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Explaining How The Just Announced ECB Market Rescue Pledged 133% Of German GDP To Cover All Of Europe's Bad Debt

Tyler Durden's picture


Two weeks after Zero Hedge readers were informed about it, slowly the sell side is coming to the realization that not only will the EFSF have to be expanded (that much was known), but that Germany, and specifically the outright economy, will be on the hook by an unprecedented amount of money. And expanded it will have to be: not by two, not by three, but by a cool four times, to a unbelievable €3.5 trillion which according to Daiwa's Head of Economic Research, Grant Lewis, is an act which will be necessary to convince financial markets of euro area resolve to save Italy and Spain. Says Lewis: "France, Germany contribution to EFSF’s capital would increase to 80% if Spain, Italy had to drop out of guarantee structure.  France, German contingent liabilities would be > 50% of GDP if EFSF expanded; added to France, Germany current debt may trigger downgrades to both countries." Yes... and no. As we explained when we referred to a far more accurate and complete report by Bernstein, merely a €1.5 trillion expansion in the EFSF, would mean that Germany is on the hook to the tune of €790 billion or 32% of German GDP. If France is downgraded, Germany essentially becomes the sole backstopper of the entire Eurozone, to the tune of €1.4 trillion or 56% of its GDP. Now let's assume Daiwa is correct, and the full amount under the EFSF has to increase to €3.5 trillion. That means that Germany "contin[g]ent liabilities", in the worst case scenario where France again gets downgraded, and it likely will eventually, would surge to about €3.3 trillion, or an insane 133% of German GDP!

Now let's put today's events in perspective.

Basically what just happened an hour ago, is that the ECB gave a green light to use the SMP program to buy Italian and Spanish bonds: the two countries which recently put themselves into a self-imposed capital markets exile as we reported earlier. The problem is that the SMP's unsterilized purchasing capacity is de-minimis and it is merely a stopgap until the sterilized EFSF is enacted in its final form. The question is precisely what this final form will be: will it be €1.5 or €3.5 trillion. Nobody knows yet which is why Rehn refused to answer the question twice already today.

Either way, let's assume EFSF gets clearance. At that point the SMP gets deactivated, and EFSF takes over.

And here is where Germans get angry, because explicitly they end up backstopping everyone in europe! And the cost to them becomes 133% of their entire economy in a worst case scenario, which of course in this centrally planned world, is now guaranteed.

So the ball is now basically in Germany's court: will the German export sector be ok with leaving the country on the hook to a complete implosion once the final European house of cards implodes, or, will German practically once again take over, and tell the ECB, the bureaucrats and every other insolvent European country to go shove it, in the process bringing back the D-Mark and returning to a life of quiet contentment without a customs, cultural or monetary union.

Oddly enough, our money is on the latter.

PS. In the meantime, short Bunds (or to borrow a Gartmanism, go long gold in Bund terms) ahead of the market's realization that peak risk transfer from the periphery to the core is now in process.

PPS. A fully funded EFSF will need to issue €3.5 trillion, or $5 trillion in debt. Repeat: $5 TRILLION.


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Fri, 08/05/2011 - 13:09 | 1527472 jus_lite_reading
jus_lite_reading's picture

Wow! Talk about being all in on a bad poker game! The global ponzi will sure as hell blow up soon after they realize they can't handle it all at once!!! HYPERINFLATION HERE WE COME!!

Fri, 08/05/2011 - 13:21 | 1527523 Tortfeasor
Tortfeasor's picture

Bullshish for stocks!

And barrels.  Especially the ATI, Mossberg, AR and Ruger varieties.

Fri, 08/05/2011 - 13:34 | 1527594 SheepDog-One
SheepDog-One's picture

Dont forget about nice German ones like H&K.

Fri, 08/05/2011 - 13:55 | 1527648 DoChenRollingBearing
DoChenRollingBearing's picture

Or cheap, reliable ones like the AK, easy enough for even teenaged morons to operate.  Did I really say that?

Fri, 08/05/2011 - 14:50 | 1527757 Shell Game
Shell Game's picture

Did someone mention AKs?

Good folks and good service at J&G.  I exchanged FRNs for two of their AKs and am happy with them.

Fri, 08/05/2011 - 15:26 | 1527950 FEDbuster
FEDbuster's picture

Just heard Rush comment on this story on the radio, "According to Tyler Durden at .....".  Love it.

Hasten the Collapse, OBAMA 2012

Fri, 08/05/2011 - 15:35 | 1527990 SokPOTUS
SokPOTUS's picture

Rush is now quoting Tyler on the air?  Rut-roh.  ZH has gone mainstream.  We're screwed.

Fri, 08/05/2011 - 15:40 | 1528002 FEDbuster
FEDbuster's picture

Yes he is.  It was great, I almost spit the Coke I was drinking out while I was driving.  "According to Tyler Durden at", it was a beautiful thing.  Glenn Beck did it a couple of times on his TV show, too.

Fri, 08/05/2011 - 16:34 | 1528173 Idiot Savant
Idiot Savant's picture

Ummm... being mentioned by Rush & Beck is quite the opposite of a good thing. Jesus, Tyler will soon be running NASCAR adds on this site.

Fri, 08/05/2011 - 16:41 | 1528189 New_Meat
New_Meat's picture

Idiot-not the first time for either mention.

And your suggestion about NASCAR is really good.  More clicks than Cramer, I'm sure-->more revenue.

- Ned

{But WAIT!  The ads are sensitive to your viewing history and cookies!  Don't tell us that you surf NASCAR?}

Fri, 08/05/2011 - 16:52 | 1528228 CompassionateFascist
CompassionateFascist's picture

Limbaugh referenced ZH (this article) at 10:15 AM (PST), 8/5; his last obeisance to TD was a couple months back, so we were due. In fact I suggested he do so in a thread here last night; he saw the article/thread, cause>effect. It's a mistake to lump Limbaugh with Beck and other neo-cons. He's actually further toward the right, and on political economy, pretty much in synch with this site. He detests banksters and crony capitalists as thoroughly as he detests the Left.  

