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Behind the Scenes, Germany is Already Preparing For a Grexit

Phoenix Capital Research's picture




 

 

The US Presidential election is over and the world has woken up from the political rhetoric and propaganda to realize that the problems it faced before November 6 are still in place. Indeed, one could very well make the case that the US Presidential Election distracted most people from the fact that things were in fact getting markedly worse in the financial system.

 

Let’s start with Europe.

 

Greece has managed to get through its latest budgetary crisis (a €5 billion bond redemption due this Friday) by the skin of its teeth. In this case, the ECB permitted Greece to redeem asset-backed-securities (read: total and complete garbage) in exchange for funds.

 

This deal occurred commensurate with the usual promised budgetary cuts on the part of Greek politicians (none of which will be met as usual) along with the Greek populace rioting in Athens. This has been and will remain the deal in Greece right up until someone cuts off funding. At that point Greece will leave the EU, default or both.

 

Timing this will be quite difficult, but Germany has already given us clues that it is preparing for a Greek exit.

 

            Debt crisis: German finance ministry examines cost of Greek exit

 

A special working group, led by deputy finance minister Thomas Steffen, is working on scenarios in the case that Greece is forced to withdraw from the 17-nation bloc, the Financial Times Deutschland reported on Friday.

 

"Colleagues are making calculations about the financial consequences [of an exit] and are considering how a domino effect on other euro member states might be prevented," it quoted a finance industry source as saying.

 

The ten-member working group, which is made up of officials from various finance ministry departments, wanted to be fully prepared for a possible "negative scenario," the source added.

 

Last week, German finance minister Wolfgang Schaeuble said it would be “stupid” not to make contingency plans in case Europe's rescue efforts failed, adding that the debt crisis must not become a “bottomless pit” for Germany.

 

http://www.telegraph.co.uk/finance/financialcrisis/9496397/Debt-crisis-German-finance-ministry-examines-cost-of-Greek-exit.html

 

This news story received almost no coverage from the mainstream media, despite its import.

 

Firstly, this is the first time Germany has officially moved to prepare for a Grexit. Germany has certainly threatened to kick Greece out, but it has never actually taken formal, official steps to prepare for this.

 

Since August 24 2012, it has.

 

There is good reason for this and we get clues from German Finance Minister Schauble’s “bottomless pit” comments in the above article.

 

Schauble made this comment once before back in February 2012 before the second Greek bailout:

 

Schaeuble pointed out that German opinion polls show a majority of Germans are willing to help Greece.

 

"But it's important to say that it cannot be a bottomless pit. That's why the Greeks have to finally close that pit. And then we can put something in there. At least people are now starting to realize it won't work with a bottomless pit."

 

Schaeuble said Greece would be supported "one way or another" but warned the country needed to do its homework on improving its competitiveness and hinted it might have to leave the euro zone to do that.

 

http://www.reuters.com/article/2012/02/12/us-germany-greece-idUSTRE81B05N20120212

 

Note that in reference to Greece being a bottomless pit, Schauble was already hinting that Greece may leave the EU even before the second Greek bailout occurred.

The fact that Schauble has now formed a working group to measure the impact of a Grexit while again referring to Greece as a “bottomless pit,” shows clearly that he is about done with propping up Greece… and for good reason.

 

Currently Germany is on the hook for €751 billion in EU backstops. The German economy is only €2.5 trillion. Put another way, Germany is on the hook for an amount equal to of its GDP.

Anyone who believes Germany will actually pony up this cash is dreaming. The single largest transfer payment in history was the German Marshall Plan, which was $13 billion at a time when US GDP was just $200 billion.

 

This constituted a transfer of slightly over 6% of US GDP.

 

That is the single largest transfer in history… and Germany is going to bailout Europe by an amount equal to over FIVE TIMES this?

 

This is simply not going to happen. Germany will play ball with the EU by signaling its efforts to keep things together, but the German’s have in fact been implementing a contingency plan for nearly one year now.

 

I broke this story in February 2012. I haven’t seen it mentioned anywhere else. I wrote:

 

…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).

