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NSA Leak Reveals Both Merkel And Schauble Saw Greek Debt As Unsustainable Even After Haircut

Tyler Durden's picture




 

Several days ago, we posted a NSA cable leaked by Wikileaks, in which then French finance minister Moscovici (currently a European commissioner) was admitted that the French economic situation was "worse than anyone [could] imagine and drastic measures [would] have to be taken in the next two years." It has not improved since then.   

Overnight, in another perhaps even more relevant to the current quagmire in Greece leak, Wikileaks has released another intercepted NSA communication between German Chancellor Angela Merkel and her personal assistant reveals that not only Merkel, but Schauble, were well aware that even with a debt haircut (which took place in 2012 but only for private creditors and whose impact was promptly countered with the debt from the second bailout) Greek debt would be unsustainable. Technically, she did not use that word: she said that "Athens would be unable to overcome its problems even with an additional haircut, since it would not be able to handle the remaining debt."

She was right. And yet here she is, telling Tsipras and the Greek people that all Greece needs is to comply with the existing program when she knows well by her own admission that Greece is insolvent in its current state - precisely what Syriza is arguing and demanding be part of any deal.

Because why bother making a deal if Greece will once again be in default a few months down the line, just as Varoufakis said earlier today.

But where it gets really humorous is where the cable notes that even "Finance Minister Wolfgang Schaeuble alone continued to strongly back another haircut, despite Merkel's efforts to rein him in... with IMF Managing Director Christine Lagarde described as undecided on the issue."

Fast forward to today and now Lagarde is decided, and the IMF admits a 30% Greek haircut is necessary. So, one wonders, why is Syriza getting hell for pushing what both Germany in 2011 and the IMF now admit has to happen in order to have a viable Greek nation. Unless, of course, they don't want a viable Greek nation, and instead want a vassal state that is constantly on the brink of collapse and thus creating enough systemic risk to constantly push the EUR lower.

Becuase, just in case anyone has forgotten, the real issue here is not the fate of Greece or even the rest of the PIIGS, but how can Germany continue enjoying a currency that is substantially weaker than what a far stronger, and export-crushing Deutsche Mark would be at this very moment.

From Wikileaks:

Eurozone Crisis: Merkel Uncertain on Solution to Greek Problems, Would Press U.S. and UK (TS//SI-G//OC/REL TO USA, FVEY)

 

(TS//SI-G//OC/REL TO USA, FVEY) Discussing the Greek financial crisis with her personal assistant on 11 October, German Chancellor Angela Merkel professed to be at a loss as to which option--another haircut or a transfer union--would be best for addressing the situation. (The term "haircut" refers to the losses that private investors would incur on the current net value of their Greek bond holdings.) Merkel's fear was that Athens would be unable to overcome its problems even with an additional haircut, since it would not be able to handle the remaining debt. Furthermore, she doubted that sending financial experts to Greece would be of much help in bringing the financial system there under control. Within the German cabinet, Finance Minister Wolfgang Schnaeuble alone continued to strongly back another haircut, despite Merkel's efforts to rein him in, while France and European Commission President Jose Manuel Barroso were seen to be in favor of a gentler approach. European Central Bank President Jean-Claude Trichet was solidly opposed, with IMF Managing Director Christine Lagarde described as undecided on the issue. Finally, Merkel believed that action must be taken to enact a Financial Transaction Tax (FTT); doing so next year, she assessed, would be a major step toward achieving some balance in relief for banks. In that regard, the Germans thought that pressure could be brought to bear on the U.S. and British governments to help bring about an FTT.

 

Unconventional

Full pdf

 

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Thu, 07/02/2015 - 17:47 | 6263903 Carpenter1
Carpenter1's picture

Referendum won't matter.

 

No vote= Greece leaves

 

yes vote= IMF/Germany kick Greece out

 

Into the waiting arms of Russia at the summit next week.

 

 

Thu, 07/02/2015 - 17:51 | 6263915 Pinto Currency
Pinto Currency's picture

 

 

Eurozone wants all countries to cede sovereignty - starting with Greece then Spain, Italy...