Fri, 08/05/2011 - 16:53 | 1528230 smlbizman
smlbizman's picture

as addressed yesterday, these guys {the tylers} should be the most well paid, most reverend financial people on this planet, they have literally saved so many of our furtures.  i really hope that they can understand  the impact they have had on us, the appreciation the  daily loyal followers have for them.  so much of  underground brilliance ends when the light of day is finally placed upon it. i truly do not know what i would do without the "hedge".  i am constantly a person who always think of others first in all i do, but this time for my own selfishness, i  pray that they remain underground.  i do not want fair weather sheep fuckin up my "hedge".....i love ya man!...


and for all you grammer assholes who feel the need to point out typos and other imperfections , i would like to say with all due respect to  ...please go fuck yourselves...and i said with all due respect so it makes it ok......   


Fri, 08/05/2011 - 19:03 | 1528433 Cathartes Aura
Cathartes Aura's picture


Glenn Beck has changed the location of his big rally in Israel this August due to security concerns

Read more:
Fri, 08/05/2011 - 19:38 | 1528530 FEDbuster
FEDbuster's picture

It's interesting that Glenn draws so much anger here.  Sometimes the clown and preacher act gets old, but Glenn is ripping on the FED, banksters and politicians equally.  He is also telling people to "prepare for the worst, and hope for the best".  He has talked about owning gold for years, buying a years worth of food for your family and is a proud gun owner.  So to all the Beck haters out there, fuck off.

Hasten the Collapse, OBAMA 2012

Sat, 08/06/2011 - 00:37 | 1529627 Cathartes Aura
Cathartes Aura's picture

no information peddled by Beck is new or exclusive, it can all be found in many many other places, HERE for example - there's no need to have your news chewed up and spit into your mouth, pre-digested by someone with an agenda.

know your source.

Fri, 08/05/2011 - 15:43 | 1528016 Pegasus Muse
Fri, 08/05/2011 - 20:33 | 1528682 sabra1
sabra1's picture

can't beat a slingshot and ball bearings! kill quietly, kill often!

Fri, 08/05/2011 - 15:16 | 1527915 Variance Doc
Variance Doc's picture

Yep, the MR556 is a masterpiece.

Fri, 08/05/2011 - 15:47 | 1528036 Greater Fool
Greater Fool's picture

At least I'm managing to fish a few choice pieces out of the river of sewage as it flows along.

Fri, 08/05/2011 - 16:29 | 1528162 Ghordius
Ghordius's picture

Read it: "In what amounts to a massive bluff, the entire fiscal condition of the EU is on the table. If the bluff is called, Germany could be left holding the bail-out bag."




It will not be called. If it will be called, it' wont be honoured. Everybody knows the German would go berserk, if we know something in Europe, is that you don't want the Germans to go berserk.

Fri, 08/05/2011 - 18:58 | 1528427 Pay Day Today
Pay Day Today's picture

Any guesses what the Americans are pressuring their allies the Germans to do about the EU debt crisis? Do you have a sense of US-German political relations at the moment?

Or have the Germans finally decided that their US allies have led them into one blunder after another.

Sat, 08/06/2011 - 06:42 | 1529971 Ghordius
Ghordius's picture

I don't see (from my limited vision) a "unified US" pressure on the German and French Govs. What I see is:

- a strong TBTF pressure on the EU to 1) accept a different set-up and 2) to install the TBTF preferred set-up, i.e. an EuroBond

- a medium pressure on Italy on having no opinion on the future of Libya and, more important, to OPEN their capital markets more to other banks. TBTF wants the Italian capital market to resemble more their usual hunting grounds.

- the usual decade-long pressure on Europe to decrease military spending (Ike warned against this)

- the usual misunderstanding in US diplomacy about how much the French and the Germans care for joint policies, how much the Italians and now the Spaniards are into it and the role the Benelux. Sometimes I think this is because US diplomats focus on one country and one language and become "color-blind".

- Meanwhile Russia has become the most important trading partner of Germany, followed by France. Last time it was the 1930's. Soon being friends with Russia will become more natural...

- IMO the Germans's position is still clear and the French, Italians and Spaniards are going to try many, many "unorthodox" approaches so that the German's keep their cool.

Fri, 08/05/2011 - 13:51 | 1527640 caconhma
caconhma's picture

Geopolitically, Germans always were and are stupid, fking idiots

  • There were no need for them to get involved in the WWI
  • There was no need for them to declare a war on the USA in 1941
  • Their leaders never purged their country from a 5th column
  • Their stupid arrogance never knew limits

Germans might learn something from Afghan people: regardless who you are but, if you invade their country,  they will send you back home in a body-bag.


Fri, 08/05/2011 - 14:15 | 1527716 DaveyJones
DaveyJones's picture

yes, thank God the Americans were not ignorant or arrogant on the Afghan front

Fri, 08/05/2011 - 15:01 | 1527874 caconhma
caconhma's picture

Yes indeed but Obama thought that he is a Bonaparte. May be not.

May be Obama thought he is a Duke Wilmington or some other Great Kenya chief.

It is 3-feet tall Sarkozy who thinks he is a Bonaparte.



Fri, 08/05/2011 - 15:07 | 1527899 RichardENixon
RichardENixon's picture

Actually, he thinks he's a Duke Snyder.

Fri, 08/05/2011 - 14:09 | 1527697 midtowng
midtowng's picture

It's all a confidence game. This latest bailout will never happen, and wasn't supposed to happen.

The announcement was only supposed to calm markets for the weekend. It's harder to control the markets over a weekend.

   When the markets start realizing the bailout won't happen some time next week, we'll see another plunge. But in the meantime they put off the day of reckoning for a little while longer.

Fri, 08/05/2011 - 14:57 | 1527862 macholatte
macholatte's picture

The poker game is a good analogy. Didn't the USA fund huge money to bail out the EU banks? My guess is that the player sitting in position #3, that guy with the really large sunglasses and sombrero, is Uncle Sam.


Fri, 08/05/2011 - 13:10 | 1527475 anonnn
anonnn's picture

Dow/Naz/S&P 2-min charst presenting ragged-jerky-ticky dirty-pen motion.

Where's the doctor? Call in the auditors. The InvisibleHand[s] fighting itself.

Fri, 08/05/2011 - 13:12 | 1527480 jus_lite_reading
jus_lite_reading's picture

The hand that feeds is biting itself! LMAO! 

We can clearly see 100% that this GAME IS OVER!!! THERE IS NO MORE HIDING!! 

