This page has been archived and commenting is disabled.

“The Euro Is Like a Knife in the Hands of a Child”

testosteronepit's picture




 

Wolf Richter   www.testosteronepit.com

While France is preoccupied with the legislative elections next weekend, Germany and Austria plunge into intense public soul searching about the euro, its meaning, its relevancy, the sheer and endlessly growing expense of maintaining it. To which are now added the $125 billion for bailing out Spain, the first in a series as Greece and others have shown: the bailout to solve the problem once and for all proves insufficient and is followed by more bailouts. Spain won’t be an exception. And then there’s Italy.

And yet, the German-language media scream about the expense of abandoning the euro. They call it the crazy option of returning to the D-Mark and warn of gigantic losses. But the very fact these discussions appear on the front pages of established newspapers moves the option a step closer to reality. Because, once the debate is opened up—and it’s a big can crammed with ugly worms—it’ll be difficult for governments to sweep all these worms under the rug and to revert to the con-game.

“As it’s going at the moment, the monetary union cannot function long term,” affirmed German Bundesbank President Jens Weidmann on Sunday. To avoid the worst turbulence, he called clarity: either establish a fiscal union with transfer of sovereignty to a central authority, or continue with autonomous national budget policies, in which case, “common liability must be limited.” He warned of the consequences of the break-up of the Eurozone, which would produce unpredictable and huge costs and risks. In the same breath, he cautioned that the threat of these costs and risks must not make Germany vulnerable to extortion.

Germans are worried. According the ARD-Welt poll published last week, 55% believe that it would have been better to keep the D-Mark, up 9 points from November, 56% fear for their savings, 78% believe that the worst of the euro crisis is still ahead, and 83% want Greece to leave the Eurozone if it doesn’t stick to the austerity and reform measures it had agreed to.

“The euro is like a knife in the hands of a child,” said Thilo Sarrazin, former member of the Executive Board of the Bundesbank and politician in the opposition SPD. As so often, “something that appears useful and sensible becomes dangerous,” he said. The advantages of the euro, including low interest rates, have led almost all participating countries astray, he said. “Now you see the consequences.”

“The problem isn’t just the construction of the euro, but the bailout funds,” said Sahra Wagenknecht, deputy chairperson of the Left Party, Germany fourth largest party with 12% of the vote in 2009. “They’re not saving the euro but the financial sector! Banks, insurance companies, hedge funds, and speculators are being ransomed. Neither in Greece nor elsewhere do the people benefit.”

“It was certainly a mistake to bring the euro to life without the necessary instruments to control it and secure it,” Austrian Chancellor Werner Faymann chimed in. Economically, Austria is joined at the hip to Germany. Most of its exports go to Germany, and for decades prior to the euro, the shilling had been pegged to the D-Mark. When Germany joined the euro, Austria did too. And if Germany leaves the euro, Austria will have to as well. 

So the Austrian Chancellor, echoing his German counterpart Angela Merkel, called for a banking union “with strict rules for banks and financial markets and a common and independent banking supervisor.” Like the Fed, perhaps: of the banks, by the banks, for the banks. The US had more debt than Europe, he added, “but as a union, they have the necessary instruments to deal with this debt.”

While that type of pungent debate is missing in France, one French voice came through, in Austria: Marine Le Pen, President of the right-wing National Front and third in the French presidential election with 18% of the vote, said in an interview with the Austrian paper Kurier that she wanted to end not only the Eurozone, one of her campaign promises, but also the 27-member EU—in whose parliament she is a representative, ironically.

“I want the collapse of the European Union, to make room for a Europe of Nations,” she said. Cooperating independent nations would be the principle. She cited Airbus and Ariane. A Europe “that the people agree to freely and democratically, which isn’t the case currently.” Ultimately, she said, “you have to ask the question if the system is reformable. Can you convert a Europe that is becoming a federal state into a Europe of Nations? I don’t think so. The Soviet Union wasn’t reformable either.”

Not a day goes by when Germany isn’t under heavy fire from outside interests, including Barak Obama who is facing a tough reelection campaign; the last thing he wants is any crap flying across the Atlantic. They all want Germany to bail out the Eurozone. But timing couldn’t be worse. Read.... Germany on the Verge: “Dispel This Fog,” begs Mario Draghi.

Yet the working-age population in Germany is set to decline, concentrating the burden of the bailouts on fewer people. Demographics are a worldwide issue that leads to investment super cycles, and to the Fed’s fear of deflation, according to economics expert and author Harry Dent who concludes in his excellent video that “Demographics is destiny.” Thought-provoking, funny at times, and laced with dark overtones.... “Understanding Demographics Is Vital to Success” (video).

