While France Simmers In Its Own Juices, Germany Frets

Wolf Richter's picture

By Wolf Richter  www.testosteronepit.com

"We're not doing this for the Greeks, but for us," said Chancellor Angela Merkel during a TV interview Sunday night. It was part of her efforts to ramrod a law through parliament that would raise the German contribution to the European Financial Stability Fund (EFSF) from €123 billion to €211 billion ($285 billion). In a moment of truth, she'd admitted that the fund would bail out German banks and prop up German exporters. But when asked where the money would come from if Germany had to make good on its promises, she weaseled out.

"Chocolate for diabetics," is what Peter Gauweiler called the EFSF in a counter-interview (Tagesspiegel, article in German). Ranking CSU member and a significant figure in Merkel's coalition, he is vociferously opposed to her efforts. "I will only be content," he adds, "when this form of bailout chaos that is taking place in Berlin these days stops."

In contrast to Germany's cacophony of discussions, opinions, and doomsday scenarios, France curiously seems to be sleepwalking through the debt crisis. For the largest dailies, Le Monde and Le Figaro, it doesn't exist (September 26). Le Monde gives top billing to the defeat of President Sorkozy's party in the senatorial elections, followed by three stories about Dominique Strauss-Kahn, the ex-alleged rapist of New York, followed by turmoil in the Russian government, followed by toxic loans that towns in France are drowning in. Facebook is big, too. Among the dozens of articles, only two headlines in small font mention the debt crisis. Another article covers Dexia's efforts to unload $27 billion in rotten assets—the bailed-out French-Belgian bank is failing again.

Le Figaro engages in similar non-coverage of the debt crisis but adds some articles on the corruption scandal that has been dogging President Sakozy and his top lieutenants. For L'Express, an online news magazine, there is no debt crisis. L'Expansion, a property of L'Express, does a hype job on how Eurobonds will save the world. Les Echo, a business daily, relegates the debt crisis to the bottom half of its home page—an article based on a CNBC story. Only La Tribune, another business daily, gives the debt crisis top billing with the same CNBC story.

No soul searching about the debt crisis tears apart the political establishment in France. Only Marine Le Pen, the right-wing presidential candidate, has made pronouncements on the issue, has in fact declared that the Euro should die its natural death (article 'Let the Euro Die,' Said the Woman Who Could Be the Next French President), but her comments have disappeared from the press. No lines have been drawn in the sand. No compromises are up for discussion.

Aren't French politicians and finance gurus concerned that the debt crisis might also impact France? Shouldn't that be discussed publicly, as behooves a democracy? Apparently not. Perhaps the government imposed a rule to avoid getting its citizenry all riled up—a Gallic version of the Denkverbot (prohibition to think) that Merkel and Timothy Geithner wanted to impose on the political scene in Germany, but failed.

Even in Germany, there are efforts underway to limit public discussion when topics get too hot. Yet again expanding the bailout fund, before the current expansion is even voted into law is one of them. The idea to add leverage via the European Central Bank (ECB) gained momentum at the G-20 in Washington when it became clear that doubling the fund would still leave it way too small. In addition to bailing out Greece, Portugal, and Ireland, it might also have to bail out Italy, Spain, and other countries, plus recapitalize the tottering banks in the Eurozone. Apparently, this topic could only be discussed in Washington. But not in Berlin. Otherwise, someone might ask in shock, who should fund all that (FAZ, article in German).

Yet, while still in Washington, Bundesbank president Jens Weidmann forcefully excluded participation by the ECB in a leverage mechanism; its founding laws specifically prohibit it from monetizing governmental debt.

"There are other possibilities," Wolfgang Schäuble, Germany's finance minister, told journalists, without elaborating what these possibilities were, though discussions already started on how to structure the leverage mechanism in such a way as to get around any laws governing the ECB. With his other foot, Schäuble tried to step out brushfires by denying that there were plans to increase the EFSF far beyond the new limits. But skeptics have lost trust in his denials and assume that the EFSF will become a bottomless pit. Already, the number "€2 trillion" is being bandied about.

Now this: Ratings agency Standard & Poor's warns that the increased contributions by Germany, France, and other triple-A countries to the bailout fund might have negative consequences on their credit rating, and that leveraging the EFSF might cause it to get downgraded as well (Reuters, article). The free lunches have all been eaten.