Fri, 08/05/2011 - 13:30 | 1527577 MsCreant
MsCreant's picture

If the majority does not get it, does not understand it, is bored sitting and trying to understand it, is not motivated to understand it, they will get away with kicking the can yet again. I can't tell you how hopping pissed I am, but sadly, I think this is the truth. We will need to come against an obdurate, physical, kickable, limit, before this shit shack comes down.

Fri, 08/05/2011 - 13:48 | 1527628 newworldorder
newworldorder's picture

I am with you, +1000% on this. The only hope left is for the German electorate to say NO to this insane backstopping and guarantees. If they go along then nothing will bring this ponzi down.

There is no hope for the US electorate. Most of what is going on is really beyond their ability to comprehend and resits what is going on.

Fri, 08/05/2011 - 14:05 | 1527685 itchy166
itchy166's picture

The great recession will end the same way as the great depression ended.  The can will get kicked down the road until another (world) war starts.  

Unemployment solved, ponzi obliterated in the process with one big world-wide default.  New World Ponzi ground floor level when the war is over......

Fri, 08/05/2011 - 15:42 | 1528018 caconhma
caconhma's picture

This time, the WWIII will not do a shit for the USA.

It is a very different world than one in 1940s. Obama is definitely not FDR.

The most important item is that today USA is not the USA of 1940s

·        There are not too many idiots to fight and die for the Kenyan preseidente and his WallStreet oligarchs handlers

·        The US industrial base is not in a position to produce high quality weaponry in high quantities. The Pentagon budget is as wasteful as Medicare

·        Just look at Obama’s successes in Afghanistan, Iraq, Yemen, Libya, Somalia, etc.,

·        As for our European friends, Afghanistan and Libya are more than can handle


Sat, 08/06/2011 - 02:04 | 1529770 itchy166
itchy166's picture

You must be an American.

Nowhere did I say that WW3 would benifit America (or Americans).  Nor did I say or imply that they would win.

The US will start, or join, or will purposely be drawn into ww3.  They will reinstitute the draft to fight unemployment.  They will default on their debt.

After the war, a new ponzi will replace the current one.

Will the US still be a superpower on the other side? Maybe, but who cares?

Fri, 08/05/2011 - 14:17 | 1527727 Jonas Parker
Jonas Parker's picture

The Deutchmark, returning soon to a brauhaus near you...

Fri, 08/05/2011 - 14:18 | 1527739 DaveyJones
DaveyJones's picture

at least the shit shack is carpeted wall to wall with paper

one little match however

Fri, 08/05/2011 - 14:14 | 1527714 Strider52
Strider52's picture

Why don't we just print up a gazillion Quatloos, drop them all over the planet, and tell everyone that they're worth 1 iSomething or another?

Fri, 08/05/2011 - 17:00 | 1528247 CompassionateFascist
CompassionateFascist's picture

We already are...they're called "dollars".

Fri, 08/05/2011 - 15:53 | 1528055 Manthong
Manthong's picture

If they thought they took it in the shorts after the Treaty of Versailles, wait till they figure out what the deal is this time around.

Fri, 08/05/2011 - 14:21 | 1527754 24KGOLD FOIL HAT
24KGOLD FOIL HAT's picture

Like Dr. Strangelove's black gloved hand...Thur eve in Wisconsin we had a reverse racism mob attack ala Clockwork Orange...Time to have a Kubrick film festival this weekend to prepare for the Goldman HAL 9000 moment on monday...Major Kong has almost got the bomb door wiring fixed!!!!!!!!!!!!!

Fri, 08/05/2011 - 13:10 | 1527478 Cleanclog
Cleanclog's picture

So the ECB is the "fireman" in town. Does he have enough hoses and hydrants?

Fri, 08/05/2011 - 13:15 | 1527493 Bastiat
Bastiat's picture

ECB's got hose in hand and a half-empty bladder.  No problem!

Fri, 08/05/2011 - 13:32 | 1527588 MsCreant
MsCreant's picture

So that's what a piss-ant is...

Fri, 08/05/2011 - 13:50 | 1527636 Cleanclog
Cleanclog's picture

Great visual!

Fri, 08/05/2011 - 14:02 | 1527672 Tom_333
Tom_333's picture

Piss - bar pervert? There are things I could tell you about Germany that you wouldn´t believe

Fri, 08/05/2011 - 13:12 | 1527481 john_connor
john_connor's picture

German Bunds blow up in 3....2....1......

Then 1/6th US funded IMF comes in to save the day however US debt will get detonated to the chagrin of the PTB.

Fri, 08/05/2011 - 13:21 | 1527492 hedgeless_horseman
hedgeless_horseman's picture

Losing world wars (twice) has consequences. 

Fri, 08/05/2011 - 13:30 | 1527570 ZeroPower
ZeroPower's picture

Theres also a typo:

in the process bringing back the D-Mark and returning to a life of quiet contentment without a customs, cultural or monetary union.

Fri, 08/05/2011 - 14:29 | 1527780 arizona11912
arizona11912's picture

It doesn't matter that a spelling mistake occurred. What matters is the oligarchs will not allow the EU to crumble. Its all part of the plan to form a global currency. The ECB will just push some of the stress off onto the Fed. By understanding monetary policy you know a one world currency is inevitable. Google and read Reserve Accumulation International Monetary Stability by the IMF.

Fri, 08/05/2011 - 14:51 | 1527854 itchy166
itchy166's picture

You over-estimate the power of said oligarchs.  A global (fiat) currency is undoubtedly their goal, but it is a goal that will never be achieved.  

In fact, the exact opposite of what they are trying to do is happening, and that is a return to PM's.  



Fri, 08/05/2011 - 15:11 | 1527905 macholatte
macholatte's picture


The EU is a good example of why that globalism thingy won't work. Too many deadbeats. Too many conflicts of interest. The only way for one world government to function is by vicious dictatorship. The entire democracy thing has to go away. The EU is doomed, another Titanic, and that reality is becoming clear. The only question is how to unwind it.

Fri, 08/05/2011 - 15:15 | 1527913 MsCreant
MsCreant's picture

I hope you are right, but that is the war shaping up, isn't it, totalitarianism vs. local determinationism. Here is his document. If people don't want to do the work to understand what is at stake, it will be decided for them. Boy this frightens me:

It seems so reasonable...