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 06/11/2012 - 06:52 | 2513757 Zero Govt
Zero Govt's picture

Excellent article Wolfy except where you mention demographics

are we all so obsessed with the Govts retirement age that we cannot see past this folly?

do you think people stop being productive when they hit the entirely false tape measure Govt age limit?

...well i suppose they do if they just sit back and retire as the Govt told them to but in reality if the pension cannot sustain themselves (or the pension implodes) the 60-somethings can be as productive as any other age group and work on for years indeed decades after yet another false/ignorant/Unionised Govt standard 

Mon, 06/11/2012 - 08:11 | 2513898 EFNuttin
EFNuttin's picture

the 60-somethings can be as productive as any other age group and work on for years indeed decades after yet another false/ignorant/Unionised Govt standard

The irony is that mandatory retirement ages may have been relevant in a primarily agricultural or manufacturing economy, but in a service economy?  Given the changing nature of work and the below replacement rate of births in so much of the Western world, it is absurd to run these retirement systems on the current assumptions and actuarial tables. If we also factor in the rising lifespans and improvements in healthcare, mandatory/recommended retirement ages should be rising rapidly.

For a deeper view of the demographic issues, check out http://www.demographicwinter.com/index.html

Mon, 06/11/2012 - 08:51 | 2513991 mjk0259
mjk0259's picture

Nice theory but you pretty much can't even get an interview in computers if over 50, many places over 40. Not much different in many other fields...

Mon, 06/11/2012 - 03:02 | 2513519 GeneMarchbanks
GeneMarchbanks's picture

+1.2630 as of this morning...

So bright green on my screen.

Now, where were we? Oh, something about 'markets' reflecting 'reality'. Yes yes...

Mon, 06/11/2012 - 02:15 | 2513467 Grand Supercycle
Grand Supercycle's picture

Rally Warning from last week:

'Daily chart now gives bullish warning and significant
SPX rally & USDX retracement should commence in a week or so'

http://www.zerohedge.com/news/2012-12-24/market-analysis

Mon, 06/11/2012 - 01:00 | 2513413 Tao 4 the Show
Tao 4 the Show's picture

The idea of putting Greeks, southern Italians, and Germans in the same fiscal union is beyond laughable. Italy cannot control it's own corruption and organized crime. Who is going to do that? A new Euro Gestapo? Monti just keeps squeezing the workers and old people. A feeble effort to reign in politician salaries and self-directed handouts went nowhere and died without a whimper.

Sun, 06/10/2012 - 23:23 | 2513307 Diogenes
Diogenes's picture

"The Euro is like a knife in the hands of a child"

More like a credit card in the hands of a teenager. Make that a crowd of college students with unlimited student loans.

Sun, 06/10/2012 - 22:09 | 2513175 RiverRoad
RiverRoad's picture

+1  Nailed it. Especially the demographics part:  demographics is destiny for damn sure.

Sun, 06/10/2012 - 21:48 | 2513153 Peter Pan
Peter Pan's picture

The Euro has turned out to be a great party drug. Everybody was happy until the music stopped and then nobody wants to take responsibility for the trashing of the venue.

Like the saying goes, the only thing worse than biting into an apple and finding a worm, is biting into an apple and finding half a worm. I guess that's where Europeans now find themselves. The question is will Germany spit or swallow?

Sun, 06/10/2012 - 23:28 | 2513320 mcguire
mcguire's picture

i think you are mixing your metaphors..

Mon, 06/11/2012 - 08:08 | 2513892 Peter Pan
Peter Pan's picture

My apologies for any distress it may have caused. Times are tough and we have to mix and match.

Sun, 06/10/2012 - 21:42 | 2513148 Ned Zeppelin
Ned Zeppelin's picture

Certainly seems as though it is headed towards either Union or secession - gee, where did that happen before? This time it is debt slaves serving the TBTFs.

Mon, 06/11/2012 - 05:03 | 2513681 Azannoth
Azannoth's picture

Good call, will they again use military force to keep the South from leaving ?

Sun, 06/10/2012 - 20:53 | 2513092 ebworthen
ebworthen's picture

Nationalization and the end of the Euro guaranteed - just a matter of time, elections, and riots.

Sun, 06/10/2012 - 23:34 | 2513328 mcguire
mcguire's picture

agreed.  the puzzle is how this end will somehow fit into the plan for a "one world" currency.  after the (impending) collosal failure of the euro, it would seem the idea of an international "bancor" would be completely outrageous... yet, according to my conspiracy theory files, global currency is on the docket...

interesting times..   

