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Guest Post: Why Germany Is Going To Exit The Eurozone

Tyler Durden's picture


Submitted by Alasdair Macleod, via Peak Prosperity,

It's becoming clear that there is only one sensible solution ahead of us as the Eurozone’s problems evolve: Germany and the other countries suited to a strong currency should leave. If they do, the European Central Bank (ECB) will be free to pursue the easy money policies recommended by Keynesians and monetarists alike. It's increasingly clear that Germany has no option but to behave like any creditor seeking to protect its interests – and do its best to defuse the growing resentment against her from the Eurozone’s debtors.

However, leaving the Eurozone is a political and legal, even seismic wrench, reversing decades of historical progression towards political and economic union.

The saga of the Eurozone reads like an old-fashioned novel – with a beginning, a middle, and presumably an end. In the beginning we are introduced to the characters, the middle is where the action is, and the end is plainly predictable. There are two broad types of story: fairy tale and murder mystery.  A fairy tale starts with a handsome prince, who meets and conquers evil and woos the princess, and at the end they marry and live happily ever after.  A murder mystery starts with a murder, the middle is littered with clues (many of which are designed to put the reader off the scent), and the perpetrator of the crime is revealed at the end. The starry-eyed visionaries behind the Eurozone embarked on a fairy tale and instead have found themselves as characters in a murder plot. The difference is not the outcome, but how many pages we have left to turn to the end of the story.

The victim, of course, is the great European ideal, the political project that was meant to unite the European nations. The murderer is sound economic theory, which has been ignored, even trampled underfoot, but has resurfaced in the guise of reality. None of the actors foresaw (let alone can accept) this turn of events, and to get a flavour of the current mood we only have to listen to Manuel Barroso, President of the European Commission, whose response is to retreat into yet more regulation and statist control in denial of all reality.

Germany and France are centre-stage; in the post-war years they were partners in forming an economic and political block on Soviet Russia’s western boundary, containing the spread of communism. And by uniting the nations of Continental Europe, the reasons for war between them would be neutralised. These objectives were achieved, not so much by the formation of the European Union, but because the USSR’s communist model ensured the eventual economic collapse and disintegration of Russia and her satellites. And after the Franco-Prussian War and the First and Second World Wars, Germany lost all appetite for belligerence anyway.

France, with a little help from her Anglo-Saxon friends, was cock-of-the-roost after the two world wars, so much so that De Gaulle, France’s post-WW2 leader, was confident enough to refuse to join NATO, building France’s own arms capability instead. This sharply contrasted with Germany, who disavowed any military capability of her own and submitted completely to the military jurisdiction of NATO. This was reflected in post-war politics, with Germany quietly rebuilding her shattered economy, basing it on the preservation of savings, while France sought to build the state. The background to our story is one involving neighbours presenting a common front, but with very different attitudes toward life.

It is tempting to think that none of this matters, but it does. Politics, and not economics, are centre-stage. The German establishment is fundamentally reluctant to lead the Eurozone, being more interested in protecting Germany’s commercial interests. The French retain perhaps a sense of insecurity expressed in their jingoism. The former president, Sarkozy, visibly epitomised this. The new president, Hollande, expresses his nationalism by promoting French socialism. While Frau Merkel and M. Sarkozy were able on the surface to rub along together, Hollande’s denial of fiscal austerity exposes Germany’s underlying problem: As the rich and successful partner, it is now expected to subsidise the rest of the Eurozone for as long as it takes.

Germany is now in the unhappy position of a lender who has committed large amounts of money to a number of borrowers, who find themselves unable to repay and require further finance. Does it dig deep and find more money in the hope that it does not have to write its investments off, or does it say enough is enough? But it is worse than that; it hasn’t enough money itself to throw at these debtors, with the likely costs certain to exceed all its tax revenues. To give you a sense of the problem, in very round figures Germany’s tax revenues are €1.2 trillion, while the estimated costs of keeping defaults in the Eurozone at bay stand at close to €4 trillion.

But it gets worse still; it has no control over the money flowing through its own central bank. The chart below is of the money the Bundesbank automatically has to lend the other Eurozone central banks under the TARGET2 settlement system. Some of this figure, by the way, is included the in the total estimated €4 trillion.

This balance, which reflects private sector capital fleeing from the Eurozone debtor nations and being lent back to their central banks, stood at €751bn ($975bn) at the end of August, representing perhaps one sixth of all Eurozone deposits. On top of this, Germany and a few others are being asked to bankroll these nations’ governments. You only have to look at the rate of increase to get a sense of the banking runs being suffered in the weaker states and to understand the scale of the underlying crisis.

Germany’s electorate is becoming acutely aware of the enormity of the task. In theory, under the European Stability Mechanism (ESM), which is the vehicle for bailing out debtor nations unable to fund themselves, each Eurozone nation has to contribute. While one can understand the case for a nation being bailed out not having to contribute, does this mean that Italy, for example, must contribute to a bailout for Spain, and if so, how is it going to come up with the money? Obviously it cannot. And what about France, with its inward-looking economic model and with its own budget deficit running at over 6% and rising? It's silent on this matter, but it is a reasonable guess that it will make diplomatic excuses. This is the background to the German Constitutional Court’s judgment delivered on September 12, 2012.

