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Is Germany the Great Savior of Europe?
Courtesy of Russ Winter of Winter Watch at Wall Street Examiner
"We won't come to grips with economies deleveraging by having governments and central banks throwing -- literally -- even more money at the problem." - Wolfgang Schaeuble, German finance minister
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Germany is portrayed as the Great Hope of saving or bailing out other European sovereigns and, in turn, banks. You hear it from the talking heads all the time: The Eurozone needs to do this, the Eurozone needs to do that. As soon as they "do that" -- and do it big -- it's off to the races, according to these wags.
It's all code for German backstops, which begs the question: How exactly are things going for Germany? The acute problem is that the German people themselves don't feel up to or perhaps strong enough for the task. Despite whatever spinmeisters may say, two thirds of German voters oppose these bailouts.
A different picture from the one of Germany as savior emerges when one looks at the monthly Gallup-Healthways Well-Being Index, which represents polls conducted in the U.S., UK and Germany. Germans' sense of well being about their lives and the future is below that of Americans and Brits. Although a small minority in these countries is suffering, those that say they are struggling is 10% higher in Germany than the U.S. and UK.
As far as the so-called pristine "flight to safety" of AAA German debt, some analysts are predicting that a credit downgrade is at hand and soon - even before the implementation of the next round of EFSF, even before the nationalization of sick German banks and even before the Greek bankruptcy. Two years ago, Germany's debt to GDP was 64%. Now, it's 84% and moving up fast.
So far, political leaders in Germany have chosen to ignore all this and instead have passed a fresh measure to throw 211 billion euros more into the pot as Germany's contribution to the "do that" problem. Apparently, the appeal of the EFSF issue is that it will be another AAA supranational debt guaranteed by the rest of Europe, which coincidentally has far lower than a AAA rating. The "rest," namely France and Germany, are facing debt downgrades and have populations in deepening funks while their political will is being blown off.
In judging how this plays out from a social and political perspective, it would seem that Germany is the weak link. The U.S., with even more debt than Germany and less cohesive as a people, can also drop like a rock in a heartbeat. There is major political discontent in all these countries, but so far all the public can do is vote for a stranger and stranger revolving-door of politicians, who employ the same one-trick-pony bailout economics. It is increasingly obvious that the persistence of struggling and suffering populations combined with politicians unresponsive to their wishes, leads to protest movements such as Occupy Wall Street. But most of the serious protesting is in truly ruined countries, where much larger groups are suffering.
As the sovereign debt crisis spreads to Germany, France, the UK and the U.S., and some austerity enters the scene, at what percent of population counted as struggling and suffering does democratic protest turn into something far more dangerous (or in the end positive)?
This post is reprinted from Russ’s premium service, Russ Winter’s Actionable. Click here for information.
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AHAHAHA gimme a break! Most people here may not know this, but to "prepare" the german population to become 2nd grade china, all the austerity, privatization and wagedumping which now is proposed to the PIIGS, HAS ALREADY BEEN DONE TO GERMANS DURING THE INTRODUCTION OF THE EUR!
That's right - you wonder how the oh so big and "benefiting" germany, can in polls be the leader regarding populations saying that they are "struggling" and "suffering"? Well, there's your answer - all the shit which the PIIGS now are protesting against, is stuff that german politicians did already do to the german population - and it hasn't forgotten the slightest bit of it!
The day you even just mention the proposal of more austerity to germans, streets will be burning in no time!
AHAHAHA gimme a break! Most people here may not know this, but to "prepare" the german population to become 2nd grade china, all the austerity, privatization and wagedumping which now is proposed to the PIIGS, HAS ALREADY BEEN DONE TO GERMANS DURING THE INTRODUCTION OF THE EUR!
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I'm not so sure Germans need to tighten their belts that much-
Seems to me they were smart enough not to get caught up in the Credit mania that the rest of the Western world engaged in-
http://blogs.telegraph.co.uk/finance/files/2010/08/house-prices.gif
http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt
That however will only work out, if they let their banks default, and only guarantee cash deposits. Do you think politicians will without a fight kill off i.e. Deutsche Bank?