Sun, 06/10/2012 - 20:24 | 2513050 tiger
tiger's picture

do not try to blame the knife... the knife does not exist.

Mon, 06/11/2012 - 08:09 | 2513895 fiercekitty
fiercekitty's picture

there is no spoon.

Sun, 06/10/2012 - 20:18 | 2513042 fockewulf190
fockewulf190's picture

"The Euro is like a knife in the hands of a child."

 

Sure is....and the child happens to be named Chucky!

Sun, 06/10/2012 - 20:13 | 2513033 Bansters-in-my-...
Bansters-in-my- feces's picture

Just have to ask,how the hell can a knife appear useful and "sensible" in the hands of a child...?

Define child.

Sounds like your typical delusional Banker/politician.

Sun, 06/10/2012 - 20:11 | 2513028 Herbman
Herbman's picture

patiently waiting for the Fieces to hit the fan. 

Sun, 06/10/2012 - 20:09 | 2513026 The Alarmist
The Alarmist's picture

I knew things were screwed when, even as the ECB said the changeover from the D-Mark to the Euro was not resulting in inflation, the price of a Bratwurst somehow magically went from 3DM to 3 EUR without inducing any inflation.  To the benefit of the ECB argument, the 3 EUR bratwurst started backing down to 2 EUR, but since 2001 the price has slowly gravitated back to 3 EUR.  At the same time, France, which used to be a nice place to shop late on Saturdays for about 67% of the cost of shopping in Germany, has become little more than a French-speaking place to shop on Saturdays.  I don't think anyone has really benefitted from the convenience of being able to pay in a common currency aside from not having to go to the bank to get cash, if you really needed to get cash.  

Sun, 06/10/2012 - 20:40 | 2513072 fockewulf190
fockewulf190's picture

Nobody can tell me there is no difference in lifestyle between taking home 3000 DM versus €1500 today.  The German people got screwed bigtime on the exchange.  I am absolutely convinced that the politicians of this country, wheather they come from the left or the right, are going to totally pull an economic Gretel und Louise and drive this bitch straight off the proverbial cliff.

Sun, 06/10/2012 - 20:03 | 2513021 The Alarmist
The Alarmist's picture

Knives don't kill ... It's people with knives who kill.

Mon, 06/11/2012 - 03:48 | 2513632 AnAnonymous
AnAnonymous's picture

Not exactly.

Knives dont kill. People do.

US citizen old saying. New wisdom of the world.

Mon, 06/11/2012 - 04:08 | 2513647 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Knives dont kill. People do.

Not exactly.

People don't kill. US citizens do.

Chinese citizenism citizen old saying, with French citizenism accent. New unwisdom of the old world (and Easter Island).

Mon, 06/11/2012 - 06:00 | 2513710 AnAnonymous
AnAnonymous's picture

The new world is marked by US citizenism.

A wisdom hold by the old world can not be marked by new world. Time chronology. Again.

But hey, US citizenism classics.

This beyond the fact there is nothing like chinese citizenism.

Anything by the way on the how saving being consumption in US citizen economics, make it that immediate is the same as postponed?
Time, time, US citizens have trouble with it.

Mon, 06/11/2012 - 06:46 | 2513754 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

A wisdom hold by the old world can not be marked by new world. Time chronology. Again.

But hey, US citizenism classics.

Tell us again your story on Easter Island how it being is sunk now by US citizenism before even 1776,July,4th. It is AnAnonymous classic, best entertainment making.

This beyond the fact there is nothing like chinese citizenism.

Yes, sure, and your assertion nothing like French citizenism is next being placed? Deliriousness of funny is your construction of fantasy world which you have chosen inhabitation to reside.

Anything by the way on the how saving being consumption in US citizen economics, make it that immediate is the same as postponed?

Using your own words and your citizenism fantasies I endeavored the explanation of logical mousetrap you did making and fall into snapping quickly by taking contradictorialism of your statements to their conclusiveness. Your contradictions exposed then you choosing the path of denial first, ignoration second by the running away. Confirmation of the eternal nature of AnAnonymousism being exhibited thusly.

Time, time, US citizens have trouble with it.

Such a statement from mangler of Easter Island historialism is comedy in purity of essence. Your infallibility and stubbornism is great driving force of your humourism famously. You are fountain of merriment, giving much laughingness to make. Bear with it.

Mon, 06/11/2012 - 06:56 | 2513765 AnAnonymous
AnAnonymous's picture

Ah, ah. At last. Fantasy has its own way. But still...

I was expecting the moment when the new fantasy that was building the french indo chinese antartic citizenism could lead to french citizenism.