 

This occurred back in February. And Germany now has a formal working group assessing the cost of a Grexit? The EU is on borrowed time. I mentioned earlier this year that German tourism companies have put contingency plans for the return to the Drachma in the contracts for their Greek subsidiaries. However, now even large US-based multinationals are implementing contingency plans for a Grexit.

 

The list includes JP Morgan, Bank of America Merrill Lynch, Visa, PricewaterhoursCoopers, Boston Consulting Group, Juniper Networks, and others.

 

Buckle up, things are about to get ugly.

 

This is why I’ve been warning that the 2008 was just a warm-up. It’s why the Powers That Be in Europe are absolutely terrified of what’s happening there. And it’s why those investors who do not prepare in advance for what’s coming will lose everything.

 

If you do not want to be one of them, you need to get moving.

 

We have produced a FREE Special Report available to all investors titled What Europe’s Collapse Means For You and Your Savings.

 

This report features ten pages of material outlining our independent analysis real debt situation in Europe (numbers far worse than is publicly admitted), the true nature of the EU banking system, and the systemic risks Europe poses to investors around the world.

 

It also outlines a number of investments to profit from this; investments that anyone can use to take advantage of the European Debt Crisis.

 

Best of all, this report is 100% FREE. You can pick up a copy today at:

http://gainspainscapital.com/eu-report/

 

Best Regards,

 

Graham Summers

 

PS. We also offer a FREE Special Report detailing the threat of inflation as well as two investments that will explode higher as it seeps throughout the financial system. You can pick up a copy of this report at:

 

 

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Wed, 11/28/2012 - 02:25 | 3016616 edotabin
edotabin's picture

I'm starting to believe that there may be a GRExit because Merkel very recently said she is personally committed to making certain Greece remains in the Euro.

Who was it that said you have to lie when things get really serious?

Tue, 11/27/2012 - 23:20 | 3016357 dlmaniac
dlmaniac's picture

Between Germany going back to Mark and Greexit my bet is on the former.

Tue, 11/27/2012 - 23:09 | 3016327 honestann
honestann's picture

The following is the real story.  The banksters and their paid liars (mainstream media) managed to misdirect people at large and so-called leaders of nations to the FACT that Iceland got lots better results by chucking the banksters and politicians out the air lock than others did by remaining enslaved to them.

Since the price of losing this game is losing their absolute predatory grip on the entire planet, the predators-that-be and predator-class will do just about anything to avoid giving the world a second chance to notice how much better off they are by ejecting the predators (banksters and politicians) out the air lock.

This is why they keep throwing worse money after bad money into the endless pit that is the Greek (and Spain, and Portugal, and Italian, and...) economy.  Above all, the predators don't want the world to realize how utterly and completely DESTRUCTIVE they are to every honest, productive (and semi-honest and semi-productive) human being on the planet.  That's their worst case scenario, and the one thing they will not allow to happen if they can help it.

And in their view, they have just the tool to deal with these problems, namely fiat money.  They figure, as long as they can create endless, unlimited, unrestrained and unaccountable money out of nothing, they can simply bury troublemakers deeper and deeper and deeper into debt, until someday they have the power to literally take ownership of entire nations.

Which is the ultimate scam and ultimate travisty, is it not?  Not that paying off debt isn't honorable behavior.  But when those who lent you money did so at zero cost or risk to themselves, and without any need for productive activity and savings, someone has to notice when they attempt to take ownership of entire nations that those taking ownership never worked an honest day in their lives, and never earned the money they loaned.

This entire contortion is to avoid another Iceland or two.  The predators-that-be and predator-class know very clearly that another example of how easy and liberating another escape from their utterly fiat, fake, fraud, fiction, fantasy-based clutches might wake up people around the world.  At which point, so much for their elitist, one-world-government NWO.

Lesson to everyone and every nation:  DEFAULT.  It was all a scam, a trick, an illusion.  ALL of it.

Tue, 11/27/2012 - 21:18 | 3016104 Jolly.Roger
Jolly.Roger's picture

Behind the Scenes, Germany is Already Preparing For a Grexit

Bullshit.
Phoenix Capital Research/ Graham Summers have no fucking idea what's happening behind the scenes.

