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In Stunning Decision, EU Orders Germany To Start Onboarding "Bad Debt" To Sovereign Balance Sheet: RBS, Fannie, Freddie Next?
In what could be the most important news of the day, German Die Zeit reports that, in a stunning move, the EU has ordered Germany to count the holdings of WestLB and Hypo Real Estate (the latter of which failed the stress farce from last month which nobody cares about or remembers anymore) as government debt! As Bloomberg notes, "That could raise Germany’s debt to 90 percent of gross domestic product, Die Zeit said." Of course the implications of this decision are massive, as it takes out all the guess work of whether insolvent institutions are or are not on the government's balance sheet. The net result, for Germany alone, is that just the addition of Hypo's debt would push German debt/GDP from 79% to 90%, both of which are well above the Maastricht limit of 60% (not like anyone cares that is - everyone is now aware the EU is a failed experiment). The next question: what happens to nationalized RBS and it $168 billion in debt? Total UK debt is $1.2 trillion meaning a comparable action in the UK would rise UK debt by 15%! And then there is a whole slew of other banks in the pipeline in Europe that are full of trillions in toxic debt: will the sovereign hosts be able to onboard this debt? Most importantly, what happens to our administration's adamant claims that Fannie and Freddie's $6+ trillion in debt should not be counted as part of total Federal debt. America already has its hand full with $13.3 trillion in debt. What will happen when it moves to $20 trillion (140% of GDP) overnight. We are confident that unless this decision by the EU's statistics office is overturned, it will likely set off the next leg in the sovereign debt crisis as suddenly European Debt to GDP ratios will increase by about 15-20%.
More from the WSJ:
The bailout of Germany's banking sector may swell the country's public debt rate to 90% of gross domestic product, Die Zeit weekly newspaper reports Wednesday.
The weekly based this estimate on a recent decision by Eurostat requiring Germany to include the balance sheets of public-owned bad banks--set up to help financial institutions offload toxic and non-strategic assets--into its overall debt ratio.
State-owned WestLB AG bank has already offloaded EUR77 billion into such a rescue bank. Going by the Eurostat decision, EUR54 billion of WestLB's toxic assets transferred to the bad bank must be included in Germany's overall debt level.
Finance ministry spokeswoman, Jeanette Schwamberger, said the "winding-down entity of WestLB has already been included in the government's recently published calculations of the debt level."
In July, it forecast Germany's debt level will rise from 73.1% in 2009 to 79% of GDP in 2010, 80% in 2011, to 80.5% respectively in 2012 and 2013 before easing to 80% in 2014.
Die Zeit said that if nationalized mortgage lender Hypo Real Estate is added to the equation, Germany's debt level could widen to 90%.
However, the impact from Hypo Real Estate is yet unclear because a rescue bank hasn't been set up and it's unknown how big the volume will be, according to Schwamberger.
Hypo Real Estate has said it plans to offload EUR210 billion into such a bad bank, but has already added that it might need less fresh capital than previously said. A consolidation of assets might reduce the widening of Germany's debt.
A debt ratio of 90% of GDP would be much higher than the 60% threshold set under the European Union's Maastricht Treaty.
h/t Tim
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Please keep the good work Zero Hedge!!!!
Vix!!! yes baby yes uhh ahhh
"Tell me what currencies are going to do and i will tell you where the markets are headed"
- Pamela Anderson Lee xoxo ;)
unfortunately, i started buying vix $30 august 18th calls almost a month ago when they were around $2 ($1.55 average at the moment). i need five more days like today to make some scratch on that trade.
"The next question: what happens to nationalized RBS and it $168 billion in debt?"
an all-important follow-on question: will bob janjuah agree to be a shill for the state post-receivership?
I thought Janjuah left RBS.
Janjuah has joined Nomura. His first official work day will be in October
National Socialism bares its teeth again.
Has anyone else noticed?:
http://en.wikipedia.org/wiki/Hindenburg_Omen
Talking of the Hindenburg ...heres something interesting i found:
Titanic & Hindenburg: Two Psy-Ops, One Agenda?http://www.henrymakow.com/titanic-hindenburg_two_psy-ops.html
Shit! What is the likelihood this actually sticks?
