Germany Walks Away From Greece

Wolf Richter's picture

Wolf Richter

Preparing for Greece’s exit from the Eurozone has been picking up momentum and has reached critical mass—on the way to a fait accompli. Still unspeakable in public discussion last year, it has become a routine topic at all levels of government. While everyone at the very top still hues to the line that Greece should stay in the Eurozone, out of the other side of the mouth comes the but—especially since the focus is on Spain, the real problem, the one problem that the Eurozone will have trouble digesting.

Even if it could digest bailing out Spain or losing Spain, the next step up, Italy, due to its size, is beyond bailout and would cause the Eurozone to fracture into its component pieces—unless the ECB decides against all treaty limitations and stiff German opposition to monetize directly and without qualms any sovereign debt that needs to be monetized. And even that would tear up the Eurozone because Germany and a handful of other countries would refuse to be tied to that kind of loosey-goosey management of their currency.

There are political realities in Germany, where Chancellor Angela Merkel, slipping in the polls, is trying to decipher the scribbles on the wall. Her people, who vacation in Greece more than any other people, have handed her some clues: 60% said they wanted Greece out of the Eurozone, a jump from November when an already shocking 49% had wanted them out, according to a ZDF Politbarometer poll released Friday. Only 31% wanted Greece to remain in the Eurozone, down from 41% in November, with 9% not giving a hoot.

And Germans made short shrift of French President François Hollande’s favorite debt crisis panacea that he’d demanded from day one of his campaign, re-demanded at the G-8 in Chicago, and slammed on the table at the EU summit in Brussels earlier this week: Eurobonds. An astounding 79% were against them, and only 14% were for them.

Apparently, Germans have understood how insidious—insidious for Germans, but a great deal for debt-sinner countries—these bonds would be. They'd spread the risk of each country to all countries, but the last man standing, possibly Germany, would end up having to bear them all. They'd cut the borrowing costs for Greece (oops, scratch that), Spain, Italy, and a slew of other Eurozone countries but raise the costs for Germany—now zero on shorter term debt, and negative when adjusted for inflation. It didn't help that Bundesbank President Jens Weidmann vilified them in his quiet manner every chance he got, most recently when he said, "The belief that Eurobonds could solve the current crisis is an illusion."

But the next big battle may actually revolve around keeping Germany in the Eurozone: 50% of the respondents saw more disadvantages than advantages, up from 43% in February; only 45% saw more advantages, down from 51% in February. The more costs and risks rise for Germany, the more this number is going to skew away from the euro. A scary trend for Eurozone bailout freaks. And suddenly Germans woke up to the headline, "Greeks Pay less Taxes"—taxes being a sore subject for Germans who pay out of their noses to get their welfare-state budget into balance. For a debacle without equal, read.... The Confiscation Conundrum in Europe.

"The notoriously tax-sinning Greeks paid their government even less than before," the article began unnervingly. Turns out, Reuters had gotten two anonymous “senior” finance ministry officials to talk: Greeks were refusing to pay their taxes in euros in anticipation that they could soon pay them in drachmas, albeit with minor penalties. And lacking a government, they wanted to wait for the outcome of the next election on June 17, which hopefully would produce a government, any government. And so tax revenues in May were on track to drop 10%. Outside of Athens and Thessaloniki, tax revenues would fall between 15% and 30%. First capital flight then quiet bank runs, and now a refusal to pay taxes to a government they don’t have, in a currency they might not have much longer.... The Greeks are preparing for a reversion to the drachma, and they're trying, very understandably, and very smartly, to protect whatever they can—which, of course, simply speeds up the process of reverting to the drachma.

And when Germans were through with this article, the same Friday morning, they’re hit by the headline, “How the Greek Elite Stuff their Pockets,” an article about corruption in Greece. And so, at a conference in Berlin, Jürgen Fitschen, designated Co-Chairman of the gargantuan Deutsche Bank, said that there is no single solution for the euro debt crisis in part because the situation in Greece is so unique. Then he let it slip that Greece was a "failed state."

Thus, Europe has re-descended into rumor hell—where good rumors are head fakes that cause markets to rally, and where bad rumors, though passionately denied by all sides, turn out to be true. Read.... Rumors, Denials, and Visions of Chaos in the Eurozone.