Tue, 11/27/2012 - 21:17 | 3016101 max2205
max2205's picture

You sir are such a dork

Tue, 11/27/2012 - 20:58 | 3016055 Tommy Gunner
Tommy Gunner's picture

End of Growth - Heinberg:  http://www.youtube.com/watch?v=V0grQGKaTYA

Tue, 11/27/2012 - 20:03 | 3015890 lynnybee
lynnybee's picture

i do not let them ; they steal & think that what's mine is theirs.   some adult children are kind & respectful of their moms; not mine.   ( but, i love them still, that's what moms do )

Tue, 11/27/2012 - 19:49 | 3015843 lynnybee
lynnybee's picture

how long can this get drawn out !?   i've lost any & all credibility with my family; they are eating my supplies & stealing my flats of bottled water 'cause they don't want to buy it themselves.   they treat my house like a free grocery store, saying, "you said we'd collapse two years ago, nothing has happened!."    then, they grab my bathroom supplies & laugh at me, "thanks for all the free potty paper, sucker ! " 

Tue, 11/27/2012 - 19:56 | 3015868 Temporalist
Temporalist's picture

Why would you let them take anything at all?  It wasn't free to begin with why would it be free for them now?  Nobody knows when disaster strikes but it's better to have than need.

Tue, 11/27/2012 - 18:37 | 3015643 Joe A
Joe A's picture

He says he broke this story in feb 2012 and hasn't seen it somewhere else.....sigh.....You know why? Because no one states the fucking obvious. Of course the Germans have contingencyplans. Jesus H. Christ. So do others. They might not admit it, but they've got them. Apart from that, Germany is also targeting new export markets and to increase existing ones, moving away from the European disaster zones.

Tue, 11/27/2012 - 18:07 | 3015544 slickrock
slickrock's picture

Being correct early is the same as being wrong.  Although the clock hands are winding around to catch up with this continual prediction, timing is everything in making this bet.

Tue, 11/27/2012 - 16:57 | 3015272 Bullwinkle Moose
Bullwinkle Moose's picture

Bloviation Maximization

Tue, 11/27/2012 - 17:04 | 3015262 omniversling
omniversling's picture

errr...but, by the same author from 10/26/2011...a quote from Dr Pippa Malmgren, a former economic advisor to George W. Bush and a former advisor to Deutsche Bank, "Germany already printing D'marks":

http://www.zerohedge.com/contributed/germany-already-printing-money…-deutsche-marks

(edit: this link is broken, and doesn't show on a ZH search. Google page for link is: http://www.google.com.au/search?client=safari&rls=en&q=germany+printing+...

 

GS: "So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We're literally at most a few months, and very likely just a few weeks from Europe's banks imploding.

 

What happened in 2008 was literally just the warm up. The REAL DEAL is coming in the next 14 months. And it’s going to involve corporate, financial, and sovereign defaults".

 

On that note, if you’re looking for specific ideas to profit from this mess, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor."

 

Talking up his blog both ways? So that'll be by next month then...cue Mayans 12/2012...

 

 

Heads I win, tails you lose...

 

 

Tue, 11/27/2012 - 20:54 | 3016044 Tommy Gunner
Tommy Gunner's picture

Isn't this the SAME guy who was saying the EU wouldn't make it through the summer - that collapse was imminent - and of course subscribe to the 'end of world' newsletter of his?

We all know the crash is coming - but anyone who says they know when is so completely and utterly FULL OF SHIT

Tue, 11/27/2012 - 16:33 | 3015209 EARLPEARL
EARLPEARL's picture

when greek defaults companies A B and C will go broke trying to payoff the cds's on greece...when a b and c go broke companpanies D E and F will go broke paying off the cds,s on a b and c..and on and on ...GET THE PICTURE...so we must do everything to save greece....DOMINOES ANYONE???

Tue, 11/27/2012 - 16:21 | 3015171 LawsofPhysics
LawsofPhysics's picture

I know i have seen this "report" before.  Perhaps every month for the last 4 years?