German Constitutional Court’s Judgment

Last month on behalf of GoldMoney, I spoke to Professor Markus Kerber, who is one of the German academics that led the action placed before the Court on behalf of about 37,000 citizens. The Constitutional Court was asked to block presidential ratification of the German parliament’s approval of the ESM. Central to his case was the rapid increase in the bailout costs faced by Germany. Kerber told me that in the deposition to the court, the estimated costs for which Germany would be liable and that can be substantiated are in the order of €2 trillion, with further commitments of €1.7 trillion in the pipeline. This is in stark contrast with a similar action bought before the court a year ago, where the costs appeared to be only €170 billion. That action was rejected on the grounds that Germany could effectively afford it, in the view of the judges. So it was entirely logical that they ruled that the German President could ratify parliamentary approval of the ESM, so long as Germany’s contribution is capped at the level authorised by parliament at €190 billion.

This is small change in the scheme of things, and the ESM will require considerably larger contributions from Germany, assuming that an immediate and miraculous economic recovery doesn’t happen for the debtor nations. It doesn’t even begin to tackle Spain’s problems, let alone Italy’s. The larger contributions required for these debtors can only be obtained by going back to parliament and asking for an increase; something that is getting progressively more difficult as the general election approaches. But the Court went further, by ruling that the ESM can only use funds directly contributed to it and cannot borrow by issuing bonds in its own right or operating as a bank. This eliminates any hope that the ESM can be levered up.

Even more startling is its ruling with respect to the ECB and its recently announced Outright Monetary Transactions (OMT), and I quote from an English translation:

For an acquisition of government bonds on the secondary market by the European Central Bank aiming at financing the Members’ budgets independently of the capital markets is prohibited as well, as it would circumvent the prohibition of monetary financing (see also Recital 7 of Council Regulation (EC) No 3603/93 of 13 December 1993 (OJ L 332 of 31 December 1993, p. 1)).

The Court ruling therefore appears to put a straitjacket on the ECB as well as the ESM, together with all the bail-out plans cobbled together so far. The Court has basically made it impossible for unelected officials to commit German citizens’ funds without parliamentary approval and for the Bundesbank to condone the ECB’s actions.

The immediate response from German politicians has been supportive of the judgment, because it does not seek to overturn the Bundestag (the German parliament), and frankly, what else can they say without disrespecting the law? Privately, they must be reflecting on not only the difficulties or even the impossibility of going back to the Bundestag for ratification of even greater contributions to the ESM, but also they must be wondering where on earth they go from here.

The alternative, assuming attempts to rescue indebted nations are not to be abandoned, is for the ECB to ignore the German Constitutional Court on the basis that the GCC has no jurisdiction over it, confront the Bundesbank, and accelerate its lending through the banking system, which of course is likely to eventually undermine the euro itself. The question then arises as to whether or not Germany will voice its objections to such a policy. It makes no sense for Germany, which has seen its own currency destroyed twice in the last ninety years and has experienced a period of national prosperity based on sound money before the creation of the euro, to be a party to the rapid expansion of money by the ECB.

This monetary expansion has to happen, however, if widespread sovereign defaults are to be averted. Its Constitutional Court has effectively made Germany’s decision. It can only with the greatest political difficulty raise more than €190bn from its own citizens to support debtors, and it cannot condone the monetisation of government debt. There is now only one alternative: Germany must leave the Eurozone and allow the member states, who happen to believe in the Keynesian salvation of a weak currency, to pursue their favoured solution with a weak euro. Germany’s politicians can now demonstrate that their hands are well and truly tied by their own constitution, which is getting in the way of co-ordinated solutions.

What does Germany get out of the euro?

Not as much as you would think. It is a common fallacy that Germany has benefited by anchoring its terms of trade with its neighbours through a common currency; this is an error born from neoclassical economic suppositions. Germany’s original supporters of Eurozone membership were its large industrial companies, which were looking forward to a trading environment made easier by a weaker currency. However, it was not long before these benefits were lost, because companies naturally felt less pressure to control their costs. The result is that German companies have (if anything) lost their competitive edge as a result of the single currency, and gains in productivity have been disappointing as a result.

The biggest losers have been the ordinary workers, whose wages continued to rise at a very pedestrian pace, if at all. Whereas in the past, a wage-packet bought more as the Deutsche mark rose in value against other paper currencies, that is no longer true. Instead, static wages have lost purchasing power over time, and the result is that growth in real disposable income per capita is virtually non-existent. Workers have been squeezed between a legacy of past wage-bargaining assumptions and a change from a strong to a weaker currency.


