Schäuble: Another Financial Crisis Is Coming Due To Spiraling Global Debt, "New Bubbles"

Tyler Durden's picture

Following the disappointing for Angela Merkel and her CDU German election results, which propelled the populist AfD into Germany's political establishment with 92 members of parliament, the first casualty was Germany's finance minister, Wolfgang Schäuble, who in a few days will relinquish his long-held post and move on to the ceremonial role of Bundestag president. As part of his farewell tour, Schäuble - like so many other former members of the establishment- took a parting shot at the system he helped create and warned that "spiraling levels of global debt and liquidity", as well as "new bubbles" present a major risk to the world economy.

Speaking to the FT, the Europhile beloved in Germany for successfully steering one of the world’s largest economies for the past eight years, and who nearly led to Grexit in the summer of 2005, said there was a danger of “new bubbles” forming due to the trillions of dollars that central banks have pumped into markets. Confirming another fear widely propagated by the Putin propaganda alternative media, Schäuble also warned of risks to stability in the eurozone, particularly those posed by bank balance sheets burdened by the post-crisis legacy of non-performing loans, something we have warned about since 2012, and an issue which remains largely unresolved.

A strong advocate of fiscal rectitude and debt reduction, Mr Schäuble dominated Europe’s policy response to the eurozone debt crisis and has been vilified in countries such as Greece as an architect of austerity. But he will mainly be remembered as the most ardently pro-European politician in German chancellor Angela Merkel’s cabinet, skilled at selling the benefits of the euro and of deeper European integration to an often sceptical German public.

To underscore his point, Schäuble said that the Brexit vote last year had demonstrated how “foolish” it was to listen to “demagogues who say . . . we’re paying too much for Europe”. “In that respect they made a great contribution to European integration,” he said. “Though in the short term that doesn’t really help Britain.”

Ahead of his last finance minister meeting on Monday, Schauble "sought to reassure Germany’s allies that the AfD’s surprise success would not in any way affect the country’s commitment to liberal democracy."

 

“There’s no chance Germany will ever relapse into nationalism,” he said. The AfD’s voters were dissatisfied, felt excluded, were angry about perceived injustice and worried about how the world was changing. “But there’s no reason to believe that democracy and the rule of law are in danger,” he said.

However, taking a broader swipe at the current financial regime, Schauble warned that the world was in danger of “encouraging new bubbles to form”.

"Economists all over the world are concerned about the increased risks arising from the accumulation of more and more liquidity and the growth of public and private debt. I myself am concerned about this, too," he said echoing the concern voiced just one day earlier by IMF head Christine Lagarde, said the world was enjoying its best growth spurt since the start of the decade, but warned of “threats on the horizon” from “high levels of debt in many countries to rapid credit expansion in China, to excessive risk-taking in financial markets”.

Schäuble also echoed the latest warning from the BIS, which last month said that the world had become so used to cheap credit that higher interest rates could derail the global economic recovery.

Meanwhile, Schäuble defended austerity, saying the word was, “strictly speaking, an Anglo-Saxon way of describing a solid financial policy which doesn’t necessarily see more, or higher deficits as a good thing." The soon to be former finance minister also took a pot shot at the UK:

“The UK always made fun of Rhineland capitalism,” he said, contrasting Germany’s consensus-driven, social market model with Anglo-American free markets and deregulation. “[But] we have seen that the tools of the social market economy were more effective at dealing with the [financial] crisis . . . than in the places where the crisis arose.”

Of course, Germany's success - almost entirely a function of the common currency which has effectively kept the Deutsche Mark from soaring - has come at the expense of crisis after crisis among Europe's southern states. Unfortunately it has resulted in an entire generation of unemployed youth in countries like Greece, Italy and Spain.

Still, in keeping with his dour image, Schäuble's last words were pessimistic:

“We have to ensure that we will be resilient enough if we ever face a new economic crisis,” he added. “We won’t always have such positive economic times as we have now” concluded the jolly 75-year-old.

Perhaps Wolfi is worrying too much: after all, according to Janet Yellen, "we will not see another crisis in our lifetime." And if we do, well central banks are primed and ready to injects trillions more to keep the artificial "recovery" and market "all time highs" can kicked just a little bit further.

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Cognitive Dissonance's picture

Give them 'credit' where credit is due. They successfully kicked the can for 9 years.

<A when the next 'crisis' hits, they will do whatever is needed to kick it some more.>

ThirdWorldNut's picture

Its funny when its their time to move-on how honest they become. Greenspan sold fiat crap for decades and once outside fed said gold was the only currency. 

Clint Liquor's picture

The ‘can’ has become a 55 gal drum.

Déjà view's picture

Wonder which one is his ZH handle?

TeethVillage88s's picture

But Schauble was in on the Bailouts of the PIIGS, he took care of Greece didn't he. The fuck gave them new loans, more debt with interest.

- Over 300 Corporations Bailed out by Federal Reserve
- How many corporations bailed out by Japan, EU, Latin America
- Fiscal Stimulus, more debt
- QE Japan, EU, USA, more debt
- PIIGS
- Japan

More loans, more debt will solve everything. IPOs, ICOs.