Such a demand would cause me to immediately begin proceedings to withdraw from the EU. But then, if I were in charge of Germany, I would have done that long ago.
Oxygen Sensor I agree so what if they know what the US is doing. If you aren't willing to do something about it then shut the hell up. China can't do shit about it till they have more people making 10k+. That doesn't look like that will happen for a long long time.
whoa!
RBS, Lloyds, Northern Rock... The UK's in deep you-know-what.
at the moment the debt would be offset by the share value so it wouldn't make much difference.
...but once house prices start dipping, which is starting to happen, a lot of their RMBS portfolio will go bad, which will lead to further losses for RBS and Lloyd's.
Witnessing what happened in the US, Gordon Brown was absolutely desperate for this not to happen, which resulted in ridiculously low base interest rates - just long enough to reflate the baloon that is the UK property market a few years. The second time he resorted to that solution, when you consider Eddie George's 2007 Independent article.
double post
Not so. UK has one of the better debt/GDP levels in Europe (ie. less debt).
They also have a government which is yanking on the reins of public spending and aren't required to contribute anything to the 1 trillion euro debt.
Notice how EURUSD has sold off much more than GBPUSD? I like GBP, especially GBPNZD:)
Well, the 62.2% debt/GDP figure doesn't include bailouts. Furthermore, the debt/GDP doesn't look so inviting, when you add unfunded liabilities and ridiculous final salary public sector pensions Gordon Brown "forgot" to add to the bottom line.
As far as the austerity goes - and as a Tory, I do believe Cameron is on the right track - so far the cuts and tax increases only address 25% of the deficit. For us to get rid of the deficit entirely, it will mean slashing university budgets, closing schools, axing police departments, and slicing welfare spending.
If you head over to the Guardian at present time, you'll see all sorts of moron Labourites, who think the existing cuts are "savage" and "unnecessarily harsh" - imagine what will happen when they realize the true scale of the cuts.
The UK does however have relatively long average gilt maturity.
You are right, but 62.2% debt/GDP in UK is better than 79% debt/GDP in Germany.
As for the unfunded stuff, every western country has that and we will all face alot of pain balancing the books.
I think the UK has benefited from the conservative's foresight, their clarification of where the money is going to come from to fill the black hole. If only other countrys would show such fiscal prudence:)
Fiscal debt does not mean jack shit - its the total debt baby - the UK and Ireland has monetarist muck everywhere and nobodys going to clean up this mess but their own subjects.
The Anglos are dead in the water and the French man of wars are going to sink them into the Atlantic.
UK is the most indebted nation in the world, with total debt/GDP around 470%.
See for example this:
http://ricefarmer.blogspot.com/2010/01/total-debt-to-gdp-ratio-help.html
They will default or (hyper)inflate, at some level. It can be the public or the private sector, but with these levels of debt they will never make it whole. It' s impossible. Just to roll over it at, say, 4%, costs 19% of GDP. You would need to grow at almost that rate to make it WITHOUT running budget deficits.
You don't need an economic PHd to understand UK (and the whole western economy) is fucked.
no wonder they are pounding gold today.
That's OK, I'll be buying yummy physical gold tomorrow.
Some of the FRNs ($500) I will be using will come from the ATM tomorrow. Hope to see you there!
"Let's Deflate the Bitchez!"
Excellent news! Sunlight is the best disinfectant.
Now it's time to watch the roaches scatter.
Hello... Fannie Mae, Freddie Mac... anyone??? Nah, they get a pass. Jesus H Christ...
Wow. If this is accurate, it will be interesting to see if Deutschland acquieses, or gives the EU a teutonic FU. If the latter occurs, we ain't seen nothin' yet. It explains the USD action today, and why the US is still likely the best dump in a lousy neighborhood (barring non-fiat currencies).
I going to hijack your comment just to get myself higher on the string. :) At least I'm transparent.
