It is more likely that any tax breaks would come closer to the next German federal election in the fall of 2013.

Still, the wind certainly seems to be blowing in the right direction for tax cuts. The German economy is buzzing after emerging from the crisis, faring better than most other European nations. Compared to the same period last year, government tax revenues are up by around €18 billion, with much of that coming from full-time permanent employees.

The tax cuts currently being discussed could be worth up to €10 billion ($14.25 billion) annually.

Speaking to SPIEGEL ONLINE, Merkel ally and the head of the Christian Democrats' parliamentary group, Volker Kauder, said the economic situation is strong enough that tax relief would be possible. He also called for a reduction in social insurance premiums, like payments into the state health insurance and pension schemes as an additional way of reducing the burden on average Germans. However, he added, "budget consolidation is the priority."

For the beleaguered FDP, a tax break could be a windfall, giving the party a desperately needed boost in the polls. The party's former chief, Foreign Minister Guido Westerwelle, recently resigned as FDP chairman due to his lack of popularity and strife within the coalition, not in small part due to the obstinate manner in which he insisted on tax breaks. Critics have long accused his party of big-business, clientele politics . And under his leadership, the FDP fell to as low as 4 percent in the polls. Even now, around a month after his departure and replacement by Economics Minister Philipp Rösler, the party is hardly faring any better, hovering at between 4 and 5 percent.

While having a stable economy, for now, tax cuts are not the key priority for Germany. As a reminder, in 2012 Germany will still have to finance 10% of its GDP from external borrowing.

The SPD's budget pointman in parliament also warned against cuts. "We are experiencing an upswing, but we are still borrowing money, so we shouldn't be talking abut tax cuts," Carsten Schneider told the financial daily Handelsblatt. He also stated that Germany's new debt brake balanced budget law also requires that the government build up reserves during prosperous times in order to provide relief during crises.

Alas, when political concessions enter the financial and economic realm, the resulting decisions always end up being the worst possible ones. We are confident that with the increasing weakness of the CDU, the one thing sacrificed the most will be German economic prosperity to buy up the electorate's love to the detriment of long-term economic prospects: a natural push to a strong EUR in the longer run.

 

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Mon, 06/27/2011 - 07:22 | 1404930 Josephine29
Josephine29's picture

The problems in Europe just seem to keep on coming. I was reading an analysis earlier which spoke of the problems beginning to hit Spain and particularly Italy.

We have seen that so far no grip at all has been got on the Greek crisis for example which means that a widening of the problem to Spain and Italy would provoke a more serious international problem. Should Italian and Spanish government bond yields continue the rise that has seen the Italian ten-year maturity go above 5% this morning then we have a new stage of the crisis. We now know how it goes, Rising bond yields lead to austerity which leads to weakening economies  and repeat in what has become a vicious circle for those involved

http://t.co/kyYvJpj

 

Seeing as those in Europe cannot cope with Greece then Italy and Spain are way beyond their abilities...

Mon, 06/27/2011 - 07:51 | 1404965 TheFourthStooge-ing
TheFourthStooge-ing's picture

Ist das nicht ein Scheiss Gewehr?

Ja, das ist ein Scheiss Gewehr (aber nicht ein Schiess Gewehr).

 

Mon, 06/27/2011 - 07:25 | 1404932 GeneMarchbanks
GeneMarchbanks's picture

Euro exit mechanism to commence. At which point your new boss is: China. Step aside IMF, China is here to 'rescue'

What a horror show.

Mon, 06/27/2011 - 09:03 | 1405066 tiger7905
tiger7905's picture

Ben Davis believes Merkel backed down due to US pressure and the IEA 60 million barrels was a form of creative QE.

http://goldandsilverlinings.com/?p=1326

Mon, 06/27/2011 - 07:29 | 1404933 Tabarnaque
Tabarnaque's picture

The Bangsters were culprits in hiding the real Greek debt level just before they entered the Euro zone. GS and JPM actively participated in hiding part of the Greek debt through the use of derivatives. Then the Bangsters kept on lending more money for years at an extreme low cost to an already broke and highly corrupt country. These were years of irresponsible investment practice done by the banks. Therefore the Banks should get a haircut on the Greek debt. Not the tax payers (either German, French or Greek). I hope the Greeks default on their debt and let the TBTF Bangsters take a hit on the money that they first created out of thin air anyway. The hell with selling national Greek assets to feed the greedy bangsters. They created money out of thin air, lent it for years to a broke country and now they want nothing less than possessing Greek’s national assets on one side and get the German tax payers on the hook for the rest of whatever will be left unpaid.

 

We need a serious revolution here. What is going on in Greece is just a prelude of what will happen in the USA. These crocks have no limit on their greed and desire to possess as much of the world’s resources as they can. The whole monetary system we live in is the biggest scam that was ever created by mankind. 

Mon, 06/27/2011 - 07:33 | 1404942 topcallingtroll
topcallingtroll's picture

I believe the greeks are equally to blame for electing politicians who promised lots of freebies financed with debt instead of taxes.