And here is an awesome video by investment manager and author of Currency Wars, James Rickards—particularly in light of the euro crisis: Currency Wars – The Making of the next Global Crisis (video).

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jonjon831983's picture

Media is starting to let a little more line out from the rod about the EUROPOCALYPSE

Here's one:


"Lloyd's of London preparing for euro collapse"

Optimusprime's picture

The phrase you want is  "hews to the line" not "hues".


Hues are color tones; "hews" is present participle of "hew" which means hack or chisel. 

The phrase "hewn stone" is still used fairly commonly.  To "hew to the line" refers to the process of chiselling along a scored line in order to make a relatively plane surface.


Your use is metaphorical, which is fine, but use "hew" not "hue".

hooligan2009's picture

i think the italians, the irish, the portuguese and the hungarians are deeply insulted that the world thinks that greece is more important than they are. why is greece even going to capital markets when the ECB is the guarantor of the debt of (currently) four economies. I think we all know the french, the british, the belgians, the dutch and even the germans are all up shit creek without a paddle. the US and the Japanese have been simply been printing money to hide their applicaitons of lipstick on pigs for decades also.

Tsukato's picture

Vote up!
Vote down!
Online I found a list of "bad words" which red flag emails, texts, etc. by the authorities. I thought to myself " most people are too afraid to ever rise up against the man, but perhaps there is some passive-aggressive action that most people could be bothered to do, and could keep the g-men busy/overloaded". This list of words should be spread to everyone, and attached at the end of every message we all write online, during chat, emails, etc. Please take this list, and pass it along to everyone you know. Thanks and vaya con Dios.

Here is where to find the list:

hooligan2009's picture

i tried that once...used the words in an innocent sentence in an email...lost the internet for a week...maybe they were looking for responses to the email thread..

Joe A's picture

IMF boss Legarde said she had no sympathy for the Greeks. Her sympathy of course goes to the oligarchy. While Greece proper is overall responsible for their own problems due to rappant corruption and tax evasion, the Greek people are very much the victim of their own political and financial elite. People such as Litsas, other tycoons and the orthodox church are filthy rich, hardly pay taxes and parked their money in banks outside Greece. It are these people and institutions that the Greek people need to force to pay up. Considering Greece's history regarding terrorism, it surprises me that there are no cases of this in Greece at the moment.

nicxios's picture

Who cares what the people want, in this case German citizens? They will be dragged along like everyone else. The media is setting german citizens up, inciting and directing their anger at greek citizens; a sleight of hand--look at my left hand while my right hand is busy picking everyone's pocket.

German industy benefits from the Euro and it will be their call along with the Bankers. I bet they choose Eurobonds. 

Master Chef's picture

Let's hurry up and get this Greek tagedy under way - they will benefit from it a bit later. The Euro Empire building has been done using shaky foundations and eventually it's all gonna come down, I wouldn't want to stand too close when that happens, and if I had any cash with the banks I would certainly get it in some form that i can actually hold. I just can't understand why Germany of all nations is willing to let others gamble with its currency. Let the show begin.

shovelhead's picture

I feel for the ECB.

I once loaned money to my brother in law.

That worked out the same way.

nah's picture



government is overrated

mjk0259's picture

Germans should invade Greece again. Sell them as slaves to the Turks and make it part of Greater Germany. The Greeks have been a hopeless waste for over a thousand years.


pasmurf's picture

Really, after the Greeks didn't demand reparations after WW2? A mindless comment as effective as the Troika austerity packages that leads to communists talking of growth, and a lead in the polls. LOL

Joebloinvestor's picture

Looks like the IMF is getting out of Dodge also.

I hope Chris has the same attitude toward France when it sucks on that tailpipe.

HungrySeagull's picture

Start buying metals before the Tape starts on Tuesday for the USA.

That way you are in the money when the herd dumps paper and starts clamoring for Physical.

My spouse gave me the green light to BUY IT ALLLLLL.

up to the limits of credit of course... the dis-chargeable kind not that it really matters.

HungrySeagull's picture

We are watching a great people work with what they have in a failed Europe's currency and possible exit.

"They don't pay taxes to a government they don't have..."

Euro to Drachmas... what is the exchange rate going to be?

First greece, then spain, then france then then then....