Most institutional investors have to realize this reality already. I think the real impact of this is more political/popular opinion. As the taxpayers around the world increasingly awaken to the idea that they are left holding the bankster's bag of shit, they will slow down tax payments, purchases, mortgage payments, etc. It's a small revolution but will increase over time, especially as these sorts of notices.
It may cause a new immediate crisis, but it's more likely the EU will simply continue to paper over the issues. It's the long slow burn of the social fabric that will be the real problem.
Ah, so now it comes to this - wanting to be higher on the string. I can remember when I aspired to be higher on the ladder. Now I'm just hoping that I don't do something like this on the ladder of life: http://www.youtube.com/watch?v=XEmDZepON60.
Is Goldman still short the vix??
LOL I can wait to get their margin in my account when today settles, and my VIX calls are worth so so so much more than friday's...
Goldman isn't short the vix - that's just what they told their customers to do...
I hope so....and I hope they are leveraged to the hill!
come on curb, if that's the case you know they'll package it, rebrand it, and repo it to the fed
Does this have anything to do with the assault on the Euro?
Yes... have a look at EURJPY and the VIX, the gamma trade has huge returns when the carry explodes.. money has to go somewhere...
I've heard plenty of talking heads saying last week would see the top of the EUR/USD. Looking like they had that right.. I had a feeling 1.35 would cap it either way.
Interesting development. In particular I don't see why the buck would stop with Germany...
Shootout at the EU Corral.
Excellent news! Bravo EU bureaucrats!
The Fed announced yesterday it's going to buy the worst of the paper held by the GSEs. Last I heard IMF auditors weren't very welcome at the Fed.
Are you kidding... they are kissing cousins..
it's not so much their kissing I'm afraid of, it's their offspring
yawn
Well the answer is obviously yes, our officials simply won't directly acknowledge as such - so glad that when I am old I will be able to say I witnessed the collapse of the once great American society....
Wunderbar!
They are taking their medicine. I can only assume they think this is a way to 'bottom out' the economic free fall and start again.
It's a suppository. This is what I think the EU is doing...
http://www.youtube.com/watch?v=qVE60zwXx1k
health education 101 grade school.
Very glad my kids were in bed before I clicked on the link. The following recent comment on the video was a hoot, " so that's what Kermit was referring to when he said it's? not easy being green."
Time for ze Bundesbankers un der Volk to tell the EU to Fuck Off, reissue the Deutsche Mark, tend their own side of the street and let the rest of those arrogant riders in the cart fend for themselves.
PS. You're shitting where you eat, EU. This portends a global demise of fiat currencies and Major Flight to Quality and Gold, for the image of all consolidated debt shall closely parallel John the Devine's (Brother of Andy, son of Mrs.) Book of Revelations. Oh, what a feast this shall be for the Global Institutionalization of the NWO's Plans.
Right up the Kazoo, Mr. and Mrs. Middle Class Whoever is Left, Anymore, Anywhere.
The next question: what happens to nationalized RBS and it $168 billion in debt? Total UK debt is $1.2 trillion meaning a comparable action in the UK would rise UK debt by 15%!
Last I heard the UK was not part of the EU, so the answer to the question is "nothing."
Thank goodness for that. We can make our own mistakes, without needing to play stupid European games
You last heard in 1973? By the way, Nixon resigned...
http://news.bbc.co.uk/onthisday/hi/dates/stories/january/1/newsid_245900...
The Brits are in the EU but not in the Euro.
Well, it might be nothing. On the other hand, it might become the new global precedent, if say TPTB want to use it to trigger their next omelet making session.
Like say, forcing the nationalization of every insolvent bank, which of course, is every bank.
Will this be the next "shot heard round the world," introducing QE to infinity?
Last time I check, the UK is part of the EU but simply it does not participate in the common currency (the Euro).
Now I do not know if not being part of the euro currency means that the EU cannot impose/ask to the UK do do the same thing with the bad debt of its banks.
Uk is part of the EU - Therefore it does not have full soverignty over its affairs - whatever British politicians would have us all believe. However the UK does have its own currency (printing press) so it is much harder for Brussels to impose this on the UK. i do not see Mrs Merkel accepting this for one second.