Truther's picture
Schäuble

Another mother fucker who should hang high.

earleflorida's picture

hmmm,... 'isn't death by 'debt' a moar humane life-sentece punnishment than hanging oneself on the 'money`tree' in a machiavellian fiat world?'

BarkingCat's picture

I look at his face and all I see is a face of evil.

That is one evil son of a bitch who would kill you to enforce his beliefs.

It just so happens his belief is EU ruling Europe instead of direct German rule.

VD's picture

this is akin to the arsonist torching your home and blaming it on poor fire safety.

Cognitive Dissonance's picture

You should have put that commercial sprinkler system in when you built the house.

/sarc

lasvegaspersona's picture

What a cheerless, dour and somewhat unattractive man.

...always seemed off his rocker too...

1 Alabama's picture

we've been kicking the can around here since 1967, so he aint got nothin on me, and we're done kicked out.

ArthurDaley-OldieTimeTrader's picture

Cognitive,

Germans can remember 1923 and 1945-47 & the value of their currency. The Rest of the World, not so much.. There's new monetary debacle coming to our computer screens soon enough.. & Don't ask me when as I don't know..

Rapunzal's picture

Selling out the people of one nation over the people of another, always worked best. Always a warning for all the bystanders. The parasitic elite best playbook for centuries. With the age of AI and robotics dawning, they don't need as many plebs anymore. So NWO and depopulation is coming. In Case you wander why they kill their cash cow the USA. It's aging and they don't need it anymore.

TeethVillage88s's picture

Etu Schlanger?

http://chuckspinney.blogspot.com/2016/12/trump-inherits-defense-budget-t...

Does that include $80 Trillion in Bonds? Pension Funds, Social Security, Medical, Insurance, $60 Trillion in stock Equities, $4 Trillion in US Federal Budget Annually

small axe's picture

No mention of Wolfgang's crucial role in creating our bubbiclious global world, of course.

They doubled down on debt as salvation; time to pay up.

The SOB would look quite dashing with a bullseye tatooed on his forehead.

rex-lacrymarum's picture

Pray tell, what was his "crucial role" in that? As far as I can tell, Schäuble was one of the few politicians who tried to prevent the bailout policy and the 24/7 ECB printathon that followed in its wake. At most one can reproach him for having been unable to push his views through and for not resigning when that became obvious. As we have seen, the ECB has revved up the printing presses against the (initial) opposition of its German Council members (former chief economist Jürgen Stark and BuBa president Weidmann). Stark proved to be the most principled person in the entire drama - when he realized he would be outmaneuvered by the printers, he waved good-bye to the ECB. That takes some strength of character, as these positions not only convey great power, but are extraordinarily well remunerated as well. Weidmann later dropped his opposition based on some Keynesian balderdash about "too low inflation", I guess after he received some stern talking to from Ms. Merkel and decided he wanted to continue pursuing his career. As to Schäuble, people in his position often think of themselves as irreplaceable. I guess his motive for dropping his opposition to the bailout was that he feared he might end up splitting his party and he didn't want to go down in the history books as the guy who did that. At least he succeeded in making the bailout terms a quite rigid piece of tough love (which is going to be watered down as time passes, but at least he gave it a try). 

SparticusUK's picture

New bubbles? 

More like the old ponzi scheme running out of road.

Greenspazm's picture

Fossilized, patronizing old prick.

Pinche Caballero's picture

Of course, he'll cry Wolf one too many times...

onthedeschutes's picture

Schäuble...the face of pure evil.

max2205's picture

Voted most creepyist politician 

ArthurDaley-OldieTimeTrader's picture

Most don't know who the Daleks were.. They'll find out soon enough

oncemore's picture

Tyler, where did you buy the term "populist AfD"????????

I stopped reading there. The same, like CNN.

TeethVillage88s's picture

He means Liberal Socialism, Liberal Progressivism - Totalitarian Rule that shoved Refugees & Immigrants down everyone throat since they enjoyed a boom with migration & reunification of East Germans.

“But there’s no reason to believe that democracy and the rule of law are in danger,” he said.

Germany - "Federal constitutional parliamentary republic"

seattleslewsz's picture

new bubbles.  markets going to fall. more porn doom on ZH.  

Shepwave.  Nice to get market calls right.  https://www.facebook.com/permalink.php?story_fbid=10155108125820326&id=166578775325

                                                                    

myorouter's picture

I am not real clear what you are getting at. But if you notice thre are obvious connections with Shepwave and the other analysis firms.  SHepwave in the link you showed had also given a target for gold of 1370 area. They gave that target last year. Then GOldman Sachs repeated their target and analysis just a few weeks prior to the Shepwave target getting hit.

 

Plus Shepwave is revealing other sources of analysis as their new Mr. T guy. I bet that is GOldman 

Xanadu99's picture

All of the big analysts are in on the same data.  Shepwave does give it to the little guy a lot sooner than Goldman does. Goldman gives the good stuff to the super rich only. 

el buitre's picture

I think Goldman fucks their big clients over even worse than the little guys, because as Willie Sutton replied when he was asked why he robbed banks,  that's where the money is.

