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I Said Germany Would Leave the Euro… Well, Germans Are Already Using Deutschemarks Again!

Phoenix Capital Research's picture





 

 

Since November 2011, I’ve been saying that Germany will leave the Euro, but NOT necessarily the EU. The reason? Well, for one thing Germany laid out legislation that would allow this happen. Then of course you have the following comments from Germany’s finance minister Wolfgang

 

Wolfgang Schauble admits euro bail-out fund won't halt crisis

 

Europe's "big bazooka" bail-out fund is not ready and won't stem the debt crisis that on Tuesday pounded Italy and the European Central Bank (ECB), admitted Wolfgang Schauble, Germany's finance minister.

 

http://www.telegraph.co.uk/finance/financialcrisis/8924462/Wolfgang-Schauble-admits-euro-bail-out-fund-wont-halt-crisis.html

 

This is a pretty strong admission from the finance minister of the country that Europe looks to as a financial backstop. It was made back in November 2011. And the following is even more disconcerting for the future of the Euro:

 

            Seeing in Crisis the Last Best Chance to Unite Europe

 

MR. SCHÄUBLE said the German government would propose treaty changes at the summit of European leaders in Brussels on Dec. 9 that would move Europe closer to the centralized fiscal government that the currency zone has lacked. The ultimate goal, Mr. Schäuble says, is a political union with a European president directly elected by the people.

 

“What we’re now doing with the fiscal union, what I’m describing here, is a short-term step for the currency,” Mr. Schäuble said. “In a larger context, naturally we need a political union.”

 

Critics say the spending cuts German leaders have demanded from other countries are hurting growth across the Continent, in the process making debts only harder to repay. And his proposals to give the European Commission far-reaching powers to enforce budgetary discipline have been likened by skeptics in Britain to an invasive new “super state.” Even some euro supporters fear that Mrs. Merkel and Mr. Schäuble are talking about long-term changes while panicked investors and practiced speculators are tearing the euro to pieces right now.

 

“There is a limited transition period where we have to manage the nervousness on the markets,” Mr. Schäuble said. “If it is clear that by the end of 2012 or the middle of 2013 that we have all the ingredients for new, strengthened and deepened political structures together, I think that will work.”

 

He sees the turmoil as not an obstacle but a necessity. “We can only achieve a political union if we have a crisis,” Mr. Schäuble said.

 

http://www.nytimes.com/2011/11/19/world/europe/for-wolfgang-schauble-seeing-opportunity-in-europes-crisis.html?_r=1&pagewanted=2           

 

Note that Schauble repeatedly emphasized the goal of a “political union,” NOT a “fiscal union” or “monetary union.” Indeed, his one reference to a “fiscal union” is in the “short-term,” while stressing that in a “larger context” the EU needs a “political union.”

 

The message here was very, very clear: Germany was interested in the EU as a political entity, NOT the Euro as a currency.  It was willing to act as backstop for the EU up to a point, but we’ve now reached that point.

 

How do I know?

 

Germany is now only €328 billion away from reaching an official Debt to GDP of 90%: the level at which national solvency is called into question.

 

Moreover, that €328 billion has already been spent via various EU props. Indeed, when we account for all the backdoor schemes Germany has engaged in to prop up the EU, Germany's REAL Debt to GDP is closer to 300%.

 

In Euro terms, Germany now has €1 trillion in exposure to the EU via its various bailout mechanisms. That's EQUAL TO roughly 30% of German GDP. If even a significant portion of that €1 trillion goes bad (which it will as this money has been spent helping the PIIGS), Germany's financial system will take a MASSIVE hit.

 

This will guarantee Germany losing its AAA status, which in turn makes its funding costs much higher (see what happened to France in the last year: that country is now facing bank runs and its own solvency Crisis which you'll be hearing about in the coming weeks).

 

Which brings us to today, where Germans area ALREADY USING DEUTSCHEMARKS AGAIN.

 

Who Needs the Euro When You Can Pay With Deutsche Marks?

 

Shopping for pain reliever here on a recent sunny morning, Ulrike Berger giddily counted her coins and approached the pharmacy counter. She had just enough to make the purchase: 31.09 deutsche marks.

 

"They just feel nice to hold again," the 55-year-old preschool teacher marveled, cupping the grubby coins fished from the crevices of her castaway living room sofa. "And they're still worth something."

 

Behind the counter of Rolf-Dieter Schaetzle's pharmacy in this southern German village lay a tray full of deutsche mark notes and coins—a month's worth of sales.

 

Germans have yet to give up on the euro. But as Europe's debt crisis rages on, many are indulging their nostalgia for the abandoned mark by shopping with it again—and retailers are happily going along.

 

As defunct currencies go, "die gute alte D-mark," or "the good old D-mark," as it is still affectionately called, is far from dead. Germans officially traded in the currency for euro bills and coins on Jan. 1, 2002, and the mark immediately ceased to be legal tender. But 13.2 billion marks—worth €6.75 billion ($8.3 billion)—remain tucked in mattresses, old prayer books, coat pockets or otherwise in circulation, according to the Bundesbank, more lucre than the euro bloc's 16 other ex-currencies combined.