In short, it has become obvious to many people from all walks of life in Germany that the euro has done them no good, and, far from reaping benefits, they are actually less wealthy as a result of it. Therefore, the brash assumption fostered by the debtor nations that Germany can and will pay is simply incorrect, even if we stick to the headline numbers. But we all know that a government budget deficit is only the tip of an iceberg. For Spain and Italy, we must also consider rapidly escalating off-balance-sheet liabilities, the financial difficulties of local governments, and central government guarantees for nationalised and other supported industries. Government liabilities can be doubled or even tripled – who knows? Our experience of Greece’s troubles has confirmed that an initial few tens of billions, which Deo volente was enough, turned out to be only the first of a series of ever-increasing demands. If Greece is to be regarded as a learning experience, Spain will certainly be impossible to support, given that she shows no sign or even any prospect of economic recovery.

Germany’s politicians know this. For the moment they are frozen in a state of inaction, but there is a general election to concentrate their minds in about a year’s time. So irrespective of the timing imperative from Eurozone countries facing financial disaster, Germany is running out of time as well. It is make-your-mind-up-time for everyone.

If Germany is to abandon the euro, it has to do so as quickly and elegantly as possible. It must be able to demonstrate that it has no alternative and that it is the best solution for all parties involved. It must gain international support for its actions and the support of other key Eurozone members. There will also be legal difficulties to surmount – because, put simply, leaving the Eurozone is against the law.


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Tue, 09/25/2012 - 12:45 | 2828373 LawsofPhysics
LawsofPhysics's picture

Several have been saying this for quite some time now.  Fiat is fiat is fiat, wake me when Germany leaves or some country, any country, has a monetary system/unit grounded in reality.

Tue, 09/25/2012 - 12:47 | 2828383 Ahmeexnal
Ahmeexnal's picture

Gold Yuan, Gold Swiss Franc, Silver Drachma, Silver Amero.

Tue, 09/25/2012 - 12:50 | 2828394 LawsofPhysics
LawsofPhysics's picture

so all the available physical coinage.  well, that is simply revolutionary.  I think most around here, knew this.

Tue, 09/25/2012 - 12:52 | 2828398 NotApplicable
NotApplicable's picture

Well, if Germany leaving is the only "sensible" solution, that's the very reason it will never happen.

This is all about instilling collective discontent and guilt, AGAIN!

Divide and Conquer, FTMFW!

Tue, 09/25/2012 - 12:54 | 2828413 LawsofPhysics
LawsofPhysics's picture

Yes, moreover, I actually inquired about being paid in gold yuan when negotiating another shipment of soybeans bound for China.  Funny how they got rather upset.  I wonder why?

Tue, 09/25/2012 - 13:17 | 2828533 falak pema
falak pema's picture

so do I, its so easy to tungstenise their payments to you; as example has shown. Like their toothpaste.

The Yuan is pegged to the USD. The gloden yuan, would be pegged to Us tungsten-gold; probably made by the FED! 

Gold yuan, golden greek-dawn and golden tungsten-Fed, that is a nice allegory in goldfingered alliteration!


Tue, 09/25/2012 - 13:27 | 2828577 Tango in the Blight
Tango in the Blight's picture

Can anyone explain to me why China keeps selling Gold Panda's when at the same time they are buying massive amounts of gold?

Tue, 09/25/2012 - 13:31 | 2828597 RSBriggs
RSBriggs's picture

There's quite a bit of margin in the tungsten trade?

Wed, 09/26/2012 - 08:04 | 2831262 Ar-Pharazôn
Ar-Pharazôn's picture

Gold Yuan or Tungsten Yuan?


would you trust a chinese businessman paying you in gold?


me, no...

Tue, 09/25/2012 - 13:39 | 2828631 insanelysane
insanelysane's picture

I was one of the ones that HAD been saying it for a while now.  It was the easiest solution.  I stress HAD been saying it because after watching the German political system work over the last 6 months it has become clear that all Western government officials have a vested interest in keeping the status quo.  I, along with many ZH readers, have made the mistake of not considering how strong this political will is.  Politicians will never make a difficult decision until there is no choice but to make that decision.  It only ends when the market stops playing the game or the market is unable to play the game.


At some point, with governments borrowing 20 to 50% of every thing they spend, the world runs out of borrowable money.  Banksters will ctrl-P but the appetitie of the beasts will always be greater.

Tue, 09/25/2012 - 17:03 | 2829629 max2205
max2205's picture

Build that damn wall, and give those other countries back to ussr where they belong. How fucking implement is that. End the Gorbachive curse right now


Tue, 09/25/2012 - 14:44 | 2828885 disabledvet
disabledvet's picture

Spot on. German banks and insurance wins with a strong euro via repatriation (then they buy gold)....but German industry wins when the euro weakens or goes kaput. Security problems are the problem. Germany herself has no issues that I am aware of...but the periphery has been so obliterated and Germany herself will not intervene (indeed they do seem to me be the exact opposite of the solution) only "an other sovereign" can do that. That's France, England, Spain and Sweden.

Tue, 09/25/2012 - 12:47 | 2828384 westboundnup
westboundnup's picture

Is it just me, or is the Dow diving for cover?

Tue, 09/25/2012 - 13:23 | 2828561 RSloane
RSloane's picture

Right now yes. Wait until 3:00, the WS witching hour.

