Just Say No, Germany ... and Don't Listen to Geithner

Wolf Richter's picture

By Wolf Richter   www.testosteronepit.com

The German parliament has a historic opportunity to say no to the bankers: On Wednesday, the Bundestag gets to vote on the expansion of the European bailout fund, the EFSF. The new limit: €1 trillion ($1.37 trillion), though it had just been expanded to €440 billion. Since no one has any money, the expansion will be in form of leverage—the very mechanism that has wreaked so much havoc already.

While the details are still uncertain, we know one thing for sure: you can't enlarge something by leveraging it without multiplying risks and ultimate costs. And the idea that these operations will prevent contagion and buy time to solve the underlying fiscal problems is self-contradictory: if the EFSF were actually able to eliminate market pressures on over-indebted governments, it would also eliminate the incentives to make the needed hard choices.

That's what happened in the U.S. The Fed's strategy of printing trillions of dollars and forcing interest rates to near zero has eliminated any and all market pressures on Congress to solve the budget fiasco. As a consequence, Congress is sitting contentedly on a situation where the U.S. borrows 38% of every dollar it spends. In about two years, gross national debt will approach 120% of GDP, the unenviable spot where Italy is today.

And Italy is in deep trouble. To bail it out, experts are already examining how the leveraged EFSF could buy massive amounts of Italian debt on the secondary market (Spiegel). This, despite provisions in the European Union treaty that specifically prohibit such bailouts. But these experts are now looking for a way around the law. The same has already occurred at the ECB, which has been buying the debt of countries like Italy, though by law, it cannot do so.

No country has ever paid off its sovereign debt without resorting to inflation and devaluation. It can't be done because the money from debt sales goes into salaries, paperclips, wars, politicians, pensions, offshore bank accounts, subsidies, infrastructure, bailouts, healthcare, etc., which do not produce enough revenues to pay off the debt when it matures. Investors understand that. But they have some sort of fuzzy guarantee that the piece of paper (or number on a screen) they hold will be redeemed at face value with funds obtained from the sale of new debt.

The idea is to create 2-3% inflation and 2-5% growth. Then a deficit of 3% of GDP, or more when the economy dips, is no problem. New debt can be issued, and maturing debt can be rolled over. The debt level remains "sustainable." Until the percentages go out of whack.

Now they have gone out of whack. Italy, Greece, the US, and some other countries have deficits that are 8-10% of GDP, far beyond the rate at which a developed country can grow. At these levels of deficit spending, even during a period of growth of 5%—the sound barrier for developed countries—the debt problem only gets worse. Inflation, at least in the U.S. economy, is no solution either because real wages have declined significantly since their peak in 1999. Reduced purchasing power has been a drag on growth, and more inflation will only make it worse.

So, rather than getting budget deficits in line, fancy schemes are devised to borrow more, print more, and add leverage to the mix. Losses, risks, and mountains of debt are shifted from one country to another, from banks to the taxpayer, and from one generation to the next.

Now the Bundestag has an opportunity to say no to this madness—and to stand up to the bankers. German taxpayers are shouldering 48% of the EFSF that is ballooning with every squiggle in the market. Their voices should be heard. While the Bundestag apparently cannot, or does not want to, prevent the subversion of the laws that govern the ECB and the EFSF, it can turn off one of the spigots. Through its vote, the Bundestag can allow market pressures to impose some discipline on budgets around the Eurozone. In the U.S., the Fed has eliminated that discipline, and with it, the checks and balances of capitalism. And we're paying the price. In the Eurozone, that is about to happen, too. So just say no.

Now, The GAO Audit of the Fed Doesn't Call It 'Corruption' but....

Wolf Richter   www.testosteronepit.com

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shortus cynicus's picture

Thay will pass it, they will fight until Endsieg.

Ethics Gradient's picture

Quite. Believing that Germany might vote to lessen its influence and control over other sovereign states is the first step on the path to madness.

hero HNL's picture

I pray the German people would reject this evil scheme of a quick medicine without dealing with the real issue of debt.


See what happened to the US with leverage & it will kill your country in no time.


Please stop this madness.


JOYFUL's picture


You are correct, but slightly bashful in addressing the issue. Thankfully, we have the previous correspondent random drift available to ice your cake

The alternative is a central European finance ministry. That will repeat the pattern of the Jewish* (bankers') conquest of England, in 1815.   They did it by getting control of the Bank of England and their conquest was at least as thorough as William I's.  

