Der Elefant In Das Room: Germany - The Ultimate Doomsday Presentation

Tyler Durden's picture

* Please stop emailing us: we know the German is gramatically incorrect. That was not by mistake.

Two months ago, Carmel Asset Management came out with what we dubbed "Spain: The Ultimate Doomsday Presentation." Since that day Spanish yields have exploded, the domestic (and global) stock market has collapsed, and as of hours ago, Spain for the first time requested an official bail out from its European partners. But Spain was easy - only Nobel prize winning economists and TV anchors could not foresee the final outcome for the country. Today, we redirect our attention to real elephant in the room: Germany. Recall that it was right here on Zero Hedge where we warned, just under a year ago, that "the cost of the euro not plunging today as a result of the ECB not proceeding with outright monetization, is that Germany is now the ultimate backstopper of all of Europe's risk... Germany has directly onboarded the risk associated with terminal failure of this latest and riskiest "bailout" plan and in doing so may have jeopardized anywhere between 32% and 56% of its entire annual economic output. One wonders if the risk of runaway inflation is worth offsetting the risk of a plunge into the worst depression in the nation's history?" Simply said: Germany's opportunity cost to preserving the status quo right now, is at a cost of hundreds of billions in the future, yet even that pales to the cost of letting it all fall apart. But this was a year ago, and out of headlines means out of mind. Today, we are happy to remind readers of just this dilemma, once again courtesy of Carmel. And if the hedge funds' predictive ability is gauged by the response in the Spanish market (and economy), Germany should be worried. Very worried.

In summary:

To summarize, as we inquired on July 21, 2011:

  • The Cost to Save the Euro is Much Less Than to Let It Fall Apart, but Do the Germans Have the Political Will?

Read on. It only gets better. And by better we mean terrifying for all our German readers.


h/t Peter Tchir

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
LawsofPhysics's picture

Still does not account for resource cost to keep the German machine going.  Fuck these eCONomists and paper-pusher's bullshit already.

Biggvs's picture

And I suppose the "Euro stays together" column assumes no default in Spain or Italy. The numbers will grow massively. Better to leave the Euro now. Take the bigger pain now or get an even bigger flogging soon enough.

Ivanovich's picture

So where's the column that shows the costs of staying in the Euro, and then adding the collapse of the Euro after "staying in the euro" doesn't work?  Shouldn't there be a sum of both?

JeffB's picture

Unless the strategy all along has been to cause/allow a meltdown and then take advantage of it from a globalist standpoint. "Allow no crisis to go to waste" and all.

If the (interim?) goal is to bring about a unified Europe, allowing a collapse of a country here and there and holding out the carrot of a bailout in return for giving up sovereignty, then maybe things are going quite well according to "the plan".

Who knows?


jdelano's picture

"People close to Mr. Paulson said he was attracted to Hala Ranch for its vast land and forest filled with aspens and pines." 

Wonder if he verified the trees are actually there this time?


OttoMBMP's picture

Unfortunately, this possibly interesting presentation starts with outright BS:

"Germany becomes an export powerhouse because of the Euro." ---- No, Germany has been an export powerhouse long time befor the euro introduction. THe share of exports to countries outside of the euro zone is now higher than before the euro introduction.

"The effective exchange rate was set far too low vs. other Euro countries." ---- No, research, for example by Ifo Institute, shows, that the D-Mark was overvalued ahead of the Euro introduction. Thus the exchange rate was too high and Germany suffered from a lack of competitiveness in the early years of the Euro.

So, can I trust in the rest of this presentation? Rather not. I will not spend my time reading it.

withnmeans's picture

If I were Germany, I would leave the Euro immediately.  I'm not sure that I would agree to the above "respectively", the Eurozone will implode regardless, do not throw your money away Germany! Start backing your "Marks" with gold now, prepare for an unraveling. 

Reggie Middleton's picture

Do realize that if Germany yields budge just a tiny bit, there goes ALL of those European insurance portfolios and the rest of the bank HTM inventory - just about all of it. See and then The Biggest Threat To The 2012 Economy Is??? Not What Wall Street Is Telling You..