They are going to kick them in, not out.

Thu, 07/02/2015 - 17:58 | 6263926 Carpenter1
Carpenter1's picture

That's yesterday's NWO narrative.

Welcome to NWO2, led by Russia and China and their BRICs and AIIB banks

 

Old NWO plays bad cop, chases deer into new, good cop NWO2. 

 

That way the prey think it was their decision and are much more compliant as a result.

Thu, 07/02/2015 - 18:01 | 6263947 knukles
knukles's picture

Funny how this comes to light right about NOW  (Which is an anagram of NWO, BTW)
Why, you'd think that this was all .... well .... you know .....  kinda ....
Paging George Sorso, George Soros.  Pick up solid bullion phone, George Soros. 

Thu, 07/02/2015 - 18:14 | 6263997 Paveway IV
Paveway IV's picture

And then there's Puerto Rico. It could take out MBIA and Oppenheimer - both have about $4.5 billion sunk into that ponzi. AMBAC isn't looking like they're in much better shape, either. And if large U.S. financial institutions have screwed the pooch, that means U.S. taxpayers are on the hook for it. Between Greece and PR, that's only like 100 BILLION DOLLARS.

The U.S. does not negotiate with taxpayers or terrorists!

Thu, 07/02/2015 - 18:40 | 6264072 eatthebanksters
eatthebanksters's picture

So the US goverment gathers insider info and passes along to their rich crony buddies on Wall Street.  Wow,I'm fucking pissed if I'm Merkle, Holland or any of the other poor bastards who can never win this game.

Thu, 07/02/2015 - 19:13 | 6264168 COSMOS
COSMOS's picture

AIPAC controlled USA govt passes on the information to AIPAC members and Israel.  Pretty simple.

Thu, 07/02/2015 - 19:19 | 6264185 NotApplicable
NotApplicable's picture

Puppets oughta know better than to get in touch with their feelings.

Thu, 07/02/2015 - 18:05 | 6263963 Peter Pan
Peter Pan's picture

Ceding sovereignty is not a solution when the underlying maths does not show a way out other than writing off the debt and then living within one's means.

 

Thu, 07/02/2015 - 18:10 | 6263984 Pinto Currency
Pinto Currency's picture

 

 

Ceding of sovereignty will be one of the terms of the debt haircut.

Thu, 07/02/2015 - 20:11 | 6264330 Charlie M.
Charlie M.'s picture

Greece already ceded sovereignty under the terms of the first and second bailouts.

Thu, 07/02/2015 - 20:36 | 6264401 Pinto Currency
Pinto Currency's picture

 

 

They still (apparently) hold their gold.

Thu, 07/02/2015 - 18:35 | 6263919 tc06rtw
tc06rtw's picture

… it’s so frustrating trying to convince the world your  lies are true  anymore!

Thu, 07/02/2015 - 23:07 | 6264884 TheReplacement
TheReplacement's picture

Leaked or

planted?

 

Thu, 07/02/2015 - 23:09 | 6264889 TheReplacement
TheReplacement's picture

Cynic or

Realist (When dealing with people in positions of power oiver others)

Fri, 07/03/2015 - 09:52 | 6265889 fattail
fattail's picture

Splitting the Euro apart one PIIGS at a time will eventually make the Euro a less desirable currency improving the reserve currency status of the bankrupt US $.  In which there will always be liquidity and a market, at least on a longer timeline than the Euro.  

Let's see the chinese are launching their competing money transfer system to swift this fall, right about the same time that the IMF rebalances the basket of reservable currencies and is expected to add the chinese yuan into it.  I wonder what could possibly go wrong in an area of the world with endemic corruption, ubiquitous pollution, waaaaaay to many people, a stock market bubble, and a real estate bubble?  

Cui bono??

Good thing the chinese have finished those new air bases out in the middle of the ocean.  The people are going to need a distraction.  Where does all of that money invested in emerging market ETFs go when WW3 breaks out?

I just bought some more silver but my spidey sense tells me it is going lower.