Everything that the Greek People have done up to now is flat simple for all to learn a lesson.

No matter what the Policy, Law, Banking etc... the PEOPLE will take care of the PEOPLE FIRST.

Nations come later when everything is taken care of and settled in each and every greek home.

Soon to come to the USA.

Money 4 Nothing's picture

Wow! your a mind reader or something, I just wrote a brief 2 day's ago on exactly the same concerns.

mayavision2012's picture

I think Catherine Austin Fitts said it straight out in an email she sent to a member of GSachs research team in 2009:

You and your colleagues have helped to build and manage a machinery that has committed treason and genocide on a breathtaking scale. The history of Goldman Sachs over the last two decades is living proof that it is possible to kill with a financial system and a pen.”

One could substitute GS with any number of narcissistic global financial banksters.

HungrySeagull's picture

It's usually best to write a Epitaph before one is written in your blood.

lolmao500's picture

I'll believe it when I see it... probably never unless the German government is overthrown.

Yorick7's picture

Thats probably the stupidest comment I've ever seen.  Good luck, buy your Euros, you and the ECB are the only buyers.  See you down there.

news printer's picture
The European Commission draws the vortex of the crisis in Poland

An article in the Financial Times describes the new regulations drawn up by the European Commission, under which holders of bank bonds will bear the costs of the bankruptcy of the bank at least on par with taxpayers.

Element's picture

One month ago the idea of Greece leaving the EU was still being poo-pooed in the main-stream 'discussion' about the EU.

Today the same MSM were doing reports describing how Central Banks and Countries and Companies have been planning in-depth for Greece's leaving of the Euro, "for many months".

We must not panic the sheep!  Have to keep feeding them bullshit, right up to the end, must tell them they're ok, no real problems that can't be muddled-through ... move along now ... nothing to see folks ... it's all just routine 'banking'.

They feed us a supertanker full of lies and delusion even when the banksters and politicians all know the system is terminal, beyond attempts to 'save' it (and let's face it, there never were any, not really) , and is now mere months away from profound systemic seizure.'

But they can't even hide behind their curtains of lies any longer -- the undead are about to die.

smb12321's picture

What's so strange or even sinister about making preparations?  The least the States can do is prepare for an orderly exit from this mess. And it's NOT only banksters/ politicians who are at fault.  EU citizens voted for this pact despite mountains of evidence that it was unworkable and figures were falsified.  Citizens kept electing those who ruled by debt.  Citizens accepted a system that could never succeed on the basis ofr demographics and simple math.  Let's spread the blame around....

Element's picture

What don't you get about this, or haven't you been paying attention?

One day it's all; "No, no, no, no, NO!  It isn't going to happen!  we are determined to not let it collapse! EVER! ... go back to sleep!"

Then the next day it's all like;  "oh yes, we've been working on what to do when it finally collapses, like for ages."

And just this morning my clock radio alarm informs me the UK is talking about its special preparations to enforce emergency border crossing controls, in the event of the Euro and banking system collapse, and how thety have the planning for it worked out in fine-detail.

They lied and lied and lied ... and now they're forced to finally tell the truth,

But only because the lie doesn't work.  If they could lie some more, they would.

Because we can't handle the truth, we must be sheilded from it, behind an Alpine mountain-range of steaming bullshit.

If you don't think that's, "strange or even sinister", then good luck to you.

Zero Govt's picture

"..keep feeding them bullshit, right up to the end.."

Indeed. As someone wrote on a blog yesterday, "they'll cling onto power and keep making decisions right up until the point they put a bullet through their melon in a bunker"

that is the insanity/vacuousness of power and authority

Yorick7's picture

The tone in Europe has changed so much, it seems like all this is becoming inevitable.  Interesting times.

noses's picture


Gemany is already preparing for the re-taxation of the crumbs the state is leaving after robbing its citizens. Including registration of gold and jewellery and raising taxes pension fund shares. All for the good of Greece (which some people already call Greegalia, waiting for pirates to infest its coasts)  and the idiot banks who lent them money and are not getting it back. Socialists. Trust them to turn gold into shit.

HungrySeagull's picture

Germany? Ja.

As in controlling Greece?


Invade then.


Zero Govt's picture

"...lacking a government, they wanted to wait for the outcome of the next election on June 17, which hopefully would produce a government.."