Centralized systems are fragile systems. Unsustainable.

Fri, 08/05/2011 - 15:48 | 1528040 arizona11912
arizona11912's picture

I think some people who think that a global currency don't see just how stupid most people are. Its understandable in some respects to think that there may be a change in tide because the internet allows for like minded people to congregate. But step away from sites like ZH and go to the store and ask someone what is money? Or who the ECB or Fed and what do they do? They'll gloss over the question and tell you about last night episode of Jersey Shore.

Fri, 08/05/2011 - 15:48 | 1528041 arizona11912
arizona11912's picture

I think some people who think that a global currency don't see just how stupid most people are. Its understandable in some respects to think that there may be a change in tide because the internet allows for like minded people to congregate. But step away from sites like ZH and go to the store and ask someone what is money? Or who the ECB or Fed and what do they do? They'll gloss over the question and tell you about last night episode of Jersey Shore.

Fri, 08/05/2011 - 15:48 | 1528042 arizona11912
arizona11912's picture

I think some people who think that a global currency don't see just how stupid most people are. Its understandable in some respects to think that there may be a change in tide because the internet allows for like minded people to congregate. But step away from sites like ZH and go to the store and ask someone what is money? Or who the ECB or Fed and what do they do? They'll gloss over the question and tell you about last night episode of Jersey Shore.

Fri, 08/05/2011 - 17:05 | 1528256 CompassionateFascist
CompassionateFascist's picture

a.k.a. Slavery vs. Freedom. Chaos theory predicts the winner: Freedom. Us. But there will be blood...

Fri, 08/05/2011 - 13:29 | 1527571 Doyle Hargraves
Doyle Hargraves's picture

Seems like the economic hardship imposed on the Germans after one of those wars had a lot to do with the second war being fought. History is never an exact repeat but it does rhyme, this certainly would rhyme with Versailles.

Fri, 08/05/2011 - 13:46 | 1527620 walküre
walküre's picture

1913 the Fed is created

1914 WW1 begins over some stupid pretext

1929 the Fed crashes the global economy

1933 Hitler (a man with no background) takes power in Germany

1936 WW2 begins over 2 things: money and resources (forget the over the top flashy Nazi drama)

What will the future hold you ask?

More of the same, but always keep in mind and remember how and where it all started even before 1913

Mayer Amsel Rothschild is just one piece of the puzzle.

Fri, 08/05/2011 - 14:16 | 1527728 HellFish
HellFish's picture

2008 a man with no background takes power in the USA.

Fri, 08/05/2011 - 15:07 | 1527896 itchy166
itchy166's picture

I like this game! Can I play too?

2001 a man with no brain takes power in the USA.

Fri, 08/05/2011 - 16:23 | 1528121 Ghordius
Ghordius's picture

2011 the earth is awash with cheap credit and record low rates

Fri, 08/05/2011 - 17:26 | 1528318 Calmyourself
Calmyourself's picture

I want to play too!

The man who takes power in 2008 never went to college, not that I can tell

 The idiot in charge in 2001 did, transcripts and all..

Does it matter no, but you bots are just soo dumb it is fun to poke you..

Fri, 08/05/2011 - 20:11 | 1528612 itchy166
itchy166's picture

This bot is soo dumb that I actually like your comment.  (maybe because it proves a theory I have about American higher education).  Or maybe it was because you called GWB an idiot :)


Fri, 08/05/2011 - 14:42 | 1527747 Doyle Hargraves
Doyle Hargraves's picture

Jekyll Island brought it to 'merika in full force before that Rothschild et al. were still able to be thwarted, after Jekyll Island, well you see where we are today.

2008-owebama (a man with no background) takes power in 'merika

2011-2012?- WW3 begins over two things money (the dollar's reserve currency status), and resources(oil)

Sounds like more of the same to me as well. But it never could have happened here without the Jekyll Island conference.

Fri, 08/05/2011 - 13:12 | 1527482 phungus_mungus
phungus_mungus's picture

The EU is dying... Germany is best served letting it die.

Fri, 08/05/2011 - 13:13 | 1527489 jus_lite_reading
jus_lite_reading's picture

Germany gets what it deserves and if the German citizens dont realize what just happened then they deserve it too. Sorry to say but that is truth!!!

Fri, 08/05/2011 - 13:15 | 1527506 j0nx
j0nx's picture

Why be sorry? If the German people allow that then they are no better than the American people who have allowed this travesty here to fester as long as it has. Ultimately, the people get exactly what they deserve.

Fri, 08/05/2011 - 13:23 | 1527531 unununium
unununium's picture

Unless crimes were committed.

Fri, 08/05/2011 - 13:30 | 1527590 SheepDog-One
SheepDog-One's picture

What crimes HAVENT been committed?? Hell Wall St just got busted running a hooker and cocaine ring....WTF??

Fri, 08/05/2011 - 13:34 | 1527595 MsCreant
MsCreant's picture


Fri, 08/05/2011 - 13:37 | 1527602 j0nx
j0nx's picture

Whuh? Of course crimes were F'ng committed. They've been committed since this shit began. As long as the American people continue to piss and moan and look the other way and give lip service about it and nothing else and then continue to re-elect the same old scum bags year after year then crimes will continue to be committed.

Fri, 08/05/2011 - 14:25 | 1527761 DaveyJones
DaveyJones's picture

crimes have been committed except the criminals run the government now. That is getting clearer every day. The responsibility is now clearly in our hands

Fri, 08/05/2011 - 15:34 | 1527987 Variance Doc
Variance Doc's picture

+ 5.56x45

Fri, 08/05/2011 - 16:23 | 1528147 Doyle Hargraves
Doyle Hargraves's picture



Fri, 08/05/2011 - 17:32 | 1528335 saulysw
saulysw's picture

...but they change the laws so that they are no longer crimes.

Fri, 08/05/2011 - 15:39 | 1528005 Slipmeanother
Slipmeanother's picture

You guys dont get it, the Germans will now get what they have always wanted the new 4th Reich. They will rule Europe!

Fri, 08/05/2011 - 13:11 | 1527483 SheepDog-One
SheepDog-One's picture

Lets see....go bankrupt and let your own house be foreclosed on to finance your bum neighbors....

or tell the neighbors to go deal with their own problems and leave you alone.

