This page has been archived and commenting is disabled.
Why Did Schauble Almost Use The "Nuclear Option" - Tim Geithner Explains
While a Greek (pre) deal in some format was largely expected this weekend (especially following the unprecedented humiliation of Greece that would allow the Troika to repay... the Troika) the biggest stunner from the past 48 hours was Schauble's insistence (which as we subsequently learned had been coordinated with Merkel) that either Greece accepts draconian terms which will strip the country of its sovereignty, or it will suffer a 5 year "time out" from the Eurozone.
To wit:
The Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and timely.
[Provided that all the necessary conditions contained in this document are fulfilled, the Eurogroup and ESM Board of Governors may, in accordance with Article 13.2 of the ESM Treaty, mandate the institutions to negotiate a new ESM programme, if the preconditions of Article 13 of the ESM Treaty are met on the basis of the assessment referred to in Article 13.1.]
[In case no agreement could be reached, Greece should be offered swift negotiations on a time-out from the euro area, with possible debt restructuring.]
But while Schauble's "time out" language never made it into the final documents, its presence alone was sufficient to remind the members of the Eurozone that the monetary union has quiet specific loopholes to push any member out that infuriates the German finance minister. It was also enough for FT's Wolfgang Munchau to write earlier today that "The Eurozone As We Know It Is Destroyed."
But why did Schauble insist on this "nuclear option"? For the answer we turn to none other than former NY Fed president (and leaker) and US Treasury advisor and current Warburg Pincus president, whose 2014 memoir Stress Test lays it all out:
A few days later [i.e., late July 2012], I flew to meet Wolfgang Schäuble for lunch during his vacation at a resort in Sylt, a North Sea island known as Germany’s Martha’s Vineyard. Schäuble was engaging, but I left Sylt feeling more worried than ever. He told me there were many in Europe who still thought kicking the Greeks out of the eurozone was a plausible — even desirable — strategy. The idea was that with Greece out, Germany would be more likely to provide the financial support the eurozone needed because the German people would no longer perceive aid to Europe as a bailout for the Greeks. At the same time, a Grexit would be traumatic enough that it would help scare the rest of Europe into giving up more sovereignty to a stronger banking and fiscal union. The argument was that letting Greece burn would make it easier to build a stronger Europe with a more credible firewall.
Naturally, Geithner who himself is atavistic to debt relief and instead urged the Fed and Treasury to fix debt with even more debt, "found the argument terrifying."
He adds that "letting Greece go could create a spectacular crisis of confidence, regardless of what Europeans committed to do afterward."
For now, at least, Grexit - whether temporary or permanent - has been delayed for a few months until Greece violates Bailout #3 and Europe is back to he drawing board. At that point not even fellow debt sinner Italy and France will have enough sway to convince "northern Europe" that bailout #4 is merited.
But the question is: was Schauble wrong, especially when considering the alternative that Greece is now presented with: handing over its sovereignty to Berlin on a silver platter, and an outcome which "leaves Greece in a permanent debt trap, under neo-colonial control, and so economically fragile that it is almost guaranteed to crash into a fresh crisis in the next global downturn or European recession."
Telegraph's Ambrose Evans-Pritchard believes Schauble's "solution" was the right one for Greece:
In an odd way, the only European politician who was really offering Greece a way out of the impasse was Wolfgang Schauble, the German finance minister, even if his offer was made in a graceless fashion, almost in the form of diktat.
His plan for a five-year velvet withdrawal from EMU – a euphemism, since he really meant Grexit – with Paris Club debt relief, humanitarian help, and a package of growth measures, might allow Greece to regain competitiveness under the drachma in an orderly way.
Such a formula would imply intervention by the ECB to stabilise the drachma, preventing an overshoot and dangerous downward spiral. It would certainly have been better than the atrocious document that Mr Tsipras must now take back to Athens.
