Do You REALLY Think Merkel Will Lose Germany's AAA Status the Year Before Her Re-Election?

Phoenix Capital Research's picture


Here’s a story you might not have heard… In some areas of Germany, you can once again use Deutsche Marks as legal tender:


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.



My question to investors today is…why would Germany start allowing Deutsche Marks to be used again? Moreover, if Spain and Greece are on the brink, why has Germany refused to increase the funding of the EFSF and ESM bailout funds AND tied up its ratification of the ESM in legal proceedings that won’t even begin until September?


The answer is simple: Germany knows that the game is up. Its best bet is to put off the implementation of various bailout funds (for legal reasons) while looking as though it wants to help… and let the EU crash and burn around it.


Consider the following stories:


            Top German court to announce ESM ruling Sept. 12


Germany's Federal Constitutional Court will announce a decision on lawsuits challenging the country's participation in the permanent euro-zone rescue fund, the European Stability Mechanism, and the fiscal pact on Sept. 12, the court said Monday in a statement on its website. The court held a public hearing earlier this month to examine complaints that participation in the fund and the fiscal pact violated German law by taking some authority over the national budget away from parliament.


German court dumps election law that favored Merkel


Indeed, if we read between the lines of the political proceedings coming out of Germany


Germany's top court ruled on Wednesday that the country's election law is unconstitutional, leaving Europe's biggest economy with no valid rules on how to distribute seats in the Bundestag lower house just over a year before the next vote.


The Karlsruhe-based Constitutional Court upheld a case brought by the opposition Social Democrats (SPD), the Greens and more than over 3,000 citizens against the law, which was altered by Chancellor Angela Merkel's center-right coalition last year.


Germany's complex system, which can end up creating extra or "overhang" parliamentary seats that benefit the bigger parties, breaches citizens' rights to take part in direct, free and equal elections as enshrined in the constitution, the court said.


Merkel's government, preoccupied with trying to stem the euro zone debt crisis, now has to come up with a new law by autumn 2013, when the next federal election is due.,0,2079941.story


Europe is imploding and Spain is so desperate for cash that its Finance Minster flew to Germany to meet in private with German officials, begging for €300 billion… and Germany won’t vote to even ratify the ESM, let alone raise capital for it until September 12!?!?


On top of this, Germany suddenly decided that its election process is unconstitutional and needs to be revised? Why now? Aren’t there more pressing issues such as the implosion of the European banking system? (remember, Germany has already created a firewall around its own banks… read the former issue titled, Germany: The Smoking Gun)


To me the message is clear, Germany is going to do all it can to appear ready to help, but it will forestall any actual helping, especially if it involves increasing Germany’s exposure to the PIIGS (note: Merkel stated that there would never be Euro-bonds for as long as she lived).


This is not political posturing. Germany has already brought its own solvency into question (see the Moody’s warning) by propping up the EU. Angela Merkel is not going to lose Germany’s AAA status the year before she’s up for re-election.


So don’t count on Germany to come to save the day. Look at the country’s actions, not what its leaders are saying. The writing is clear here.


On that note, we’ve recently published a report showing investors how to prepare for this. It’s called What Europe Means For You and Your Savings and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.


This report is 100% FREE. You can pick up a copy today at:


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:









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Zero Govt's picture

Graham will extrapolate any mundane event into a 'Mega Happening' of global proportions

i think he invented the bullshit about a butterfly's wings in Brazil causing a hurricane in Montana

bless him, he was made for academia

jhm's picture

Please do your homework before posting another one of these texts, thank you so very much!

The DeutschE Mark is still valid in that it is officially allowed of being exchanged into €uros at every bank in Germany. A lot of people still have many coins and paper pieces in their homes, be it of nostalgia or whatever. Now, if a shop owner wishes to make a statement and thus to "trade" in that former currency he may do so by accepting it as payment, but he is not allowed to give out Deutsche Mark as an exchange to his customers, alass he is allowed to take DeutschE Mark to the actual exchange rate which is the same as on the day the €uro was taking over in 2001, and that was and is 1,96€ (exactly 1,95583€) in exchange for 1,-DM.

There has nothing been altered in this regard since 11 years. Nichts. Nada. Niente. It has been that way since 2001.