Tue, 09/25/2012 - 12:48 | 2828388 bankonthebust
bankonthebust's picture

Germany wont be allowed to leave.


Tue, 09/25/2012 - 12:57 | 2828426 Popo
Popo's picture

If only they were still sovereign.  

Tue, 09/25/2012 - 13:11 | 2828500 jal
jal's picture

You mean that the bankers will not allow them to hand in their keys, cut their losses and walk away from an underwater mortgage!!!

Tue, 09/25/2012 - 13:24 | 2828566 RSloane
RSloane's picture

For some reason, I read that twice as underwear mortgage.

Tue, 09/25/2012 - 12:48 | 2828389 reload
reload's picture

The victim, of course, is the great European ideal

All common sense will be overriden and the German people, their savings and future prosperity will be sacrificed by the political class in the name of the great european ideal.

Believing anything else is wishful thinking at this point - much as I despise the EU, its undemocratic institutions and its fraudulent central bank.

Tue, 09/25/2012 - 12:51 | 2828396 ParkAveFlasher
ParkAveFlasher's picture

Fondue will survive, Reload.  Fondue will survive all.

Tue, 09/25/2012 - 12:58 | 2828432 Urban Redneck
Urban Redneck's picture

Please, God, No!!!!!!!!!!!!!!!

Tue, 09/25/2012 - 17:16 | 2829682 falak pema
falak pema's picture

the great kantian dream will never die. Liebnitz, Kant but no more Keynes as golden rule prevails! 

Thy will have to name a Banking Czar who tells all those banks; your balance sheets are now ours, you fukking criminals, open your books, stop all derivatives, pay your transaction taxes and we'll cut you down to size and balance your sheets; write off your debts, to each other, and make you pay all the others or go belly up. 

Its time the real economy defused this shit pile. It will take a european czar to cut off their nuts. 

Tue, 09/25/2012 - 12:48 | 2828392 ParkAveFlasher
ParkAveFlasher's picture

<<< Germany exits before Greece flakes off

<<< Greece flakes off before Germany exits


Tue, 09/25/2012 - 12:51 | 2828397 rvremi
rvremi's picture

The real question is how do you quit the euro-zone ? All the rest is non-sense.

Imagine the Kansas want to quit the USA... The question is not is it right or not. The question how do you do that.

So, stop talking about the exit of such or such country from the euro-zone. It's just non-sense. The euro-zone will collapse all or not. Like the USA and the China and the Japon.

Tue, 09/25/2012 - 12:59 | 2828436 LULZBank
LULZBank's picture

Agree on Jap-on, they cant Jap it off.

Tue, 09/25/2012 - 13:52 | 2828679 insanelysane
insanelysane's picture

You allow German citizens a week or two to exchange their Euros for NDM (new deutshe marks) with some limit per person.  All German bank accounts are automatically switched over.  Done.

Tue, 09/25/2012 - 14:37 | 2828848 rvremi
rvremi's picture

And all the europeen companies will pay with which devise ? And all the contract between different countries, they will used which devise, with VAT ? What will be the process to export/import ? How will be modified the VAT exchange with the country ? How will the central banck exchange mechanism ? Will we restaure the frontier with the country ? Etc, etc...

Wed, 09/26/2012 - 01:55 | 2830968 Non Passaran
Non Passaran's picture

WTF are you talking about, what frontier? You are so clueless, you even don't know that a country can be in the EU but outside of eurozone.
Funny guy.

Tue, 09/25/2012 - 12:52 | 2828399 kaiserhoff
kaiserhoff's picture

If Frau Merkel would just auction her soiled panties on e-bay, they would have plenty of money.

Hell's the problem?

Tue, 09/25/2012 - 13:32 | 2828596 WALLST8MY8BALL
WALLST8MY8BALL's picture

Germany was having trouble

What a sad, sad story

Needed a new leader to restore Its former glory

Where, oh, where was she? Where could that woman be?

We looked around and then we found

The lady for you and me And now it's...

Weimar Time for Merkel and Germany

Deutschlander’s happily obey?

We're printing to a faster pace

prices rising faster in this place

Weimar Time for Merkel and Germany

Rhineland's a cold land once more!

Weimar Time for Merkel and Germany

Watch out, Europe We're going for QE4!

Weimar Time for Merkel and Germany

Tue, 09/25/2012 - 12:53 | 2828404 Cult_of_Reason
Cult_of_Reason's picture

German referendum und exit from the EU is inevitable, just a matter of time.

Tue, 09/25/2012 - 13:03 | 2828461 ThirdWorldDude
ThirdWorldDude's picture

~999~  Germany is not Switzerland!

Tue, 09/25/2012 - 12:55 | 2828417 Aegelis
Aegelis's picture

I thought The New World Order needs one economy to rule them all.  Looks like a few more years then before the mandatory chip implant in the hand or forehead.

Tue, 09/25/2012 - 12:58 | 2828437 Dr. Engali
Dr. Engali's picture

Yep coming soon.

