Bundesbank Reiterates Objection To New Bond Buying As German FinMin Refutes Spiegel Report

Tyler Durden's picture

And to think that the market could have learned its lesson by now. Following the planting of an unsourced, glaringly obvious ECB propaganda report such as that attempted yesterday in Der Spiegel, in which nothing of substance was in fact enacted or even proposed (as rate caps is merely a regurgitation of ideas thrown out previously in the summer and fall of 2011), peripheral bonds once again tightened on absolutely nothing, with the Spanish 10 Year now back in the 6.30% territory, over 100 bps inside where it was a month ago. On not a single enacted reform or actual ECB action. Of course, it was a matter of hours before the German FinMin put an end to this latest rumor, and sure enough an hour ago a spokesman for the German FinMin said they were unaware of any ECB plan to target bond spread. Perhaps because there are none? And of course, if there were, the Germans would promptly put an end to what is my implication an open-ended bond buying program without conditionality: something that worked like a "charm" last summer with Italy. And just to make sure Germany's message was read loud and clear, here is the Bundesbank turning on the "just say 9" machine.

From MarketNews:

The Bundesbank on Monday reiterated its objection to new government bond purchases by the European Central Bank and called for strict conditionality on any new bailout loans.


"The Bundesbank maintains its view that government bond buys in particular should be assessed critically and that they come with significant risks for stability policies," The Bundesbank warned in its monthly report.


"Decisions regarding yet more pronounced pooling of solvency risks should be made through fiscal policies - that is, governments and parliaments - and should not be carried out via the central bank balance sheets," the Bundesbank said.


The German central bank warned against further weakening of conditionality on aid provided by the Eurozone's bailout funds, the European Financial Stability Facility and the European Stability Mechanism.


Additional interest rate charges on bailout loans and strict economic and fiscal policy conditions are key to maintaining incentives for bailout countries to quickly adjust and secure a return to capital markets, the report said.


"In this context the tendency towards weakening conditionality is alarming," the Bundesbank warned.

In the meantime, unanonymous sources warn that listening to anonymous sources may be hazardous for your P&L:

Germany's finance ministry is not aware of any plans for the European Central Bank to target spreads of bonds of struggling euro zone member states, a spokesman said on Monday in response to a media report.


"I am not aware of any such plans and haven't heard anything," spokesman Martin Kotthaus told a news conference.


"In purely theoretical, abstract terms, such an instrument would certainly be very problematic. But I know of no proposal along these lines," he said.


The latest edition of Der Spiegel says, without naming its sources, that the ECB is discussing interest rate thresholds for individual euro zone countries with a view to intervening if the premium over German bonds is exceeded.

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AlphaDawg's picture


"Money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of getting wealth this is the most unnatural."

LawsofPhysics's picture

Correct.  In other words money for nothing, as nothing of REAL value is created by the recipient of the interest in exchange-FAIL.

tmosley's picture

Interest in a non-fiat monetary system comes from consumer spending.  The lender sacrifices present consumption and takes on risk so that he can gain in the future.

The act of lending does not create value, it IS value that is given in exchange for greater future value.  It is the responsibility of the borrower to ensure that additional value is created, via capital investment.

Ghordius's picture

you are addressing the various ministers that tried to float a different opinion and were called back by their parties, for example just recently a Finn and an Austrian.

in this case, the BundesBank does not need to retract anything - how the others will vote in the ECB is a different matter

Inthemix96's picture

When the fuck is this bollocks gonna stop?

End it allready fuckers, some of us want off this ride.

Croatian Patriot's picture

Bluff. Best game played by evil bankers and politicians ever

lolmao500's picture

Merkel, shut your pie hole and get the fuck out of the euro.

Greece aims to reach deal on 2013-14 cutbacks by mid-September, according to sources

LOL... I bet those sources are the ECB trying to rig the markets.

El Gordo's picture

It will not stop as the result of any political action.  It will stop when the great unwashed out there decide that it's over and their currency is worthless.

icanhasbailout's picture

strikes me that there is potentially a lot of money to be made shorting the pump from these obviously-absurd anonymous rumors that pop the market

RECISION's picture

...here is the Bundesbank turning on the "just say 9" machine.


Ok, that's clever.  :-)

Dead Canary's picture

Ok, I'm I right in assuming these "rumors" that send bond yields down, followed by "corrections" that come out of Germany that send yields back up are "orchestrated" by the banks. I think the big banks are cleaning up on these moves that, if not created by the TBTF's they at least are getting fore warning. Up and down. Up and down. Three fracken YEARS now. Like pumping a well.

new game's picture

been gone for 3 weeks and absolutly nothing has changed...