Meanwhile in Greece, which continues to sink ever deeper into its own hell, "Merkel" has become a practical cuss word that people hiss out between their teeth (Zeit, article in German), and the old friendship between Greece and Germany has crumbled. In 2005, 78% of the Greeks considered Germany their favorite foreign country. Now it's 29%, behind China, Russia, and India.

The Denkverbot, Geithner's smack-down, and Germany's struggles with the debt crisis: Bailout Rebellion in Germany Heats Up.

Wolf Richter   www.testosteronepit.com

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
ZeroPoint's picture

Didn't France just make it a crime to buy gold & silver in cash? So much for fraternité....

Florida Joe's picture



Well said.

You articulated what is on every thinking citizen's mind, no matter the country.  

PulauHantu29's picture

German turmoil over EU bail-outs as top judge calls for referendum Germany's top judge has issued a blunt warning that no further fiscal powers may be surrendered to Europe without a new constitution and a popular referendum, vastly complicating plans to boost the EU's rescue machinery to €2 trillion (£1.7 trillion). http://www.telegraph.co.uk/finance/finan...

yabs's picture

when will be get a real leader whbo does not prostitute him/herself and has the balls to stand up to these clowns?

yabs's picture

excellent popo

well said indeed

the politicains we havbe now are not leaders but merely prositutes for the banks

Indeed they are not even as high as a prosititute

They are GIMPS for the banks


phi-in-the-sky's picture

"Aren't French politicians and finance gurus concerned that the debt crisis might also impact France? Shouldn't that be discussed publicly, as behooves a democracy? Apparently not. Perhaps the government imposed a rule to avoid getting its citizenry all riled up—a Gallic version of the Denkverbot (prohibition to think) that Merkel and Timothy Geithner wanted to impose on the political scene in Germany, but failed."


France heavily subsidizes its medias, newspapers, etc, all in the interest of keeping them "independent". The state owns France 2, France 3, France 4, France 5, France 24, etc, etc. They can criticise all they want the small stuff and the president's personal lifestyle, but when it comes to debates that really matter, the only time slots available are from 10pm till midnight. Hardly anyone watching...

Move right along, nothing to see here. Everything is under control.

Bicycle Repairman's picture

The revolution will not be televised.

dcb's picture

Better if she had said, we are not doing this for the greeks, we are doing it for our bankers. Or "It not about bailing out people in distress, but banks and corporations". the list could be endless

GCT's picture

Talk is cheap when the German supreme court last night basically shut Merkel down funding or leveraging more German money.  Basically it must be a constitutional change and be put to a vote of the German people.  The supremes in Germany just drew the line in the sand.  Mish does have a good write up about it.

The Big Ching-aso's picture

All this is turning into a systemic planet-wide chronic condition of The People vs The Banks.   

The flawed yet nonetheless symbiotic relationship between the two is deteriorating at an accelerated pace.    Historically such adversarial relationships which involve money can only end one way if they don't resolve their major differences: first, localized hostilities, then war, as in global war.

Everybody better get their collective shit together here real soon.    Because it's guaranteed someone's big trigger finger is starting to twitch.


Joshua Falken's picture

As ZH pointed out for us, John Hussman said (see http://hussmanfunds.com/wmc/wmc110905.htm) the global economy is at a crossroad that demands a decision – whom will our leaders defend?

  One choice is to defend bondholders – existing owners of mismanaged banks, unserviceable peripheral European debt, and lenders who misallocated capital

The alternative is to defend the public by reducing of unserviceable debt burdens, restructuring mortgages and let mismanaged financial institutional share and bond holders take losses or transfer of ownership and recapitalization to better stewards.





Bicycle Repairman's picture

I find the lack of positive action stunning.  Will the rich keep their "gin and tonic" while enslaving everyone else, or will they give up a fraction of their wealth and income and get the world functioning again?

supermaxedout's picture

Well said new Popo.

This all can be achieved and done once the atomic bombs and rocket heads still stored in great amounts are removed from  Germany.

The Germans do not have the fear that Russia or China or Iran is starting a war with Germany and its direct neighbours are also no threat. But there are plenty of such defensive  weapons in Germany while nobody wants them here. This must say something to you.