Thu, 07/02/2015 - 17:49 | 6263910 ANestIOS
ANestIOS's picture

Re Greece, the narrative is simple (Greek state IOUs were unlikely to be honoured, banks -greek, european and global- were likely to go lehman brothers way exactly at the wrong point in time - just when the US & UK through QE printed enough to avert the banking collapse - the EU stepped in and magiced the Greek debt to banks into debt to the euro taxpayer - with the banks walking away not only without losses but with profits that covered their exposure in other bad debt. Now the EU refused to do QE (the germans objected) until recently thus as far as greece was concerned the bailout was real money. So the EU used the greek bailout to bailout -up to a point- the euro area banks. Right now the greek state's IOUs are to european taxpayers with the position of the greek government (and the IMF as of today as well as the rest of EU people privately) that a debt forgiveness is necessary, i.e. the EU taxpayer will have to share the cost of their bank bailout (that was called greek bailout). The EU leaders, being politicians, will not admit to that and will try to the end (of their careers) to kick the can down the road through a Yes vote, by trying to imply that it is a EU stay in or leave referendum, while the (current) greek government wants to get on with governing rather than being told what to do by - often conflicting - eurocrats) Greeks being Greeks will polarise and shout and muddy the waters and take the vote down to the wire.

Thu, 07/02/2015 - 19:18 | 6264182 Fod
Fod's picture

Greek media and opposition party politicians are currently on black propaganda mode against the Greek government. Oh, and they are also formenting civil strife while they're at it....

Thu, 07/02/2015 - 20:20 | 6264359 Faeriedust
Faeriedust's picture

By George, I think he's Got It!

Thu, 07/02/2015 - 17:51 | 6263916 Fun Facts
Fun Facts's picture

Proof that all we hear are lies and carefully constructed propaganda.

Thu, 07/02/2015 - 17:58 | 6263929 unplugged
unplugged's picture

can't trust anything these days - so then is wikileaks a CIA asset ?

"how would you tell the difference between the dream world and the real world?"

Thu, 07/02/2015 - 18:03 | 6263957 knukles
knukles's picture

Sticky question.

By which one is wet? 
A rhetorical answer to a rehtorical meandering down some glazed over misty lane .....

Thu, 07/02/2015 - 19:23 | 6264194 NotApplicable
NotApplicable's picture

It's an asset of somebody. That's all you need to know.

Fri, 07/03/2015 - 02:03 | 6265229 OldPhart
OldPhart's picture

In MY dream world I get laid by hot blondes.

Real world, they think I'm a nice old man.

Fri, 07/03/2015 - 09:43 | 6265862 WhyWait
WhyWait's picture

You would have to assume that someone is protecting Wikileaks or it would have been shut down by now.  But why is Assange still trapped in a small embassy?

There is more here than meets the eye.

Thu, 07/02/2015 - 17:53 | 6263920 unplugged
unplugged's picture

<-- can will be kicked again

<-- can blew up - kicking is over

Thu, 07/02/2015 - 17:54 | 6263925 cart00ner
cart00ner's picture

Does any country have sustainable debt?

Thu, 07/02/2015 - 17:57 | 6263933 kowalli
kowalli's picture

Russia

Thu, 07/02/2015 - 18:21 | 6264020 Tall Tom
Tall Tom's picture

So Russia has sustainable debt?

 

Russia can keep going into debt ad infintum? They can sustain their indebtedness?

 

 

Are you crazy? There is no such monster as sustainable debt as it leads to death and destruction with insolvency and bankruptcy

 

And you believe that Russia is stupid enough to embark upon that path?

 

That is really funny..

 

The Death and Debt Paradigm does not wot and Russia's Central Bank is just as flawed as any other Western Central Bank.

 

And any other assessment of that is just a wild flight into the fantasy of Skittle shitting Unicorns.

 

(And I thought you were more sensible than that...Surprise, surprise.)

 

 

Thu, 07/02/2015 - 18:54 | 6264112 kowalli
kowalli's picture

Russia can pay it debt out, west can't do it

Thu, 07/02/2015 - 20:11 | 6264328 Pinto Currency
Pinto Currency's picture

 

 

Russia's Fed Gov debt is 18% of GDP.