So, would be it asked too much to stop writing as if the germans would have reinstated their old currency in some strange way overnight and to do as if this would be an indicator for Germany leaving the €urozone currency? Could this ongoing hysteria be calmed down now, please. If this country will change its currency it will be a swift, perfectly planned, perfectly organized, perfectly run action, a complete "surprise" to everyone, and Germany will survive this change, maybe not with ease, maybe hated by many of those who still consider this country as being the ever-guilty-ever-paying dumbass of the world, but it will survive, be sure about that.

Such a little change in plans could well drive the City of London and the Wall Street both into, well, some unpleasent "problems". And rightly so, after what these financial bastards did in the last 150 years, not to Germany alone, but to the whole world.

So, be patient and have some fun, until Mackinders heartland nightmare comes true, finally, when Germany, Russia and China decide to change the path of history.

forexskin's picture

the best thing would be for them, like everybody, to let all this defaulted paper fail, instead of continuing with this charade. sure, pain for a while as the great unwind cascades throughout the system, but it would be very hard for the status quo to maintain their claims on all the debt slaves if their foundation crumbled.

maybe germany is just arranging the deck chairs to tangle the opposition before music stops - but stop it will.

i look at every graham summers article and think "about 50% of ZH readers have already inferred and probably articulated as much, but without his boyish certainty - and we're at least sophisticated enough to realize the game is probably deeper".

ultimately this superficial earnest arrogance of summers is damn misleading - i'm sure some people read this drivel and conclude they now understand the situation. right graham?

lasvegaspersona's picture

predictions not yet come to pass aside....why would zee Germans want to help Spain after their fearless leader makes a mockery of debt/GDP  and deficit compliance? Time to grow up Euro perifery, your allowance ended when you got a place of your own. ditto Greece...Where do these countries get the nerve to insist that others pay for their extravagances?

DeadFred's picture

The German LEADERS mays want to help out Spain, if they believe it will help their country prosper, if they believe it will lead to enough campaign contributions to get re-elected, if they believe it will will keep the pictures of what they did in the bathhouse from being published or if it will keep those nasty men in the combat gear from harming their kids. There are lots of possible reasons for them to bail out Spain. Don't make any short term bets that Germany won't cave, they might. We all know it would be stupid but they're politicians, they went into politics for reasons that leave them more vulnerable than most to bouts of stupidity. Don't short this market before SPY drops below 134. Maybe tomorrow.

Financial_Guardian_Angel's picture

Pass the Deutsche on the left hand side...

TPTB_r_TBTF's picture

Deutschmark is trader jargon.


The currency is officially "Deutsche Mark"

1. Übersicht

Am Sonntag, dem 20. Juni 1948, trat die damals lang erwartete Währungsreform in Kraft, mit der die neue Deutsche Mark ...

iaw the Bundesbank

BanjoDoug's picture

I don't thing the krauts should co-sign for any other country's loan(s) - as all in eruo-world wants Germany to do.....    let those other countries get their own stinking loans, until they can't, which is pretty much today, and then just suck it up.....  

SheepDog-One's picture

I REALLY dont care and very sick of hearing how its all about getting some fuckin lowlife politician back in their stinking throne of power.

Joe A's picture

"Do You REALLY Think Merkel Will Lose Germany's AAA Status the Year Before Her Re-Election?

No Graham, it never crossed my mind.

"So don’t count on Germany to come to save the day. Look at the country’s actions, not what its leaders are saying. The writing is clear here."

Well, actually the German leaders are not really saying much which could be regarded as 'Germany coming to the rescue'. What they are saying is in line with their actions.

Germany is playing the game very well. The pressure on them is high, from different directions: the ECB, Fed and the Machiavellian coalition that is France, Italy and Spain. But Germany has better cards and a couple of aces up her sleeves.

andrewp111's picture

Really?? France has deliverable nuclear weapons. Hundreds of them, in fact.  Germany doesn't have any.

the tower's picture

First of all, it's DEUTSCH MARK, not DEUTSCHE MARK.

Second, read what supermaxedout wrote.

Oh and Graham, you should visit Spain, you will see property priced in Pesetas! Yes! BUT! This does not mean you can actually PAY with them, they just never gave up pricing property in Pesetas.