 Hopefully, between the two of you, readers will now be able to see for themselves the vapid effort of Mr Wolf 'Blitzer' Richter to extend the pretense that any German entity has the power to influence let alone decide the fate of Germany or the rest of the EuroMerikan satrapies of the Sabbatean/Frankist Khanate.

Mass apocalyptic event of concern to certain  melatonin-challenged Haplogroups accustomed in the past to riding horses, forging weapons, and livin free comin real soon to a place their sadly brain addled descendants are  now under siege. (Hyperbole? Suit yurself, stick around n find out!)

God/Gold/and two fresh mounts....never defend a fixed perimeter.

*that whole 'Jews' thing is a tiresome sideshow...they were/are Kabbalist Talmudists....they hate Christians/Muslims/Jews equally and worship numbers & false profits[non sic]

yogirock's picture


@ Joyful


I accept the "bashful" criticism, but prudence is also important. As to the Kabbalist-Talmudist "core values"...I partially agree but you make the separation too extreme, I see KT as just an extreme case of the same root.




JOYFUL's picture

My intention was not to critique, but to leverage the coincidence of your comment with that of the previous contributor, so as to bring into focus for the reader the terrible dilemma of the German State: accept your golden chains as enforcers of the ultimate conquest of Euro-Merika by the moneychangers, or die by the sword in a futile effort to regain the status of freemen...a meme made purposely clear by the facile "Brevik" false flag event....they think of everything, don't they!>?

further to which, the above commentator's mention of 1453[fall of Constantinople] allows me to indulge in an observation pertinent to the future of the same DNA group I made mention of:  wandering amongst the residue of the peoples who descend from the area of the once mighty (and Christian!) Byzantine Empire, one is struck by the lack of core values of humility, honesty and innovation. Few of the populace of the former Ottoman Empire were actual "Turks," "Mongols" or other "eastern" invaders...rather, most are the degraded remnants of our own "western" peoples, reduced by centuries of enslavement to a state of moral impoverishment much more damaging than that of the economic kind-which our forbears lived through many times!

The Germans, as with the rest of the so called 'western' peoples have lost the will to survive that was the hallmark of their teutonic tradition.  Their remaining arrogance is only superficial; deep down they are already cringing kow-towers to the monstrous entity which has subsumed them.  The only pockets of resistance to survive us will be 'outlaws' who return to the traditions which made  the usurers live in fear of us.

Soon enough, "live free or die" will be more than a rhetorical device I fear. Glad to see a post below this one mention the word "pray"...few other tools of survival seem left to us at this juncture.

yogirock's picture


"they" won centuries ago. 1815 is an important landmark, but so are the American Civil War, the French Revolution, the Glorious Revolution, Cromwell and if one wants to be very speculative the thread can go deep into antiquity. It is only in the mid 19th and beginning of the 20th century though, when the process acquired "critical global mass" not only in the economic sphere but in the cultural and educational one too. How do you fight memes that have been so skillfully and deeply ingrained in the "western mind"? and "they" have all the money after all, and the organization, and the will. I do not believe this process can be reversed but by prayers being answered...a dim proposition....but being aware of it all...can help in finding mitigants....perhaps delay the endgame.

As to the false flag "Brevik"...I do not know enough about it....I am agnostic...false flagging is certainly a very useful tool and widely used...but not all is that...there are coincidences and random events too. 

I agree that Germany has lost most of its spirit...but who hasn't? unfortunately "it" is bigger than us all.


JOYFUL's picture

trouble with these threads at the top of the ZH front page is that when they disappear in the morn they get stale fast...so given that we are just pretty much having a private conversation at this point, allow me to respond just by saying

I was totally serious bout the God/Gold and two mounts motif: but if God's not your thing, get zee the gold, and dwell on this:  they used to bury our long long ago ancestors with their horses...the grave sites from all over Eurasia prove what generations of our betters knew what made us greater than our foes...

saddle up old son  - evade the enemy and live to fight another day... the tactical choice left to us now. But if caught in battle against a superior force, we will know death before dishonor.

That's all the difference there is between freeman and slave.

randomdrift's picture

For the last approximately twenty years I have opposed that political doctrine (that is, totalitarian-fascist-globalism, also called Neodemocracy) in State and local politics and believe that I understand the underlying psychology. --- They are at a low stage of personal development and entirely lack the higher mental process of inspiration. That is, what the Dali Lama calls the "ah hah! experience." Consequently, having never had any direct experience of Truth nor of Natural Law, they believe that truth is socially determined. That is the nature of their condition and they think that all people are like them, and that that is how the universe is constructed. Some of them have even stated that, if enough people believe their lies, they become truth.  So, to them, it is an issue not of truth and falsehood but of achieving that critical mass. 

