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Nine Months Ago I Said Germany Would Leave the Euro... Finally the MSM is Starting to Catch On

Phoenix Capital Research's picture




 

 

Since November 16th 2011, I’ve been forecasting that when push comes to shove, Germany will opt to leave the Euro. At that time I wrote…

 

…everyone claims they want to support the EFSF… but no one wants to commit the money. Moreover, Germany’s constitution forbids the backing of Euro bonds… and the EFSF itself has failed to stage even a three billion Euro bond offering under] normal market conditions.

 

Again, the bailout game is ending. Under these conditions, I believe Germany and France will push to either:

 

1) Leave the EU

2) Draft legislation that allows countries to leave the Euro but remain in the EU

3) Propose kicking out the PIIGS from the Euro

Whichever one of these options Germany opts for, the Euro will collapse

 

~November 16 2011

 

Sure enough, soon after I wrote this, Germany began implementing measures to put a firewall around its financial system. I noted in this in February 2012, writing:

 

…Germany has put into place a contingency plan that would permit it to leave the Euro if it had to.

 

As a brief recap, this contingency plan consists of:

 

  1. Legislation that would permit Germany to leave the Euro but remain a part of the EU
  2. The revival of its Special Financial Market Stabilization Funds, or SoFFin for short, to which Germany has allocated 480€ billion Euros to in the case of a banking crisis (the fund will also permit German banks to dump their euro-zone government bonds if needed).

 

So Germany is ready to bail if it needs to. Meanwhile, on the other side of EU equation, Spain and Italy must be watching what’s happening in Greece and asking themselves whether they want to go through this whole process of negotiating for bailouts via austerity measures.

 

~February 21 2012

 

Now, nearly nine months after my initial forecast, this story is finally getting picked up in the mainstream media. The Economist has a fictitious cover story about Merkel pondering how to break up the Euro. And Der Spiegel notes:

 

Officially, though, Merkel's line is that she wants more Europe, not less. In the chancellor's bid to save the common currency, she is willing to go to the very limits of what is permissible under the German constitution. That was made clear by her support for the permanent euro rescue fund, the European Stability Mechanism (ESM), and her pet project, the fiscal pact. But Merkel still wants more. "We need a political union," she recently said on German public television station ARD. "That means we have to give up further competencies to Europe, step by step, in an ongoing process."

 

Talk of a Vote

 

But that will probably not work, given the limits of the German constitution, something that members of the opposition have been pointing out for some time. In the meantime, more and more people within the governing parties have been talking about holding a referendum in Germany on the European Union. Rainer Brüderle, the floor leader of the business-friendly Free Democrats, Merkel's junior coalition partner, said on Friday that there could come a point "when a referendum on Europe becomes necessary."

 

Horst Seehofer, head of the Christian Social Union (CSU), the Bavarian sister party to Merkel's Christian Democratic Union (CDU), has even called for several referendums. Finance Minister Wolfgang Schäuble has also talked about holding a national vote on the EU.

 

Such a vote could indeed be a way to get the much needed legitimacy for a transfer of national competences to Brussels. But how would it actually work in practice? SPIEGEL ONLINE presents an overview of some possibilities.

 

There are three conceivable options for a referendum:

 

http://www.spiegel.de/international/europe/germany-considers-holding-eu-referendum-a-849441.html

 

 

How exactly all of this will play is hard to say. The fact that we’ve seen hints of Germany leaving the Euro popping up in the mainstream media should be a BIG warning. Moreover, the Wall Street Journal recently noted that certain areas of Germany are once again accepting Deutsche Marks as legal tender.

 

Will Germany leave the Euro? I believe so. The country is already  bordering on insolvency due to nearly €1 trillion in backdoor EU bailouts (pushing Germany’s Debt to GDP to 90%). Over 69% of Germans are worried about inflation. Angela Merkel is up for re-election next year (and has gained political points anytime she played hardball with Europe) and Germany has implemented steps to place a firewall around its financial system and passed legislation allowing it to leave the Euro if need be.

 

None of this adds up to Germany bailing out all of Europe. Merkel has said there will not be Eurobonds for as “long as [she] lives.” And Germany doesn’t have the €5 trillion needed to backstop the PIIGS banking deposits, let alone the deposits for all of the EU.

 

On that note, we’ve recently published a report showing investors how to prepare for the collapse of the EU. It’s called What Europe’s Collapse Means For You 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: 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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Mon, 11/05/2012 - 09:24 | 2948226 watch2x
watch2x's picture

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Sat, 08/11/2012 - 09:12 | 2696844 Lost Wages
Lost Wages's picture

Germany will leave the Euro just as soon as New York leaves America.