Alas, Tsipras ignored this option and instead of doing the honorable thing and resigning following his "mental waterboarding" by Europe, in the process not only salvaging the disastrous Syriza negotiating tactics of the past 6 months and cementing himself as a martyr in the public's eye thus assuring himself a landslide victory in the next elections but also putting the ball once again back in Merkel's court, he conceded to everything, in the process starting the clock on the next Greek default and bailout, with Grexit - either temporary or permanent - merely delayed.
In this regard, AEP's conclusion is spot on:
For the eurozone this “deal” is the worst of all worlds. They have solved nothing. Germany and its allies have for the first time attempted to eject a country from the euro, and by doing so have violated the sanctity of monetary union.
Rather than go forward in times of deep crisis to fiscal and political union to hold the euro together – as the architects of EMU always anticipated - they have instead gone backwards.
They have at a single stroke converted the eurozone into a hard-peg currency bloc, a renewed Exchange Rate Mechanism that is inherently unstable, at the whim and mercy of populist politicians playing to the gallery at home. The markets are already starting to call it ERM3.
Schauble will get the last laugh yet.
»
- 35711 reads
- Printer-friendly version
- Send to friend
- advertisements -
Just in: Idiocracy's Upgrayedd has been hospitalized in Houston.
Get well soon, Scarface. There can be no Idiocracy II: Reverend Upgrayedd's Ministries without you, sir!
When is Germany getting its gold back ?
While everyone is watching the Germans and Greeks,
Don’t overlook the possibility of a July Fed rate hikeTime lapse comment. He's thinking july 2012
A 'Lehman' moment perhaps...
This is possibly the biggest on-topic non-sequitur ever.
If they ever make Idiocracy II, I want to see some central bankers, finance ministers and treasury secretaries in there. (Gold, like out the sewer?) And religion shouldn't get a pass either, I want to see it skewered too (the almighty says global warming is real). That is why I think a pimp should become a minister.
"He adds that "letting Greece go could create a spectacular crisis of confidence"
What the fuck does that even mean? WHAT CONFIDENCE?? It's gone like virginity on prom night and it ain't coming back. These guys must think pretty highly of themselves. Like a bunch of raging alcoholics who claim nobody in the family has ever seen then drunk. Bullshit, Uncle Wolfgang, we all saw you so blasted you screwed the family dog behind the garage and then fell in the swimming pool naked last Memorial Day. What is this honor you are so desperate to protect?
Fuck you tiny Tim.
I think he is (really) referring to the confidence of the neocons that no country ever leaves NATO.
http://news.yahoo.com/obama-administration-urges-europe-avoid-greek-melt...
~
Germany wanted GREXIT but was TOLD it wasn't happening, so they took it out on the Greeks.
Can I still get a handy at Starbuck's?
Well...DUUHHHH. It's ALWAYS been about CONTROL !!!
With Money....IT ALWAYS IS !!!
Hey why didn't anyone just use the nuke?
Kaaa BOOOM and Greece is gone! Problem solved. Shoeble is dumb.
Because it would blow up all the assets they want to appropriate. And the slave labor, too.
Hey, it would really suck if they ruined the ruins.
I swear to God none of this makes any sense to me. The whole thing just makes me think of bad poetry actually.
"From devaluation to devolution" basically.
Who is buying "negative yielding Swedish debt denominated in Swedish Krona" again?
I know I'm not.
A "Shauble Head Doll"??
Nice Bank you got in Franfurter Herr Bugurmeister.
Any money in that thing or just IOU's like everywhere else?
You have to be a total nut to be buying anything in "euro's" right now.
In equity parlance "does it pay a dividend yes or no?"
If not it's probably a scam.
whoever wrote your algorithm needs antipsychotics
I fear, for once Schäuble was right.
If you get the synthesis you desire, the dialectic is always right.
thats how a rigged chess game is played...you first decide where the undefeated enemy king gets checkmated for awesome symbolism; "the walk of the fallen God" legend; and then you design the algo that plays both black and white to get to that result.