ZeroHedge's excellent articles have revealed that their policies are nonsense. (for a detailed example, see Annotated European Union Document On EFSF Status )  That is a reflection of the nature of the people who formed them. 

People such as they, are easy prey to Evil. But know that you have the upper-hand, that you control your own mind and can ignore evil thoughts, even command them to leave. That is  taught in the story of Jesus in the Wilderness but it is also recognized in modern psychology in the treatment of dissociative idendity disorder (DID). I think DID is often what is involved here. --- In short, "The lunatics are in charge of the assylum." 

Incidentally, when I refer to their level of personal development, I am not referring to the Cabalistic model, which Freud's work was based upon, but to the three-level Classical Greek / Hindu / Nordic (Asatru) / Alchemical / Christian model.  (Note, however, that just as Nietzsche stated, "Christianity is Paganism for the masses:" That is, the New Testiment almost exclusively dwells upon the lower two levels and only hints of the existence of a third and higher level.)

falak pema's picture

Good article that spells out very simply the inevitable existential choice now facing western civilization; and we know which way it will go...Germany is as hamstrung, caught between two rocks, as all the other western nations.

The only practical outcome of the current debt spiral now is : Western economic/sociological decadence en masse, transfer of power to East and Pacific rim. Our "going local" economic trend  now promoted by "isolationist/deflationist/ reset to zero" mindset will be resisted madly by the Oligarchs, who have lived off the nipple of the outsourcing globalized construct, whose money is all 'off-shore', and whose power base is the 'transnational corporate behemoth'. No country in that construct, no place for allowing nation state's "people governance" in that Zeitgeist. 

Goodbye Atlantis, the 1492 experiment is coming to a close, just like in 1453 the previous episode of Crusader adventure did.

And btw, the comparison is intentional, as the power  structure in the west, then as now, is totally identical : outside nation state and FEUDAL.

Buckle down and get ready for a massive thirty year geopolitical paradigm change for the worse for the middle-lower classes of first world via hyperinflation of costs and deflation of revenues, through fiat devaluation. Or war, or revolution...


yogirock's picture

As if they had a choice...Bundestag, governments, citizen...nobody has a choice..."they" decide...this should be clear to most readers of ZH

slaughterer's picture

Looks like you are looking for a repeat of the Schroeder "No!" to Iraq war.  Not going to happen in today's Germany.  CDU has the majority, and the German gov will support (to the detriment of the taxpayer) the proposed solutions to the Europe.  Merkel knows how far she can push her government, and she has cut down the more extreme forms of rescue from opponents at the Euro summit.  The package she brings back to the Bundestag will slip through with a "Yes" as fast an oiled weasel into a circus hoop. 

Cast Iron Skillet's picture

As it turns out, the most adamant opponents of the EFSF are within Merkel's own party. Since the entire bundestag is voting on the package, and since the opposition Social Democratic Party has stated they will support the EFSF, there is no chance it will be defeated.

The danger for Frau Merkel is that too few people out of her own party ranks will vote for the package. If less than 311 representatives of the coalition parties FDP and CDU/CSU vote for the package, Merkel's government would likely fall. At the last vote (last week), 315 coalition representatives voted for the package.

If Merkel's government falls, it will be ... interesting.

yogirock's picture

This is precisely what I think will happen, you are right...but my point was not about expecting a "no"...it will be a "yes"...the point was that Merkel herself, Germany, does not have much of a choice..."they" decide

ManicMechanic's picture

It will certainly be interesting to see if and how Germany's next incarnation of a Final Solution begins to assume form.  But maybe Winston Churchill saw this euro thing coming in his now famous,
"this is not the end.. it is not even the beginning of the end.." speech, as we kick the can a little more.

Harbourcity's picture

Great article - nice summation and perspective. Impressed.

Cast Iron Skillet's picture

"The German parliament has a historic opportunity to say no to the bankers"

But they won't.

e-recep's picture

Yes, they won't coz they are "buyable", too.