Tue, 11/27/2012 - 16:10 | 3015132 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

History looks back on Nero as fiddling while Rome burned.  This will be the case this time around too, but instead of just Rome, the world is afire.

Tue, 11/27/2012 - 15:54 | 3015093 semperfi
semperfi's picture

GREXIT  WILL  NOT  HAPPEN  until civil war breaks out and progresses to the point where the anti-Euro faction is in a position to call the shots and tells the EU to shove it.

Tue, 11/27/2012 - 16:41 | 3015237 Bear
Bear's picture

Even civil war would not get TPTB to recognize their folly ... Only when the ruling elite feel the pain or fear of loss will this thing change ... the Sheepclass will continue to be bled out. The EuroElite are like a band of medieval physicians who's only remedy is bleeding of its patients.

Tue, 11/27/2012 - 16:00 | 3015106 EuroInhabitant
EuroInhabitant's picture

A majority of the Greek voters voted for this government. Suckers. Just like not enough Catalonians voted in favor of a referendum. Suckers. Just like enough Germans will vote for the europhiles of the SPD to win the election next year. Suckers. Just like enough British voters would vote for Labour to make it win, if there were to be elections today. Suckers.

I am a non-voter.

Tue, 11/27/2012 - 22:33 | 3016257 Tompooz
Tompooz's picture

"I am a non-voter."

 

..but I rely on my feet.       Right?

Wed, 11/28/2012 - 16:33 | 3018370 EuroInhabitant
EuroInhabitant's picture

I rely on PMs.

Tue, 11/27/2012 - 16:23 | 3015176 semperfi
semperfi's picture

Things need to "ferment" a bit longer.  Still not ripe yet.  When things get bad enough for enough people (~33%) to switch into rebellion mode, it will happen.  I like your icon.

Tue, 11/27/2012 - 18:10 | 3015560 EuroInhabitant
EuroInhabitant's picture

Thanks. I like your icon too.

Tue, 11/27/2012 - 20:55 | 3016048 Tommy Gunner
Tommy Gunner's picture

You both have such AMAZING icons!!!  Where'd you get them?

Wed, 11/28/2012 - 13:45 | 3017866 EuroInhabitant
EuroInhabitant's picture

Online :)

Tue, 11/27/2012 - 15:26 | 3015004 walküre
walküre's picture

The Germans are thinking of alternatives. They're putting government time to work on possible ramifications. This working group says they're planning for a Greek exit. How much do you want to bet that inside that group, the cost of a German exit is at least put forth and discussed?

Working group member: "Hey, so .. since we're all here meeting ANYWAY .. to discuss the Greek exit ... and the fallout from that happening and maybe Spain, Portugal and whoever else considering the same  ... how about we think at least for a minute what would happen if Germany just pulled the plug? .. [silence .. coughing ... silence .. sound of boots marching faintly in the background .. silence ] WELL LISTEN.. oh sorry, uhm it was just a thought!!"

Another working group member: "Pssst, quiet. We suspect that at least the Fins and the Dutch are working on this already... That is in our meeting NEXT WEEK .. but one word and you're dead. Ok?"

The Euro(zone) is dead. There is no long term solution to sustain this ugly bitch.

Tue, 11/27/2012 - 15:48 | 3015067 Jolly.Roger
Jolly.Roger's picture

You've been swallowing too much team USA and UK plc newsmedia propaganda. 

The Eurozone periphery is going through restructuring (unlike USA/JAPAN/UK). It's starting to work. 

Poland and Latvia are joining the Euro in 2014. 

How much reality before you realise that ZH is forcing their phoney ideology down yr throat EXACTLY as Fox/MSNbc/CNBC do etc. 

The Dollar is giant turd that the world is getting oiut from under without causing it to collapse. China is supporting the Euro. Oil will be priced and traded in Euro. 

It's weakness is its strength – no-one will ever expect the Euro to be a store of value. 

 

 

Tue, 11/27/2012 - 16:45 | 3015243 walküre
walküre's picture

Jolly.Roger, may I call you Berlin Bob?