 

http://online.wsj.com/article/SB10001424052702304373804577520930784840596.html?mod=rss_markets_main

 

If the above article doesn’t spell it out for you, nothing will. Germans NEVER really trusted the Euro. They went along with it because of the benefit to their export driven economy. But now that the PIIGS and others are begging Germany to backstop the entire EU, they’re back to using D-marks again.

 

It’s now just a matter of time before Germany officially drops the Euro.  Smart investors are using this latest rally based on the BS from the EU summit to prepare for what’s coming: an EU banking Crisis that will make 2008 look like a joke. On that note, I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investments (both direct and backdoor) you can make to profit from it.

 

This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com

 

Good Investing!

 

Graham Summers

 

PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.

 

And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com

 

 

 

 

 

 

 


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Fri, 08/03/2012 - 05:44 | Link to Comment BetaRules
BetaRules's picture

We may see a rerun of Traders of the Lost Mark.

Wed, 07/18/2012 - 14:52 | Link to Comment Jack Sheet
Jack Sheet's picture

No comment.

Wed, 07/18/2012 - 13:27 | Link to Comment The Reich
The Reich's picture

WARNING! WARNING!

 

Bull$hit detected

Wed, 07/18/2012 - 13:25 | Link to Comment malek
malek's picture

Yeah, I also still have 25 DM (German Mark) in some drawer.

If I find a shop that still accepts them, and let a reporter take pictures when I buy something there with them, am I then an indicator that Germany is on the brink of reverting to the old DM?

Wed, 07/18/2012 - 13:14 | Link to Comment El
El's picture

Hmmmm, weren't you also the one saying everything would go south and fall apart in June? It is the middle of July already and no end is in sight. Ah well...your guess is as good as anyone else's.

Wed, 07/18/2012 - 12:34 | Link to Comment Buzzworthy
Buzzworthy's picture

Congratulations, Graham.  Grab yourself a cookie and take the day off. 

Wed, 07/18/2012 - 13:08 | Link to Comment Mark Carney
Mark Carney's picture

LOL at pheonix cap down arrowing everyones comment.

 

Oooh, my feelings butt hurt....JUNKED!!!!

Wed, 07/18/2012 - 13:34 | Link to Comment Negro Primero
Negro Primero's picture

...guess this is where they got some inspiration from:  http://www.thejunkguys.com/

The Junk Guys is a family owned and operated business serving the greater Phoenix area with professional, uniformed, reliable, and honest employees...We will fulfill your highest expectations and provide nothing less than 100% Customer Satisfaction...Guaranteed!... LOL!!!

Wed, 07/18/2012 - 12:20 | Link to Comment PLove
PLove's picture

Germany leaves  the Euro.

And works a deal with Russia.

 

Deutschland Ubber Alles

 

 

 

Wed, 07/18/2012 - 14:35 | Link to Comment graneros
graneros's picture

Never happen.  The hatred between these two countries  though tempered with faux political niceties the last few decades is blood deep.  We may not see it in our lifetime but the Hun and Slav will be at each others throats again.

Wed, 07/18/2012 - 12:36 | Link to Comment trilliontroll
trilliontroll's picture

And suddenly leaves NATO ? And joins Shanghai Group ? and leaves EU ?

And US, Britain, Canada suddenly all giving up their military bases on German request?

Of course this will happen, just as german reunification was done on behalf of west and

east Germany alone without any necessity to regard foreign interests.

Wed, 07/18/2012 - 12:12 | Link to Comment PiratePawpaw
PiratePawpaw's picture

Does this mean my 100 Million ReichMark Notes are good again?!?....

Wed, 07/18/2012 - 11:54 | Link to Comment oldmanofthesee
oldmanofthesee's picture

I notice that he doesn't re-appear to defend himself?

Thu, 07/19/2012 - 01:10 | Link to Comment Vic Vinegar
Vic Vinegar's picture

He doesn't have the time.  Dude has made 87 winning trades in a row and bothering to interact here may preclude him from #88.

Wed, 07/18/2012 - 11:51 | Link to Comment schadenfreude
schadenfreude's picture

A big portion of the DM's is supposed to be in Turkey, Russia, etc....that haven't been exchanged to Euros, as DM's have been the shadow currency for Eastern Europe countries in the '90's.

Once again a non-event on which Summers founds his thesis.

Wed, 07/18/2012 - 12:01 | Link to Comment Silberadler
Silberadler's picture

Just a note:

 

see http://www.bundesbank.de/Redaktion/DE/Standardartikel/Kerngeschaeftsfeld...

(run this trough google translator)

 

Since the introduction of the Euro in Germany the Deutsche Bundesbank exchanges DM for Euro, all bills and coins.