3 months fwd, hmmm, say 100 zh posts and thousands of coments and STILL same bs.

come on folks, get a clue, the kickers make the rules, bought the refs and move the goal posts.

Surrealist's picture

The Euro party is back on!


Euro Crisis Revving Up Again – Fasten Your Seatbelts



Anasteus's picture

I don't believe Germany can resist the pressure. Practically all other 'economies' go against them, US, EU, IMF, OECD, and most likely China as well. Germany itself is dependent on the Ponzi as any other country just being on better side for now. Sooner or later, they'll give it up saying 'Na, ja' instead of Nein.

boiltherich's picture

Dear god this getting to be a major bore. It sort of reminds me of watching the World Trade Center on September 11, the shock, the certainty that it all must collapse, and the fear of what is to follow which we could not predict but that the life we knew was not going to be improved upon by the events. Only that took hours to transpire not years.

I am firmly in the camp of the euro going away, and there is not enough space here to write all my reasons for it, but I see it in my head as a fact so unavoidable that I am confused that anybody else can still cling to the fiction that the euro has any future at all. And I could understand it when the pro's of the euro outweighed the con's, but that time was over with about two years ago now. At this point no people or entity is better off because the euro still exists.

But, the final collapse, like that last failing structural beam in the tower that allowed the rest to come down, will only be when business in general goes on strike or resorts to using pounds or dollars for transactions because of the chaos and uncertainty surrounding the fate of the euro.

The question then will be, as you should be asking now, is to what extent if any will the separate nations and corporations as well as individuals, honor their euro denominated obligations once there is no longer a euro. Clearly much of the peripheral debts will be discharged one way or another, and what isn't will be devalued. The total debts not honored in the end will be in the trillions of $US I think, and the world will not be happy about that, they will see it as having been one huge scam all along.

The winners in this scam will be those in the former eurozone that still have their fortunes, the losers will be the free riders who greedily hoped for a windfall by going along with the scam and hold now worthless euro denominated anything, as well as the middle class and poor of Europe that will have to start from scratch with nothing.

Another winner will be Russia. I would have to research what the Russians have been paid with for their oil and gas deliveries to Europe, but I am betting the bulk of transfers were not euro. Also, Europe will have to honor their debts to Russia no matter the currency used because if they do not Russia simply can turn the tap off on the great pipelines fueling Europe. Russia could simply demand payment in gold in advance.

At any rate I plan to tune out any more talk of the euro or PIIGS, or German opposition which never gels into any action, as far as I am concerned they are keeping the kettle simmering with conflicting headlines solely for the reason of lowering the value of the euro to benefit core exporters in the north. And I have the feeling that while the total collapse could come at any moment it also could take years, I am not willing to invest that much time or energy into this matter.

Dareconomics's picture

The ECB will eventually print in an effort to save the Euro. The Bundesbank has objected to all these tricks since the Eurocrisis began in 2010, yet the ECB still deployed them. The Bundesbank’s role is that of the defender of the German monetary system. By objecting to everything, they are playing their role and providing political cover for the ECB’s shenanigans.

The Finance Ministry is also playing its role to a tee by jawboning Teutonic financial values and thrift. In the meantime, the ECB is giving backdoor bailouts to Greece.

Merkel views the euro as part of a grand scheme to unify the continent, and she supports ECB efforts to “save” the euro. Eventually, the ECB will begin monetizing PIIGs debt.


boiltherich's picture

Printing in any quantity that would "help" will bust the zone from the point of view of the northern core even if Germany looks the other way. Not printing means a debt deflation and unemployment spiral in the PIIGS, doing nothing simply is not an option, and the debt market players do not like any of the options, and after all they have the last word because without them all there is will be central bank buying, which is the same as massive devaluations.

The only logical thing to do is end the euro once and for all. But, because it is and has been the only logical thing to do yet they have not done it we can only speculate as to why. It could be that creditor nations like China, Russia, and the OPEC'ers have threatened really severe consequences in the event of defaults. It could be that the world really is going to end on December 21 as the Mayan calendar theory holds. Maybe they are building several huge arks in the Himalayan Mountains. Or, sending people to a moon base the size of Athens on the dark side of the moon.

At this point any other possible reasons are just as good a guess as what we read in the financial media or get from government reports.