Funny you speak about propaganda. I've been reading Handelsblatt among other GERMAN websites and lately, the pushback against the neverending story of Greece is becoming louder.

The Euro is hurting people! This is no longer a fun filled experiment for the whole family. The Greeks, Spaniards, Italians and so on need to be able to devaluate their currencies or they will simply go down the drain.

Ze Germans are living in a state of denial about the Euro themselves. They have swallowed this argument that Germany benefits the most from their exports into the Eurozone. It's negligible in the big scheme of things. Considering Target2 has Germany by the balls just like Versailles. Most Germans don't know that their holy manufacturing sector is OWED close to one trillion Dollars from other EZ members because the payments are structured with Target2. As long as the books are balanced, right? Bullshit. When the EZ cannot afford German innovation and production, then it makes no sense to support your weakest buyers to the tune of a trillion Dollars just so they can keep buying shit made in Germany. You know that.

Oil in Euro? Which oil? What oil does Europe own? NONE. Therein lies the problem.

Tue, 11/27/2012 - 21:02 | 3016064 Jolly.Roger
Jolly.Roger's picture

"The Euro is hurting people! " 

Ehm ... Not as much as the GBP pound will eventually hurt the British. Or the yen will hurt the Japans. ... nothing compared to how much the dollar is gonna destroy Americans/most of the world's paper assests. 

Is there anyone on this thread who isn't sucking on ZH's everlasting hysterical doom-pipe? 

The world economies needs to be restructed.
The ECB is being mean and cruel and nasty etc and FORCING the peripery to restructure. 
The Fed, BoJ and BoE are doing their best to let the party continue.  

Who will be better off 5 years from now? 
A group of countries goverened by non-soverign CB that couldn't give a shit about the suffering of the people, or, a CB that is trying to help politicnas stay in power/get re-elecetd etc. 


Tue, 11/27/2012 - 23:16 | 3016343 walküre
walküre's picture

Is this satire? It must be!

Who will be better off? I thought you were defending the Euro and the Eurozone?

The ECB gives a rats ass about Europeans. Its only mandate is to save the banks which have gotten themselves in a heap of trouble over junk loans to the Club Med.

Yes, amigo those are JUNK LOANS. Pussy footing around the issue won't bring it back. Either they do what the street would normally do, send in the collection agent and his 6'6" "buddies" from Viking decent OR they write it off and move on AND NEVER GIVE THE CLUB MED ANOTHER DIME. But they're not doing that, are they? They are cooking up a venomous brew which will saddle all the debt onto the best customers and make good for the bookies in the City. The best customers have no fucking clue what is going on or can't help themselves.

Fuck the Brits, fuck the City and fuck the banking cabal. They can all put a sock in it and stuff the bullshit bets up their arse. Evict all the Eurocrats from Germany and tell them to take their EU norms and EU laws and go fuck themselves sideways.

You think the Greek economy for example is better off when their agricultural sector is micro managed from some nitwits in the ivory towers of Brussels or Strasbourg? The entire setup is bullshit. It didn't work for the Soviets and the empire fell apart. It won't work for the Europeans either and the sooner they can all go back to doing their own deals and manage their own affairs, THE BETTER FOR ALL.

Tue, 11/27/2012 - 20:57 | 3016051 Tommy Gunner
Tommy Gunner's picture

EU devaluing won't happen - because other countries will fight that with their own devaluations.   Currency war.

Tue, 11/27/2012 - 17:43 | 3015295 Observer
Observer's picture

They can write down the receivables, recapitalise through the banks' soffin funds and sell their much in demand products to the emerging markets and the rest of the world..if the rest of Europe doesn't shape up unless the US decides to bomb them again literally or through BIS (bs). Getting at the Swiss banks may be part of that plan...but then the Germans with help from the Chinese and the Russians may outsmart the US. It's certainly going to be interesting

Tue, 11/27/2012 - 17:02 | 3015186 LawsofPhysics
LawsofPhysics's picture

"It's weakness is its strength – no-one will ever expect the dollar to be a store of value."

-----------------------------------------------------------------

Precisely what was said over one hundred years ago, it was said along with "gold is money, everything else is credit".

