This page has been archived and commenting is disabled.

Spiegel On Schrödinger Schauble: When It Gets Serious, He Has To Lie

Tyler Durden's picture




 

By now everyone knows, even the mainstream media, that in Europe if one is a member of the oligarchy, "when it becomes serious, you have to lie" as the unelected viceroy of neofeudal Europe Jean-Claude Juncker said once upon a time, back when Greece and Spain were still "fine." Everyone also knows that judging by politican commentary and statement, in Europe it has been very serious for the past 3 years, as the lies have not ended. In fact, the more insolvent a country, the more serious it got, and the more gruesome and unbelievable the lies emanating thereof were. The one place where lying was at least somewhat contained was Europe's paymaster, Germany, which now is actively vying to not only not cede banking supervision to the ECB, but is seeking to displace the central bank in the budget and FX central planning category with a push to be elected budget commissioner and FX tsar. Eventually it will get its wish, but more when we cross to that bridge. Which is why it is surprising that today, German financial magazine Spiegel calls out none other than German FinMin Wolfi Schauble for doing precisely what Juncker was caught doing 2 years ago. Lying.

From Spiegel:

German Finance Minister Wolfgang Schäuble has been inconsistent in his statements about Greece recently, and is now having to explain himself. But even as he has tried to clarify, yet another contradiction has appeared.

 

Wolfgang Schäuble is guided by two maxims in the euro crisis: He knows what is going on, and if something goes wrong, it's probably someone else's fault.

 

For example, the German finance minister tends to get upset when his European colleagues, the heads of government and representatives of the European Commission, once again forget about joint resolutions they've already reached, and everyone talks over each other at the same time.

 

Schäuble has determined the reason for this cacophony. He believes that, unlike himself, and perhaps Chancellor Angela Merkel, many decision-makers in Europe are overwhelmed by the crisis. He is convinced that they often fail to understand the details of bailout policy, and that this frequently turns communication in the euro zone into a "disaster."

 

But now Schäuble has followed their example. Unlike his European colleagues, though, he was man enough to create an unparalleled chaos of communication all on his own.

So what did the man, whom we correctly penned as Schrodinger Schauble many months ago, precisely for his ability to take both sides of the argument with uncanny precisions, so to finally expose himself to the German press? The object of "contradiction" - why the endless Greek money black hole of course.

On a tour through Asia in mid-October, the fateful question facing the monetary union was raised once again: Will Greece remain a member or not?

 

The drama began at a panel discussion hosted by the BBC in Tokyo, when Schäuble appeared with his confidante Christine Lagarde, head of the International Monetary Fund (IMF). Schäuble usually enjoys his meetings with Lagarde, but this time the two friends tangled with one another.

 

Schäuble repeated what the government in Berlin had been preaching for months, namely that a decision could only be made after the troika -- made up of the IMF, the European Commission and the European Central Bank (ECB) -- had issued its report. Lagarde disagreed, arguing that the stricken country needs more time to satisfy the requirements of its creditors.

 

Lagarde was merely expressing what everyone already knows, and what Merkel has already decided, namely that Greece should be rescued. But because the current restructuring program is unrealistic, the operation will be more expensive than planned.

 

Her response could have been an opportunity for Schäuble to explain his own view. But instead he perceived it as an affront, and stated that such speculations were not helpful. It was his way of retaliating.

That was the beginning. Then things got even more convoluted and apparently it was all Bill Murray's fault:

But on the next stop of the trip in Singapore, Schäuble had apparently changed his mind. At an event hosted by the Singaporean-German Chamber of Industry and Commerce, he said, in an inimitable mixture of German and English: "It will not happen that there will be a Staatsbankrott in Greece." A Staatsbankrott is a national bankruptcy.

 

The news attracted attention, especially in Europe. But by then Schäuble was already in Bangkok, and was irritated because he felt misunderstood. He said that it was impossible that he could have said anything in Singapore that contradicted what he had been saying all along.

 

Schäuble spent half an hour trying to justify what he had said in front of the journalists traveling with him. A speech to Asian investors, he said, simply had to be clearer than one he would give at home. Besides, he added, he finds it difficult to express himself as precisely in English as he can in German. In other words, it was clearly a case of "lost in translation."

 

But Schäuble knows that both arguments are unconvincing. News spreads within seconds from any place in the world, especially when two dozen German journalists are along for the ride. Besides, Schäuble's English had been good enough for his appearance on the BBC with Lagarde just two days earlier.