Sat, 08/11/2012 - 09:01 | 2696820 MillionDollarBoner_
MillionDollarBoner_'s picture

 REPOST

When - and only when - the printing begins in earnest (best guess December 2012) will Germany return to the DM.

Its great living next to a hyper-inflationary economy so long as you have a solid currency of your own. You simply pop across the border and snap up assets for cents-on-the-dollar from people who are desperate for any currency but their own. After all, your own government can't ass-rape you so bad if you are holding "real" money, right? Check out "When Money Dies" by Adam Fergusson for the details.

Germany has every incentive to keep the ponzi going until maximum stress is reached - that way the pickings will be so much juicier. It also has the added benefit of keeping German exports competitive through the ongoing weakness of the failing Euro.

When the time is right she can neatly step aside into the safety of the new DM and reap the rewards.

Weimar? It's payback time !;o)

Sat, 08/11/2012 - 09:00 | 2696819 Joe A
Joe A's picture

Actually, I already said it on October 4th 1989 when the Wall came down, having a few beers with friends. I said "you know, Germany will leave the common European currency in 2012". My friends thought I was drunk and laughed at me. I, of course, knew better.

Sat, 08/11/2012 - 08:22 | 2696740 Paul Thomason
Paul Thomason's picture

Astrology of the markets says brickwall next week - 'Astro-Technical Update: Major Fireworks Loom'

Sat, 08/11/2012 - 06:56 | 2696652 silverdragon
silverdragon's picture

Graham, Really?

You are trying to sell your nonesense here, when in reality you aren't even smarter than most people posting comments.

 

 

Sat, 08/11/2012 - 06:40 | 2696641 BeetleBailey
BeetleBailey's picture

A stopped clock: Right twice as much as Graham per day.

Sat, 08/11/2012 - 06:06 | 2696626 silverdragon
silverdragon's picture

Really Graham,

that's the best you can do?

Sat, 08/11/2012 - 08:59 | 2696817 BlankfeinDiamond
BlankfeinDiamond's picture

Hey hey hey, take it easy on Graham. He has a newsletter to sell.

Sat, 08/11/2012 - 02:12 | 2696503 dcb
dcb's picture

I am not saying it won't happen, but the banksters have a lot more they can steal before germany leaves.

Fri, 08/10/2012 - 23:46 | 2696307 q99x2
q99x2's picture

No one is waiting for the EU to do anything. We've opted for WWIII instead.

Sat, 08/11/2012 - 02:02 | 2696495 cynicalskeptic
cynicalskeptic's picture

The US won't attack Iran until after the Nov elections..... (no matter who wins. the neo-con hit list is in play).  Until then we''ll have to settle for making noise about Syria.

War is always the last resort of collapsing economies and failing empires, but it's doubtful that an expanded version of the war against terroristic Islam (what?!?! those countries also have major oil fileds - what a coincidence!)  will revive the US's failing fortunes.  In all likelihood all it'll do is hasten our national bankruptcy (Iraq and Afghanistan sure moved that date up and an expanded war in the ME will speed it even more).  

No matter what,  war is coming - foreign or domestic.  Sadly the latter is far too likely as TPTB fight to hold onto power after destroying the US.

At least all tht military technology will come in handy repressing the domestic rebellion that will occur when the US populace faces the end of bread and circuses.  Hungry and out of beer, the all too well-armed US (formerly) working class will not be too happy to find out they've been conned.   The question is:  WIll the US military and police serve tgheir corporate overlords or uphold their oaths to preserve and protect the Constitution? (in simpler terms - will THEY stand up for their own self-intersts or be ggod hired help to the richest .01%).

Fri, 08/10/2012 - 23:34 | 2696271 shovelhead
shovelhead's picture

Nonsense.

The EZ will have their debt paid off in June 3124.

The US ...a bit longer timeline.

The real question is that of whether Lloyd Blankfein's clones will look the same or if the DNA will diverge.

Sat, 08/11/2012 - 09:04 | 2696827 MillionDollarBoner_
MillionDollarBoner_'s picture

Blankfein has DNA ?!?

Fri, 08/10/2012 - 22:26 | 2696128 BlackSharpiePen
BlackSharpiePen's picture

Here Ye, Here Ye, I said everything that Graham said, only before Graham actually said it. Therefore, I shall be known forthwith as The Oracle of Phoenix Capital.

Fri, 08/10/2012 - 23:02 | 2696210 philipat
philipat's picture

Like a Phoenix from the asses (sic)??

Fri, 08/10/2012 - 20:02 | 2695796 boogerbently
boogerbently's picture

More SPAM from the "I told you so" dufus.

Phoenix Capital punk.