GeneMarchbanks's picture

You could say the same for Japan. Twenty years and counting now...

tarsubil's picture

Isn't Japan different from Germany in more ways than one that make it more able to extend and pretend? If this goes on for 20 more years, I'm not sure I'll be able to keep what is left of my sanity.

Cognitive Dissonance's picture

This game has a long way to go before the great unwind. We haven't even begun to consider the impossible.....which is simply impossible NOW under current conditions.

BandGap's picture

Reggie, enlighten me. What holds them in place?

NotApplicable's picture

Fiction. Pure fiction, instilled during childhood.

Cognitive Dissonance's picture

The L O N G con is coming to an end.

Time to set up the game board for the next one.

jus_lite_reading's picture

G7 emergency meeting in effect. I predict, nothing will be accomplished.

More ponzi in every form. Australia cuts rates today. Spain will get bailed out by Uncle Ben. Flood the whole system until it explodes... great plan they have. 

Oh and BTW... expect to see martial law "traning exercises" across the country... tick tock tick tock...

LongSoupLine's picture

don't worry, idiots on CNBS say their "sources" said we are setting up for a "rip your head off rally" in the SPX because that's what happened on Oct 4, 2011 when the headlines were similar.


You just can't make this fucking stupidity up.  These assholes would go out and hump telephone poles if they thought it could lead to a market pump. 

jus_lite_reading's picture

Hey, a man has gots to make a buck, eh?

Would you buy a stock knowing that tomorrow you might not be able to sell it or tomorrow it will be worth half? Would they sell you something now if they thought it would have more value tomorrow? The game is over...

eclectic syncretist's picture

We market some bonds, we market some debt.  We just Weimar.  What's the problem?

LULZBank's picture

A guy with a drill machine thinks solution to every problem is drilling a hole.

CrashisOptimistic's picture

LoPdood, watch Russia's play to control Germany.  Germany is shutting down its nukes and the only natgas source for them is Russia.

 Pipelines uber alles.  I don't think Germany is ramped up with LNG terminals so it DOES have to come from Russia.

I am looking for Russian dictate of German policy within 18 mos.

TwoHoot's picture

When Germany looks East they see endless natural resources for their industrial machine. When Russia looks West, they see financial discipline, efficient labor and access to global markets. Merkel and Putin are made for each other. The only problem is that their familes have been feuding forever and will disapprove. Plus, they both want to be on top when they screw each other. That can be worked out after the wedding.

But make no mistake, Germany is growing tired of the silly, lazy, irresponsible, undisciplined, something-for-nothing part of the EU. Germany will throw them to the dogs sooner or later. As always, Poland and the rest of Eastern Europe will have to make their accomodations to survive.

You are absolutely correct in thinking the breakup of the EU will drive Russia westward and Germany eastward. "Dictate" may be too strong a word. I think it will be a two-way "accomodation" with attempts to "Dictate" at regular intervals.




mrktwtch2's picture

maybe they let the euro collapse as payback for losing ww2??

LawsofPhysics's picture

maybe, but only if they can profit from WWIII.  The world is much bigger than germany, or europe for that matter.

The Big Ching-aso's picture



Germany is like the plantation owner of Europe.  Sooner or later the slaves R gonna wanna be free 2 be poorer.

hedgeless_horseman's picture



maybe they let the euro collapse as payback for losing ww2??

"Germany, like Japan, are post-war pawns. Their currencies are DESIGNED to be debased, as and when needed, to achieve synchronized diving with the pound and dollar. If Germany wasn't in the Euro, its prior experience with hyper-inflation would prevent it from debasing when instructed to do so (obviously not a problem with the Nips). Both countries go along as willing pawns simply because they have been re-created post-war as export nations totally reliant on weak currencies."  -said I.

It is all just cover for more money printing by everyone. 


GeneMarchbanks's picture

Gross oversimplification. Certainly there is an outside presence that has a relentless motive with both of these nations.


dark pools of soros's picture

Rothschilds and the likes of Soros...  for no sovereign nations just a NWO with an army against the people, paid by the people

spinone's picture

What? There's a problem in Europe? Why wasn't I notified?

