Germany’s Fed Up and Getting Ready to Walk

Phoenix Capital Research's picture


For months I’ve been warning that when push come to shove Germany will bail on the Euro.

The reasons for this are simple:

1)   The German public and court system won’t stand for QE from the European Central Bank

2)   Issuing Euro bonds goes against the German constitution

3)   Germany has its own share of domestic problems with a REAL Debt to GDP ratio north of 200% and its banks needing tens of billions of Euros in new capital

All of these factors lead me to believe that Germany would refuse to be the ultimate backstop for the EU. You could also see Germany preparing the legislation to allow it to walk if it wanted to:

German Chancellor Angela Merkel’s Christian Democratic Union party voted to allow euro states to quit the currency area, endorsing the prospect of a move not permitted under euro rules.

The resolution reads:

"Should a member [of the euro zone] be unable or unwilling to permanently obey the rules connected to the common currency he will be able to voluntarily--according to the rules of the Lisbon Treaty for leaving the European Union--leave the euro zone without leaving the European Union. He would receive the same status as those member states that do not have the euro."

I believe Germany implemented this legislation for itself… not some other country. And by the look of things, Germany’s getting a lot closer to walking.

BBK Thiele: Current ECB Government Bond Buys Violate Treaty

The European Central Bank's government bond buys are a violation of the Maastricht Treaty, Bundesbank board member Carl-Ludwig Thiele said Monday.

Thiele's comments depart form the official Bundesbank line. While the German central bank has warned that larger purchases may be illegal, it has said that current purchases do not violate the prohibition of monetary financing.

Thiele recalled that the decision to buy Greek government bonds had found no support from German ECB Governing Council members. "Germany was over-ruled on the Council," Thiele said.

"These buys were a violation against the prohibition of monetary financing, that is the basic principle that a central bank should not give credit to a state," Thiele said in a speech text provided by the Bundesbank.

Bundesbanker says euro zone must forget idea of QE

Europe must abandon the idea that printing money, or quantitative easing, can be used to address the euro zone debt crisis, Bundesbank board member Carl-Ludwig Thiele said on Monday.

Thiele called for euro zone countries to exercise fiscal discipline and said that boosting the resources of Europe's rescue funds would buy time to address the bloc's debt woes.

"But lasting confidence cannot be bought with money alone," he added in the text of a speech for delivery in Hamburg.

"One idea should be brushed aside once and for all - namely the idea of printing the required money. Because that would threaten the most important foundation for a stable currency: the independence of a price stability orientated central bank."

These are extremely strong statements coming from the Bundesbank. Remember, Merkel is the German political leader, but she doesn’t control the purse strings to Germany: the German courts and Bundesbank do. And if they don’t support more bailouts, there’s nothing Merkel can do.

We see similar warnings coming out of German CEOs:


Linde CEO says Germany should mull euro exit-paper

Germany should consider leaving the euro if efforts to impose fiscal discipline upon indebted euro zone countries fail, the head of industrial gases firm Linde (LING.DE) told German weekly paper Der Spiegel.

"I fear the willingness of crisis countries to reform themselves is abating if, in the end, the European Central Bank steps in," Linde's chief executive Wolfgang Reitzle was quoted as saying.

"If we do not succeed in disciplining crisis countries, Germany needs to exit," said Reitzle who was previously a board member at carmaker BMW (BMWG.DE) and head of Jaguar and Land Rover.

I firmly believe Germany is already makings moves to prepare for precisely this outcome. No EU member state is going to submit to German authority regarding fiscal policies. Indeed, virtually every EU legislation passed in the post-WWII era was aimed at limiting Germany’s power.

And Germany isn’t going to simply prop up the EU out of the goodness of its heart. As I mentioned before, Germany has its own domestic issues to deal with. And when push comes to shove, Germany will look after its own interests rather than Greece’s or Italy’s.

With that in mind I believe it’s only a matter of time before Germany walks out of the EU. When this happens the Euro will collapse a minimum of 20-30% and we will see numerous sovereign defaults.