Mon, 06/27/2011 - 10:07 | 1405185 GoinFawr
GoinFawr's picture

Off course, just like in America, every Greek citizen is an MBA  who just knew it was going to blow up, despite the banks and their bought politicians repeatedly telling them it would all work out; that it was all 'Triple A Rated'. You ass. The Greeks were set up.

You sound like the type who would blame the rape victim because she passed a fleeting smile at the rapist when he bought her a drink.

Go prescribe more suicide inducing drugs for bipolars... or maybe that's why you're here?

Mon, 06/27/2011 - 10:14 | 1405220 dussasr
dussasr's picture

One doesn't need an MBA to figure out that their government is giving out more freebies than it collects in taxes and that it's not sustainable.

Mon, 06/27/2011 - 14:05 | 1405330 GoinFawr
GoinFawr's picture

Then there are only three or four countries on this list that have that figured out (and three out of the top four would be considered /gasp/, hardcore socialist by ZH standards), which is less than 1% of the world's population. So what's your excuse?

I mean, the financial hocus pocus perp'd by an international crime syndicate fooled enough 'experts' to get Greece into the Euro, so what chance did their plebs have to see the truth, really?

The Greeks were lied to repeatedly by their leaders and the professional (hitmen) financial experts that advised (owned) them. They were told 'yes we can' and, just like you, they believed it because it came from people with whom they had mistakenly placed their trust.

Mon, 06/27/2011 - 10:52 | 1405372 Rynak
Rynak's picture

As opposed to electing whom?

In current democracies, you vote for people or parties, not policies. In (un-)representative democracies, people are not responsible for anything politicians do, because people do not get to vote on policies, and politicians can do whatever they want - even do the opposite of what they claim to do.

The only thing people are to blame for, is to have voted at all, and that they have not killed (un-)representative democracy.

Mon, 06/27/2011 - 08:58 | 1405057 rufusbird
rufusbird's picture

+1 (for Tab.)

Mon, 06/27/2011 - 07:31 | 1404934 PaperBear
PaperBear's picture

This is 3 times the deficit/GDP ratio that eurodollar nations are supposed to stay under. The eurodollar has to go.

Mon, 06/27/2011 - 07:38 | 1404948 Ghordius
Ghordius's picture

PaperBear, what do you mean with "the eurodollar..." and "...has to go"?

Mon, 06/27/2011 - 07:30 | 1404937 topcallingtroll
topcallingtroll's picture

What is surprising is why it took so long for this change in german viewpoint.

To those of us of northern european protestant descent the southern european culture is looked upon as lazy, short sighted, immoral, and lacking in self discipline.

Kick the greeks out of the euro now.

Mon, 06/27/2011 - 07:41 | 1404952 midnight
midnight's picture

It's not a matter of protestant descent, it's racial superiority. We are more beautiful and intelligent than those pigs. Call me politically incorrect or Nazi, I don't care.

Mon, 06/27/2011 - 07:58 | 1404967 Ghordius
Ghordius's picture

Your comment about "protestant descent" just clarified your superior intelligence, now we need you to post a picture of yourself (or your sister) so that we all can see how beautiful you are...

Mon, 06/27/2011 - 07:50 | 1404961 Ghordius
Ghordius's picture

Hahaha!

Laziness, perhaps (the heat? religion? customs?).

Self discipline, debatable (do you look at who is fatter?).

But do you really think that southern Europeans have a monopoly on shortsightedness and immorality? Based on what facts? Racial prejudice? Max Weber's "Protestant Work Ethic"? A history of European Morality?

You have no moral right to ask for "kicking the Greeks out of the Euro". You do have a moral right to ask for an end to the bailouts. I'd suggest you ask for what you have a moral right to do, then half the ZH's readers and all of the TBTF banks will accuse you of shortsightedness (not me).

Mon, 06/27/2011 - 08:33 | 1405012 Yen Cross
Yen Cross's picture

@ least you get[YOUR] rear end up and trade! I'm impressed! You like your job as do I!

Mon, 06/27/2011 - 08:14 | 1404987 Jack Sheet
Jack Sheet's picture

The viewpoint was always present. it just hadn't been polled or publicized adequately. The mainstream media decide which issues the public should hear about at a given point in time. Up to now the abandonment of atomic power and tunnelling of the Stuttgart main railroad station (both documenting the irresistible rise of the Green party) were deemed more important. Murkle has been bought or threatened by the banks (or both), probably at the last Bilderberg meeting, and is in the process of selling the taxpayers down the river.

Mon, 06/27/2011 - 11:01 | 1405439 Rynak
Rynak's picture

Actually, the germans hated the euro already during its introduction. But not because of your slavedriver mentality, but for something much more simple: It devalued everyone's monetary savings, and wages. Or in short: It took their moneys.