If you would make a poll in Germany whether to remove these giant genocide machines (nuclear weapons) from the German soil you would receive a 99% vote for the removal. For sure. 

But since this means nothing such a poll will never take place in Germany. So how can you ecpect that Germany is free to do or express its opinion in other matters of some importance, such as its economic and political future..  Winne the Pooh. Think, Think, Think

anonnn's picture

Popo and Supermaxedout--if only yr posts are translated and pass thru Merkel's frightened coterie, who failed to protect her from George Buffoon's shoulder-rub outrage.

chump666's picture

That is why France will get a credit down grade if it does 20% or 30% of that bailout fund.  With Germany close to going into a recession...

Greece will 100% get booted out one way or another...

Also Merkel is done = EU is going to sink. This is the pain trade and they keep delaying and delaying, it will hit like a freight train.

3 days of rallies, then the sell is on end week/early next week.

TK7936's picture

The Euro can only go with political will. And there is none. Its here to stay. Nomatter how down it goes.

Barb Dwire's picture

I love all the talking heads crowing about this is the big rebound. We're going up to resistance and then down we go. We're still in a downtrend - the worst is yet to come.

PhoThus's picture

The U.S. needs a guy like Bill Black again resolving all the mess.

HardlyZero's picture

Yes, Bill Black would be the man, if the laws were to be followed. 

I fear instead this is a lawless operation with collusion if not direct governing involvement. 

That is why there have and will probably be no court proceedings...lawless all the way.

Next, we will watch this fiasco devolve into hell...one state...one country...one government...at a time.

trampstamp's picture

And we go into over time!

max2205's picture

S&P soon to be muzzeled (bought by )AIG

Barb Dwire's picture

Won't somebody please just kill this pig?

Popo's picture

"We're not doing this for the Greeks, but for us," said Chancellor Angela Merkel


No Angela. You're doing this for your banks.  And yes,  the people need banks -- but they don't need these specific banks.   And the German people don't need bank management to survive intact,  with their past 10 years of bonuses preserved,  and walking around free and unimprisoned.

Nor do the German people need shareholders in Deutchebank to be preserved.   And they don't need to hand over their sovereignty to Brussels either.

What the German people need is a leader who recognizes the CAUSE of the problem -- and not only finds solutions,  but eradicates the cause forever -- enacting laws which prevent banks from creating dangerous leverage,  protecting the system from greed-induced risk,   severely punishing those who brought Germany to her knees and insuring that the current scenario never repeats itself.

And that, Angela -- is a job for a stronger person:  A person who isn't afraid of clawing back bonuses, houses, jets and years of fraudulently generated wealth.   A person who isn't afraid of wiping out shareholders.  A person who isn't afraid of impoverishing an extremely dangerous, parasitic elite few who operate above the law and who have endangered their people and their nation -- and who now represent a direct, existential threat to German sovereignty.

This isn't about a financial crisis.  It's about your national survival.   You still don't get it, Angela.   (And that alone, would be bad enough).

But the truth is far worse than that:  you're preparing to perpetuate the problem at a greater scale -- facilitating the neo-serfdom of the German people, and entrenching the very usurpers who have stolen Germany from under your people's feet.

If you succeed in facilitating this financial and political coup, you should hang.

Florida Joe's picture



Well said.

You articulate what is on every citizen's mind, regardless of their nationality.

blueridgeviews's picture

Popo, you could replace the word Angela Mekel in your paragraph with the word Barack Obama and it would be just as poignant for the situation in America.  Makes me think these heads of countries are just pawns of the banks or some rich folk. The rumblings of discontent are getting louder.

Shylockracy's picture

Hear! Hear! Very well said!

aleph0's picture

Excellent Summary - Thankyou !

russki standart's picture

Well said, Popo. Angela is just another stinking globalist swine, a cheap whore paid off to ruin her country. Hopefully, before she is finished, she must be destroyed politically. What Germany needs is the final solution for her domestic criminal  political and bankster class.

Sambo's picture

An old dream is dying....people bought into this system and therefore they are also equally responsible. You cannot blame only the politicians. The people voted for these blood suckers backed by banksters.

Bicycle Repairman's picture

As a citizen who was handed this system, a system that ignored my input, I accept zero blame.  Exactly none.

rcintc's picture

It's Over Johnny!  It's OVER!!