El Gordo's picture

Put the gold and silver under your matress, but keep the gun on your person.  Otherwise, the thieves will get everything.

mailll's picture

I'm thinking of buying lots of gold and silver and sticking it under my mattress.  Do I have to buy a gun too and put that under my mattress also to protect all me gold? I mean My gold? Sorry, I thought I was a leprechaun for a second there.  But seriously, articles like this are starting to convince me to at least buy silver.

dalkrin's picture

Depends on your living situation, and whether you expect someone to threaten you and your possessions.  If you are an American, do go ahead and exercise your right to bear arms.  A $300 shotgun and some shells are cheap for providing a compelling psychological, and if necessary deadly, deterrent to any would-be pillagers. 

It seems the reasons for owning gold and silver are becoming more glaring every day.  I myself only started stacking about a year ago, but some here have been at it for a decade or more.  1971 and the severance of the gold standard was one big wake-up call, not to mention this past 2008-present economic fiasco. 

Do your research, average in, and bunker down.  You've already found the best spot to be a spectator to the bizzaro world we are entering.

Freddie's picture

I lost all my guns, ammo and gold in a boating accident. Tragic.

OldTrooper's picture

Go to your bank, local gun shop and coin dealer - in that order - as soon as possible.

akak's picture

I know just how you feel, laddy --- they're always after me Lucky Charms.

web bot's picture

You too?!

Did you get my earlier post a couple of days ago re my prognosis that you were asking about?

It looks like Greece is getting ready to fold... I'm hearing that if nothing is solidified by Wednesday, then things are about to get ugly in the markets.

Take care Mr. A.

akak's picture

Yes, sorry Web bot, I did see your post, and thank you for it.

Sorry for the delay in responding here today -- I was absorbed in blasting and damning leo in another thread.  And they say that one should not speak ill of the (mentally and spiritually) dead --- hah!

web bot's picture

Ahhh... that's great Mr. A.

Would you be so kind as to let me know which blog :)  

I'd love to have an opportunity to say hi to Leo again... if you know what I mean...

LawsofPhysics's picture

Everyone knows the debt is a fraud, just like China's GDP numbers.  I mean 8% GDP growth is good right?  Riiiggghhhttt....

mailll's picture

The US govt. numbers are a fraud also.  But when they keep throwing their numbers at us over and over again, they must be real right?  I mean these stats have been around for decades.  So they must be trustworthy right?  But look at the source from where these numbers come from. The Chinese aren't the only ones playing this game. Ever the media, leading up to the Iraq war kept telling us over and over again that Iraq had weapons of mass destruction. They told us so many times that they brainwashed us into believing that it was true.  Guess what? They lied and 4400 brave Americans died.  Who benefitted? Or should I say, who profitted?   Just like this Iran crap that is out that the Iranians are trying to assassinate a Saudi Prince.  I turn on Fox News today and they kept telling us over and over again that the allegations against Iran are true and they have all this evidence.  They tell us over and over and over again that it is true.  Just like they did with Iraq and weapons of mass destruction.  This is called brainwashing.  The media has been brainwashing people from the get go.  We have to realize that if they keep trying to convince us of these things over and over again, then we know they are trying to brainwash us by convincing us that it is true.  We need to stop being fools and start questioning everything they tell us. Start questioning the source of this information.  Everything they tell us is coming from secret organizations.  CIA, FBI, Federal Reserve, etc. Every operation they do is "Fast and Furious" it seems. The only truth I see is that the truth is not coming from the mainstream media.  The only thing that comes from them is propaganda.  What a weapon.  And this weapon is being used on its own people.  It always has been.

saiybat's picture

"It always has been."

And it always will be unless people go back to a hunter-gatherer life and barter where there is no need for war or enslavement. Money is the cause of all the problems in the world even if it is precious metals.

mailll's picture

I agree.  Money is the root of all evil.  When I was about 17 years old, I had to rush so I could get to work on time.  While I was driving to work, I had sort of a vision in front of me of how imprisoned we are by this economic structure.  The monetary system enslaves us all and prevents us from serving God by using our God given talents. The solution I see is, and it won't be possible at this time because much suffering is to take place beforehand I believe, is by taking the example Jesus set.  He didn't work for money, He did his work serving God by serving his fellow man.  Jesus was the greatest doctor of all time and he never charged a dime for his services. We have to serve eachother, not money.  A couple of things the new testement says about money besides the love of money being the root of all evil.  It's easier for a camel to go through the eye of a needle than it is for a rich man to get to heaven.  And Jesus says you can't serve 2 masters.  You can't serve both God and money. But anyway, I have to run.  I'm running late for work. I'll get to the peaceful nature of Jesus in another post.


saiybat's picture

The New Testament has been altered countless times to fit the needs of power. The passage Timothy 6:10 in particular is one of the most telling.