The answer seems simple! Yet this is a different world where the most insane solution wins every time.

Fri, 08/05/2011 - 14:02 | 1527644 Sancho Ponzi
Sancho Ponzi's picture

Merkel is totally screwed. What she should do is tell the EU to stick it and return to the deutsche mark, but if that happens, the DM will soar for the same reason the CHF is appreciating, and Germany's exports become far more expensive.

If she doesn't capitulate with the EU bailout, she risks blowing up Deutsche Bank which is leveraged to the moon, owns a shitload of toxic RE, and is almost as big (assets) as JPM in a country with an economy less than 1/4 the size of the US economy. 


Fri, 08/05/2011 - 13:58 | 1527671 Rodent Freikorps
Rodent Freikorps's picture

Why do you think .gov, movies and the international press has been pushing the guilt meme for so long?

Fri, 08/05/2011 - 17:34 | 1528338's picture

Who is John Galt?

Fri, 08/05/2011 - 13:13 | 1527485 buzzsaw99
buzzsaw99's picture

sounds like "problem solved" to me. [/sarcasm]

Fri, 08/05/2011 - 13:15 | 1527495 jus_lite_reading
jus_lite_reading's picture

Notice how "problem solved, the world is saved" seems to be happening on a daily basis now? Yeah thats the shit... game over!!

Fri, 08/05/2011 - 19:14 | 1528462 Cathartes Aura
Cathartes Aura's picture

short-attention-span-positive-feedback-loop, engaged.

Fri, 08/05/2011 - 13:13 | 1527487 citizen2084
citizen2084's picture

This has the scent of Versailles Redoux.  Shouldnt be too concenred I guess, the first time germany was forced to shoulder the entire burden of Europe's foolishness it worked out so well. 



Fri, 08/05/2011 - 13:14 | 1527490 Josh Randall
Josh Randall's picture

The only way this makes sense is if Germany stands to gain everyone's GOLD if there is a default. Infrastructure and land won't be enough to justify this action

Fri, 08/05/2011 - 13:25 | 1527566 Azannoth
Azannoth's picture

Germany is the 3rd larges gold 'holder' too bad 99% of this gold is in New York and London

Fri, 08/05/2011 - 13:59 | 1527663 DeltaDawn
DeltaDawn's picture

Whose dumbass decision was it to allow foreigners to hold your sovereign gold?

Fri, 08/05/2011 - 14:22 | 1527758 Things that go bump
Things that go bump's picture

Spoils of war. 

Fri, 08/05/2011 - 14:25 | 1527764 Shell Game
Shell Game's picture

Because no one could see this coming.  NO ONE.

Fri, 08/05/2011 - 14:26 | 1527777 zorba THE GREEK
zorba THE GREEK's picture

And that NY gold is probably mostly tungsten 

I am sure they are feeding German people 'End of the world' scenario like they did in U.S. when they bailed out banks

German people are going to be really pissed when they hear this. Riots will begin in...5..4..3..2..

Fri, 08/05/2011 - 14:54 | 1527856 trav7777
trav7777's picture

they can trade us for all our military hardware and nuclear weapons on their soil

Fri, 08/05/2011 - 13:36 | 1527600 MsCreant
MsCreant's picture

You don't hold it, you don't own it.

Fri, 08/05/2011 - 13:43 | 1527615 Doyle Hargraves
Doyle Hargraves's picture

Physical Bitchez! When the time comes paper saying you own it is not as good as having it in your own safe with all the firepower you need in a fortified bunker.

Fri, 08/05/2011 - 13:14 | 1527491 slaughterer
slaughterer's picture

But German taxpayers are used to getting shafted (see: reunification costs) and public protest in Germany amounts to little more than grumbling at the Pub over the latest "Der Spiegel" or "Bild Zeitung" expose on some mass-murderer or the cancellation of the next season of "Jschungle Camp."   Germans are virtually as anesthetized as Americans.

Fri, 08/05/2011 - 14:35 | 1527704 Reptil
Reptil's picture

They're my neighbours. And I'd say "no, this is absolutely not the case". IME in Germany, good manners are very important, and govern each communication or transaction, even in a tiny ossi supermarket.
But once something is clear, is logically proven, the concensus is there, that this is not going to work out, exports in euros be damned (the ONLY reason this has continued so long), the italians and the eurocrats (incl. Chancellor Merkel) will be told politely to shove their debt, and there will be no deal. That is my opinion. Dutch are waking up too, to the fact that the ECB is nothing but a "transfer mechanism" to level the EU zone. Problem is, in their haste and greed the burocrats in Brussels only raised the level of money going to corrupt politicians, who did nothing with that opportunity to "up" their country. Spain, with corruption, hidden problems of funding and with their share of arrogant incompetent pricks, at least made an effort to get some infrastructure right. For Italy, sadly, corruption is a way of living.
It's a cultural crisis alright, but a totally different one that's prevalent in the USA. I'd say Italy is in some strange way on par with the USA, as far as "pretend and extend" is concerned, two BIG players in the global economy of financials, but different in another way, in that it's asleep also, but not divided. Once shit there starts hitting the fan, and parts of Italia will be sold off, Berlusconi might end the way of his great example. On a lamppost.

IMO there is only one way out. Schluß mit dem Quatsch. A total and lightning fast restructuring of the banks (and now for REAL), a huge haircut (to cut out all the diseased parts), an overhaul of the EU (to throw the administrators who started thinking and acting like they're the bosses, out), and a new currency, based on a basket of assets, with a real political force behind it. One that is both versed in the markets as has democratic backing. This will position the EU in a frontal collision with the anglo saxon banks and their friends in the US and UK militairy complex, and will meet considerable opposition from the french political class. NATO will have to be dissolved as a logical consequence. So they'll do everything they can, to prevent it though it's inevitable that former partners will grow apart at some point. The banking cartel will find a willing ally in europeans who don't understand that keeping the present course, and in their eyes avoid defeat, will only lead to debt slavery, as the americans before them.

Alternatively, the EU could be split up, but that would be bad for everybody, the anglo-saxon banks and multinationals included, because they'll lose their backdoor into supra-national politics (Brussels). Only hyper-nationalists with a hang for a romantic glorification of the past would be helped. Most intelligent informed men know that divided europe is like a helpless herd inbetween east and west competitors. So I doubt that will happen too.