Thu, 07/02/2015 - 18:31 | 6264044 balanced
balanced's picture

I was thinking about this recently. Russia IS much better off than most western countries because of Putin. Here's why...

In western countries, the people in power such as bankers, those who control large corporations, unelected bureaucrats, and even politicians, are all there to loot the resources of the nation and it's people. In the simplest terms -- they are there to take what they can while they can, and they often collude with one another in order to do this more efficiently. The proverbial foxes guarding the hen house.

Russia is different. I cannot speak to Putin's motives, and frankly they aren't relevant to my point. What I CAN see though is that Putin runs Russia with an iron fist. You never hear people say things like, "Putin will never get Parliament to go along with that." You DO hear things like, "That guy that was giving Putin shit died of polonium-210-induced acute radiation syndrome."

I mean sure when Putin took power he gave the oil and gas companies to his friends, but he has clearly aligned his own interests with those of Russia itself. He treats Russia as his own corporation, so when Russia becomes stronger, Putin becomes stronger.I'm not saying that he isn't corrupt, or hasn't skimmed billions. What I AM saying is that unlike in most western nations, Putin has no insentive to loot and destroy his country, because it's all basically his already.

That symmetry between nations and their "leaders" seems to be missing, in fact inverted, in western countries. I don't claim to have the solution -- just describing the water in which we are all drowning.

Thu, 07/02/2015 - 19:00 | 6264128 JimmyRainbow
JimmyRainbow's picture

just no.

replace putin  with obama and polonium with cia

and it is the same everywhere.

such descriptions turn easily to new-hitler-memes

Thu, 07/02/2015 - 19:05 | 6264131 kowalli
kowalli's picture

"That guy that was giving Putin shit died of polonium-210-induced acute radiation syndrome."

We didn't kill this guy with polonium.

It's the same story as Berezovski killed himself with scarf

MI5 killed them both.

There were guys with "died of polonium" and they get out from England in same day to Russia, but you didn't read it in western press.

We killed ukrainian soldiers which were fighting in Georgia and shot down our plane, but they died silently

When you will start think?

and  parlament didn't have a power, they vote  yes/no, they are NOT writing laws. It's a kabuki theatre

Thu, 07/02/2015 - 19:26 | 6264207 HowdyDoody
HowdyDoody's picture

Wrong. When Putin came to power, he called in all the Yeltsin era oligarchs and told what was going to happen. They could keep their looted companies provided i) they stayed out of politics and ii) they paid their taxes. Most did so. The notable exception was Kohodakovsky who ended up in jail. For some bizarre reason, Putin gave him an early release.

 

Thu, 07/02/2015 - 20:18 | 6264354 Faeriedust
Faeriedust's picture

This is how ancient monarchies worked.  Phillip of Makedon OWNED the country.  Everything in it was his to give to his friends, and he did, in careful payment for favors owed or favors wanted.  But he never, ever wasted it, nor did Antipater after him (Alexander didn't really rule Makedon; he was King of Persia).

Thu, 07/02/2015 - 20:15 | 6264346 Faeriedust
Faeriedust's picture

Ah, but Russia was allowed to DEFAULT a mere fifteen years ago.  Anybody will have little or no debt, right after a bankruptcy.

 

Thu, 07/02/2015 - 18:02 | 6263948 Peter Pan
Peter Pan's picture

If one takes unfunded liabilities into account it would seem that no nation has sustainable levels of debt.

And if interest rates were to make just a small upward move then......better not even talk about it.

Thu, 07/02/2015 - 18:19 | 6264017 Dominus Ludificatio
Dominus Ludificatio's picture

Norway has no debt and you can call them socialist as well.

Thu, 07/02/2015 - 17:56 | 6263931 gdgenius
gdgenius's picture

This whole thing is just becoming more unbelievable with every passing day...

Thu, 07/02/2015 - 17:58 | 6263939 nickels
nickels's picture

Rosebud.

Thu, 07/02/2015 - 18:05 | 6263961 knukles
knukles's picture

My mom named my penis after the sled in that movie.
The neighborhood kids made unmerciful fun of me when I told them.