Sat, 08/11/2012 - 09:06 | 2696832 Jack Sheet
Jack Sheet's picture

Yeah just about every 24 h now.
For those fairly new here it goes something like this:
- see Penix Crapital Research at the top of ZH
-say shit, not again, not more useless crap
- receive confirmation of such expectation in the post
- give it a 1 point rating as zero is not possible
- tell Graham to fuck off in the comments section.

Fri, 08/10/2012 - 18:20 | 2695588 XtraBullish
XtraBullish's picture

So why would I pay for your newsletter again?

Fri, 08/10/2012 - 23:00 | 2696206 philipat
philipat's picture

.....but, but it's "Absolutely free". And worth the same.

Fri, 08/10/2012 - 21:26 | 2695966 Eireann go Brach
Eireann go Brach's picture

Graham you also said the EU would be broken up by now too! Would you like to expand on that call please? Thank you

Fri, 08/10/2012 - 19:44 | 2695770 hannah
hannah's picture

wow ...you paid for a first time....?

Fri, 08/10/2012 - 18:20 | 2695587 MGA_1
MGA_1's picture

Egad... has this guy been right in the past 5 years?

Fri, 08/10/2012 - 19:31 | 2695737 Savyindallas
Savyindallas's picture

Other than the criminals who have manipulated the markets -who has been right? Graham will be right -in due time  -we all know that.

Fri, 08/10/2012 - 17:47 | 2695491 Ironmaan
Ironmaan's picture

This is another case of non-productive profligate spenders whining to the productive and prudent to pay their fucking bills.

Fri, 08/10/2012 - 18:32 | 2695618 Zero Govt
Zero Govt's picture

it's worse than that actually

think of Europes entire Parasite Club (bankers, politcians of local, national and international - EC, ECB, EU - Govt plus all their crony businesses attached from monopoly utilities, green Co's, accountants/consultants, service and goods suppliers and all the public servants) all facing their 1st crash diet in 2-3 decades

these obese spoilt brats are not going down without taking the productive economy with them (ie. anarchy, which is the real definition of Govt)

 

Fri, 08/10/2012 - 20:03 | 2695800 boogerbently
boogerbently's picture

I saw PARASITE CLUB and I thought you were referring to Phoenix Capital.

Fri, 08/10/2012 - 16:43 | 2695288 Negro Primero
Negro Primero's picture

Graham please go to Mars!

Fri, 08/10/2012 - 22:58 | 2696201 philipat
philipat's picture

As in Marstricht?

Fri, 08/10/2012 - 16:27 | 2695234 LowProfile
LowProfile's picture

I'll keep this up until we get a dialog going (or my head turns to mush against a brick wall...).

 

Here is what will happen:

The EUR will devalue.  But it won't disappear, or lose utility. 

Ghordius so far has said it best (link to the comment below http://www.zerohedge.com/news/feds-gold-being-audited-us-treasury#commen... )

"it is well known that the bulk of Europe's sovereign gold is also contained deep under downtown Manhattan: we wish them all the best when they attempt to repatriate the physical when they need it, such as the day after the EUR finally collapses".

This is the other way round. First Nixon forbade repatriation on August 1971. Then europe had think through where all this was heading and concocted the EUR as a response to the situation, present and future.

This included expectations of future currency wars and great rounds of "competitive devaluations" in an environment that would make small currencies very, very fragile in view of huge waves of hot, speculative fiat looking for something to break for a quick profit. The CHF is already hiding under the EUR skirt, if this goes on we'll soon see other small currencies in some kind of trouble (the GBP's fate will also be very interesting). No financial pundit is currently ever thinking through (in the way of Bastiat) how this mess since 2008 would have looked like with 17 eu currencies all biting each other...

Ironically, the best way to get rid of the EUR would be the repatriation of the european gold, same as in 1971.

Fat chance. As long as the US Treasury/FED goes the fiat way and the USD is the global reserve currency (the two facts reinforce each other), I don't see how this "EUR collapse" could happen with an eurozone that is a net exporter, an ECB that values it's gold at market value and the European Fiscal Compact that is going to at least try to institutionalize nearly-balanced-budgets in the eurozone's future.

For all near-blind hate against all central banks that some here have, anybody looking seriously at the current situation should realize a few of those facts, that make btw the search for "understanding where the EURUSD is going" quite irrelevant, a mere short-term distraction. By now, we all have some proof that the ECB is really guided by the compromise between 17 national interests (yeah, call them mercantile, if you wish).

Parts of the gold markets are "getting it", eventually we'll talk here about "eurogold vs. usdgold", and more about "central banks FX reserves", etc.

And for all those that are expecting a "marriage of convenience" between the USD and the EUR - or even think this is a "grand plan": please remember East Asia's policies, expectations, demands (including SDRs), past currency manipulations and plans for the future. And how the current global trade flows function.

