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And The Biggest Beneficiary Of The Greek Crisis Is...
While it was certainly no secret that Germany, the EMU’s bastion of prudent finances and sound money, was no fan of the fiscally irresponsible eurozone periphery going into 2015, the extent to which Berlin’s relationship with Athens and the Greek people deteriorated over the course of six months of bailout negotiations was truly remarkable.
To let former Greek Finance Minister Yanis Varoufakis tell it, the German finance ministry was determined to push Greece from the eurozone from the time Syriza swept to power in January on an anti-austerity platform, and while it was clear from the beginning that the ideological divide between Varoufakis and German FinMin Wolfgang Schaueble was likely unbridgeable, the relationship between the two eventually transformed Schaeuble into a symbol of repression for the Greek populace.
Tensions between the Greeks and the Germans eventually reached a boiling point when, in a farcical effort to extract war reparations Athens claims it’s still owed from World War II, Greece began showing looped video footage of the Nazi occupation to commuters on public transportation.
Germany would ultimately have the last laugh after Schaeuble and Angela Merkel extracted a humiliating set of concessions from Greek PM Alexis Tsipras and while it’s true that the German taxpayer is on the hook yet again for a Greek bailout, a new report argues that for all the sharp-tongued criticism and Grexit threats, it is none other than Germany that has benefited the most from the ongoing crisis in Greece. Here’s AFP:
Germany, which has taken a tough line on Greece, has profited from the country's crisis to the tune of 100 billion euros ($109 billion), according to a new study Monday.
The sum represents money Germany saved through lower interest payments on funds the government borrowed amid investor "flights to safety", the study said.
"These savings exceed the costs of the crisis -- even if Greece were to default on its entire debt," said the private, non-profit Leibniz Institute of Economic Research in its paper. "Germany has clearly benefited from the Greek crisis."
When investors are faced with turmoil, they typically seek a safe haven for their money, and export champion Germany "disproportionately benefited" from that during the debt crisis, it said.
"Every time financial markets faced negative news on Greece in recent years, interest rates on German government bonds fell, and every time there was good news, they rose."
Germany, the eurozone's effective paymaster, has demanded fiscal discipline and tough economic reforms in Greece in return for consenting to new aid from international creditors.
Finance Minister Wolfgang Schaeuble has opposed a Greek debt write-down while pointing to his own government's balanced budget.
The institute, however, argued that the balanced budget was possible in large part only because of Germany's interest savings amid the Greek debt crisis.
The estimated 100 billion euros Germany had saved since 2010 accounted for over three percent of GDP, said the institute based in the eastern city of Halle.
Germany's share of the international rescue packages for Greece, including a new loan being negotiated now, came to around 90 billion euros, said the institute.
"Even if Greece doesn't pay back a single cent, the German public purse has benefited financially from the crisis," said the institute.
Could this be the ultimate irony in the entire Greek tragicomedy: that after all is said and done, the crisis-wracked perihpery's pain was indeed Germany's gain, as Berlin's borrowing costs plummeted, allowing the country to balance its budget for the first time in four and a half decades while the eurozone's struggling debtor states were forced to live hand-to-mouth? Have a look at the following chart and decide for yourself:
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Cheap "money" here in the U.S.S.A serves as an excuse to spend moar.
Charge It!
https://youtu.be/8rqNZAIQH4U
Slightly O/T...
World's Most Growlingest Uber Bear Jim Willie (9 Aug):
http://news.goldseek.com/GoldenJackass/1439151178.php
The Greeks should have told the EU to fuck off and defaulted. Instead, they were sold out by their Elites. Were I Greek, I would pay nothing whenever possible in taxes. Better to let the criminal cabal in Athens starve than to wear debt chains forever.
Fuck that. He's not a bear, he's a truthteller, which is why nobody listens to him. For example,
"The major bond investors have long ago sold out to the USFed, which has accumulated a $4.8 trillion heaping pile of toxic paper that nobody wants. The USFed has become the USTBond market, the buyers long gone. The value of a toxic paper mache monster pig pile is spurious, probably zero. When burned down to its base elements, it will show paper ash, ink, and metal filaments, nothing more."