Why do you INSIST on writing about Europe while you so CLEARLY know NOTHING about the continent?

the tower's picture

Go back to Googling, but don't talk shit about a continent you don't know.

forexskin's picture

i've got a 10 Deutsche Mark bill on the side of my computer right here, nice picture of Gauss and his function of bell curve distributions, and it sure as hell is spelled DEUTSCHE.

kinda hard to consider your views seriously with such a hard headed wrongness, defended so vigorously.

Money 4 Nothing's picture

Do You REALLY Think Merkel Will Lose Germany's AAA Status the Year Before Her Re-Election?


If this shit keeps up.. yea. I believe after monitoring all the action yesterday, we have officially began the unwind in a real way. I watch bonds more than anything else. Contagion will be the buzz word being thrown around by tommorow, hope I'm wrong, but I'm watching nothing but cratered confidence.



 [kuh n-tey-juhn]


1350–1400; Middle English  (< Middle French ) < Latin cont?gi?n- (stem of cont?gi? contact, infection, equivalent to con- con-  +t?g-  (variant stem of tangere  to touch) + -i?n- -ioncomparecontact


NotApplicable's picture

I don't think Merkel has any say in the matter. Like all other "leaders," she will do as told by her masters.

Her job is to make it all seem inevitable, however it turns out.

jhm's picture

It may be that her masters do not reside anywhere in the west ...

supermaxedout's picture

My question to investors today is…why would Germany start allowing Deutsche Marks to be used again?

You want to know it. Its simple.

When the Euro was introduced all DMs in the bank accounts etc, were exchanged to Euro by January 1 2002 or 3 -I think-. But the cash can be converted over time. It was a promise by the governement, that there is no hurry to change the cash to Euros. And this is still valid. Every German knows that.

The reasons were multiple. One of the main reason was the fact, that the average small and medium business man usually has a pool of black cash money. Untaxed money for example to pay in cash a salary on top of the official salary. Or he saves black cash money from untaxed business. It is an open secret in Germany that a small business man has to operate at least partially in the black economy simply because he has to competetive in price. If he pays all the taxes correctly his services are to expensive for his costumers to pay.

The amounts in the black cash economy in Germany then and also nowadays are huge. Its many billions. In other words its a very  important part of the economy estimates range around 20% of GDP.  No wise Finance Minister wants to kill this black economy because he gets indirectly (through indirect taxes such as VAT or gasoline tax) a lot of tax money in his coffers. For example all black work salaries are normally quick spent for goods of consumption because the workers need this black money for their daily needs. All construction material purchased include VAT and it does not matter if the materials go to the black sector or the white one. The VAT is paid.

There were rumours, that in the last two years before the Euro was introduced half of the houses and villas build along the coast of Spain were build by Germans desperately hiding their black savings. And this money is still there circulating in Spain. Spain had since the introduction of the Euro always the biggest demand and circulation of 500 Euro bils in the Eurozone. Much bigger than in Germany. So dont worry to much about the economy in Spain. They know their ways around even better than the Germans do.

p.s. till now its often an advertsing gimmick that a store offers to accept DM for a month or so. Normally one has to visit one of the Central banks to exchange nowadays DM to Euro it is not practical to do so. But to spent DM conveniently in a shop around the corner is easy and anonym. Thats the background.


forexskin's picture

insight like this is more valuable than the article that illicited it. jus' saying.

Jack Sheet's picture

Graham, here's a simple, sincere message that you might not have heard:
F*** off and don't come back.

bank guy in Brussels's picture

A ZH favourite of mine ... the comment section after a Graham Summers Phoenix Capital post ... always good for a chuckle

Financial_Guardian_Angel's picture

Amen to that!

1.) Gloom

2.) Doom

3.) Pimp newsletter

4.) Read comments

5.) Laugh ass off

Popo's picture

You forgot:

#6). Misread Graham's idiotically long URL as Gain Spain's Capital .com for the umpteenth time. And then wonder how the fuck he can be so stupid.

LawsofPhysics's picture

The game has been "up" since the PM exchange window closed in the 70's.  Hedge accordingly.

mrktwtch2's picture

not more of this guy again..tyler..just ban this guy from posting already..he has been wrong for 3

Popo's picture

More junior-varsity punditry from the oracle of suburban Arizona.

The poor guy clearly has no idea how amateurish he is.