Tue, 09/25/2012 - 13:01 | 2828449 Urban Redneck
Urban Redneck's picture

A single currency destroys the single greatest arbitrage opportunity for the ALL the oligarchs...

Tue, 09/25/2012 - 13:35 | 2828610 dwayne elizando
dwayne elizando's picture

Arbitrage would still exist in a world currency system.

Tue, 09/25/2012 - 12:57 | 2828428 LULZBank
LULZBank's picture


Whereas in the past, a wage-packet bought more as the Deutsche mark rose in value against other paper currencies,

So what was good for Germany in the past is not good for Swiss francs now?

Do we want a strong currency or a weak currency?

I am getting so confused now.

Tue, 09/25/2012 - 13:08 | 2828430 Dr. Engali
Dr. Engali's picture

Germany is not going to leave the Euro...period. They are too easy to demonize and all the chaos would be blamed on them. Germany will continue down the road to perdition withh all the other Euro countries , just as the U.S will with all 57 of her states.

Tue, 09/25/2012 - 13:24 | 2828564 TIMBEEER
TIMBEEER's picture

Bingo! Exactly. Germany will not leave until the Euro breaks. Hopefully soon, however.

Tue, 09/25/2012 - 13:43 | 2828642 Temporalist
Temporalist's picture

I don't agree as they are in a catch 22, damned if they do and damned if they don't.  They are the parents to teenagers who hate them beacause they won't raise their allowance even as the parent goes broke.  Either way the child will hate them because if the parent leaves the kid is scarred for life, feels poor and abandonded and if the parent stays the kid grows into a helpless indebted adult that still hates the parent for not caring and giving more.


If they are going to be hated anyway why stay and have to put up with all the nonsense?

Tue, 09/25/2012 - 14:41 | 2828868 rvremi
rvremi's picture

Nobody will leave the euro-zone... It's 5 years to enter and minimum 5 years to exit. All the contracts are to be rewriten, all the treaties are to be change...

Tue, 09/25/2012 - 13:01 | 2828450 JustObserving
JustObserving's picture

Why would the Netherlands, Finland stay in the Euro after Germany leaves?  They will be stuck with the debts of southern Europe. After they leave, why would France stay?  They do not want the debt either.  

It will be a complete collapse since no country wants the debt that benefits others.  Would Italy subsidize Greece's debt?  Of course, not.  So it will be every country for itself after Germany leaves.

Tue, 09/25/2012 - 13:32 | 2828600 Tango in the Blight
Tango in the Blight's picture

The Netherlands will probably stay in the Euro till the very end because the Dutch sheeple voted in the two biggest Europhile parties and it looks they are going to form a cabinet very soon. Dutch sheep are going to get fleeced to the bone soon.

Tue, 09/25/2012 - 15:25 | 2829118 Joe A
Joe A's picture

Yes, the Dutch voters are sheep but the elections in the Netherlands were not about Europe. They were about the economy and the division of wealth within the country. Roughly one part voted for the Liberals while the other part voted for the Socialists. Ironically, while these two are opposites in ideology, they will likely form a new government. For the sake of political stability (NL had 5 elections in the last 10 years) they will make compromises. Nevertheless, you are right in saying that these two parties are europhile but if Germany were to leave the Euro, NL would follow suite since Germany is NL's biggest trading partner.

Wed, 09/26/2012 - 02:38 | 2830998 Tompooz
Tompooz's picture

"Germany were to leave the Euro, NL would follow suite since Germany is NL's biggest trading partner."

Too right. Not only would they follow suit, they would stick to a common currency, together with Finland and Austria. That "core euro" with its institutions will be the one that survives. It may also become competition for the world's current reserve currency.

Tue, 09/25/2012 - 13:54 | 2828687 insanelysane
insanelysane's picture

Once the Northern countries leave, the Southern countries can devalue the Euro (ctrl-P^2) and pay off their debts.

Tue, 09/25/2012 - 13:02 | 2828455 Sandmann
Sandmann's picture

Germany and France are centre-stage; in the post-war years they were partners in forming an economic and political block


Fantasy. Germany was disarmed under SHAEF and only re-armed in 1957 because the USA needed German manpower to defend Western Europe. France objected so The Treaty of Rome was used as a quid pro quo to tie Germany down under French control. Gemany was locked into NATO and forced to buy US aircraft like Starfighter and Phantom. MI6 and CIA funded the European Movement to create a counterbalance to Stalin's hegemony of Central Europe. 

Germany was a country without sovereignty, without Constitution, without a convertible currency, without Armed Forces, and with Sections 53 and 107 of the UN Charter even today defining Germany (and Japan) as "enemy states" 


Germany did what the USA demanded just as the GDR did what the USSR demanded

Tue, 09/25/2012 - 13:04 | 2828465 shovelhead
shovelhead's picture

The zombies are coming...