++
Gawd bless the Jackass --
And the biggest beneficiaries of the Fed printing have been the 0.1% in the land of the free.
The top 0.1% now have more wealth than the bottom 90%
The Fed Won: America's 0.1% Are Now Wealthier Than The Bottom 90%http://www.zerohedge.com/news/2014-11-11/fed-won-americas-01-are-now-wea...
Our government was able to borrow more money to waste on socialist bullshit. Yay.
We are so blessed. :-/
nobody forced the Greek people into the bent over position...
they could have killed the politicians that sold them out...
they could have killed the bankers and told the EU to fuck off...
but, they did nothing...
over them already....
It's cheaper and easier than infantry divisions and main battle tanks.....
I cannot see the underlying data, but the "savings" would only accrue on NEW DEBT issuances that captured the lower rates.
Is this study saying that Germany issued hundreds of billions (trilions) of dollars of 10 year debt, to have some average of 150 to 200 basis point savings generate 100 billion dollars in interest expense?
Either that or I'm being obtuse this afternoon -- my apologies in advance
I came on here to write a post asking just this. Don't apologize, I am not certain I follow it either.
They are saying Germany saves a lot of money by paying lower interest rates, because Greece, which is bullshit.
Germany pays lower interest rates because they have a better credit rating, in other words they are more trustworthy and less likely to default.
I don't know how this is news, or gets twisted into some anti German rant
"Have you stopped beating your wife when you are drunk?"
It's complete nonsense from every possible angle in fact.
EU proves that “democracy,” “compassion,” “good will,” are cant used to cloak Western looting and oppression.
Mr. George Romanias, Greek Secretary General on Social Services, has said today, speaking to the Greek MEGA TV station:
“? cannot stay in the Ministry. I went to apply some principles. I cannot do the opposite” Mr Romanias said adding that he will submit his resignation by tomorrow morning. “I cannot apply the law they oblige me to introduce. It is not possible to give a monthly pension of 87 Euros to a handicapped person. This is what was put in law”
Speaking about the law introduced with express procedures, upon insistence of the Creditors, including all European governements and the Commission, he said “it is the first time in my life that I see a project of law written with such illiteracy, such amateurism and such ignorance… The Prime Minister was blackmailed, that is sure, but I cannot apply a law I don’t agree with and about which I was not asked”.
http://www.paulcraigroberts.org/2015/07/19/wealthy-germans-forced-pensio...
I am disabled due to a series of unforeseen issues and had to give up my "gov't" job; the SSA/Disability process & payment calculation structure is so convoluted and in the end; if I did not have other assistance, then I would be living either in a car or on the street. Sadly, if I got a divorce, then we would be "better-off" financially..It should not be that way imo. In the Darwinian culture; people like me should be eliminated for the good of mankind & help save the goddess "Mother Earth".
Wait till the US Taxpayer has to pay benefits for the animal that someone married or extra benefits for the multiple spouses and on what grounds could the Supreme Court refuse? Obamacare now eats away at 60% of the disability; before Obamacare ; my healthcare took about 12% annually and I use 1/2 the needed services because of that. I can only imagine what our Vets must go through. Do not get me wrong; I am very thankful for the help I do get; very thankful. We are not much different than Greece in this regard however. The sad thing is that God has provided an Earth that has more than enough resources for everyone and given each gifts, that if used to benefit each other; no one would have a lack of need and government could be reduced greatly in size and scope. Bit we are stuck with a nature that is bent on self, the world and one other. My apologies for the ramblings.
This is BS. Germans are losing 200 billion €/year cause the euro is undervalued for them and imports are too expensive. It is an implicit transfer of buying power to the south, and that's exactly why the PIIGS do not want lo leave.
Beside, look at the interest rates of CH, that is the reference. But anyway, it is again the german people though their shrinking pension insurances and lower retirement payments that are paying the price.