By then it was too late, and as one can see in the price of Greek bonds, his statement has lifted confidence that not only will Germany fund any and all Spanish and Italian inevitable failures, but will continue funding the Greek even horizon with crisp repo'ed EUR bills.

The truth is that Schäuble is torn between taking responsibility for European policy and taking domestic political factors into account. He knows that saving the euro is going to cost more money, but he also fears resistance within the center-right coalition government in Berlin and among the German people. This explains why he sometimes takes one position or another.

 

This was also the case when Jörg Asmussen, the German representative on the ECB Executive Board, revived the plan to create a repurchase program for Greek sovereign debt while in Tokyo. Under the plan, the Greek government would borrow money from the euro bailout fund, the European Stability Mechanism (ESM), money it could then use to repurchase old bonds at the current rate. Greek government bonds are currently valued at about 25 percent of face value. In other words, with every euro it borrowed Athens could take €4 of old debt off the market.

 

The idea had hardly been floated before Schäuble was behaving as though he were hearing about the proposal for the first time. He should have known better, because his people have been working on the same type of program for some time and have already developed concrete ideas. They've calculated that with a commitment of €10 billion ($13 billion), Greece's debt burden could, in an optimal scenario, be reduced by €40 billion.

 

But to achieve this outcome, talks would first have to be held with the biggest investors to ensure that they would truly settle for receiving only a quarter of their claims. Experts at the German Finance Ministry hope that once the operation is over, Greece will almost be in a position to borrow money on the markets again. But that would require Schäuble to explain yet another change of position.

In other words, the Greek default is as NPVed as it always has been, and any and all statements originating out of Wolfi were merely political lies, which it seems nobody in  Europe is pretending about any more. As for Greece, if and when a distressed debt buyback begins, which it most likely won't, perhaps the politicians will realize that to the rating agencies such an event is considered yet another event of default trigger, which means that in under 1 year Greece will have bankrupted twice without actually going bankrupt.

But that is the new normal. Is there any wonder why everyone in Europe is now merely engaged in lying instead of pretending to even believe there is a mathematical solution to an intractable problem?

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 10/22/2012 - 10:49 | 2909421 turbosuperman
turbosuperman's picture

Germany needs to invade Poland.  No one would know what to make of it.  It would be a brilliant distraction.

Mon, 10/22/2012 - 10:48 | 2909426 fightthepower
fightthepower's picture

Its the Rothschild's world, we just live in it. 

Mon, 10/22/2012 - 10:54 | 2909444 turbosuperman
turbosuperman's picture

It is no coincidence that the century of total war coincided with the century of central banking.

- Ron Paul

However, I would postulate that most people want to be ruled over; otherwise, they would have understood and ended the Fed by now.

Mon, 10/22/2012 - 11:02 | 2909476 turbosuperman
turbosuperman's picture

Holy schnikes!

+1

Mon, 10/22/2012 - 10:55 | 2909450 asteroids
asteroids's picture

Ignore the politicians and their weekend circus, endless sumimits and lying. Just watch what bonds do. they must be orgasmic about a "debt jubilee".

Mon, 10/22/2012 - 10:57 | 2909462 The trend is yo...
The trend is your friend's picture

K bass gave it 2-3 years max in 2010.  2013 should be interesting

Mon, 10/22/2012 - 10:59 | 2909469 ebworthen
ebworthen's picture

"Dr. Strangelove, paging Dr. Strangelove."

Mon, 10/22/2012 - 11:07 | 2909488 Anasteus
Anasteus's picture

One can just laugh at all the increasing amount of lies, excuses, pretence and mutual hot-potato tossing hiding lame ducks trapped in ignorance, greed and self-importance. They sometimes remind me of a bunch of hamsters stuffed in one carousel; one can just wait until the carousel smashes into pieces.

Mon, 10/22/2012 - 11:13 | 2909521 The Gooch
The Gooch's picture

A metaphor-

German cannonball frozen pool fail-

http://www.youtube.com/watch?v=37MB6WhWB8I

Mon, 10/22/2012 - 12:22 | 2909781 GMadScientist
GMadScientist's picture

That was awesome...I almost felt bad, until the chest thumping started...