RUN! Germany,


Tue, 09/25/2012 - 13:04 | 2828466 Madcow
Madcow's picture

there's still a little time to lure folks into buying the bad debt before a rabid outbreak of honesty and transparency 

Tue, 09/25/2012 - 13:05 | 2828471 Sandmann
Sandmann's picture

after the Franco-Prussian War and the First and Second World Wars, Germany lost all appetite for belligerence anyway.


Franco-Prussian War  = France attacked Prussia

WW1  - British Empire declared War on Germany having allied itself to Russia for the first time in history

WW2 -  Britain went to war to save Josef Stalin and gave him Poland as a gift and half of Germany.


Tue, 09/25/2012 - 13:05 | 2828475 tuttisaluti
tuttisaluti's picture

This is just wishful thinking from a few US and UK banker. coplete nonsense in my view.

Tue, 09/25/2012 - 13:27 | 2828576 TIMBEEER
TIMBEEER's picture

yes, the UK + US banks and the German, Dutch and Finnish people are hoping for this nonsense to end.

Of course, tutti bunga bunga wants to continue the disaster..

Tue, 09/25/2012 - 13:05 | 2828476 Portugal
Portugal's picture

Germany leaving the Eurozone is a subject only for someone completely stupid or someone completely detached from reality. Would that same person consider California leaving the USA? No. Nebraska perhaps? No. Off-Course Not.

Don’t be such an ass…

Tue, 09/25/2012 - 13:16 | 2828527 dbTX
dbTX's picture

Texas, yeah maybe.

Tue, 09/25/2012 - 13:17 | 2828531 Hobbleknee
Hobbleknee's picture

You're right; Germany won't leave the EU, but your analogy is flawed.  Germany is paying the bills; California is not.

Tue, 09/25/2012 - 13:23 | 2828559 LawsofPhysics
LawsofPhysics's picture

Correct.  Moreover, I don't think people truly understand what secession really means.  Texas wouldn't have to "fight" to leave the union.  The state is paying it's bills and has real resources so it can simply dictate the terms of trade.  if it doesn't like the paper promises you are offering in exchange it will simply say "fuck-off".

Tue, 09/25/2012 - 13:35 | 2828612 RSBriggs
RSBriggs's picture

However it might have to fight AFTER leaving the union....

Tue, 09/25/2012 - 13:32 | 2828590 RSBriggs
RSBriggs's picture

California?  Yes.  Please.   Do it NOW.  Good bye and good luck...

Texas?  Yes, please.  I'll be loading up a trailer with guns and ammo and on the road within two hours to join them.  We are all Texans now....

Nebraska?  Meh.  Who cares?

Tue, 09/25/2012 - 14:15 | 2828765 Bennie Noakes
Bennie Noakes's picture

Well a whole lot of US states tried to leave the USA in the 1860's. At the time, the USA had existed for over 80 years. The EMZ has existed for about a decade.

The only thing that prevented them was military force.

Good luck keeping the Germans in the EU if they are of a mind to leave.

Tue, 09/25/2012 - 13:10 | 2828498 Debeachesand Je...
Debeachesand Jerseyshores's picture

There has been much discussion about splitting the EZ along Noth/South Lines.In the short run,there will be enough pain on both of the line.

The problem is the unelected dipsticks in the ECB etc will lose their unelected power and will do all they can to prevent that feom happening.

Tue, 09/25/2012 - 13:15 | 2828523 Hobbleknee
Hobbleknee's picture

Since when do governments do sensible things?  Germany will not leave the Euro.

Tue, 09/25/2012 - 13:20 | 2828546 WhiteHose
WhiteHose's picture

judging by the picture, Angela doesnt swallow! Oh well, FUCK YOU Bernanke!

Tue, 09/25/2012 - 13:20 | 2828547 WhiteHose
WhiteHose's picture

judging by the picture, Angela doesnt swallow! Oh well, FUCK YOU Bernanke!

Tue, 09/25/2012 - 13:21 | 2828550 Freewheelin Franklin
Freewheelin Franklin's picture

Germany is trying to take over the world, again.

Tue, 09/25/2012 - 13:28 | 2828583 TIMBEEER
TIMBEEER's picture

Sure. By hard labor and by paying other people's bills.

Wed, 09/26/2012 - 05:00 | 2831080 Freewheelin Franklin
Freewheelin Franklin's picture

It's all part of the plot.

Tue, 09/25/2012 - 13:38 | 2828552 Bam_Man
Bam_Man's picture

What will they call this, "Gerxit"?

Boy, that sounds "strange" - especially when there are pictures of Frau Merkel involved.

Tue, 09/25/2012 - 13:30 | 2828593 bugs_
bugs_'s picture

the oxen are slow, but the earth is patient

Tue, 09/25/2012 - 13:52 | 2828678 NoWayJose
NoWayJose's picture

The only thing preventing this is that Germany holds a LOT of EU debt priced in Euros.  If Germany leaves and the ECB starts printing Euros, the Euro will drop against the new German currency - meaning that Germany will actually take a haircut on the debt it holds.  Look at Hungary for the opposite of this effect, where the debt was priced in Euros, but the Hungarians devalued the forint and had to use a lot more forints to pay back that Euro-based debt.