A bit like Libor rigging or HFT playing. You can't lose with your fire power.
The dialectics of oligarchy world; ha, its invisible hand all right!
Fuck You Geithner you little asswipe fucking elf. fuck you
Geithner is such a parasite that he attaches himself to ticks.
They're doing one hell of an act rationalizing and intellectualizing the crime.
Geithner, the man who said TARP was a “best of all possible bailouts” . For whom? The bankers?
Fuck off turbo timmy
Let's see what parliament says about all this.
Why does everyone continue to simply ignore the glaring fact that the "loans" are just made up paper backed by nothing? This story is like every other "news story". Just some other form of disinformation. It is the strategy they employ. Put out story after story on every possible line of thought and nobody can ever sort out the real players or their motives. Classic non-linear disinformation campaign. That is what they do. http://www.thetruthaboutthelaw.com/non-linear-disinformation-makes-it-im...
When battling disinformation, every idea expressed in any explanation becomes the next topic to explain.
Infinite regression is NOT your friend.
This, in a nutshell, was my weekend.
"Hi! We're from China and we want our 250 billion back!
Hi! We're from Japan and we want our THREE HUNDRED billion!"
There is real money in there somewhere.
The Russian Army, the Chinese Navy...is the Brazilian Air Force next?
"Yes we want our money back" people...
the monetary union has quiet specific loopholes to push any member out that infuriates the German finance minister.
That assumes the people will accept the craziness. People can only be bent over for so long. Yes, most are apathetic, but at some point the fuse will ignite and bankers will hang. There will be no freedom for people being oppressed by a monetary union until the people mobilize and kick the EU out for good. Voting, as we've seen, means nothing.
Apathetic? Nearly 40% favoring the last bailout package and some 80% favoring remaining in the eurozone is hardly apathetic. They know who butters their bread.
Don't let facts get in the way of a good story!
at some point the fuse will ignite and bankers will hang.
I gave you an up arrow because I do agree with what you said, but I’m afraid that the sheeple need a sheep dog to lead them out of the swamp. Until then, they are merely sheep and not wolves.
“Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.”
-- Benjamin Franklin
Hey Timmy! The Chinese are still laughing.
(at you)
In 2002, Timmah failed to report his moonlighting income working for the IMF on his US IRS returns. He said it was an oversight, and that turbo tax was to blame for not knowing the taxing body for the IMF salaries. His day job was president of Federal reserve new york. He had an army of accountants, MBAs, econ PhDs, JDs and even a few tax LLMs on HIS DIRECT staff. He also could have well afforded to pay H&R Block $100 like the rest of us.
In 2008, they put him in charge of the IRS. This means in addition to the background checks run by the FED and IMF, he was given cabinet level security investigations (higher than top secret) That means polygraph. That means juvenille records. That means they interviewed almost every person he has ever exchanged "precious bodily fluids" with. (shout out to WB7s recent Dr. Strangelove works)
According to the MSM. The chinese hacked OPMs records. Yes. they are laughing at him. As should the Greeks.
I can't believe I clicked on a headline ending: "Tim Geithner Explains."
It may as well have said "Pee-Wee Herman explains".
Right up there with "Krugman's Bedtime Stories."
To be fair to Timmy, you probably clicked on the "Goldman explains" link earlier also.
But its ok, so long as you know its 110% unadulterated bullshit walking through the door and you're just there to look at the bearded lady, not screw "her"
Like an episode of "I Love Lucy", except unfunny
Timmay has said he is not a banker - he is a bureaucrat. BTW, wasn't he upside down on his mortgage in 2008?
... little Timmy thought he wanted a career, turns out he just wanted paychecks ...
Wrong.
Schauble is a misserable, deceitful, psychopathic liar.
His Grexit idea was just to save face for him and Merkel after their lies to the German goverment and citizens that they would never give Greece a 3rd Bailout.
A Grexit was never an option and never will.