When the smoke clears the EU in its current form will be broken and we will have passed through a Crisis far worse than 2008.

Many people see their portfolios go up in smoke with this. But you don’t have to be one of them. In fact, I’ve laid out a series of steps every investor can take to prepare for the coming European Collapse.  

These steps are laid out in five Special Reports that can all be downloaded for FREE at under the Our Free Special Reports tab.

To pick up your copies, swing by today!

Good Investing!

Graham Summers

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Tue, 02/07/2012 - 03:47 | 2133185 Olympia
Olympia's picture


...the barbarians, who forced beautiful Europe to get down Zeus’“back” and made her a prostitute ...the unworthy Europeans, who in 1945 “took Europe down” from “Mount Olympus” and in 2012 relinquished “enslaved” Europe to the Phoenician loan sharks.

Germans are proved to be the easy solution to breach Europe’s door. Whoever wishes to “set foot” on Europe and demolish it, the only thing he has to do is to “fool” the Germans. For a second time in less than fifty years, Europe’s idiots become the victims of foreigners and they serve their interests at the expense of Europe...



The German traitors of Europe along with the Phoenicians from Asia may have forced Europe to get down from the "back” of the Greek “bull”, but it remains to be seen how they shall pull it through with the “bull”.



Sun, 01/22/2012 - 22:04 | 2087388 arg
arg's picture

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Tue, 01/17/2012 - 20:25 | 2072805 Freegolder
Freegolder's picture

The writer, Graham Summers, has been predicting a stock market collapse for the best part of 18 months here at ZH. Well done.

Now he's moved to predicting European issues, such as Germany leaving the Euro.

This prediction is merely further proof (if any were needed) that he has no idea how Germany think, how the Euro currency system works, or how the currency could cope quite well with massive QE if it ever happened.

Tel you what Graham, you tell me why the Euro is different (better) as a stable currency, even if they QE like the US.

ALternatively, go get yourself a new crystal ball.

Tue, 01/17/2012 - 19:22 | 2072680 hyper-critical
hyper-critical's picture

Not a chance in hell Germany leaves the EU anytime soon - anyone who thinks otherwise doesn't understand European politics or basic economics.

EVEN IF Merkel's party were to lose in the upcoming elections, and EVEN IF far right parties were able to win, they wouldn't be able to form a coalition government around leaving the EU. The Social Democrats are even more gung-ho Europe than the CDU.

And think about what happens if Germany leaves and goes back to the Deutsche Mark. We're all fans of Kyle Bass here, so game theory it. The new currency would skyrocket relative to the euro. Exports would be crushed. The Bundesbank would probably need to...gasp...print money to avoid depression!

Germany is one of the biggest beneficieries of a weak euro. Language about giving countries a pathway to leave is more about eventually kicking Greece/Portugal out. This will be enough red meat for the German populace to give them the head room to shore up Italy and Spain.

Everything else is rhetoric aimed at managing long-term inflation expectations, or coming from irrelevant policymakers/academics trying to make a name for themselves/talking heads who don't know their ass from a hole in the ground. 

Tue, 01/17/2012 - 22:16 | 2073054 Buck Johnson
Buck Johnson's picture

Your correct, they want Greece, Portugal and a few others out.  This way they aren't throwing good money after bad.

Tue, 01/17/2012 - 22:17 | 2073052 Everybodys All ...
Everybodys All American's picture

German Mark sky rocketing can easily be dealt with and yet an ever spend thrift EU can't be counted on to do anything. Exports can be made attractive much easier than you think. The main issue is why would Germany not want to control their own fate rather than depend on Greece, Italy, Spain, Portugual, or Ireland who clearly are not up to the job.

Tue, 01/17/2012 - 19:18 | 2072666 Heroic Couplet
Heroic Couplet's picture

is Merkel risking assassination by going against the private bank cartel families?