"For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows."

The love of money (greed) but not money itself is the root of all evil which is just another way of repeating what's said in the Old Testament about greed. I doubt Jesus taught just that and what would be more fitting to the way he lived is that money itself is the root of all evil. In the cleansing of the temple Jesus turned over the money changers tables and whipped the money changers and called them a den of thieves. Notice how it's money changers and not people bartering chickens and goats. Then he was crucified for it

So what does this tell us? Trading in a temple isn't forbidden in the Old Testament and would be a rather trivial thing to be crucified for if it is making a mockery of the temple. Jesus was a revolutionary and threatened the money system. That's why he was crucified and the early Christians. The oldest known records of most of the books of the New Testament were written in Greek not Hebrew but were translated from Hebrew and a number of things were likely altered during this period. Someone capable of writing would not record what Jesus really taught about money nor would any sovereign allow it considering both benefit greatly from a money system. It's not known who had the first bible recorded but it would obviously be someone with finances since they are capable of writing or having it commissioned to be written.

It's very similiar to "Render unto Caesar". There's no chance that Jesus ever said that because it's contradictory to his entire character. You have to view Jesus for what he was; a revolutionary and when you do that you'll realize just how much of the bible is falsified.


e-recep's picture

What's with all this religious stuff?? Not all of us are believers, using religion as a reference point is not right.

randomdrift's picture

Prior to the twentieth century, psychology was considered to be a religious issue. It is a large part of what we are dealing with here, whether that is markets or politics.  So, although I agree that we shouldn't base our arguments upon scripture, neither should we exclude references to it as long-recognized examples of psychological truths within whatever culture the particular scripture came from. 

Mark123's picture

Ya...just like we hoped that Europe would skuttle America's bombing/occupation of Iraq.


This is just a show for the plebs.

LawsofPhysics's picture

True, but one thing is for sure, we are all about to get a lot richer.  hedge accordingly.

honestann's picture

Those in the know just say no!

Mactheknife's picture

WARNING: The above link..The GAO Audit of the Fed Doesn't Call it Corruption...

will make you want to throw up...had to get up and walk a minute. 

XitSam's picture

Yeah, insider trading at the Fed, and they don't even try to hide it.

PulauHantu29's picture

"No country has ever paid off its sovereign debt without resorting to inflation and devaluation."

You said it right there!

Widowmaker's picture

More bonuses, we need more bonuses!

Fuck the arts.

css1971's picture

When new credit money is created you have credit and debt. You get the money, the bank records the debt and the debt pays interest. The credit does not. So there is always more debt than credit. Always.


Total debt in the USA? 50 Trillion

Total money (M2) in the USA? 9.5 Trillion


10 Trillion in credit cannot pay off a debt of 50 Trillion.

10 Trillion cannot even pay the 14 Trillion public debt.


There are only 3 options. Default, inflate or change the monetary system to something sane.

shortus cynicus's picture

I disagree.

10 trillion in credit could pay 50 trillion of debt if creditors (banks and savers) would spend all interest payments immediately into economy allowing a debtor to recollect that money and pay next tranche back and so on until all debt is payed off.

It would cause mean a massive inflation, but so be it.

Currently the creditors (mostly foreign central banks) are hoarding interest payments multiplying deflation effect, that's why debtors can't pay credit off.

Debtors and savers (foreign central banks) are opposite sites of the conflict.

The only functioning debt-money system could be one when debt-money expire if hold to long.

randomdrift's picture

War has also been used to achieve that end.

But, with regard to the choice currently before Germany, surely, it would be best for them to say, "No."

The alternative is a central European finance ministry. That will repeat the pattern of the Jewish (bankers') conquest of England, in 1815.   They did it by getting control of the Bank of England and their conquest was at least as thorough as William I's.  


max2205's picture

I wonder what I'll happen and if traders buy the news..... Zzzzzz

jo6pac's picture

I'm the left and yes the elite and citizens need to say enough. Good luck banksters and investors.

philipat's picture

Pain bitchez!! A word now so alien to several entitlement generations in Europe and now the US as to be "Politically Impossible"? More Bank bailouts here we come.

Azannoth's picture

Only the German people could stop this madness by showing up at the Bundestag with pichtforks and torches but ain't gonna happen in this round of bailout, maybe in the 3rd or 4th if it even will matter then

Chuck Walla's picture

A word now so alien to several entitlement generations in Europe and now the US as to be "Politically Impossible"? More Bank bailouts here we come.


But the end is all mathematically certain.