Tue, 09/25/2012 - 13:58 | 2828698 insanelysane
insanelysane's picture

Would agree except that the debt isn't getting paid anyway.  The decision is whether Germany provides more unpayable debt or stops the loss where it currently is.

Tue, 09/25/2012 - 14:01 | 2828704 NoWayJose
NoWayJose's picture

If several countries join with Germany, I suppose we will see the 'good Euro' and 'bad Euro' come into being.

Tue, 09/25/2012 - 14:10 | 2828742 walküre
walküre's picture

The author (Alasdair Macleod) is Scottish. Scotland is about the only place outside of Germany where Germans are truly respected. Alasdair is a realist. His realistic approach is not fashionable in the twistable world. Same fate goes for Dr. Ron Paul.

Tue, 09/25/2012 - 14:20 | 2828780 willien1derland
willien1derland's picture

Alasdair Macleod's position is absolutely flawed - If Germany leaves the Euro Zone, Germany LEAVES its largest customer base because EUROPE is Germany's #1 export market....Nothwithstanding its customer base EVERY industrialized/develop nation would declare war as the severe Euro devaluation would decimate central banks & asset prices worldwide...I would highly recommend Alasdair Macleod consider writing scripts for Hollywood...Germany will leave the Euro Zone when Alasdair Macleod rides Nessie across Loch Ness....

Tue, 09/25/2012 - 21:06 | 2830523 Non Passaran
Non Passaran's picture

Odds (I am talking about betting places) are in favor of Germany exiting the euro before Greece.

Wed, 09/26/2012 - 08:08 | 2831277 willien1derland
willien1derland's picture

Really? Thank you for the post

Tue, 09/25/2012 - 14:18 | 2828784 hangemhigh
hangemhigh's picture

 it’s all about exit strategies…..think of the possible  strategic alliances……

.germany, solvent northern europe, russia, china and the rest of the brics on one team with  a marginalized euorpe and usa  on the other .

who has the hammer??   who has the markets???  who has the resources???

russia/chaostan provides the energy, germany the technical  know how and high end status goods, china/brics is the demand side of the equation. 

brazil and australia will go where the money is…….as will japan……..that leaves the arab oil boys as the last vital piece on the board…………they’ll do what they need to do……as will all of the other middle eastern schemers…..

Tue, 09/25/2012 - 14:31 | 2828824 Bennie Noakes
Bennie Noakes's picture

Germany is exporting real goods in exchange for promises of payment. There are plenty of countries (Zimbabwe, Argentina, etc.) that would be happy to accept German exports in exchange for promises that would be just as good as the promises of the PIIGS.

Tue, 09/25/2012 - 14:24 | 2828797 davidsmith
davidsmith's picture

Germany is the 51st state, and we don't allow secession.  Next?

Tue, 09/25/2012 - 14:24 | 2828799 Vince Clortho
Vince Clortho's picture

If / When the Eurozone or the U.S. breaks, It will be the trigger for the Central Planners to move into the emergency with their one world currency plan.

There are actually several paths that lead to that goal.  We are currently on one of them.

Tue, 09/25/2012 - 14:39 | 2828865 magpie
magpie's picture

Still very unlikely, but slightly possible. Just ask yourself when it causes max damage to the taxpayer, so it will be done.

Tue, 09/25/2012 - 14:41 | 2828873 sschu
sschu's picture

Germany will/may exit the Euro when/if it makes economic sense for them to do so, which it clearly does not right now.  As they are an export economy, like the Chinese, they have a favorable currency circumstance.  

As long as they can keep the Italians, Spanish and Greeks from extracting their wealth, the Germans have a near perfect setup.

Any altruistic motives that can be assigned, like the "European Ideal", is just nonsense.


Tue, 09/25/2012 - 15:30 | 2829142 Ghostbusters
Ghostbusters's picture

"[Germany hasn't benefited from the EU.  Germany will leave the Euro.]"

What is this author talking about?  You can harp on productivity gains, like that is a harbinger of economic prosperity, the German middle class, and Germany's ability to fund debtor nations like they are what is on the table.  Has the author forgot that southern Europe and debtor nations alike have run up some rather bleak economic figures such as unemployment, delinquent loans, tax receipts, drops in domestic/foreign investment, and the inability to finance oneself.  So while Germany debates to what extent they will subsidize the EU I think you should also look at Germany in the eyes of a free person unaffected by global socialist policies. 

A few things to consider...German unemployment 6.8% (Aug 2012) vs Eurozone Unemployment or vs Euro periphery, German welfare spending 26.7% of GDP vs USSA ~16% and OECD at 20.7% while peripheral nations suffer ongoing austerity, German bank deposits, German Credit Rating, German 10 yr at 1.58% vs USSA 1.62%, peripheral sovereignty now goes through Frankfurt/Brussels for budgets, funding, and aid but to what cost for local economies...and this all comes amid a currency union that was supposed to help the EU periphery, right?  It was a ponzi doomed to fail from the begninning with the idea of a federal, fiscal union at heart to be ushered in when the time was right in order to wrest control away from smaller, weaker nations and to put legislation in the hands of a few.  Do away with freedom of choice in the name of the common good and the controllers of the "common good" will loot and plunder.  That is socialism but at least it sounds good when they say they'll provide welfare.  Welfare spending is a policy whereby those dependents regress in the face of the propaganda laced term "progress." 