You mean hopefully WOULD NOT produce a Govt don't you???

The problems of Greece HAVE ALL BEEN CREATED by Govt. The wrecked economy, the bankrupt Govt, the indebted banking sector.

NOT FORMING A GOVT would be the PERFECT SOLUTION to the problems caused by Greek Govt.

We need some basic problem-solving lessons in the West because the quality of problem solving to date is pathetic

Govt is the fucking problem in Greece: are we crystal clear???

smb12321's picture

It is infuritating reading post after post that follow the EU party line on austerity.  Those who oppose austerity do so for one reason - it weakens the State.  In this case, governments simultaneously "cut" spending (lol) AND raised taxes - a double whammy to the economy.   With less disposable income is it any wonder unemployment jumped?  The populace can only be hurt by austerity if government is the main employer.  In other words, cutting back in a political economy will hurt. 

falak pema's picture

Merkel's plan B is working well; let club med burn as this gets the EUro low for an export oriented German economy, in this mad currency war race to bottom between USA/China/Japan/EU. 

As at the higher global level, plan A is masterminded by FED/O'bammy. So as long as USD stays reserve currency she has to tag along on the side lines and make the best of surrogate Euro role. Letting CLub Med burn and  fall off the global structural chasm as victim of Euro millstone around their necks facing the dystopian noncompetitive conundrum, created by the Oligarchy's international labour arbitrage global paradigm which benefits the low cost third world. How long will USD stay top dog; how long can FED juggle with all the balls up in the air. That's not her problem. If the QE-infinity pump dries up then the Banksta bubble explodes on both sides of the pond, as that is what Greece fleecing is currently buffering. ANd then we will be in Armageddon territory or in great depression land; issues on which MERKEL has no direct control as she is historically and militarily US surrogate on Nato front.

So she plays along to the best of her ability to save what she can save , of German model first and foremost, in this mad race to bottom that 2008 capitalist crisis has begot the world. 

What south Europe does is now only incidental to maintaining Germany's uber-alles role in a sinking ship, the Titanic of world capitalism, which looks like it will split first in EUrozone then in Anglo zone. 

Its tipping times where the world will change big time, and her narrow window is all she can look thru to defend Deutschland. Plan B is all that's left for her to stick her guns to. As Eurobonding without fiscal bonding is impossible, and fiscal bonding in Westphalien Europe is just not politically on. Europe is now where it was in 1984, with China now breathing down its neck instead of USSR, and its continent in total disarray. Back to the drawing board! 

Play on broken Pax Americana, but for how long?

PS : Plan C strategy : JIM O'NEILL: 'Three Easy Steps Could Put An End To This Crisis This Weekend' - Business Insider

azzhatter's picture

Fuck Jim O' Neill that smarmy prick

Psyman's picture

What's the investment play if you're SURE that Eurobonds will become a reality sometime in 2012 or early 2013?  I'd put 75% of my net worth on it.

theMAXILOPEZpsycho's picture

long german exports/short german retail

Psyman's picture

There will be no Greek exit from the E.U.  They may temporarily use a different currency, but that's the maximum extent of things.  The decades of planning will not be cast aside so easily by the plutocracy, the European aristocracy, whatever you wish to call them.  The European Union is literally their life's work.  Them and their parent's who passed this great work onto them, the sons of the ancient European Aristocratic families.


I've said it before and I'll say it again, there is no European Crisis other than what has been engineered by the central planners.  This is not a meteor about to land on Europe, but an artificial crisis in an artificial system created by man and controlled by man.  Therefore, it can be manipulated by powerful men to achieve their goals.


Their goal is a closer economic union amongst European states.  Their goal is the eventual destruction of national sovereignty for each individual Europen state.  This "crisis" has been engineered to achieve that goal.  As George Soros and so many before him have said, in a crisis you can do things that would otherwise be impossible.  You can pull the USA PATRIOT Act out of the drawer and start spying on all Americans, for a recent example.  "Crisis" is good for the plutocracy, it only makes them stronger.


They're meeting again in June to discuss, not the breakup of the E.U., but further and more tightly binding its member states together.  Euro bonds WILL happen.