Politically at least-i think the German hiarchy is hooped for providing more bailouts to Banks-
Merkle seems to be hinting more and more about bond and share holders taking the hit this time-
Deutsche Bank is insolvent and has been since the credit/paper market vaporized-like all banks have-
I somehow doubt they have the Political will to underpin the banks again-but it is still anyone's guess i suppose-
I am actually doing very well right now, so I fit in the thriving category. Then again, I have spent the last 2 years going back to get a new degree, switched careers in mid life, and paid down my debt by quite a bit. Not happy with the state of my State and country and the world, but moderately successful on a personal level.
Then again, any moderate success these days is highly tenuous. Time to buy more metal (lead, silver, and of course gold).
the euro is just a tired worn down wedge that's run its course - indeed the dollar and yaun are fighting for hegemony supremacy - think back not so long ago when GATT & Sino/WTO [?] was a thought and now has morphed into a stirle wetdream - China seated at the right hand of God's Work,... thus we have a dilemma of known proportion, quantifiable in human nature - bounded only by avarice, and the nafarious esoteric dirty dozen - the eruozone will and should disband, for its useful pragmatism was but a failed experiment from its inception [?] - China will go its merry way and the United States should follow suit if it were wise -
isolationism, seems the word for today's morrow? - America can go it alone with its geographic abundance in all resources except energy which by the way is abundant in our northern neighbors territory - our first cousins can fill the void - thusly our own blue-gold reserves once harnessed can drive our vehicles, and all commerce into the 23rd century - whereas our dirt is filthy rich contrary to what the MSN's speak - Thorium Nuclear Reactors do not "Meltdown"[!!!], period -
infrastructure buildup cry's out for steel mills,... this is an absolute automatic starter in our survival mode testimonial for a better future -
let China deal with its imploding hubris - but let us also deal with our arrogant, and narcissistic ways by reining in this FRB,... this abomination that has brought our country, and the world to its very knees -
so the answer to your question,... it's a no brainer
Danke schone
52.9% Americans are thriving.Boy,hopium must be cheap and plentiful.
Does anyone know where I can find a good high quality pair of Jack Boots in Germany?
I have looked everywhere and had no luck!
Still Shop-hope-y-ing...
Germany Jack Boot Shopper.
It's a start.
http://www.hessenantique.com/NVA_German_Jack_Boots_p/hagp005.htm
Sooner or later Germany will bailout Europe, it will also send in German troops to keep the peace, hehe I luv the part where Germany deploys peacekeeping forces in Europe. Nostalgic.
Oh Lebensraum, oh Lebensraum...
In the struggle to gain advantage in the corporate structure, the banks play a game of "heads they win, tails you lose". Politicians don't particularly care who buys them off, as long as they get a reprieve for another election cycle. The politics of economics are far more entertaining than the reality of economics. In this instance, whatever Germany is doing in Western Europe, Russia wants a piece of it. This is a pimps fashion show.
http://georgesblogforum.wordpress.com/2011/09/14/war-under-heaven-the-wo...
Has this US citizen shares in this stupid 'research' think tank to mount a whole article on that piece of information?
Economists are never short of one useless innovation.
This is most interesting to me, "Germans' sense of well being about their lives and the future is below that of Americans and Brits. Although a small minority in these countries is suffering, those that say they are struggling is 10% higher in Germany than the U.S. and UK."
With the higher employement for Germans,, there is, at least, a disconnect" between the Western outlook on the future prosperity based based on "if I had a Job"/employment determining future well being,, and what is reported here, with German "well being" index.
Very strange. I wonder where the discrepancy exists in this reflecion on well being. Is there a closer association for the German Financial condition than Western Countrys as far as the individual? Maybe they simply see their future being sold away.. some thing is not right. Perhaps a demarcation line has been crossed recently whereby recent events have turned attitudes and opinions, quickly in another direction?
Aside the official 3 million unemployed (around 8%) in Germany there are about 10 millions more people that are living from governmental benefit recipients.Barely enough to keep body and soul together.
These additional "poor people" without prospects explain the low "well being" quite profound.
The Germans tend to be careful and pessimistic which in turn renders them hard working and saving. A very conservative folk despite all these modernist inventions like socialism and communism...