Soybeans and oil in exchange for gold, yes, fucking bring it.  How much oil is there in the E.Z. again?  FAIL.

Tue, 11/27/2012 - 23:54 | 3016444 Imminent Crucible
Imminent Crucible's picture

You forgot the olive oil. Extra Virgin.  If there are any extra virgins anywhere in Europe.

Tue, 11/27/2012 - 15:42 | 3015050 MillionDollarBoner_
MillionDollarBoner_'s picture

For crying out loud...Greece is NOT a bottomless pit!

It is a pit about 5 metres deep with punji sticks in the bottom ;O)

http://www.youtube.com/watch?v=g3TgnvEIPxk

 

Tue, 11/27/2012 - 15:22 | 3014986 No Euros please...
No Euros please we're British's picture

Maybe Germany have also considered a Gerxit, a Frexit, a Spaxit, a Itaxit and a Ukaxit? Maybe you should seriously consider a sokinit.

Tue, 11/27/2012 - 16:23 | 3015183 Zero Govt
Zero Govt's picture

So politicians who always produce the worst are now prepared for the worst

...a new era has begun, clowns prepared for their own farce, novel.

Tue, 11/27/2012 - 15:21 | 3014983 THE DORK OF CORK
THE DORK OF CORK's picture

But Italy is shrinking...........

Italy was a larger economy then the  UK at one stage of its existence/

Who cares about Greece now except the Greeks !!!!!!!!!!

its just further down the Hertzsprung Russell diagram.

http://www.youtube.com/watch?v=38EDhpxzn2g

 

Tue, 11/27/2012 - 16:00 | 3015110 Mrmojorisin515
Mrmojorisin515's picture

is this the same Dork Of Cork that comments on Golem XIV?

Tue, 11/27/2012 - 15:22 | 3014982 AT
AT's picture

What!? No mention of the old German lady who likes the feel of Deutsche Marks in her hand!

Tue, 11/27/2012 - 15:47 | 3015070 MillionDollarBoner_
MillionDollarBoner_'s picture

Tried buying some Deutshmarks on eBay?

They go for a premium over Euros - bigmouth !;O)

Tue, 11/27/2012 - 16:21 | 3015172 TPTB_r_TBTF
TPTB_r_TBTF's picture

 

exchange rate 280.83 : 1

available here

 

 

Tue, 11/27/2012 - 19:53 | 3015860 Temporalist
Temporalist's picture

Ebay also sells 100,000,000,000,000 Zimbabwe dollars for 4-5:1 in some cases.  Go figure.

http://www.ebay.com/itm/ZIMBABWE-100-Trillion-Dollar-Bill-Foreign-Curren...

Tue, 11/27/2012 - 15:08 | 3014933 mrktwtch2
mrktwtch2's picture

tyler why do you post this doom and glommer he has been wrong for 3 years..!!!

Tue, 11/27/2012 - 19:05 | 3015717 Travis Bickel
Travis Bickel's picture

What's a "glommer" genius? If you don't like Summers, don't read his articles. I'm tired of everyone jumping on this guy's case just because he pimps his newsletter. 

Wed, 11/28/2012 - 00:18 | 3016476 derek_vineyard
derek_vineyard's picture

he gave his word that his last and final crash call would occur by june 2012

Tue, 11/27/2012 - 15:28 | 3015011 KidHorn
KidHorn's picture

Exactly what I was thinking

Tue, 11/27/2012 - 14:33 | 3014783 bank guy in Brussels
bank guy in Brussels's picture

Bring it on

Greek euro exit

Spanish euro exit

American fiscal cliff jump ...

We're all tired of waiting ... It's all gotta be resolved one way or another ... so let's do it ...

Time to light that match!

Tue, 11/27/2012 - 16:13 | 3015152 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Or the Central Banks keep printing, the Treasuries keep issuing toxic debt, the Banking Houses keep creating toxic debt, and living standards keep falling while people agree to maintain the status quo by whining instead of toking action.

What could people do? 

People could take the money supply back by buying gold and silver.

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