Remains.. extend and pretend again, and lies to the populace of the core countries. Attempts to divide, put blame on "lazy greek" and "corrupt italians" or "greedy germans" etc. Fill in some clichés yourself. I've seen some here on ZH, about some nonsense of a "fourth reich". Coming from americans, given the present reality, that's rich. lol But understandable as most americans only look at outward appearances. If the flag has a different color, then it's alright. The shape of the helmets and some aircraft are the same though (ever notice that?) Of course that extend and pretend will end in tears. And not in a year or two, but sooner, much sooner. An opportunity to build a strong europe through consensus, slow growth and understanding, and prosperity, destroyed. All according to the paradigm "Ordo ab chao".

HOWEVER... this is not a fixed outcome: This is logical as we all shape our own future. It starts in our thoughts and expectations.
The only way to win the war (of the banks and militairy industrial complex) against everyone else, is to let realism and positiveness (incl. altruïsm) go hand in hand. Less government intervention on the one hand (more self regulating capitalism), and more on the other (to protect the weak as wel as the righteous against corruption; the primary function of State)

Giving Silvio a free reign (again) would be madness. If something doesn't work, it should not be repeated under the same circumstances. In that the ECB is wrong and clearly serves another master.

Fri, 08/05/2011 - 14:56 | 1527860 Commander Cody
Commander Cody's picture

In order to save the banksters who control them, the ECB, as does the FED, will pump public money into the Ponzi until the holes are too big to contain the losses.  Then, it all crashes and everybody loses.  Smoke 'em if ya got 'em.

Fri, 08/05/2011 - 15:21 | 1527930 Reptil
Reptil's picture

Thanks, though I'm abstaining tonight (and the past month) got to stay clearheaded. Next week however.... B')

I did find a nice Merlot yesterday, mjum.

Of course you're right. That's "extend and pretend". It's like "Jersey Shore", all the drama is repeated over and over, slowly falls apart, without even the wish to reach some kind of concluding result.

Fri, 08/05/2011 - 14:46 | 1527834 optimator
optimator's picture

and with reunification came Angela M. from behind that wall.

Fri, 08/05/2011 - 13:16 | 1527498 Eagle Keeper
Eagle Keeper's picture

This will only be a temporary fix since the structural problems haven't and won't change....

Good for about 3 months.....

Fri, 08/05/2011 - 13:16 | 1527499 Doyle Hargraves
Doyle Hargraves's picture

Just as I said earlier how long are the producers in Germany going to subsidize the rest of Europe's lifestyles? Germany is the EU's GDP, If they don't tell the ECB to fuck off then they are truly a bunch of little bitchez and deserve the raping that they get!

Fri, 08/05/2011 - 13:26 | 1527558 Gnurant
Gnurant's picture

It's not exactly as you all say, there is a two big issues. One, EU is now internal market for Germany and the producers here had their gains in the last years. Two, linked with the first one, the other producers have been fu**ed from this change in competition scenario. Germans had to take the debit on their shoulders years ago, not now.

We will see, I'm italian and I live in Germany... pretty interesting times at the moment here...

Fri, 08/05/2011 - 13:29 | 1527569 Gnurant
Gnurant's picture

and, by the way, if you want to laugh a bit, take a look here, now:

Berlusconi and Tremonti in conferece (if you know italian, but for laughing at Berlusconi the language is not so important)

Fri, 08/05/2011 - 13:34 | 1527597 Doyle Hargraves
Doyle Hargraves's picture

I knew a Sicilian guy who ran a place in when I lived in Germany, he worked hard, spoke 4 or 5 languages, he and his family got up every day at the break of dawn made fresh pasta, ice cream, and other stuff from scratch. Used to love eating there his hard work was reflected in the quality of food. Had the best Tiramisu I have ever had, period. Anyways a bit off topic I just wondered what would make an Italian leave Italy for Germany?

Fri, 08/05/2011 - 13:43 | 1527616 Gnurant
Gnurant's picture

Easy, a job. Sorry, a "good" job. In Italy you can not find a permanent contract now. I'm working as manager in green tech market: Germany (left aside the € situtation) is investing a lot of money in it. Italy is investing money in nothing at all. Consumer spending is going good here, Italy is stuck. And living here (Munich) is not so different as in Italy: I'm driving back home just for my job or for holidays.

Going back to the topic: it is basically difficult for anyone to understand who is fooling whom. Germans don't want to save anyone, Italians thinks they are going to be fucked by Germans. The point is, democracy is based on what I call "electoralism": no one has the power to change things and we wait, we wait, we wait till... boom! 

Fri, 08/05/2011 - 13:57 | 1527655 Doyle Hargraves
Doyle Hargraves's picture

This guy owned his place outright. It was in Bad Windsheim. Italy/Greece/Spain/Portugal seem to have a lot of benefits to pay out but little investment to speak of. It was the same when I lived in Germany. My thoughts then were the euro will never work, I left before it was implemnted (the end of 1998). Munich wasn't that far went a few times. "Electoralism" has seem to lead to compromise and compromise is a shit sandwich no one party involved wants to eat let alone the 6-7 parties? Germany has in the Bundestag, shit needs to break permanantly so the only option left is the honest option and all bullshit goes out the window. My thoughts are at this point,(though I am not on the ground there), The EU needs Germany more than Germany needs the EU. Of course should Germany leave the euro I am sure there will be hell to pay with the other EU nations as far as payback in the guise of huge export tariffs levied on German products as well as a restriction on free movement, but I think Germany exports enough worldwide to overcome those obstacles very easily. Of course if Germany leaves all the euro nations will think Germany has fucked them even though they would only be acting in self preservation.

Fri, 08/05/2011 - 13:56 | 1527658 walküre
walküre's picture

Mein lieber italienischer Freund.. let the past be the past. We have a long history and many traditions and cultural aspects that connect us deeply.

The common denominator of our frustration is Wall Street and the pirates who live there. They fucked us before and they will fuck us again. Make no mistake. Long time has passed but to pretend all that happened, has happened for no particular reason and was all just made up bullshit fantasy is wrong.

Fri, 08/05/2011 - 13:16 | 1527500 THE DORK OF CORK
THE DORK OF CORK's picture

Mad sheer madness - I was really expecting them to print or electronically create new euros to the tune of 1 to 2 trillion......