No the winners of the Euro is the aristocracy of the PIIGS by transfering devaluation costs to the german people.
Am I missing the /sarc or are you actually serious?
You do realize Germany runs a massive trade surplus both within the EU and globally. This trade surplus is so bad and in their favor there are literally hundreds of position papers that have been written on the subject.
If you are being serious then you might not understand this trade surplus proves the opposite of your point.
I'll leave these here if you wanna brush up Dude:
Germany's trade surplus is a problem | Brookings Institution
German trade surplus to rise to new record in 2015 - magazine
Germany's record trade surplus is a bigger threat to euro ...
Foreign trade balance - Statistisches Bundesamt
This is only relevant if one believes that trade balances are a measure of a country's welfare. In short, it isn't. The fact that XY "position papers" have been written on this nonsense only proves how hard it is for Mercantilist fallacies to die.
It's been a while since such rubbish passed for economic analysis.
Has this so called research institute not heard about QE by the ECB?
That is the real reason for the drop in German interest costs, the benefits
being offset by rising import prices.
bears do shit in the woods!!
I think it's nonsense what the Leibniz-Institut für Wirtschaftsforschung says.
1. The interest rates are low because auf the crisis in the Euro zone. And not only greece is in trouble but France, Italy, Spain, Cyprus, Czech Republic and Ireland are. The low rates are for their support. Greece does neither profit from theses low rates (they have nearly no access to the credit market, the only buyers of their short term bonds are greek banks) nor does the ECB buy greek bonds
2. Germans savers are losing the money which the german government saves. Interests on which the have to pay taxes. This is the reason why the tax revenue from the capital tax does not rise - despite high capital gains on bonds and shares
3. The pundits did not consider potential losses on the TARGET2 balances. Or does anybody think that theses 542 bn € will be fully repaid?
4. They did not consider losses for german life insurers, which will come in trouble if interest rates stay at artificial low levels for some more years.
5. The low interest rates and the weak euro fuel exports to unsastainable level. The goods are sold on credit and these credits will never been fully repaid.
Nothing of this has to do anything with greek but with the monstrosity called euro.
I believe that is the biggest BS I have read on ZH, so far.
Blaming Germany for what is happening in Greece is a mistake. The group that needs to be blamned is the Rothschild private banking cartel that controls the ECB and is using its control of the right to create money in the EU to asset strip every country in the alliance. Germany is just one of the dominoes waiting in line to be destroyed by the Rothschilds and should be looked at as a victim rather than the perpetrator.
The basic facts of a financial construct.
The alliance between Greek Oligarchs who hired and sold out to the Squid and German Oligarchs who control the EU means the Greek population gets grilled on the charcoals.
And this will be rinse and repeat in Club MEd as Oligarchs vs people in a neo-feudal constructs just ends one way.
Bingo. Ty for keeping this on point.
So austerity imposed by Germany first of all killed off the competition and also drove down interest on German bonds so it is win-win for Germany? Don't know if all that is true but if it would turn out that continuing the crisis in the PIIGS countries was actual policy in Germany in order to drive down interest on German bonds then that would for sure blow up the EU.
Someone needs to produce a talking Wolfgang Schauble doll that goes batshit crazy when you mention the words 'Greece', 'debt write downs',
'Yanis Varoufakis' etc, to it - "Nein! Nein! Nein!"
I'd buy it and it would keep me amused for at least a couple of days. If the doll's wheelchair was remote controlled that would be even more
fun.
Europe is benefitting from letting blood from Greeks. Too bad Greece won't standup for herself.
Sorry to say, these calculations make no sense whatsoever (it shouldn't be too difficult to figure out why). Not to mention that it is probably not even true that German yields fell "because" of the Greek crisis. If that were the case, then why did Spanish. Italian and Portuguese yields fall even more? The reality is that the ECB's money printing combined with low falling inflation expectations and weak economic performance across the euro area pushed yields down.