Nice thing. Very nice.

French citizenism is the same thing as US citizenism. So indeed, it is very nice.
Because as the exterior is running dry, US citizens will have to cannibalize.

As to Easter Island, once again, the people leaving on the island were picking up before contact with US citizens. They had their low. Nothing comparable with the low they would have to face after contact with US citizens.

As to the rest, well, the usual running away, unable to push up for any argument.

Mon, 06/11/2012 - 07:21 | 2513801 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Ah, ah. At last. Fantasy has its own way. But still...

You are far too modest. When it comes to construction of amazing fantasy of bedazzlement, you are the master builder, a stonedmason of unparalleled skill.

French citizenism is the same thing as US citizenism. So indeed, it is very nice.

Very nice and, for you, very convenient. Your ability to cloak from yourself the animosity you harbour toward all other people by labeling them 'US citizens' is a fruitful gift you have given yourself. Anything to propagate your self delusion must be quite nice indeed.

As to Easter Island, once again, the people leaving on the island were picking up before contact with US citizens. They had their low. Nothing comparable with the low they would have to face after contact with US citizens.

Yes, sure, the contact with 'US citizens' in 1722, 1770, and 1774. Some kind of weird calendar you have going downthere. Made me laugh, again.

As to the rest, well, the usual running away, unable to push up for any argument.

Yes, that describes your behaviour succinctly, as seen here:

http://www.zerohedge.com/news/are-low-interest-rates-good?page=1#comment...

Mon, 06/11/2012 - 07:36 | 2513831 AnAnonymous
AnAnonymous's picture

Yes, sure, the contact with 'US citizens' in 1722, 1770, and 1774. Some kind of weird calendar you have going downthere. Made me laugh, again.

_____________________________________________

Again, this stuff? How a previous contact exclude following contacts from being made with US citizens?

It is like telling that contact with the King's envoys is what destroyed the Indians in the US of A.

Indians had contact with the King's envoys before they had contact with US citizens. The rest is well known.

__________________________________________________

Very nice and, for you, very convenient. Your ability to cloak from yourself the animosity you harbour toward all other people by labeling them 'US citizens' is a fruitful gift you have given yourself. Anything to propagate your self delusion must be quite nice indeed.
_______________________________________________

What does this mean? Drivel as usual.

Most of European nations are ruled under US citizenism.
Canada is ruled under US citizenism. Japan is ruled under US citizenism.

How could this admittance could be cloaking myself from the animostiy I would harbour toward all other people?
I do not expect any answer though.

Since nothing has to be done about explaining how saving being consumption in US citizen economics leads to postponed being the same immediate, maybe more on the occupation of your country?
Who are these people who are occupying your country? Since when they are occupying it?

Mon, 06/11/2012 - 09:09 | 2514046 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Most of European nations are ruled under US citizenism.
Canada is ruled under US citizenism. Japan is ruled under US citizenism.

How could this admittance could be cloaking myself from the animostiy I would harbour toward all other people?
I do not expect any answer though.

The answer is quite plain for all to see, except for the viewing through your self cloaked eyes. You having now in your head the fetish for disagreement, even over the littlest of thing to insignificance. The deliciousness of this fetish is too much goodness for you do relinquishing of it from yourself, so you construct fantasy world of US citizenism which is much disagreeability.

The projection onto the entire world of your US citizenism fantasy is the very essence of your mettle. This projection justifies your disagreement and cloaks you from your animosity, keeping alive the cherished fetish for disagreement.

Yes, of course being you will now in denial of it. To conjugate acceptance would result in loss of fetish deliciousness through dissipation of making disagreement.

But hey, you entertain, so why not embrace your insanitation?

Mon, 06/11/2012 - 10:21 | 2514335 AnAnonymous
AnAnonymous's picture

The entire world? The list of countries run under US citizenism hardly makes the whole world.

Now if reporting one point that is commonly reported by US citizens themselves and can be checked at will is projection, fetish or something, well... so be it.

Mon, 06/11/2012 - 10:59 | 2514600 Nukular Freedum
Nukular Freedum's picture

Incredible comedy gold from both of you, yet again. I am simply not believing of it. Just about the only thing worth coming to ZH for nowadays. Bravo!

Mon, 06/11/2012 - 06:20 | 2513730 ThirdWorldDude
ThirdWorldDude's picture

I'll keep junking you until I see a post where you address the shit in your own yard!

Mon, 06/11/2012 - 06:59 | 2513770 AnAnonymous
AnAnonymous's picture

My own yard? But humanity is the yard of every human being.