Thu, 07/02/2015 - 18:14 | 6264001 FredFlintstone
FredFlintstone's picture

Bill Gates named his company after his mom's pet name for his penis.

Fri, 07/03/2015 - 02:50 | 6265293 Four chan
Four chan's picture

lol

Fri, 07/03/2015 - 10:37 | 6266020 DuneCreature
DuneCreature's picture

Wow! … Ya learn sumpin' new every day.

I began to dislike the guy back in the early ‘90s when I caught him snooping on my newborn network without permission.

So the little prick really has one huh?

~ DC

Thu, 07/02/2015 - 18:07 | 6263972 Peter Pan
Peter Pan's picture

On the contrary, as the truth becomes known the whole thing does in fact become more believable as the conspiracy theories and the suspicions we have voiced over the years are proven correct.

Thu, 07/02/2015 - 18:54 | 6264100 JimmyRainbow
JimmyRainbow's picture

the truth is known since lehman

greece is the first "opportunity" to scratch a little deeper again.

it will not be a solution

funny the timing of the leak

the same sources coming up now where for 100% available to GS/muricas/bank side when

greece joined the EU (thats my trained conspiracy nuttiness)

it is still just a blamegame as of now not much written off

Thu, 07/02/2015 - 17:57 | 6263934 Kirk2NCC1701
Kirk2NCC1701's picture

Moscovici is French? 

Must be a Napoleon thing, I guess. 

Thu, 07/02/2015 - 18:06 | 6263968 Omega_Man
Omega_Man's picture

evil germans, rape Greece to keep low Euro for their own benefit...

Thu, 07/02/2015 - 18:16 | 6264004 Peter Pan
Peter Pan's picture

The ordinary working German is by no means evil. They too were raped by a government and corporate alliance whcih did its best to supress wages during the first ten years of the Euro so as to further strengthen German competitveness against the others who were granting themselves rises and benefits beyond the norm.

Thu, 07/02/2015 - 18:27 | 6264029 Tall Tom
Tall Tom's picture

The German Slave is just as complicit as the American Slave.

 

There are degrees of complicity and then there are degrees of suffering. 

 

However the suffering will not be justice served, post collapse.

 

Many of those who deserve the greatest suffering will escape while far too many innocent children will starve.

 

There is no justice in this World, nor, in the World which follows.

Thu, 07/02/2015 - 20:13 | 6264335 Faeriedust
Faeriedust's picture

Yeah, for those of us who fully expect rebirth, The World Which Follows just so happens to be THIS world, about 50 years down the road.

Gives you an entirely different perspective about long-term global problems.

 

Thu, 07/02/2015 - 20:11 | 6264334 Faeriedust
Faeriedust's picture

Exactly.  The German system has worked to deliberately suppress German wages while increasing corporate profits.  Kinda like the Anglo-American system, eh?

 

Thu, 07/02/2015 - 18:13 | 6263993 i_call_you_my_base
i_call_you_my_base's picture

Lending someone money who says they can't pay it back, and that you know can't pay it back is by definition odious. Repudiate the debt.

Thu, 07/02/2015 - 18:22 | 6264024 Albertarocks
Albertarocks's picture

100% correct.  This could be Germany's worst nightmare.  And the ECB's.  And the IMF's.  And the Fed's.  And Goldman's.  Let's fucking hope so.

Thu, 07/02/2015 - 18:21 | 6264023 Joe A
Joe A's picture

Wolfrl, Sauerkraut and any other Germans on ZH want to comment on this one.....?

Still "throw these lazy Greeks out of Europe already" comments?

Fri, 07/03/2015 - 09:48 | 6265847 Element
Element's picture

 

 

I'm not a German, except partially by descent, but I'll point out to you, and others, what I thought every one on the planet with a brain knew in April and May 2010, namely that Greece had ZERO chance of ever repaying its debts and would definitely default in time.

All of Greece knew it.

All of the donars to the initial three year alleged 'bailout' fund knew it, but all decided it was best to do it anyway.