Its hard not to escape the conclusion they don't have the Gold they say they have.

Fri, 08/05/2011 - 13:17 | 1527504 machineh
machineh's picture

'Our money is on the latter.'

Same here. Germany is not going to commit fiscal suicide to save the euro.

The euro's fate was always a question of whether Greece or Germany would leave first.

Now we know: Germany will have to pull the plug on this insane upping of the ante, and face the wrath of the PIIGS swine herd for having 'destroyed Europe' with its D-mark Blitzkrieg.

Watch for rioters in the streets of Berlin to force the political issue. D-marks by Christmas!


Fri, 08/05/2011 - 13:33 | 1527576 hedgeless_horseman
hedgeless_horseman's picture

Watch for rioters in the streets of Berlin...

October 2 will likely be the wurst of the German rioting...

Fri, 08/05/2011 - 13:37 | 1527608 scratch_and_sniff
scratch_and_sniff's picture

hits from the bong, all night long.

Fri, 08/05/2011 - 13:54 | 1527646 fuu
fuu's picture

They're going to need bigger guns. Lots of bigger guns.

Fri, 08/05/2011 - 18:35 | 1528405 PY-129-20
PY-129-20's picture

As a German I could not resist to...laugh. Great picture hedge. But they are Bavarians and as a proud Prussian I will proudly wear a Pickelhaube while I am driving that Panther Panzer right into the ECB building in Frankfurt.

Pickelhaube + mustache

Fri, 08/05/2011 - 13:15 | 1527505 slaughterer
slaughterer's picture

Die haben das Gold.  Mann kann darüber sicher sein. 

Fri, 08/05/2011 - 13:21 | 1527525 TradingJoe
TradingJoe's picture

Wer? Die Deutschen? Die Amis? Wage zu bezweifeln! Und wenn, es ist sicher bereits X mal weiterverpfaendet!

Fri, 08/05/2011 - 13:19 | 1527512 youngman
youngman's picture

And these numbers are at todays GDP for Germany...if all of their trading partners are going broke..they are not going to be buying more German fact they will buy Germanys GDP drops......what kind of crap is this.....isn´t there an adult in the room???? Guess not...

Fri, 08/05/2011 - 13:19 | 1527513 TradingJoe
TradingJoe's picture

Germans will not take this as easily as it is here portraited! Get ready for another round of selling! After the conference!

Fri, 08/05/2011 - 13:19 | 1527515 Azannoth
Azannoth's picture

"Oddly enough, our money is on the latter" I wish I could be this optimistic, but I have yet to see 1 single protests/demonstration in Germany against this, and even if/when people here fully realize how badly they got screwed it will be most likely too late

Fri, 08/05/2011 - 13:17 | 1527517 alien-IQ
alien-IQ's picture

Are you suggesting that the citizens of Germany will not be happy about this?

What can possibly go wrong?

And lastly, do you think youtube will allow posting of videos of people lynching European politicians and bankers?...Or would that be frowned upon?

Fri, 08/05/2011 - 13:20 | 1527518 SheepDog-One
SheepDog-One's picture

Wow hard to believe the DOW was just down -300 points only an hour ago, and now up +100 now that Germany has been designated as rescuer of all of Europe, all is obviously well what could go wrong here?

Fri, 08/05/2011 - 13:25 | 1527550 jus_lite_reading
jus_lite_reading's picture

Its up on Goldman saying QE3 is coming next week... of course if Goldman says it then heaven answers back YES SIR!! and so the serfs are served $10 gas and $20 bread to pay for bonuses and corruption until the whole shit blows the fuck up and everyone ends up in a MadMax world. IT didnt have to be this way... none of us wanted it that way but its past the point of no return.. my advice is get your money out of banks and buy gold and supplies and just wait it out... patience grasshopper!

Fri, 08/05/2011 - 13:25 | 1527551 Missiondweller
Missiondweller's picture

You may recall we had similar swings in the market in 2007 leading up to the 2008 crisis.

Fri, 08/05/2011 - 13:49 | 1527632 SheepDog-One
SheepDog-One's picture

Sure of course I recall.

Fri, 08/05/2011 - 14:52 | 1527845 Jonas Parker
Jonas Parker's picture

There were also similar (percentage-wise) swings in the markets in August of  1929.

Fri, 08/05/2011 - 13:30 | 1527589 John McCloy
John McCloy's picture

  Is it really that hard to believe Sheep at this point? We knew some rumor or printing was going to occur today...we have seen this many times before and will many times ahead. Football is starting soon and Jersey Shore Italy just kicked off so all is well the zombies are well medicated.

Fri, 08/05/2011 - 14:40 | 1527816 I Got Worms
I Got Worms's picture

I was talking to my brother yesterday in the middle of the market puking its guts out. (I have nothing in the market, am 100% physical gold and silver, and rent my home, so I am just watching it implode in amazement/for entertainment. My brother on the other hand, has pretty sizeable investments tied up in the markets, which are 100% handled by some dude that was in his college fraternity. He makes pirate jokes about my gold, etc.)  Anyways, I'm talking to him and am like, "are you seeing this shit? Have you had a talk with your acct manager about what he's got you in, how its performing, and what he thinks you should be doing in all this turmoil?" Blank stare on his face for a moment, followed by, "yeah, I should probably give him a call sometime and see how things are going." Blank stare disappears, followed by, "But dude, did you see that the Aggies are ranked No. 9 in the Coaches' Poll?? It's fucking Miller Time!!"

Full disclosure: I watched the premiere of Jersey Shore last night.

Fri, 08/05/2011 - 13:20 | 1527519 John McCloy
John McCloy's picture

 This is going to end in war. It is unavoidable and Russia and China look on with a chuckle knowing that everyone of our nations will follow them down the path of collapse just a little more delayed. So all a nation in the Eurozone needs to do now is cancel their auctions and watch the magical ECB printing press do their heavy lifting.


Fri, 08/05/2011 - 13:47 | 1527625 hedgeless_horseman
hedgeless_horseman's picture

Europe is going to grow itself out of this mess? 

Demographics would indicate going long burqas and fufu!

Fri, 08/05/2011 - 14:41 | 1527813 Rodent Freikorps
Rodent Freikorps's picture

Liberals, gays and feminists hardest hit.