_-_-_-_

All I can think to add to what Ghordius wrote above (for now) is that the EUR is a supra-national currency, with no single nation in control of the issuance of currency (BIG difference between the ECB and the Fed, although it's clear the Fed is in collusion with the big banks).

Also, it uses the market price of gold to calculate it's reserves, with which it lends against.  This gives it an enormous advantage over both a debt-based and a gold-redeemable currency.

This also has the effect of limiting the ability of any one Eurozone member from issuing unsustainable debt (Greece, Spain, et. al. are running up against this market limit right now).

This has the effect of in the long run, making the EUR the most stable of all transactional currencies in the world.

The USD could do the same, but to try and adopt the EUR model, it would create a price shock in gold (and the USD) that TPTB are clearly trying to avoid.

This IMO will result in the EUR becoming (at least in the West) the transactional currency of choice.  Not a great store of value (unless you buy stable EU nation bonds, depending on the larger environment), but a superior medium of exchange than other currencies (owing to it's wide acceptance and greater stability).

Gold, bitchez.

Oh, and http://screwtapefiles.blogspot.de/2012/08/niceto-know-that-euro-is-in-su...

Cheers,

LowProfile

Fri, 08/10/2012 - 16:10 | 2695172 Precious
Precious's picture

Be an American patriot.  Refuse Health Insurance.

Fri, 08/10/2012 - 20:11 | 2695811 Freddie
Freddie's picture

Muslims can.  Obama Care is a jizya or Islamic tax on non-Muslims.   Oh they will get free care too.  BTW - about 50% of immigrants are still on welfare after 20 years,  Hope & Chains.

Sat, 08/11/2012 - 09:39 | 2696892 francis_sawyer
francis_sawyer's picture

It's a "jizz ya" alright... Practically a bukkake...

Fri, 08/10/2012 - 18:57 | 2695672 NidStyles
NidStyles's picture

In Arizona Obamacare is not mandatory. They fixed that problem before it even became an issue. The groups whose Medical Insurance will go up are those from out of state insurance companies. Given enough time the State based ones will push the out of state ones, well out of the state. 

Fri, 08/10/2012 - 17:52 | 2695505 silverserfer
silverserfer's picture

i would rather refuse car insurance

Fri, 08/10/2012 - 18:20 | 2695584 Zero Govt
Zero Govt's picture

so 2 options on the table, bin health and car insurance... both public-private extortion rackets, both cool to go

Fri, 08/10/2012 - 16:35 | 2695246 LowProfile
Sat, 08/11/2012 - 10:34 | 2697039 JeffB
JeffB's picture

What happens to someone who paid the penalty and got in a car wreck or had a heart attack?

Do they receive the same level of care and then can buy health insurance? Or their family buys it while they're on the table in the Emergency Room?

Not arguing. I just don't know the details.

 

Fri, 08/10/2012 - 21:09 | 2695904 Popo
Popo's picture

+1000

Graham has been wrong 9/10 times.

Not only that, but nine months ago Graham copied every other financial blog on the planet (and every ZeroHedge post) and wrote semi-literate blog posts which were 2 paragraphs long, included 90% quotes and ended with "Buy my lame newsletter" -- Now he's trying to make it look like he added something of value here.

Seriously, fuck off Graham.  You're the shittiest contributor to ZeroHedge (with the exception of Mr. "I still carry an American passport, and lie about my success" Simon Black).   Lightweight, junior-varsity posts which end with sales-pitches are what you're known for.

9 months ago you were ridiculed.  And you're still being ridiculed.  

The above post is a perfect example:

1) "I claimed Germany would leave the Euro before everyone."  (No you didn't.  The blogosphere has been absolutely filled with this idea).

2)  Quotes from Speigel (as if this is the first time it has been discussed in German media -- Seriously, are you kidding me?)

3)  Backpedaling:  "It's difficult to see how this will play out... "   Will they leave or won't they?   (Wait... what happened to your thesis?)

4)  "Protect yourself from Germany's impending Euro exit!  Buy my newsletter!"  (Ah.. So we're confident again now? Just in time for a sales pitch!)

 

 

 

 

 

 

Sat, 08/11/2012 - 02:56 | 2696536 Jack Sheet
Jack Sheet's picture

How true. Here is a simpler message: FUCK OFF, Graham

Fri, 08/10/2012 - 22:56 | 2696196 philipat
philipat's picture

And also, dear Graham, I note that you now no longer include specific dates in your ramblings. Just to remind you, though, the last time you did make a specific prediction it was that the Eurozone would completely collapse by July. But, in fairness, you didn't say which YEAR.

As another amusing aside, I excpect shortly to see the usual -1 against all posts like this and Popo's. Sheeeeesh....

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