LULZBank's picture

You never went to Ivy League colleges nor had a subscription to the EU newsletters.

JR's picture

Mark Grant says Spain is going to come under the heel of the jackboot.

It’s the bankers who wear the jackboot; who’ve always worn the jackboot; it’s the bankers' economic engines that are strip-mining Europeans’ financial future, especially that of the German people. Will these peoples’ necks ever be free of the boot?

Alejandrito points to the source:

WASHINGTON (MarketWatch) — “Germany will ultimately take whatever steps necessary to keep the euro zone intact, said Deutsche Bank’s former Chief Executive Officer Josef Ackermann on Monday.

“’If it comes to worst, before the euro zone collapses, everything will be done to bail the euro zone out,' Ackermann said in a late afternoon speech at the Atlantic Council. Read more on Deutsche Bank's CEO handover.

“Later he said that he had ‘no doubt’ that the German people would support a rescue operation for the euro zone.”

And I have no doubt that he has no doubt.

It wasn’t for nothing the NY Times two years ago designated this Jewish banker “the most powerful banker in Europe and, depending on whom you ask, possibly the most dangerous one, too.” 

francis_sawyer's picture

Just sign on the dotted line...

walküre's picture

This is stupid propaganda!

There are no losses. Germany says FUCK YOU Eurozone and goes back to the DEUTSCH MARK. Will pay as much as Greece, Spain, Italy and the rest - WHICH IS NADA. Will say FUCK YOU Wall Street and reneg on any obligations they'd have there. FUCK YOU IMF and World Bank, go skim someone else.

Then Germany which OWNS more patents, industry, collateral than all the others can REFOCUS on being innovative and entrepreneurial instead of being forced to deal with the debt of their ugly stepchildren.

NO LOSSES, ONLY BENEFITS if we cut off the gangrene. Some of the good flesh will get cut off with it.

So, where is the problem?

LawsofPhysics's picture

Yes, so long as the rest of the world accepts the DM.  Now tell me sir, will that DM be backed by something real (like gold), or simply more german promises.

walküre's picture

Gold and the promise to pay in real hard DM, not diluted through the pigs at the FED trough. Germany is proving right now they are not interested in diluting currency. The only reason Germany diluted currency in the past when the world forced Germany for the first time to pay everyone's debt loads. Not a single shot has been fired (yet) and Germany is asked a second time to pay everybody's debt? WTF?

NotApplicable's picture

Isn't this the third time?

Collective guilt is a real bitch.

walküre's picture

so is collective pride

you know, I wouldn't bring it up but regardless of where I am, who I speak with, no matter what language I represent myself in ... it all comes back to "you're German?"

LawsofPhysics's picture

Wrong. Most people are not asking germany to do shit. Tell me, how will everything work out for them when they have no customers? Or better yet when the rest of the EZ has no wages or purchasing power. They will have the best house in the slums, winning indeed.

walküre's picture

Finding customers was never Germany's problem before.

JR's picture

Hugh A. Thomas:

Productive labor is the fundamental and underlying essence of all economic activity.  Exchange is the partner to productive labor. It is these two activities that create an economy…There is a medium of exchange, but it isn’t money…

Man has the ability to store his labor, and this faculty is the foundation of economics….

Stored labor is the common denominator of value…commodities are those things which are first produced by labor, and then utilized by man. Labor creates utility….

Man has the ability to store his labor, and this faculty is the foundation of economics….

Money is stored labor. Labor is part of life. To control money is to control life… When the state declares the exclusive right of the issuance of money, freedom is impossible.

LawsofPhysics's picture

Money is not stored labor when said money can be devalued by some paperpusher, FAIL

Bunga Bunga's picture

Maybe you are too young to know that for one dollar you paid only 1.32 DM in the nineties.



optimator's picture

And in the early fifties for one dollar you got four marks.  A stein of draft was twenty-five cents.

Things that go bump's picture

Yes, but my father made 75 cents an hour at Cutahy's slaughter house in 1953.  In 1965, they bought a nice 3 bedroom house for 17,000 with a VA loan.  Yesterday, I watched a guy buy a carton of cigarettes and he laid down more than half of their monthy mortgage payment for it.