Noah I am afraid to inform you that the UK is part of the EU since 73 - it just is not part of the Euro.
Indeed as you would expect for a country on Europe's western seaboard the British economy is extremely dependent on EU trade although London as other interests also.
As for Brussels - they are correct in this instance - if countries or indeed the ECB want to play fantasy banking forever then zombie banks become systemic to the sovereign and must be recognized as such.
Heh heh. Outstanding. Lets see the rest of Europe try and get out of doing that, if Germany don't object. Time to come back from the beach, Sarkozy
So the inevitable solution to the wild, parabolic and now burst debt bubble will turn out to be : Nationalization of most of the Financial sector. The Irony is so poignant here: Die hard market fundamentalists now running to the skirts of Mother State for protection, all whimpering and crying!
The die has been cast: all countries, the US included, decided during the crisis to go from market to state run economies.
The rebirth of the Mother State Leviathan. Following along the already failed British post WWII model, the EU model....
Never let a crisis go to waste.
Epic
The folks that got us here, the ones who were vested with the care and nurturing of the very economic system itself, who have raped and pillaged for their own vested self-interest, the pinnacle of hypocrisy, those who have let mankind down, now shall become larger, more powerful and more omnipresent.
Batten down the hatches sons, for the storms of Hell are upon us.
God Help Us All, for Mankind has Failed Itself.
++++++++++++ Caviar and knukles.
Indeed batten down the hatches.
God Help us All, for Mankind has Failed Itself.
this might actually benefit the euro in the long run by adding transparency to the currency's underpinning - it's fundamentals although worse, are known and out in the open, vs. the potentially limitless and hidden liabilities in the US that are off the books, just speculation...
Nope.
Who presides over all the cooked books?
The EU.
That old don't hold one's breath.....
Expect the Germans to instantly prepare for a push through the Maginot line and take Brussels by the end of August.
(and yes, I know Brussels isn't France ;-)
You would think the Europeans would learn to not push Germany on financial issues.
http://www.vibrationdata.com/Stuka.wav
@HH
Molecool's comment was good, but this made me laugh. Harkens me back to high school world history class. I really wish more people would study and respect history.
More like the Battle of Hürtgen Forest.
http://en.wikipedia.org/wiki/Battle_of_H%C3%BCrtgen_Forest
Poignant
The fall of Rome.
Most Epic.
Its funny; it doesnt really change anything in real terms, its a an accounting gimick. Kind of like how enron showed a profit right up until the end.
+1
I was thinking exactly that: The analcysts may scurry because the numbers move around, but the liabilities are the same, the cashflow is the same, the leverage is the same.
It's cute if this tips the ship, but the ship ain't staying afloat no matter what.
mikla,
Is that the picture of your personal yacht doing cargo work because of the poor economy? I told you to not to put all the illegal drugs on one side. Now you've gone and pissed off the Colombians. See ya in the next life. :>)
I was trying to follow what I thought to be sound advice, as prescribed in the movie, "Goonies":
Apparently issues with ballast suggests I didn't have enough heroin.
Español putas!
What the hell, it's only money. Or is it? :)
It will never stick. The EU has no interest in ripping itself apart. Thousands of apparatschicks firmly and comfortably entrenched. A political paradise resort for politicians voted out of office, with plenty of space for politicians now in office.
So, the EU believes in ripping as opposed to lightly tugging at that old bandage. Good for them! They finally figured out that you can't have 'confidence' unless you have 'transparency.'
China put the screws to the worlds banks when they took this step yesterday and the EU knew it. Who would have thunk that the Chinese would lead in the area of transparency?
Another step to lower Euro, in next 2 months or so US will be forced to do similar thing to depress USD. And so on! Alternate depreciation of currencies, nobody will notice it for sure! And gold should stay at 1200USD. BPD is too strong so they will have to implement some appropriate action and probably RBS will be good excuse.
I might have to fill up the gas cans sooner than I thought...
