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The Next Step Towards The End Of The Euro
By Wolf Richter www.testosteronepit.com
Timothy Geithner, already out on a limb, told The Wall Street Journal CEO Council today that Europe’s response to the debt crisis is “obviously not fast enough.” But he hasn’t been listening. Europe is responding fast, or at least Germany is. In the opposite direction. Last week, it seemed like a trial balloon, but now it has become a clear message:
"We need a common market, not one currency,” said Anton Börner during an interview with the BBC yesterday. He is the president of the BGA, an industry federation that represents 120,000 small and medium-size exporters in Germany. One of its primary functions is to lobby the government of Germany and the government of the European Union. So, his voice doesn’t go unnoticed in the circles of power.
While Chancellor Angela Merkel was out there claiming that "everything must be done" to keep the Eurozone intact—even if it means kicking Greece out—the hitherto unthinkable happened. German companies, in particular those that directly or indirectly depend on exports, have been a massive cornerstone of support for the euro. And that cornerstone just cracked.
“The German taxpayer is not going to pay anymore," Börner said. Geithner must have tuned him out. People think that "Germans should put more money on the table, and everything will be okay,” Börner said. “But that's not the truth, and nothing will be okay."
Nevertheless, Germany’s GDP grew a fairly robust 0.5% in the third quarter from the second quarter, the Federal Statistics Office announced today. And last week, Germany’s exports for September hit a record high of €91.3 billion ($112 billion), up 0.9% from August. So Börner got to do a bit of gloating.
"The real economy is very robust,” he said today in response to the GDP figures. Then: "The problems in the Southern European countries are also our problems. But Germany cannot carry the burden alone. Countries like Italy must now deliver."
The bad news for Germany is further up the pipeline: orders for industrial goods fell 4.3% in September from August, as orders from the Eurozone plunged 12.1%. Already in August, orders had fallen 1.4%. So, the export-dependent German economy will soon have to pay a price.
Back to the BBC interview where Börner was outright brutal—or perhaps just Teutonic—in his straightforwardness.
"It's not Germany that has to tackle the crisis, but Italy.... The problem is an Italian problem. It's a problem of their domestic society. And they have to change their attitudes on how to do business in the world markets.”
He could have been a little more diplomatic:
“We have to force,” he said, though “force” should never be used by a German in regards to other countries, “the southern European countries to do their jobs themselves and not wait for money from abroad. If they get money from other countries, they won’t change their society, and a few years from now, we have the same problem.”
And then he almost backpedaled: "The euro is the best thing we have for our economy, and we’ll fight very hard to keep the euro, but not at any price."
Would Germany thrive without the euro? “Look at the UK, Poland, the Czech Republic, etc. There are many currencies in Europe. What we need is a European market, one market, one set of legislation, free trade, no barriers, etc. This has nothing to do with a common currency.”
He then reactivated the idea of a mini-Eurozone with Austria, Finland, the Netherlands, and Denmark—after rumors to that effect had been energetically denied by Merkel herself last week. "If people in some countries don't want to understand the language of the markets, then we have to live in different worlds," he said. And to keep the new currency from rising to uncompetitive levels, he suggested that it could be managed responsibly—the way the Swiss National Bank is currently managing the Swiss franc.
Judging from the stream of rumors and energetic denials, German bureaucrats are furiously working on dozens of projects that all deal with the debt crisis. But at the end, there is what they call in their inimitable German.... Greece's ‘Worst-Worst-Case-Szenario.’
Wolf Richter www.testosteronepit.com
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Shouldn't that be "Vurst, Vurst"?
Somebody has to stop this bullshit about Germany supporting the rest of Europe: Germany is the only country that actually benefit from the Euro, by keeping its Douche Mark. Germans are the ones that have been eating the free meal....also they have been borrowing at 2% rate from their bond subscribers abd reinvesting in 2 digit Greek bond rates.
If you make the wrong inverstments it is mighty right that you lose it like everybody else...duh!
Don't you hate it when the (Goberment) comes along and forces you to buy a house you can't afford then you wind up standing in the isle of some supermarket having a tatrum.. Listening to some of you guys whine is like going to walmart , but atleast here i don't see so many fat women in Spandex..
nonsense
Well, if all those "southern misfits" can't control their spending, the answer must lie in a political union with the power to force them to- while providing the security they will require.
This is all just an excuse to increase the police power of the state.
How long until all nations of the world must be brought to heel? The Free Riders must be put under the control of the State for the benefit of all the world. We will only contain their excesses, because we aren't cruel. This will allow the more productive factors of society to become more dominant and "progressive".
Almost sounds like heaven on Earth, Huh? I mean, once you get past that heel of a boot stomping on your face forever thingy...
Germany and Holland can't and won't pay for all the PIIGS drunken spending. What's so complicated about that?
Adding Denmark, (and Iceland) just as predicted by the Great Kaiserhoff;))))
"The end of the Euro".
Bullshit detail crunching and wishfull "group" think.
The Germans are NOT going to make the mistake that ushered in WWII. They know that the Euro in its current form is finished. They do support a union with like-minded countries, which means not Southern Europe.