Tue, 01/17/2012 - 19:10 | 2072641 SWRichmond
SWRichmond's picture

Virginia's ratification of the U.S. Constitution is a conditional acceptance. I know most of you don't know this:

""We, the delegates of the people of Virginia, duly elected in pursuance of a recommendation from the General Assembly, and now met in Convention, having fully and freely investigated and discussed the proceeding of the federal Convention, and being prepared, as well as the most mature deliberation hath enabled us, to decide thereon, Do, in the name and in behalf of the people of Virginia, declare and make known, that the powers granted under the Constitution, being derived from the people of the United States, be resumed by them whensoever the same shall be perverted to their injury or oppression, and that every power, not granted thereby, remains with them, and at their will; that, therefore, no right, of any denomination, can be cancelled, abridged, restrained, or modified, by the Congress, by the Senate or House of Representatives, acting in any capacity, by the President, or any department or officer of the United States, except in those instances in which power is given by the Constitution for those purposes; and that, among other essential rights, the liberty of conscience and of the press cannot be cancelled, abridged, restrained, or modified, by any authority of the United States."

Nancy Pelosi:  "Are you serious?  Are you serious?"

Tue, 01/17/2012 - 18:51 | 2072597 dumpster
dumpster's picture

the fiat will enter.     the euro will stand ,   the buck will be trashed

who can say .  lol    like reading a crystal ball.   all predictions are useless until they happen

might as well predict the weather for three weeks from last monday . 

Of course coming from phonex capital   .. fade all .. grahams   predictions  have been largely  wrong.  .. but it gives his newsletters a sense of gravitas..and constant yammer ,  somewhere in the future he may hit one..    

Tue, 01/17/2012 - 18:29 | 2072528 Cole Younger
Cole Younger's picture

The longer the EURO exists, the bigger the problems are going to get. When it collapses its going to be something to watch

Tue, 01/17/2012 - 18:29 | 2072523 Smiley
Smiley's picture

Germany won't walk, they'll roll; tanks that is!


When the money is gone and or useless all that is left is a big ole grab for resources.  Fuck it.

Tue, 01/17/2012 - 18:24 | 2072513 WilliamShatner
WilliamShatner's picture

Even guys like Ian McAvity has stated they wouldn't be surprised to see Germany back out of the Euro if push came to shove.

Aufedersein, bitchz!

Tue, 01/17/2012 - 18:13 | 2072486 Fuh Querada
Fuh Querada's picture

"I believe Germany implemented this legislation for itself…"

Since when has anyone in the EU given half a a dry fuck about legislation and treaties?

Tue, 01/17/2012 - 19:17 | 2072665 Rynak
Rynak's picture

Read again.... that's german legislation, not EU legislation. German legislation is inside germany taken seriously (thanks to the surpreme court being a pain in the ass for "non-consititutionals") until new legislation overrides or circumvents it.... well, at least it has unusually high weight for a western nation (constitutional aspects still get shit on, just not as arbitrary as in your usual western nation).

For now, you in germany cannot simply ignore the consitution and highlevel laws.... you need to actually replace them, rather than ignore them, for the surpreme court to not assrape you.

So, this "loophole"-thingie is an internal german thing, not an EU thing. Actually, with the current political leverage, germany really can give a shit about EU laws..... IF germany were to leave the EMU.... or worse, even the EU.... well, what are those left gonna do, hmm? About the only two nations on which's "cooperation" germany politically relies nowadays, is france and the UK.

Tue, 01/17/2012 - 17:38 | 2072370 LookingWithAmazement
LookingWithAmazement's picture

The Germans will not walk away from the euro.

Tue, 01/17/2012 - 18:37 | 2072555 Pancho Villa
Pancho Villa's picture

If they are smart, they will run.

Tue, 01/17/2012 - 17:54 | 2072425 Ahmeexnal
Ahmeexnal's picture

they are not going to quit, they are going to be fired!