I imagined one day I would be driving out of town passing my local gas stations with lines into the street and around the corner:
"Hahaha! Suckers! Hahahahaha! Should have read zero hedge! Stay confused and eat a twinkie! Hahahaha!"
And I thought EU only did anal... now their stuffing every god damn hole with crap!
Big Joe: Look, Mac, you and us? We're just soldiers, right? We don't even know what this war's all about. All we do is we fight and we die and for what? We don't get anything out of it. In about a half an hour the whole American army's gonna be comin' down that road. Why don't you do yourself a great, big fat favor, huh? And get the hell outta here?
German tank commander: I have orders. This bank isn't to fall into the hands of the American army.
Kelly: Sergeant, this bank's not gonna fall into the hands of the American army. It's gonna fall in our hands. You see, we're just a private enterprise operation.
German tank commander: You... the American army!
Oddball: No, baby, we ain't.
Love that Movie...
ooo gold slid green...are investors starting to realize perhaps we are in big doodoo and the USD is worth nada?.....naaaa probably not until it's too late.
A Visualization of China’s Bubble Economy
Am I missing something? Why would the EU cut off its nose to spite its face?
I don't know why the EU would cut off it's nose to spite it's face....then again they did start WW1, hundreds of thousands dead, over some unknown arch duke something or other.
Maybe they are being very clever. You see the US appears to want to deprciate its currency with abandon. In a deflationary world that makes life very difficult for the Europeans. How to fight back? The ECB is too sober to follow in Ben's footsteps. So the best way is to periodically raise the risk perception of the Euro - keeps the Euro from exploding up and becoming a safe haven against the Dollar.
++ its a race to see who can devalue their currencies the fastest.
i heard china just anounced something similar, im sure the us is next
sounds like a new global currency is comming.....
i call it the worldo
This sounds plausible. I suspect in the end Europe is going to push all the insolvent banks under the bus and itself emerge alive, while the USA dies a horrible, miserable death, in the end being forced to rent out its aircraft carriers and technical industry in order to pay basic utilities. The first step in not going down the path to hell is DON'T BAIL OUT INSOLVENT INSTITUTIONS.. LET THEM FAIL (or at worst nationalize them and chop them up for kindling)!!
they are proceeding according to their plan.....they did not do all this economic warfare just to have a 2 year DRAMA....some nonsense recovery is not in their mind.....this is "Order out of Chaos"
(Financial) Guns of August. where's Barbara Tuchman when you need her?
Deleted.
Tyler,
Pardon me for posting an old news article from March 09 although still highly relevant today.
Click on this unmodified original link and you'll notice that the 16.3-Trillion figure has been removed from the article itself!
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4590512/European-banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns.html
How reality is described doesn't in any way affect reality and the fact that the markets react as if it does just add proof that the markets have no relation to reality and thus no useful function
Interesting. A bean counter with integrity and courage. I hope it sticks, but don't think it will.
This would require an omnibus amendment to the definition of "public debt" for purposes of the "liabilities of general government" component of the EDP calculation for enforcing the Maastricht limit. Would it be possible to "treat" the debt as German (ie implicitly guranteed), but not treat it as soverign for Maastricth purposes? If so, looks like they are merely stealing a page from the GSE play book. http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Excessive_deficit_procedure_(EDP)
The ECB will buy it, nothing to worry about.
www.NationalizeTheFed.com
better:
www.AbolishTheFed.info
+1 Abolish the Fed and don't forget tomorrow is $500 ATM withdrawal day.
+ $500
Yes we can!
"Sunlight is the best disinfectant"
Well said, senor tripod.
Once again, the EU in another 'dumbloop', the
difference with the US is that 'debt' is already
included... And the German state also owns 20%
of Commerzbank, Axel Weber is readying his sword
ze govt own just over 25% of Commerzbank shares, they own another 225% in debt instruments
Hmmmm 'already priced in' I'm sure! <sarcasm off>...or is it on...can't even tell anymore.
I could be dead wrong here but something in my bones tells me that there is coordination between Brussels and Frankfurt in this regard.