In short: they always complain for having very little to complain about!
Pie eyed optimism.
There are few countries in Europe that have a financial history as colourful as the German hyper- inflation of 1920- 1924. However, in 1933, as soon as the Nazi's gained power, Germany defaulted again, and let us not forget the currency reform of 1948 that wiped out all internal debt.
In fact, the historical record shows that since 1830, every single time Germany has had a credit crisis it has been solved by defaulting on the debt owed to investors. http://www.scoinsandbullion.com/en/blog/307-does-history-provide-any-war...
Isn't that how all debt crises get solved..... eventually.
You know the gold bugs love to point out that "this time won't be any different".
Well if all debt crises end in defaults... and this time it "wont be any different"... then the gold bugs might have a wee little problem. (Counting junks starting now).
You know the gold bugs love to point out that "this time won't be any different".
Well if all debt crises end in defaults... and this time it "wont be any different"... then the gold bugs might have a wee little problem. (Counting junks starting now).
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Complete misinformed bullshit-
You haven't got a clue what Gold is or why its reacted the way it has in the last 10 years-which is in fact "because" of default risk-not the dollar as misinformed no nothing people like you spout on a regular basis-
Here's how gold reacts to default risk-or at least it did "last time"
http://bit.ly/huHhx1
http://bit.ly/dJaHAY
Gold has an inverse relationship with the 30yr bond yields-but i suspect you didn't know that either-
http://bit.ly/nxjBdC
http://research.stlouisfed.org/fred2/series/TP30A28
2001--Yields crashed-Gold spiked
2008--Yields spiked--Gold crashed-
Where are yields now?
Do you expect them to spike?
Do not mess with the GERMANS! You saw what happened 50 years ago. Those dudes are patient and calculating. Sooner or later something is gonna give and then watch what happens in a heartbeat.
What happened? I don't know, everybody of my family was on vacation
The increase in the German debt-to-GDP ratio stems from the bailouts of several banks, not from structural deficits. At least, that means that the deficits won't necessarily be repeated year after year. Nevertheless, they should have let banks like IKB or Hypo Real Estate fail though.
Germany has a very successful export model of high value products. But it does have major factors of strategic fragility :
1° Demographic decline, one of the highest in EU. It will need new labour imports, which will aggravate ethnic mix social profile.
2° Lack of RM. Near total dependency on Norway/Russia for energy. Plus a costly 'bet' on renewables that will make it dependent on French 'nuclear' for the interim thirty year period (upto 2050).
3° Political/Military clout which is much lower than its economic clout. Germany has no voice in the foreign sector. Legacy of WW2 it is still a dwarf under the US nuclear umbrella. This hampers it leadership roll in regions like MENA and Asia.
4° If the great depression arrives, its export model will tank and become a problem. As home consumption, which has been sacrificed over twenty years, will have to kick-start.
So Germany is at the cross roads. Does is go to EU leadership on fall back on traditional nation state, with a big demographic handicap etc.
2. yes, there's dependency on N/R gas. but you're totally WRONG about renewables:
http://www.bloomberg.com/news/2011-09-29/utilities-giving-away-power-as-...
http://www.dailytech.com/Renewable+Energy+Production+Beats+Nuclear+Power...
We don't need fission nuclear. That's the nuclear lobby conditioning talking. In order to grow from 6% to 20% energy production we'd need a huge amount of new reactors being built. There's not enough uranium to sustain a long run of these reactors. We have to "recycle" nuclear warheads already (MOX) to even keep the ones in service running. Fission Nuclear is economically not viable, because it needs (taxpayer?) funding to even exist as an industry. Anyway...
http://www.rmi.org/rmi/Library/E08-04_ForgetNuclear
I'm not defending or attacking Germany's position on nuclear; I'm just taking note of it as its official and accross the political spectrum. The fact is that there will be a greater energy production shortfall in coming years once the nuclear german wind down begins. That is inevitable. Its math.
As for the economics of Nuclear fission, I would be inclined to support your view point. The debate in France is an accounting farce. They have not included the 'decommissioning' cost of existing or of future plus nuclear waste treatment other than sea dumping in their calculations of electric grid price sold to consumers; its an economic time bomb for future generation.