Tue, 01/17/2012 - 19:23 | 2072683 vocational tainee
vocational tainee's picture

if they wait until last moment,they walk away with at least 40% deduction of their debt,because it is written in EURO`S and will be paid in their new deutsche mark. A perfect move without much consequences....( Iwrote about that here a year ago )

Tue, 01/17/2012 - 19:22 | 2072682 vocational tainee
vocational tainee's picture

if they wait until last moment,they walk away with at least 40% deduction of their debt,because it is written in EURO`S and will be paid in their new deutsche mark. A perfect move without much consequences....( Iwrote about that here a year ago )

Tue, 01/17/2012 - 17:36 | 2072356 NEOSERF
NEOSERF's picture

Cmon Thiele, sit down and eat your meat because you can't have any pudding if you don't eat your meat

Tue, 01/17/2012 - 19:11 | 2072653 Rynak
Rynak's picture

Bu the meat is getting rather expensive..... not just for thiele.

Tue, 01/17/2012 - 17:26 | 2072317 Joebloinvestor
Joebloinvestor's picture

This is gonna be the great history lesson about why central anything is a farce, and why socialism FAILS.

Of course expect some academic to say that it failed because there was no "union" and things will be different when EUROPE is all under one roof.

Tue, 01/17/2012 - 18:12 | 2072482 Endurus
Endurus's picture

Great lesson for us that will be remembered by our children... but forgotten by our childrens children... humanity is such a fickle, short sighted creature.

Tue, 01/17/2012 - 17:29 | 2072329 surf0766
surf0766's picture

As he stands there singing "Show me what democracy looks like. This is what democracy looks like".

Tue, 01/17/2012 - 16:50 | 2072201 SamAdams1234
SamAdams1234's picture

Caw, caw. Its the call of the Black Swan.

Tue, 01/17/2012 - 16:48 | 2072189 SamAdams1234
SamAdams1234's picture

Caw, caw. Its the call of the Black Swan.

Tue, 01/17/2012 - 16:36 | 2072129 xcehn
xcehn's picture

If Germany "walks out of the EU," I have a hard time seeing how the Euro could still exist after.

Tue, 01/17/2012 - 17:55 | 2072428 Ghordius
Ghordius's picture

Those BuBa and other comments are to be put in context: as long as price stability is here - as at the moment still is - the ECB is doing fine. Scary but fine. Should the prices rise, then the Germans will demand that the ECB hits the braking pedal. Then the fun begins...

Tue, 01/17/2012 - 19:09 | 2072647 Rynak
Rynak's picture

Haha, good joke. This was sarcasm, right? Right?

Tue, 01/17/2012 - 17:28 | 2072324 JamesBond
JamesBond's picture

it wouldn't and good catch.

Tue, 01/17/2012 - 17:38 | 2072374 NotApplicable
NotApplicable's picture

It's all transitory. It won't until it will again.

After all, the German people have walked away from the "global community" before, and just look where it got them.

Tue, 01/17/2012 - 18:15 | 2072491 nolla
nolla's picture


The Author is an American and most of the comments are made by just don't know the context.

Would any nation repeat the most dreadful experience they have had during the last 100 years? No, they won't. This is the difference: in the U.S.A. maybe THE experience is the Great Depression (not i.e. WW2), therefore Fed is doing everything to "not make IT happen again".

What's that in Germany? Yes, hyperinflation which brought in Hitler. There's a 1tn bill in the Bundesbank lobby...go figure why.

Germany will not isolate, they will not monetize, they will do everything they can to keep the euro intact. And to keep their C/A surplus... pick your menu.

Tue, 01/17/2012 - 19:26 | 2072689 jcaz
jcaz's picture

"Germany will not isolate. monetize, et al....."

Zee Germans?    Seriously, dude?

Ya, uh-huh- right after Merkel breaks out into "We Are The World".....

Tue, 01/17/2012 - 19:07 | 2072640 Rynak
Rynak's picture

This sub-discussion is like totally off-topic.... and i don't just mean regarding the article, but the situation as a whole

- some (not so?) random german

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