If Schauble and Merkel really wanted Greece out that would of happened as everyone knows they run the EU Circus.
Rather have that "velvet withdrawal" option.
Than the inevitable "iron insertion" option.
"If Schauble and Merkel really wanted Greece out that would of happened as everyone knows they run the EU Circus."
...No one ever suspected this even for an instant, but, on the other hand, plenty seem to be under the truly fantastic delusion that the Greeks want out!
"Euro land" has just missed another payment.
Sticking the word "Greece" on there does not change that fact.
All Banks in Europe close...all debt REDENOMINATED into dollars.
GET RICH OR DIE TRYING EUROLANDER!
These days the duo Merkel Schauble sing from a different song sheet.
Is Geitner wearing a wig in that photo? That has to be a rug.
He's slowly turning into his final "sith lord" form.
The scumbag is back in the news!
Geithner can't conceive of any bank losing one cent, even if it's for the good of an economy. That idea is just too "terrifying".
It's not about the money (that's fiat and can be printed); it's about control (the political kind).
Geithner and Schäuble are just puppets of the people, who are running the ponzi-debt-money-system!
So what we see in Greece, is just a big theater of Rothschild and Co.
Just read for Example the book: "Synagogue Rising" http://www.synagoguerising.com/
I too chuckle at the notions that these front people are anything beyond puppets doing what they are instructed to do. It'd be like thinking Obama actually called any shots whatsoever, without first being given the instructions to do so.
You or I can clear our unsustainable debts through bankruptcy every few years.
But the poor Greeks are expected to surrender sovereign territory, airports, utilities and other pieces of their nation. What's next? Trainloads of Greeks heading to Germany to serve as slave labor in German factories until the "debt" is paid?
I would rather this timmy explain it
https://www.youtube.com/watch?v=cTl762MuXyc
!TIMMAH!
Rather odd argument. Sounds to me like they are at it again, wanting everyone to be German, or at least think that way.
Idiots.
for fuck's sake - Greece never should have been let in, and was only so because their books were cooked. Goldman was part of that - why is no one calling for them to be disgorged?
What should happen is Greece should leave or be ejected, try to get its shit together, perhaps get some help from Russia and China, and if they have a real economy that is strong enough to rejoin and they want to do that, let them back in.
But all this doom and gloom and blaming Germany misses the point - Greece was double A, and sent up to the Bigs by people who made money helping them cook their books, then made money by betting against their performance.
Meanwhile, Saudi Arabia killed about 3,000 people in Yemen last week, mostly civilians, it seems... and nobody seems to notice... nobody seems to care.
Yeah, that's right, it's Goldman's "fault".
The best thing to happen to the Greek economy since classical times is Goldman's fault. I invite you to consult a GDP chart, or just ask the Greeks themselves.
The Greek people were not part of their of their own accession to the EU, Eurozone, and Schengen? Wow! I wonder why more drug offenders don't try that line during prosecution...
how good is Greece's economy right now?
Ah a GDP chart - that tells the whole story, doesn't it?
I invite you to consult the interwebs.
http://www.businessinsider.com/the-secret-goldman-sachs-greece-deal-that...
Yeah, no shit. "You want your trillion euro? Here it come!"
Gotta blame somebody.
At least they actually appear to have money.
Of course if the "Nannycrats" of Europe still want their way...well, very confusing of course.
Is anyone paying for anything over there right now?
Hitler's "Death Head Divsion"?
If they are they're not using dollars to do it.
Everyone talks about the stock market collapse in 1929..."conveniently forgetting the 40,000 Banks that closed their doors."
Well...you want to see a world without Banks? Take a look at GREECE!
Let me join the bandwagon...Timmy G. is an agnostic weasel...who can explain anything and everything...but knows nothing..
If as many are convinced the Israeli Mossad was the architect behind the 911 attacks, with the objective of causing the U.S. and its allies to invade the Middle East (e.g., www.bollyn.com), query whether the Mossad is somehow behind this chaos in Europe. But how would an increasingly unstable Europe benefit the most maniacal ultra right-wing Israelis?