German history of the euro:

1. It sux! We don't want this!

2. Sigh, apparently we can't do anything about it. May as well learn to like it.

3. It sux! We don't want this!

Mon, 06/27/2011 - 07:36 | 1404940 doomandbloom
doomandbloom's picture

nein!

Mon, 06/27/2011 - 07:48 | 1404950 Azannoth
Azannoth's picture

"..in 2012 Germany will still have to finance 10% of its GDP from external borrowing" where did you get this number, German GDP is around 2.5T euros the deficit is around 50B so about 2%, i think you mean 10% of it's budget

Germany's budget for 2011 was 307B euros so around $425B, USA budget is almost 10x this big with only 3.5x the population, with $3.3T GDP to $14T for USA so german budget is 15% of countrys GDP where in USA it's 30% and you think germany is 'socialist', well yes it is but talk about the good o'le USSA lol

Mon, 06/27/2011 - 07:57 | 1404971 overmedicatedun...
overmedicatedundersexed's picture

Lose all Hope who enter here!

true motto of the EU.

 

Mon, 06/27/2011 - 08:28 | 1404998 YHC-FTSE
YHC-FTSE's picture

The Germans have not "changed" anything. And the ECB has been averse to the bailout for some time. Some people (hint hint) have been pointing out for weeks that the bailout fiasco was conceived as a political rather than economic measure to prevent the consequences of a Greek societal collapse and diaspora into the EU as they urge themselves into a frenzy of biting the hand that literally feeds them and forces the members to kick them out of the currency eurozone. But of course the dimwits around here would rather believe in the ridiculous idea that the good honest Greeks are being forced to accept a ton of cash from their neighbours to "enslave" them. The Germans have tried to help Greece despite their own misgivings, and now they (like the rest of the EU) have had enough of Greek drama. 

 

The UK and Germany have been the largest contributors to the EU to help the poorest members - money with no strings attached for improvements in the infrastructure and CAP (common agricultural policy). The piigs have been sucking me dry for decades, and they are not going to get any more from me. I'd rather the EU spend the money I send them to help the new members like Latvia improve their lot, not give it away to a bunch of layabouts who have spent their way into this situation via crooks in their own government. If the Greeks had any sense, they would have hung Papandreou, and begged for forgiveness to stay in the EU. But all I have been seeing is aggressive begging for more money without doing a thing to earn it.

 

All that wishful thinking about the imminent collapse of the euro, and derivative craters in the eurobanks is just that: Wishful thinking by those whose own currency is a million times worse, and on constant lookout for bad news elsewhere so they can feel good about themselves. Americans are the kings of schadenfreude - They take malicious joy out of other people's suffering, and every msm story is tainted to cater for that craving.

Mon, 06/27/2011 - 09:10 | 1405078 rufusbird
rufusbird's picture

"Americans are the kings of schadenfreud." Isn't that the truth. and..."every msm story is tainted to cater for that craving...."  And a dumbed down version at that...Rufusbird

Mon, 06/27/2011 - 08:27 | 1405000 the not so migh...
the not so mighty maximiza's picture

These EligibleGreek.com ads are hilarious.  Greek women are in need for our precious bodily fluids now after austerity kicks in.. hahahaah

Protein needed for bitzhes!!

Mon, 06/27/2011 - 08:40 | 1405017 Dr. Engali
Dr. Engali's picture

 What is perhaps also not surprising is that German, or the citizens of the country to truly benefit the most from the "rescue" are also very much against this bailout.

 

How in the hell are the Germans supposed to benefit the most bailing out a bunch of lazy Greeks. It seems to me it's the Greeks problem. Let them suffer for their foolishness.

Mon, 06/27/2011 - 08:58 | 1405050 shortus cynicus
shortus cynicus's picture

The German population get no profits from bailing out Greece.

As stated in one of last articles, FIRE economy hurts real economy, diminishes real wealth creation.

Frankfurt's skyline is a mirage, this proud buildings represent wealth lost by tragedy of common people.

The biggest tragic joke is new ECB building, situated directly on a side to former death camp in "Grossmarkthalle". Banksters in this tower will look down on a place where thousands of people worked to death as slaves for financial elite of WWII - former Dresdner Bank. Having such a place direct under your foot must project much prestige and respect among other pathologically ill financial elitists. This symbolic coexistence of facism, finance, death in new ECB is very terrifying. The satanist spirit of the € project is slowly showing its real face.

I hope the free market, if it come, will take care about it.

The final quiz: please try to guess, who is the owner of the other "prestigious" ex death camp object Adlerwerke (KZ Katzbach during WWII). One hint: just pick number one from the "usual suspects" list.

Mon, 06/27/2011 - 09:13 | 1405096 White.Star.Line
White.Star.Line's picture

If only my beloved Titanic would have sunk during these times.

My insurance premium would not have been touched, the taxpayers would have been forced to pay for all losses.
Hell, I probably could have padded the bailout for a nice profit on the sinking!

Mon, 06/27/2011 - 13:24 | 1405860 Double down
Double down's picture

Bailouts cost twice as much.

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