Thats what Xi said's picture

What if the top 0.1% were to "disappear" from the face of this planet..!? I mean, liquidity to the world!

GoldHermit's picture

Schauble gets the NO SHIT SHERLOCK award for today.  What clued you in?  Did this come to you in your sleep last night?  

gm_general's picture

I liken the economy under the current monetary system to a bar. In the bar you are happy (equate with good economy) when you are drinking. Obviously after some time of drinking you need to stop drinking and suffer the hangover period (recession that resets the bad actors and clears debt or here drunkeness). However, in the modern central bank bar, when you are feeling tipsy and reluctant to consume more alcohol, the owners tempt you with cheaper and more plentiful drinks. Then you can just keep drinking til you either die or pass out. That is the central bank solution to avoid hangovers.

desirdavenir's picture

The attention span can be short, sometimes. As far as I remember, Schauble was for a hardline, but economically sound, resolution of Greece debt problems. He, together with Bundesbank's Jens Weidmann advocated (and partially won) for less deficit spending, less keynesianism, etc. in Europe. They have at times been vocal opponents of Mario "say chaps, why not spend 1 trillion this year, and every year thereafter ?" Draghi. So, basically, as finance minister, he has been one of the major voices of sanity in the past few years.

For non-german europeans, I think I am not alone in thinking that even though the process is bitter (getting pay/pension cuts is never happy), no one in their right mind would argue that there was no need for reforms to become more productive.

el buitre's picture

Schauble's solution to the Greek debt crisis was to get the Troika to print up  billions several times a year, send it Greece, who in return were forced to send 90% of it back to the German banks.  In reality he fucked the German public even worse than the Greeks though it is taking a few years for it to show,  When Deutche Bank goes tits up, it will be Schauble's masterpiece.

Fireman's picture

The rat has jumped...I mean rolled off the sinking ship.

Long live King Rat!

sudzee's picture

Looks like a good excuse to whack gold again this week.

ArthurDaley-OldieTimeTrader's picture

I say "POPPYCOCK" to "no rate  normalization during my lifetime"!

 

https://www.youtube.com/watch?v=INmqvibv4UU

 

https://www.joefahmy.com/2013/06/12/10-great-jesse-livermore-quotes

Jesse Livermore had so many great quotes, but here is one of my favorites:

" Markets are never obvious. They are designed to fool most of the people, most of the time."

Xanadu99's picture

Proof it is all manipulated.  I wonder if Trump threw a wrench in this plan. 

marcel tjoeng's picture

Wolfgang Schauble the faux German economist.

Germany would love a new crisis that would disappear the German bank records of their involvement in the 2008 crisis.

He’s a new world order twat like all of Brussels and Frankfurt.

fiddy pence haff pound's picture

"Schäuble said that the Brexit vote last year had demonstrated how “foolish” it was to listen to “demagogues who say . . . we’re paying too much for Europe”. “In that respect they made a great contribution to European integration,” he said. “Though in the short term that doesn’t really help Britain.”"

-Regardless of whether UK leaves the EU (they could still f*ck it up), the EU is now

solidly run by in the interests of Germany. I don't think any other country likes that,

though the French are willing to tolerate, cuz they still think it is their elite's right

to be in charge (dream on). So, Schobbly is just telling fairy stories.

""Economists all over the world are concerned about the increased risks arising from the accumulation of more and more liquidity and the growth of public and private debt. I myself am concerned about this, too,""

-Notice that Schloppy doesn't call himself an economist. The growth of private debt was encouraged by German banks, across the EU (Spain, Greece, etc). Public debt is going up cuz Schloopy has got all Europeans to bail out Douchebank. Regularly. Still. The big EU banks will never be solvent. Thanks to Schloopy, the lazy southerners got ALL the blame for his derivative-smoking banks.

"But] we have seen that the tools of the social market economy were more effective at dealing with the financial crisis"

-Ya. Socialism for German banks. "I get all of Europe to pay for my banks by blackmailing anybody who gets in the way, threatening immediate freezing of their banks. Look at Griechenland. Fucked 'em good"

abgary1's picture

Neo-classical economist,for profit central banks, fiat currency, fractional reserve banking and socialist governments, what could possibly go wrong?!?!?!?

adolphz's picture

What r u talking about?

adolphz's picture

Looks like all the Shepwave promoters are on Zerohedge.com today. Just keep call the markets and we will be fine, looks like the trend turn is coming for stocks and gold, we are waiting for your triggers Shepwave 

JailBanksters's picture

There's one cure for Spiralling Debt, WAR  U S A   U S A

But what's the chance that will happen, not very high, right, right

Silver Savior's picture

I don't care about debt or any of the fiat currencies. Take on a million times worth of debt for all I care. Send a bunch on a rocket and let it rain those worthless reserve notes. Make 100 Trillion dollar bills. None of it is money!

el buitre's picture

Suddenly the AfD has gone from far right in Tyler's articles to populist.  Wonder what that means.