I dont know, it just all sounds too far fetched to be true, so it couldnt possibly be true.
/s
It takes an Oligarch to understand another Oligarch from another country; all the while finding that what the other guy does/did is scandalous, forgetting conveniently that when he was in power himself he did EXACTLY the same thing. "Do as I say not as I DID..."
A very good example is the movie on the Nixon-Frost interview after Watergate and Nixon's resignation.
At one point in the interview Nixon's character says : It was an eerie feeling talking to Chairman Mao in an off the cuff discussion where we tried to get to know each other; knowing all the while we were in a despotic country where the COmmie SOB was probably taping every word of our "off the record" conversation...Then the character blinks... as he remembers the Watergate...
Awesome moment of how Nemesis comes back to haunt you... Geithner...Geithner...
Tim Geitner looks(AND ACTS) like a Stan Lee villian.
Interesting, remind me, how many of Tim's "arsonist that burnt down the American financial system and proftted from it" have we executed yet?
Perhaps arson is a good thing now?
tick tock motherfuckers...
Wolfgang Schauble had a "foible"
relating to very young boys
and when they failed to comply
he took away their toys
I stopped reading after - Tim Geithner Explains.
Even a liquor store hold up man would wear a mask and hide his face, but not Timmy.
He would probably wear a gimp mask with a ball gag.
Timmy doesn't need a mask because he's convinced most of the world that he does not, in fact, exist.
So how this work:
your corrupt country leaders took loans with German banks which did not benifit you.
Your country went bankrupt and these leaders disappeared
Now the German bank (via their politicians) asked you to pay back the loans, with interest, via taxes
Waddayathink. I will pay taxes? Or do you think I give the middlefinger to everything that has to do with authority.
Think hard!
Like we should care what eraser head has to say....
Seems Greece is trying to live an iPhone life with an olive economy....which it has been able to do up to now with German money.
France is not much better off. They could have made a few bucks selling ships to Russia but they dropped that ball. All of Europe will soon be living on tourism and the profit of a couple of Mercedes plants. I wonder who will buy our treasuries then. I guess we'll always have Belgium.
That weasel should be in shackles.
Instead his dreams are full of sheckles
The world is full of injustice
The EU is an american project.
Euro-federalists financed by US spy chiefs
http://www.telegraph.co.uk/news/worldnews/europe/1356047/Euro-federalist...
And the Euro is a bankster project.
"They agreed with me that [the Euro] was going to be a disaster. I asked the chief economist of what was then the fourth largest German bank: “If you think so, why don’t you speak up about this? You are forecasting gloom and doom, but I don’t see any reports by you or your bank about it.” His answer was shocking: He said that there had been clear instructions from the boards of all the large German banks to their staff that no report on the abolition of the D-Mark and the introduction of a European single currency that was in any way negative was allowed to be published. The economists in the private sector had been muzzled by their bosses. The same I heard from journalists. So the German media only quoted the rigged reports from the banking economists."
https://professorwerner.wordpress.com/2015/07/10/hallo-welt/
I knew Wolfie reminded me of someone...
His squid fangs are almost showing
I caught an interview with a Greek MP on Sky.
There may be some method in their madness.
Greece was to broken on the rack of international finance in the coming weeks unless they agreed to whatever terms were put forward.
As AEP says Greece can be broken in this manner.
Italy and Spain have the "too big to fail" status bankers covet (unconditional bailouts all round with bonuses).
Greece hopes to replay its hand with one of the bigger nations in the future. Spain being the nation mentioned.
What people do not seem to understand is that German aid to Europe is like Japanese aid to the US in the form of Treasury purchases.
It is all phantom money made for the specific purpose of creating more money for the government to use.
ANY COUNTRY COULD DO THE SAME THING (that is: create money out of thin air and buy the debt of the US or Greece). It does not have to be Germany of the EU.