"Senior EU and U.S. officials said Hollande raised the topic of euro area bonds - bonds jointly underwritten by all euro zone member states - during G8 talks at the weekend and would again push it when EU leaders meet in Brussels on May 23."

 "Proposals are expected to include boosting the paid-in capital of the European Investment Bank and plans for 'project bonds' underwritten by the EU budget to finance infrastructure."

"The aim is to agree ideas that can be formally signed off at the next summit on June 28-29."

Vince Clortho's picture

Your assessment of the Central Parasites Plan and Methods is spot on.  They engineer crisis and then try to use them to suit their needs.

The Big Question is whether they can manage all the turmoil that is approaching, or if it will blow their plan out of the water.

As always, an informed and educated population can make things very difficult for the parasites.

Psyman's picture

An informed and armed population would be much more dangerous to the elites than an informed and educated one.   What are the Europeans going to do?  Throw rocks at tanks?  Good luck.

HungrySeagull's picture

The Parasites are already implementing plans to control the borders to keep the population behind a wall unable to leave.

I forsee many boaters taking profits running Greeks to Crypus.

Freddie's picture

Unfortunately - I think you are correct.

Lucius Cornelius Sulla's picture

Its not a sure thing.  Politics may trump Eurobonds. 

shuckster's picture

Politicians who balk at the Eurobond arm twisting will no doubt meet untimely deaths, in the form of "heart attacks" and "suicides" so as to send a message to their cohorts that such rebelliousness will no longer be tolerated

CharlieSDT's picture

Just because something is made by man doenst mean he can control it.  This Euro situation is like a stick of dynamite with the fuse already lit.

Lucius Cornelius Sulla's picture

The Germans benefit a great deal from the customs union and that is one reason they may go along with debt monetization.  Greece may go, but I doubt that the core members will.  Remember, the German economy is largely based on manufacturing.  Even if they are playing a vendor finance game, it is keeping people employed and the welfare state funded.  Most Germans realize this so they may go along with monetizing Spain and Italy's debt.

Freddie's picture

I don't think the German public will go for euro bonds.   Some still remember Weimar and the 1920/1930s.

Hollande of whatever the new French socialist name is - is delusional.  Typical lefty cannot stop spending money that does not exists.  Hope & Change european style.  

walküre's picture

No, Germany will NEVER EVER agree to Eurobonds. It would be stupid. Germans were pissed when they learned the true cost of reunification and how the West bailed out the East. These were at least people from the same tribe, just divided by a wall that had fallen.

Germans will NOT work and pay taxes and such to support Greeks, Spaniards, Italians or anybody else outside of their tribal realm.

Instead everyone can go back to cooking their own books.

Ghordius's picture

"These were at least people from the same tribe" - wrong.

The major German (or Gothic) tribes that are still existing and distinguishable (and I mean it, the girls look and behave so-and-so) are (from memory): 

Alemannians, Burgundians, Franks (also North of France), Saxons (a bit everywhere), Swabian or Suebians, Lombards (in Italy only), Bavarians, Visigoths (in Spain), Jutes, Frisian and of course the Normans (a bit everywhere).

The complete list that includes the non-existing is here:

Germany, Italy, France, Austria, and the Benelux countries's borders are the way they are because history, not because of tribes.

noses's picture

Same tribe? Call me Saxon again and you'll have to defend your freedom of speech with your life. 8-)

Psyman's picture

There are several problems with your assessment.  First, you believe in Democracy.  Democracy is a lie and the will of the people means nothing.


Second, you believe the Germans are a free people.  Nothing could be further from the truth.  They are still occupied by the American military.  The American military resident on German soil is more powerful than the entire German military combined.  They will do as they are told.


So the only real question is, "What does the Anglo-Zionist empire think about Eurobonds?"


And that is indeed a wild card.  I can't say for sure whether the Anglo-Zionist empire wishes to see a unified European Superstate.  The U.K.'s standoffishness vis-a-vis the E.U. and the Euro currency would lead me to believe that the current Anglo-Zionist empire sees a unified Europe as a potential threat to the global hegemony it currently enjoys and may be working to undermine it.


But in either case the European plutocracy will do everything possible to sustain their dream of the European Union and a European Superstate.  They've been working on this for multiple generations, it won't all collapse suddenly because of a rather minor economic road bump on the fiat-brick road to serfdom.