Who says there is no poetic justice left in the world?

Last year Greece had more abortions than live births.

Seems...unsustainable, with a modern welfare state.

Fri, 08/05/2011 - 14:59 | 1527871 MsCreant
MsCreant's picture

I don't have a vested interest in this stat one way or the other but I looked it up. Greece has a staggering number of abortions, but they do not have more abortions than live births, as near as I can tell. Do you have a link to share? I can get too literal with googling terms and miss things, but I think you are wrong on this.

  • Found an article that says Greece has the highest rate of abortions in Europe.
  • Found an article that says China has more abortions than the population of Greece.
  • Found an article that says Greece has 250,000 abortions a year, 40,000 of which are girls under 16.
Fri, 08/05/2011 - 15:41 | 1527981 Rodent Freikorps
Rodent Freikorps's picture

I tried. Fucking website keeps kicking me out. Russia and Viet Nam are easy find. Plus:

The six omitted countries include Austria, Greece and Taiwan, whose data cover only services provided in public facilities and thus represent a small, atypical fraction of women having abortions. In addition, we were unable to obtain recent information for Bosnia or North Korea. No data were available for Cambodia, which liberalized its law late in 1997.

Did you know a fetus has a heartbeat at around 4-5 weeks?

Fri, 08/05/2011 - 20:20 | 1528632 RockyRacoon
RockyRacoon's picture

Odd how one sentence can put a comment right in its little pigeon-hole:

Did you know a fetus has a heartbeat at around 4-5 weeks?

I'll assume that that non sequitur was to wrench a twang out of some heart strings.  Thus cementing your position.   You realize that any "facts" that you may come up with hereafter will be suspect.

Fri, 08/05/2011 - 13:56 | 1527652 KeyserSoze
KeyserSoze's picture

China is the factory of the world and produces nearly everything you could imagine under the sun. This is why they can quite easily survive a collapse and restructuring of the world economy. They are THE manufacturers. Russia has vast oil and gas deposits.

What exactly has the West got? Government owned fertile land.... everything else is either overvalued or overpriced in the west for it to be of any competitive value against the world. Apple inc isn't big enough on its own to hold the US together.

Fri, 08/05/2011 - 14:26 | 1527701 hedgeless_horseman
hedgeless_horseman's picture



What exactly has the West got?

 Excuse me while I whip out this misnomer:

Fri, 08/05/2011 - 14:45 | 1527827 Doyle Hargraves
Doyle Hargraves's picture

The reserve currency and the ability to sit at the head of the world debt table backed by 12 Army Divisions, 12 Carrier Groups and a ton of nukes in case the oil to run the war machine that keeps the dollars flowing offshore runs out.

Fri, 08/05/2011 - 14:44 | 1527830 Rodent Freikorps
Rodent Freikorps's picture

The US has massive natural resources and massive amounts of ag land.

Any total war scenario will have the .gov firirng the economy killing agencies like EPA, OSHA, DOE and we might even be able to finally get rid of bureaucracies like the tea board.

I figure they'll keep the Dept. of Education in its traditional propaganda duties.

Fri, 08/05/2011 - 16:18 | 1528134 Founders Keeper
Founders Keeper's picture

China's problem will be food.  China's biggest problem is China.

I don't see China as a player in WWIII; China will be preoccupied with internal strife.


Fri, 08/05/2011 - 20:29 | 1528656 RockyRacoon
RockyRacoon's picture

Oh, come now.   The Chinese are very good sloganeers.   They can come up with some great caricatures for some anti-American posters to plaster on all the vacant apartment buildings.   We came up with some pretty good ones ourselves for the "Krauts" and the "Japs".   And that was just the tip of the patriotic frenzy.

Fri, 08/05/2011 - 13:20 | 1527521 carbonmutant
carbonmutant's picture

First off this market is rallying off an ECB press release.

Second Berlusconi has to commit Italy to a new austerity program before the intervention kicks in...

Good luck with that.

Fri, 08/05/2011 - 13:24 | 1527543 SheepDog-One
SheepDog-One's picture

US market total euphoria based upon an impossible works as long as Germany shoulders bankrupt Europe by itself, and assuming the German people just say 'OK whatever no problem'? Ridiculous.

Fri, 08/05/2011 - 13:34 | 1527592 Azannoth
Azannoth's picture

1st you are underestimating German people's resilience, they had it too good for too long, they need to feel some personal pain before they object to anything

2nd the German politics is split in 2 camps, the International(European) Socialists and National Socialists so there are realy no 'good' options to choose from

This situation will not be resolved in the next few months, maybe in the next few years culminating in a Big War likely

Yes things are going downhill fast but a new round for QE3, QE4 and QE5 can delay the innevitable for a few years and only after hyperinflation kicks in will the people know what game are they being played as pawns

Fri, 08/05/2011 - 13:27 | 1527561 DonnieD
DonnieD's picture

This announcement was coordinated by Geithner to stop another flash crash. It will be revoked next week as no one can fund it and the Italians won't accept the terms.

Fri, 08/05/2011 - 13:24 | 1527522 lieutenantjohnchard
lieutenantjohnchard's picture

on cattle drives in the 1800's cowboys would sing to the cattle to keep them calm, and thus avoid a stampede. nowadays, it's cnbc anchors(ettes) that sing to the hoi poloi to avoid a selling stampede. didn't work always on the drives. didn't work this time in the market either.

i'm an old cowhand from the rio grande ....

Fri, 08/05/2011 - 13:35 | 1527598 -Michelle-
-Michelle-'s picture

Yippee ki yi yo, get along little dogies. It's your misfortune and none of my own...

Fri, 08/05/2011 - 15:03 | 1527882 Rodent Freikorps
Rodent Freikorps's picture

That is so 19th centurty.

These days it is, "Yippie kai yay, Mother Fucker."

Fri, 08/05/2011 - 13:33 | 1527527 moonstears
moonstears's picture

I have two notes from 1923 equal to 2,100,000 Marks...Please, please, please Germany make these legal tender again(par with Euro, of course..they are RARE notes, most burned instead of firewood)!!! Weiner Schnitzel, bitchez! 

Fri, 08/05/2011 - 13:22 | 1527528 anonnn
anonnn's picture

What if Germans, Russians, et al rediscovered common interests and natural trading partnerships?

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