That is why this is such a farce and exposed this as a technocratic version of the 4th Reich!! Theater of the absurd... jack-booted bankers.
Tim is a Nephilim hybrid.
This is not about economics, never was, it is all about German state/corporate (fascist) conquest of Europe though economic, monetary and financial means instead of bombs which they tried already many times before in Europe and elsewhere.
To even start discussion we have to state the fact that this whole EU/EURO thing is run by Armani suit gangsters leading by Merkel Liverwurst Queen and Schauble Capo di tutti Capi who in concert with local Greek thugs have been looting Greece national treasures for decades and this is just current chapter of the playbook of exploitation.
It is disturbing that only few seem to truly want to write epilogue to the disgusting book of human suffering or propose viable alternative.
There were forces in Greece that challenged such corrupted state of affairs but were brutally suppressed by invasion of British Marines in support for pro-Hitler fascist regime embedded in, fused with recalcitrant oligarchic-theocratic Greek state in early 1940-ties. From there it only got worse.
So, things will be coming back as they were last December, except ordinary Greeks will suffer more than before. Namely EU continue extending and pretending that Greece is solvent and that she will implement so-called reform i.e. orders to dismantle the Greek state and continue with further impoverishment of society with NO HOPE FOR ECONOMIC STABILIZATION OR GROWTH.
And all of it to keep euro relatively weak to support German exports, without it Germany is already in recession and unpayable internal debt is piling up. Germany so EU is a house of cards ready to fall and no German troll on this or other site will stop me from saying this, since these are undeniable facts.
This is nothing short of insanity, with success measured via propaganda constructs of “All’s Well in the Union” that no one in EU , except for Brussels technocrats was left to believe in.
There will be no reforms in Greece and none are intended but slow motion crush and collapse of Greek society until next “Crisis” will demand more fiction and more insanity.
The Greek state and society has extreme serious, internal issues that threaten their statehood and must be addressed but neither Greek politicians nor EU/German bureaucrats want to do anything about them since their corrupted interests are dependent on greed, lies, deceit no matter how much suffering they bring to the population.
Again. This is not about economics, never was, it is all about German state/corporate (fascist) conquest of Europe though economic, monetary and financial means instead of bombs which they tried already many times before in Europe and elsewhere.
Geithner talks rubbish, dishonest man.
USA was in it with Germany against Greece, Geithner is supporting his co-conspirator , USA wanted the leftists castrated Germany wanted money by looting Greece. Match made in heaven
Giethner was part of the team (Goldman Sachs) who cooked the Greek's books with swaps and derivatives to legally circumvented the EU Maastricht deficit rules and allow the Greece into the Euro club.
These assholes can be stopped if the world wills it.
Why do we continue to allow these hand full of criminals to
control the destiny of the world and plan our demise?
We need to default on police and military pensions, right fucking now, and that will get EVERYONE'S, immediate attention and these crimes will stop.
Without the ploice and military on board we will never stop these people.
If Geithner was terrified, that's a plus
The plan would have given Greece minimal foreign aid, without having to pay it back. Instead, Greece gets minimal foreign aid they have to pay back with interest
Greece could have freed itself of EU rules. Instead of accepting the endless muslim swarm from Africa, incorrectly called refugees, they could have the UN set up AID tents in Greece, the UN would run the tents on our dime, and the UN would ship the swarm on to the EU zone where they are needed like bird flu
Greece had a chance to escape poverty ridden serfdom, and enter poverty ridden free-dom. They will have the choice again in a couple years, if WWIII hasnt started yet or the refugees havent started an ISIS army
AEP: For the eurozone this “deal” is the worst of all worlds. [...] They have at a single stroke converted the eurozone into a hard-peg currency bloc
Excuse me, Ambrose, what? You mean it hasn't been a hard-peg cyrrency bloc since start of the EUR currency?
Who exactly are you trying to bullshit here??