Maybe Frankfurt wants a sovereign debt crisis so that it has a excuse to break from the dollar system.
The more I think about it the more I am coming to believe that Frankfurt will starting bidding for Gold to protect the Treasuries of Germany, France and Italy from being impacted from bad debt at the periphery and internal fiscal problems within Italy.
Beware - I firmly believe that Europe has the Gold - chiefly in private hands and maybe Frankfurt has a mind for nationalisation via exchange at maybe the M1 price.
it's an outright given that no major central bank operates in isolation anymore.
You bet there is.
I think the EU is likely to fare better than the US, because the euro is not the main reserve note, so it's not as exposed as the dollar. And they already started to do some public finance trimming, which left the US in an offside position.
Furthermore, the Eu will prove a major advantage for Europe because part of the sovn debt is intra-community debt, which will be a lot easier to negotiate, probably even write off, IMO. I don't see that happening with the US and China, for instance.
What coordination will be between Wash DC and Beijing when the shit will hit the fan? I bet there will be more coordination between Beijing and Moskow..
After I posted previously, had a few errands to run, and thoughts along similar lines popped up. The EU thinks it would benefit from a weakened currency. Have a previously discussed/coordinated huff fest scaring those not in the loop into believing that an EU breakup could be in the worlds. Perhaps drag it out for a few months or until potential profits have been milked without to much instability setting in. Hide it behind the fig leaf of more financial transparency. (Don't laugh). Make sure that a few trusted individuals at trusted institutions are aware of the coming kabuki theater and are positioned to benefit and fill in a few financial black holes while they are at it.
which frankfurt? ECB always follow brussels, the bundesbank will be more hawkish - you'll see the mark back before you ever see Weimar II
Good point - things are complicated in Europe.
For the record I believe the Bundesbanks mentality of hostility towards high fiscal deficits has been a grave policey error that unfortunately has transferred over to the ECBs culture.
Here’s the big picture: They are going to destroy America. Everything!! Congress, just by the repeal of Glass-Steagall, opened the door to the wholesale looting of America, and the world, by the investment bankers. And now, with the public clamoring for reform, the wholly owned subsidiary of the bankers, known as the United States Congress, not only left the door to the loot unbarred, it gave the looters who own the Fed exactly what they wanted—more power, more secrecy and more regulations on their competitors.
Whom do you think Dodd works for? Or Bloomberg? Or the WSJ, or ABC/CBS/MSNBC/Fox…? It’s the ruling class.
America has to be saved as a provider of hands-clean free enterprise. There’s only one way that she can be saved, and that is to extract her cancerous center. And it is not going to be extracted by people working for reform, by letters to the editor, by voting for Republicans, by talking to a neighbor over the back fence. That cancer is going to be removed by activists forcing these people out. And the way they’re going to be forced out is by enough people seeing what’s going on, i.e., by Zero Hedge et al.
Change is in the air. The policies that Bernanke and Summers and Rubin and Trichet are undertaking are all crisis oriented—bigger and bigger lies, constant back peddling, cover up, absurdity-bordering-on-the-ridiculous media duplicity (such as CBS this morning saying the reason the market’s down is that investors are feeling the recovery is in slow motion—iow, we’re getting there, it’s just a bit slower). IOW, the words get stronger and faster and more twisted as they try to inject some essence of believability. Take Bernanke. His statement yesterday was the strongest ever on what he’s going to have to do to right this sinking ship. While it’s in recovery…
I recently had a co-worker joke about doing an "intervention" on me because I talk about these things. Scary times when those that would warn with hard evidence will go the way of Galileo.
Next stop: mass starvation.
++
Question is: how many people know what's up, and how many more do we need and at what rate are they being converted?
Like i've said before, the numbers are growing and there is something in the air. People know they are being lied to and intuitively understand that they system is working to destroy our way of life. At what point will they let go and realize it's going to take dismantling before we realize our true potential as a society.
" What will happen when it moves to $20 trillion (140% of GDP) overnight."
QE 3D
Free glasses with every set of food stamps.