By putting a monopoly on humanity, I think you fail to notice the consequence it includes all of humanity.

You can resolve this little annoyance the US citizen way though: by excluding people from their own humanity and declaring them subhuman and non human.

At this point, US citizenism will no longer address them as US citizenism only address human beings.

The story of US citizenism. Bear with it.

Mon, 06/11/2012 - 07:56 | 2513859 ThirdWorldDude
ThirdWorldDude's picture

I see that being deprived of private property and individuality has terrible consequences upon your critical thinking.

What a hypocrisy to claim that "humanity is the yard of every human being" and then accuse only US citizens of excluding people from their own humanity. Is self-criticism forbidden by the Party, or do you simply include China citizenism within US citizenism?

 

http://www.i4u.com/2012/06/dalai-lama/china-visiting-foreigners-restrict...

Mon, 06/11/2012 - 08:14 | 2513903 AnAnonymous
AnAnonymous's picture

Chinese are unlikely to be deprived of individuality as China is not yet ruled by US citizenism.

Humanity is the yard of every human being is not a claim. It is the statement of a basic fact.

US citizenism has put a monopoly on humanity. The Chinese had performed nothing like that.

It is US citizen trademark.

The bottomline is that in order to perform the move as US citizens have been doing, you have to provide an all inclusive framework. Which US citizens have provided. Not the Chinese. Not the Indians. Not the Negroes in Africa.

Barring a foreigner from entering this or that country without the proper framework can not be exclusion of a human being from one's humanity.

Now, expanding: it is true that US citizens have usually used their monopoly on humanity to meddle into others'business.

For example, they could say that it is a human right for a human being to be given access to the place the human being was born.
Anyone infringing the rule set by US citizens gives US citizens an opportunity to meddle in the affairs as US citizen claim that their definition of humanity has to come first.

But what US citizens usually dismiss is that they are the ones who set that rule and mainly noone else but themselves show be held to it first.

By US citizenism construction, it gives any human being the right to assess US citizens'performances vis a vis their own rules. And suddenly, this is another story.

Mon, 06/11/2012 - 10:38 | 2514460 Nukular Freedum
Nukular Freedum's picture

Well AA, I must say I could not hold up the way you do over time, all the ad homs etc from numerous sorts without any obvious basis. I salute you sir, wherever your from!

Mon, 06/11/2012 - 09:09 | 2514044 mjk0259
mjk0259's picture

Ah so! Confuse-us say most people forced to wear exactly the same clothes, spend all day doing pointless or counterproductive activies and who had their kids taken away to state places along with all their property taken away were Chinese citizenisms under Mao. Few examples in history of any people being deprived of individuality more thoroughly or more often then Chinese citizenisms. Might explain why Chinese citizenisms so eager to do same to Tibetan's, etc.

 

 

 

Mon, 06/11/2012 - 10:29 | 2514389 AnAnonymous
AnAnonymous's picture

Tibet ran a slavery, torture house before. Tibet, while being decreased, still runs a kid abduction facility to fill up monasteries.

Individuality is into wearing different clothes?

Wearing the same clothes or wearing different clothes has no bearing on individuality.

The way it is.

Mon, 06/11/2012 - 18:15 | 2516194 mjk0259
mjk0259's picture

Ah so. So why Chinese citizenisms now wear different clothes in manner of American citizenisms instead of previous Chinese citizenism practice of all wear same clothes? Did Chinese citizenism decide American citizenism methods superior?

Mon, 06/11/2012 - 10:46 | 2514520 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Tibet ran a slavery, torture house before. Tibet, while being decreased, still runs a kid abduction facility to fill up monasteries.

Yes, this is true. Slavery, indentured servitude, and torture were part of life's routine in Tibet before Chinese administration. The history is clear on this.

Due to the fact that I am in agreement with you on this, can you possibly admit that you are in agreement with a US citizen, on this one issue?

Mon, 06/11/2012 - 11:24 | 2514735 AnAnonymous
AnAnonymous's picture

Facts are for US citizens constructions that turn valid when agreed upon.

Fact is that Tibet was what it was. It does not need my agreement, or some US citizen's agreement to be the way it was.

Mon, 06/11/2012 - 12:53 | 2515182 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Facts are for US citizens constructions that turn valid when agreed upon.

Fact is that Tibet was what it was. It does not need my agreement, or some US citizen's agreement to be the way it was.

Ah, ah, but that is not what I asked. I asked if the possibility exists that you can be in agreement with a US citizen on one issue.

It is very simple question to ask, and very simple question to answer.

Do NOT follow this link or you will be banned from the site!