Mon, 10/22/2012 - 11:32 | 2909579 mendigo
mendigo's picture

newsflash: politians and bureaucrats and phd wielding pundits lie it is also possible that the Chinese economic data is less than accurate maybe the top management of many corporations are paid more than is neccesary possibly the standard of living in the us is and has been and will continue to decline interesting that elected offals can lie to the citizens - one might consider that a kind of dereliction of duty

Mon, 10/22/2012 - 11:34 | 2909581 Manipulism
Manipulism's picture

They have to lie because everybody expect it.

If they say the truth, nobody would believe it.

 

Mon, 10/22/2012 - 11:45 | 2909629 Matt
Matt's picture

So, is he too lazy, broke or inept to simply hire a professional translator to ensure his English means what he intends it to mean?

Mon, 10/22/2012 - 11:46 | 2909640 Manipulism
Manipulism's picture

He is a Swabian.

Too pernurious

Mon, 10/22/2012 - 11:51 | 2909658 Dareconomics
Dareconomics's picture

The bond buying plan would not retire debt at a 4 to 1 ratio. Now that details of the plan are in the public domain, speculators will front-run it  and bid up Greek debt.

 

dareconomics.wordpress.com

Mon, 10/22/2012 - 12:32 | 2909711 mendigo
mendigo's picture

the truth is that it is us who are indebted to the eu ministers for the daily dose of comedy - you could not make this stuff up... and yet they do. do they realise that people are watching or have they all gone dsk? like being forced to watch a jerry Lewis marathon I hope that in return our leaders a providing our European brothers with similar levity (no not of equity and discretionary item prices - like food) but look its not so funny on this side they are watching our every move and incarcerating anyone and everyone without justification - shits getting serious. they force us to read krugman!!

Mon, 10/22/2012 - 12:02 | 2909714 Vegetius
Vegetius's picture

Too much debt, not enough cash is the problem. Also the countries that have the cash do not want to go broke bailing out the Hobo's.

So Lie all you want Eurotrash; the big red reset button will be pushed.

Mon, 10/22/2012 - 12:19 | 2909775 GMadScientist
GMadScientist's picture

Herr Schauble would like it to be known that he was, in fact, lying, when he said you have to lie.

Mon, 10/22/2012 - 12:28 | 2909800 Herdee
Herdee's picture

You can count out private money because we are headed for a decade of stagflation and deflation of assets.That means gonernments and private money continually moves into the U.S. Dollar and out of a defective,uncertain monetary system in Europe.The world looks at the confidence factor in times of extremes.The U.S. money system is just a brighter pig with more wet-red lipstick.Non of these crooks running Germany or Europe for that matter give any investor any faith.Everyone knows that from day one,Goldman Sachs put a derivative strategy together for Greece in order to con Germany out of their money.Plain and simple.

Mon, 10/22/2012 - 12:29 | 2909805 TNTARG
TNTARG's picture

This is so fucking twisted... Wouldn't be better a good old fashioned and explicit default as Argentina declared and performed in december 2001?

Mon, 10/22/2012 - 12:34 | 2909822 Ghordius
Ghordius's picture

simply not true: "unelected viceroy of neofeudal Europe Jean-Claude Juncker"

Juncker is Prime Minister of Luxembourg, dammit! for the second time after losing elections in between. this means he governs at the sufferance of a bloody Parliament that could kick him out

he is not the "unelected" guy, he is "the one that was a tad too candid for some"

Mon, 10/22/2012 - 12:52 | 2909885 tradewithdave
tradewithdave's picture

Is it okay to lie when things aren't serious?  Jus' saying...

 

www.tradewithdave.com

Mon, 10/22/2012 - 13:02 | 2909905 timbo_em
timbo_em's picture

This man once personally received an illegal party donation over 100,000 DM and stated in front of an investigative commission that he forgot what happened with the money. He represents all that is wrong with today's political class. Don't believe a word he says.

Mon, 10/22/2012 - 13:06 | 2909922 Peter Pan
Peter Pan's picture

One hears and reads the joint statements of these liars, but if the world was privy to their conversations and arguments prior to those announcements, there would be collective pandemonium.

These stupid politicians have an arrogance which unfortunately will be brought to earth when they realise that bureaucrats and bankers have used them for their own purposes.

Mon, 10/22/2012 - 13:36 | 2910016 Nussi34
Nussi34's picture

Schäuble = Senilus Rollus

Do NOT follow this link or you will be banned from the site!