So I'd be kinda super shocked if Merkel and Schauble didn't know it as well, and probably knew it as far back as 2007, if not a fair bit earlier.

The question is, why did Greece agree to it all given they absolutely knew it too?

Oh, that's right, they would get scads of free money, all they had to do was just play along for a few years, until it all blew up anyway.

i.e. There are no innocents involved in all this, no good guys, but there was a major and on-going attempt BY ALL to try and stop it blowing up too badly, in the interim.

 

NSA Leak Reveals Both Merkel And Schauble Saw Greek Debt As Unsustainable Even After Haircut

Oh give me a fricken break! ... wikileaks!

</video cuts to scene of Julian Assange hunched over sniggering into a keyboard, "... dat showed 'em! ...">

Nice one Julian, just keep stirring the shit-pot and trying to make the people of the world hate each other, and blame each other falsely.

petty jerk

 

 

Thu, 07/02/2015 - 18:35 | 6264061 Joebloinvestor
Joebloinvestor's picture

Giving a haircut to a system that is fundamentaly corrupt doesn't fix it.

Thu, 07/02/2015 - 18:58 | 6264124 Umh
Umh's picture

The unicorn never showed up. I am so surprised.

Seriously I think they were just praying for some kind of world wide economic recovery happening before Greece blows up. I think that's what President Obama is doing too, just waiting for a miracle to occur.

Thu, 07/02/2015 - 19:04 | 6264134 JamaicaJim
JamaicaJim's picture

"I think that's what President Obama is doing too, just waiting for a miracle to occur."

 

LOL....no...Fuckbama the mouthpiece is dreaming of golf, his fucked up left handed hack in the mix, blowing and getting fucked by Reggie, and his next plane ride on Air-Choom One....

That cunt could care less.

Thu, 07/02/2015 - 19:12 | 6264139 Yen Cross
Yen Cross's picture

 

 

Finally! Some "old world" banter to get me through these last few Macros.(GMT-8)

 27 min       AUD         AIG Services Index                 49.6      
18:30       AUD         Retail Sales (MoM) (May)           0.5%     0.0%      
18:45       CNY         HSBC Services PMI (Jun)           53.8     53.5    

 Beg me Bitchez

Thu, 07/02/2015 - 19:23 | 6264198 Its_the_economy...
Its_the_economy_stupid's picture

Jubilee, Bitches.

Thu, 07/02/2015 - 19:47 | 6264265 WTFUD
WTFUD's picture

Angela Meerkat and Wolfgangbang Snowball.

The debt is high but i'm moving on , i'm gonna be your No.1, i'm not the kind of bitch who gives up just like that. oh no oo oooh . . . .

Thu, 07/02/2015 - 20:03 | 6264308 mendigo
mendigo's picture

Who would be taking the haircut?

I suspect it is not the major banks nor the ECB.

Thu, 07/02/2015 - 20:08 | 6264318 Yen Cross
Yen Cross's picture

 At least I have the " Carry Trade" interest advantage.

Thu, 07/02/2015 - 22:43 | 6264343 piratepiet2
piratepiet2's picture

 

 

these USA-wikileaks interludes are becoming a bit irritating.  Somebody is shielded from US by the embassy of a small dollarized South American country  ?  Lolz.  If the US really wanted him out, they probably had to utter a few well chosen words over the telephone, by the right person, to the right person. Just imho   

Thu, 07/02/2015 - 20:57 | 6264463 wisebastard
wisebastard's picture

NSA workers are the dumbest group of retrads on the planet. they are nothing more then punk ass peepping  tom bullies. There is no better prove that this nation is doomed then the nsa

Fri, 07/03/2015 - 01:01 | 6265142 SpanishGoop
SpanishGoop's picture

Yea, but it looks they are unintended usefull sometimes.

 

Fri, 07/03/2015 - 09:18 | 6265794 VW Nerd
VW Nerd's picture

Pitiful Merkel.  Posing as Chancellor of Germany, knowing she's just an impotent figurehead and that the ones spying on her and her colleagues call the shots for her country.  She's probably feeling like a battered wife.

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