This is good for solars, yes?
I am fairly certain if the sun stopped shining that Leo would consider it a positive for solars.
"Most importantly, what happens to our administration's adamant claims that Fannie and Freddie's $6+ trillion in debt should not be counted as part of total Federal debt. America already has its hand full with $13.3 trillion in debt. What will happen when it moves to $20 trillion (140% of GDP) overnight. "
EXACTLY! That's one of the dirty little secrets on this side of the pond that no one here wants to talk about. That our shit already stinks worse. Reserve currency, my ass! Maybe backed up by skittles.
futures @ 2:58
DAX
6,152.00 -131.00DOW/SP500 daily charts are now bearish.
So the downtrend I first mentioned in early May this year, can now resume.
http://stockmarket618.wordpress.com
Unfortunately relatively sound economies are mislead into taking the path of the United States. The gov does such a wonderful job at misrepresenting awful economic news as economic health. We can only hope that decoupling on a massive scale takes place sooner rather than later as to expedite the revitalization of the US economy. A return to production and savings is in our future. Unfortunately it will take decades to repair the damage that has been created by the Federal Reserve and US government. Loose monetary policy is the seed of all bubbles. Inflation is a politicians best friend during dismal economic times. They are able to give everyone what they want by defying the logical classical principles. One comparison that can be drawn to our economy may be Reagan's election into office during the stagflation of the late 70s and early 80s. However, instead of normal inflation we shall experience hyperinflation. When the public finally understands that bigger government is not the answer to our problem and only limits the efficiency of an economy change will be in order. Hopefully Ron Paul will be able to win the election of 2012 and finish the job Reagan and Volcker started. Aggressively increase interest rates and CUT government spending. That's where Reagan went wrong during his administration. The quality of life and standard of living in the US will decrease significantly regardless of the path we choose. Now it is a decision of whether or not we are willing to take a large dose of that awful tasting medicine now or have to be reincarnated. Looks as if the most likely scenario is stagflation with hyperinflation. Dollar crashes, new currency. Canada and Mexico combine currencies and north american union is created, the Amero emerges. When the US crumbles, Canada and Mexico go down with it. Although, they would be much better off simply remaining independent and exporting their vast natural resources to Asia.
If by finishing Raegan's work you mean killing the middle class in favour of the financial upper one, well, you have a very poor opinion of Ron Paul, then. Just leave Obama on, he's doing a very good work from this point of view.I agree with you anway with the rest of your post, in general, when you talk about stagflation. As far as what Canada and Mexico will do, well, I simply do not have any idea.
A Austrian that likes Reagan and Volcker - now I have heard everything.
I need a fucking drink.
Mexico will regain California, Nevada, New Mexico, Arizona, Texas...in spades!!!
So this means the banks and the governments colluded to institute slavery by proxy.
Yes, will happen in the U.S. too and already has, it will just get worse.
"America already has its hand full with $13.3 trillion in debt. What will happen when it moves to $20 trillion (140% of GDP) overnight."
Yes, I can see why USD gold is down on the news. And where do these GDP figures come from?
I didn't mean to compare Reagan and Volcker to Ron Paul. I neglected to mention that the conditions of their elections may be the same. Carter was elected over Reagan and ended up being an Obama. Facing stagflation, the public realized that bigger gov wasn't the answer to the problem. They were willing to elect a more unconventional candidate. Reagan got crushed when he ran against Carter (like Ron Paul did last year). The next year everyone was so disgusted they voted him into office. In that sense, election conditions appear to be similar...
Great, just great! Mission Bailout was a success in USA. Time to conduct it in Old Lady Europe. I sincerely hope the Germans tell the Plutocrat brokers to go on a quest of erotic self-enlightenment (i.e. go fuck yourselves!).
If the directive of Eurostat for nationalization of bank debt as sovereign debt is upheld or obliged, then this is a defacto federalization of the European Union, and loss of national sovereignty, which establishes Eurostat as a regional fiscal and monetary authority in the Eurozone, definitely giving new meaning to the term European Economic Governance