Why has all the wealth in the periphery gone to Germany?  Why does Germany get to make decisions for Greece, Portugal, Ireland, Spain, or Italy?  I think it is fairly easy to see that Germany has greatly benefited from the EU and for that reason they are still in the EU.  They were the strongest player regionally in an economic production and today they control the whole of Europe, they are sitting on the deposits of the whole continent with low unemployment, a strong industrial sector which has greatly benefited from the weakened currency, and this author has the nerve to say that Germany hasn't benefited from the EU and will leave?  Has the author forgotten that communism lost and socialism won...maybe it isn't the 4th Reich although there could be some truth therein but it sure as hell fulfills the globalist agenda.  It will be solved through a tighter fiscal union, read loss of sovereignty for smaller, uncompetitive debtor nations who need to devalue and take back sovereignty from a horrible failure called the European Union, debt repudiation, and a new global currency.  Germany will again devalue from the Euro to the SDR but at least they will have a socialist nation with an industrial base whereas Ireland, Portugal, Greece, Spain, and to a lesser extent Italy will have nothing except for the obligation to do as Brussels, London, Frankfurt, NYC, and the globalists decide.  This is more or less the way it is now but we still debate here like politicians were actually trying to help solve these crises rather than what they are doing, which is destroying authority in order to bring in their ruling "experts" in the name of the communal good whereby it will be easier for a few to control us all.  Socialism reigns supreme.

"The democratic revolution is the necessary preparation for the socialist revolution, and the socialist revolution is the inevitable sequel to the democratic revolution. The ultimate aim for which all communists strive is to bring about a socialist and communist society." Mao Tse Tung,

Now, those of us here know what a dirty stain on the world Communism/Socialism has become and the resulting socialist/liberal vs conservative debate has only served to further global socialism through media propaganda but i find it interesting that this all has a plan.  The truth is that the crisis is going just as planned.  Here's to the next black swan...

"Towards the people, on the contrary, it uses the method not of compulsion but of democracy, that is, it must necessarily let them take part in political activities and does not compel them to do this or that, but uses the method of democracy in educating and persuading them." Mao Tse Tung

it is all propaganda, linguistics, psychology, and subversion.  Given the global populace is now so indoctrianated through corporatist, state run schools, media, welfare, and politics we are truly incapable of thinking for ourselves.  ZH furthers the legitimate debate of right vs wrong which is still inherent in human beings despite the greed and we hold out realistic hope for the future.  We will not be mistaken or misled however and what we need is to break the cycle as a society from our dependence on the state which serves to debilitate rather than empower the global citizenry. 

Tue, 09/25/2012 - 16:05 | 2829295 markar
markar's picture

It seems when all your customers are broke and can't buy(or pay for) your exports anymore, the advantage of staying in the EU dries up pretty quickly for Germany.

Tue, 09/25/2012 - 16:29 | 2829350 exartizo
exartizo's picture

fun to read article.

However I think that the political realities in Germany (that YES The Banksters are in charge there also) are stronger than it's economic interests in protecting its people from another bout of hyperinflation.

This was most recently proven when the Kardinals of Karlsrhue bent over and were paid off by likely The Banksters.

Germany has already had at least two opportunities to politically "put it's foot down" against the ongoing threat of massive monetization from the ECB, and has not done so.

Similarly the United States laid all of its cards on the table in 2008 when The Banksters told the US Government to bend over and suspend mark to market, and when The Banksters told the SEC/government to bend over and suspend the new tougher rules imposed by Dodd-Frank. 

The end result, unless a German popular uprising takes place, is that Germany may appear to be dragged kicking and screaming into unlimited Euro printing. But in reality the German Puppet Politicians owned by The Banksters are really no different from their American counterparts.

The German Politicians, like the American ones, don't have any balls either.

Tue, 09/25/2012 - 18:41 | 2830019 bilejones
bilejones's picture

"Germany and the other countries suited to a strong currency should leave."


Then maybe the US could join.


It would please this guy


I don't think it's even satire.

Tue, 09/25/2012 - 19:37 | 2830239 EuroInhabitant
EuroInhabitant's picture

You will see: in 2013, the Germans will vote for the europhiles of the SPD. Germany will stay in the eurozone, including eurobonds, ESM and more bailouts. Yes, the people wil be that crazy.

Tue, 09/25/2012 - 20:56 | 2830492 zippy_uk
zippy_uk's picture

Germany will enact the "Panzer Plan"

Step 1 - exit Euro
Step 2 - convert now redundant Porche Cayenne factories into tank construction (no more Greek customers for the cars).
Step 3 - Use constructed tanks as part of a "diplomatic" effort to assist debtor Euro countries with their payments program's as owed to Germany.


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