If you go to your local bank they may change a service fee. If you contact the Bundesbank directly there will be no charges (as far as I can see)

So: for all the DM cash that is hidden (estates etc) - this money is not lost.

 

This has nothing to do with e re- introduction of the DM (as much as I would prefer this as well).

It is just a fair means of not having the old currency devalued.

 

A fair offer , me thinks.

 

If shops take DM - it is more a way to generate business - but they will have to go through the process and exhange for Euro.

Direct bookings in DM are not possible since beginning of 2000.

I guess this puts things intop perspective.

Alas - what would be wrong with having the DM again ?

Same btw goes for the French and others in EU. Talked to a lot of folks in our neighbour states while travelling and the mostly agree on having their currency back. They are as much fed up with that politico frenzy called Euope.

A French  is French and an Italian is Italian as much as a Geman will remain German. Agreed ?

No pols can change heritage as much as they stomp with their feet ...

European Integration does not work that way - top down.

Idiots all together.

Let's chase'em to the swamps and let us go about our ways.

 

Wed, 07/18/2012 - 11:44 | Link to Comment XitSam
XitSam's picture

Mark this post. Graham said "It’s now just a matter of time before Germany officially drops the Euro."

Wed, 07/18/2012 - 11:53 | Link to Comment engineertheeconomy
engineertheeconomy's picture

There's an exactly equivalent probability that the United States will suddenly and abruptyly stop using the dollar. Laughing my fucking ass offf rolling on the floor!

Whoever the moron is that keeps putting this imbecile's bullshit on Zerohedge, we would all be better off if you would go learn to play with your dick or something else more productive. Just say no

Wed, 07/18/2012 - 11:43 | Link to Comment LawsofPhysics
LawsofPhysics's picture

So where do I buy physical DMs then?

Wed, 07/18/2012 - 12:02 | Link to Comment Silberadler
Silberadler's picture

Buy 5 DM 1950-1974 silver coins - 1950-1974 (Silberadler ! raw weight 11.2 g silver 7g a piece) at fleabay - or camp out in front of the Bundesbank in Mainz and ask people to exhange their old DM to whatever other currency (Euro perhaps !?) they might whish.

 

 

Wed, 07/18/2012 - 11:42 | Link to Comment Elvis is Alive
Elvis is Alive's picture

I heard the same thing to be true in Spain and Greece. They are using old currencies as well. Merchants in Spain and Greece have two different prices: cash and credit. When you use cash, price is about 20% less. However, there are no cash discounts in Italy... yet.

Wed, 07/18/2012 - 11:41 | Link to Comment monkeyboy
monkeyboy's picture

What?!?! Europe hasn't collapsed yet?

 

Wed, 07/18/2012 - 11:59 | Link to Comment engineertheeconomy
engineertheeconomy's picture

U.S. will collapse faster and harder

Wed, 07/18/2012 - 11:38 | Link to Comment digitlman
digitlman's picture

You also said Greece would exit....they have not yet.

 

More FUD to keep peddling your "newsletter".

Wed, 07/18/2012 - 11:29 | Link to Comment TahoeBilly2012
TahoeBilly2012's picture

This is a shakey story. I like most of the analysis, but just because some shop somewhere is still taking Dmark and getting credits at the Bank, you suggest that tells where the Guv is headed?? Come on Graham.

Wed, 07/18/2012 - 14:24 | Link to Comment graneros
graneros's picture

Yea you're right on the money.  My guess is a majority of Deutsche seniors would like to see a return to the DM for old times sake.  Doubtful it will happen anytime soon short of total economic collapse (TEC).  But the old DM is still a fiat so even in the case of TEC the preferred currency would be gold or silver until some new gold backed DM was released.

Wed, 07/18/2012 - 11:16 | Link to Comment formerfedanalyst
formerfedanalyst's picture

Structural solutions never solve psychological problems.

Wed, 07/18/2012 - 11:13 | Link to Comment mrktwtch2
mrktwtch2's picture

go away already..you have been totally wrong for 2 yrs..

Wed, 07/18/2012 - 11:26 | Link to Comment vmromk
vmromk's picture

mrtwatch2.....i beg to differ.

Graham has not been wrong for the past 2 years, he has been wrong for over 3 years.

All you readers out there, hurry to sign up for Graham's bullshit service because the price is going up this week.

He hasn't had a loser since last July.........you believe that and I got some Enron stock to sell you.

 

Wed, 07/18/2012 - 11:23 | Link to Comment ROCE
ROCE's picture

Aint that the truth ! Zerohedge should stop working with this douche .... really this guy is just another bullshitter

Wed, 07/18/2012 - 11:31 | Link to Comment Negro Primero
Negro Primero's picture

Hey Phoenix, better get a job here: http://failblog.org/

Wed, 07/18/2012 - 11:46 | Link to Comment engineertheeconomy
engineertheeconomy's picture

Stop saying "Debt Crisis". No such thing exists. "Unpayable Ponzi Scam" is the correct term. Foreclosure, repossesion and hyperinflation are always the result. It's just plain Physics.

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