Some idiots are floating the idea that gold be used to backstop the Euro... ya.... and Ben said that gold is not a currency.
Germany appears to be doing well relative to the others because all those malinvested credit deposits is flowing back financing their defecit - which keeps their interest rate down.
Italy has a smaller structual defecit but Germany would be Toast at 6%+ interest rates.
Germany is a extreme mercantile country and therefore in mormal times would be very exposed - in a Europe of many currencies Germany would be experiencing a massive depression now.
same old story. Every country wants to be an exporter/producer. No one wants to be the customer in this eCONomic game built upon infinite growth in a world with finite resources. When the hell are we going to start trading with the other planets in the solar system already?
EARTH FIRST (We'll mine the other planets later)
CHAPTER 2:
And after the brakeup of the Euro, all the bears went back to their cave and started their wintersleep.
A rant from a simple Australian Lady:
1. We have so much coal and gas and oil - get we can't affor to pay the electricity bills
and the rest of the Permanent invasion by the US Military and its Permanet Occupation - we are screwed
and just to be you know that she has other opinions as well.
It is so wonderful she should be Prime Minister - Beware Bad Ladies Words; adult content
http://www.youtube.com/watch?v=UR200B0RUAc
http://verbewarp.blogspot.com/2011/03/operation-death-star-australis.html
You gave up your guns and now you wanna cry about being occupied-- the US mainland will be a tuff place for bankers to find a place to hide-- thats why they will move to Austriala and Dubia etc-- cause you guys will let them--
Rant, yes. Simple, obviously. No facts, no clear critical thinking, just anger. Lots and lots of anger. She needs to stop swearing, calm down and present her case.
the lady needs a tramp and a ramp to console her soul.
Good article Mr T
And what it brings to attention is the huge gulf between politics and business. The politicos want a LaLa Land where they can spend (other peoples money) forever and a day on chasing idealism (often a smokescreen to pocket brown envelopes: see Greece) without any responsibility or viable plan to repay it.
Which in a nutshell is what being in Govt is all about isn't it? ...nice job (for lazy slackers) if you can get it
Meanwhile the German businessman wants a free market, not a common currency. Well who is the enemy of the free market and restricts it working? Er, that'd be Govt and its interventions/laws and protectionism
Try finding the best cheese in the world, Cheddar, in the land of 150 cheeses (that aren't quite so good as Cheddar) in France.. you can't, the French market is rigged and 4 decades of a 'common market' hasn't changed that fact one iota
40 years on and Euro commerce is a bigger shambles than ever, the 'leaders' are a cross between clowns and criminals and Nirvana has never been further away ...in fact you need to cross an impossible mountain of Govt and banking debt (built by the Govt and bankers) to get to the Promised Land
Tut tut politicians... promise you the Earth, deliver you a time bomb ..socio-economic 'terrorists' for short
you have to be nuts if you think Cheddar is best in the world. Stilton is OK. But cheddar, tastes like english beer. Try Compté french cheese; it looks like cheddar and tastes like heaven. You need a french lesson.
When I was living in Paris, I saw two, count 'em TWO American cars in the whole damn city, a baby blue vet, and a fire engine red caddy. If you can get permission to bring in an American car, it's worth a fortune. You can't even import American dog breeds into France.
Whereas the US is drowning in imported French cars, of course. It's so unfair!
Who makes Fiat's? those tiny half-car deals
Who makes fiat? Helicopter Ben, isn't it? Genuine American product.
not true, my saab dealer network is now pushing Chevys big way as saab is in big trouble. And the chevys are selling albeit on a small pie basis. SO I don't see no import duties etc. against US cars. GM Opel and Ford cars are very prevalent in germany and spain. Just saying...
Here in Germany American cars always had problems to compete with their strong local opponents. They're not unpopular though, but rather exotic. Ford and Opel are the big exception and major players in the local car market. Some of the other American car companies are only next to regions where Americans live (military bases)
A relative of mine once had a Pontiac. He really liked it, but the repair costs were too expensive. He had to drive to Palatinate to get the missing parts and the parts had to be imported from America. At some point it was just too much for him.
Renault, Toyota, Ford, Opel, Peugeot, different Asian companies are doing quite well though and can compete against Volkswagen (Porsche), BMW and Mercs.
plenty american military bases though
You must be high.
why would you want to import American shit when you have BMW & Audi next door and Peugot / Renault at home? its not like the US is exactly popular there.
When I was there, they didn't allow German cars either, only crappy little French and Italian lemons. In any case, the Frogs park by ramming the car in front and the car behind until there is sufficient space. Not a good place for fancy wheels.
BS; audi bmw and MB doing very well in France. Niche market as more expensive than Renault and Citroen. Peugoet sells high like audi/bmw.
Just how ugly are things in the Eurozone? The debacle of sovereign debt yields: “On second thought, the major problem list now includes every country but Germany”.... http://globaleconomicanalysis.blogspot.com/2011
the euro has always been doomed from the beginning, time to return to barter.
http://expose2.wordpress.com