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Is German Anger Finally Coming To A Boil? Even Local CEOs Say Time To Exit Euro May Have Arrived

Tyler Durden's picture




 

It would appear that the German public (and political class to some extent) are beginning to see the European project in the same manner as we described back in July. As the increasing burden of saving the eurozone from its own excess falls on the shoulders of every Tobias, Dirk, and Heike taxpayer in Germany, even industry leaders, such as Wolfgang Rietzle, the CEO of Linde, this weekend according to Reuters, are suggesting a line in the sand has to be drawn and that "if we do not succeed in disciplining countries then Germany needs to exit." This has been very much a view we have held for months now that instead of the periphery limping away one-by-one, the very core of the foundation will simply decide enough is enough or as Reitzle notes (among many other critically insightful comments) "the willingness of countries to reform themselves is abating if, in the end, the European Central Bank steps in." This morning Germany's FinMin Schaeuble added to the potential separation chatter with his comments, via Bloomberg:

  • *SCHAUEBLE SAYS ECB AS LENDER OF LAST RESORT WOULDN'T CALM MKTS
  • *SCHAEUBLE SAYS JOINT EURO REGION BOND SALES NOT A SOLUTION

Hardly reassuring given the dreams of every GGB owner and BTP-exposed insurance company are banking on the ECB cranking the presses to 'secure' nominal returns in the real world. The EURUSD has opened down 40 pips or so on a slow Sunday afternoon as we remind hopeful investors (and the German public) of our comments from last July (which seem even more prescient now with the AAA downgrades and increasing reliance on EFSF and ESM mechanisms placing more burden explicitly on German taxpayers and "in doing so may have jeopardized anywhere between 32% and 56% of its entire annual economic output".  

Reuters: Linde CEO says Germany Should Mull Euro Exit

Germany should consider leaving the euro if efforts to impose fiscal discipline upon indebted euro zone countries fail, the head of industrial gases firm Linde (LING.DE) told German weekly paper Der Spiegel.

 

"I fear the willingness of crisis countries to reform themselves is abating if, in the end, the European Central Bank steps in," Linde's chief executive Wolfgang Reitzle was quoted as saying.

 

"If we do not succeed in disciplining crisis countries, Germany needs to exit," said Reitzle who was previously a board member at carmaker BMW (BMWG.DE) and head of Jaguar and Land Rover.

 

Asking Germans to pay more than 50 percent taxes to help fund other euro zone countries will erode the will of the German electorate to support rescue measures, Reitzle said.

 

Although this scenario is not desirable, he felt that German industry would survive working in a new currency.

 

"Of course it would lead the new currency - Deutschmark, North-euro or whatever it is called - to appreciate in value. But it would be by a lesser amount than feared," Reitzle said.

 

"Although this would lead to higher unemployment in Germany because exports would take a hit, pressure would increase to become more competitive."

 

Reitzle said the euro zone is unlikely to break up completely but Greece is not in a position to service its debt.

 

"The country is not in a position to restructure itself in such a way that it can remain in the currency union," Reitzle said.

 

"In the medium term Greece needs to exit. And the writedowns on Greek debt will not be between 50 to 70 percent, but in the end will be written down by 100 percent," Reitzle said.

 

So long as Greece remains in the euro it needs to be supported. "All in all this is a 500 billion-euro problem," Reitzle said.

 

Structural reforms need to continue elsewhere in places like Italy too, Reitzle said.

 

The year of destiny for the euro is not 2012, but three to four years down the line, Reitzle said.

 

Upon being asked whether Linde has a plan B to cope with a complete break-up of the euro zone, Reitzle said 'no'.

 

"Even if we had a recession for years in Europe, it would only impact 30 percent of our revenues," he added.

 

As the ESM is accelerated and deposits/investor-cash flood into German banks and bunds, the risks of subordination of existing sovereign bond holders and devaluation from non-German-euro-holding deposits is perhaps too much to bear for investors/savers and leaves the German politik, CEOs, and public at a critical decision point in terms of extending the socialist empire experiment (at their expense) or going it alone facing pain now for a brighter future - the Linde CEO seems convinced (and Schaeuble seems less than inspired by the euro-bond-based fiscal compact solution).

 

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Sun, 01/15/2012 - 16:41 | 2066847 Eireann go Brach
Eireann go Brach's picture

Germany needs Obama to pay them a visit ASAP and deliver a hope and change speech!

Sun, 01/15/2012 - 17:06 | 2066929 maxcody
maxcody's picture

Greece is what the U.S. will become if Obama and the dumocrats win nov 2012.

Sun, 01/15/2012 - 18:01 | 2067038 Kayman
Kayman's picture

Greece is what the U.S. will become no matter which one of Wall Streets puppets win nov 2012.

There, fixed it for ya.

Sun, 01/15/2012 - 18:25 | 2067071 cossack55
cossack55's picture

Solid fix.

Sun, 01/15/2012 - 22:55 | 2067734 trav7777
trav7777's picture

why the hell did they let a shit nation like Greece into their currency union in the first place??

There is a qualitative difference between the wops and the krauts.  They know it and have known it for a long time, no matter how hard the MSM tries to suppress it.  All ethnic groups are not equal.

Sun, 01/15/2012 - 23:22 | 2067799 seventree
seventree's picture

Nobody complained when the EU economy was riding high and Greek big spenders soaked up the output of export nations like Germany. Easy money while it lasted.

Sun, 01/15/2012 - 23:40 | 2067832 morning_glory
morning_glory's picture

Goldman Sachs helped them fix their books to meet EU entry criteria.

 

http://www.spiegel.de/international/europe/0,1518,676634,00.html

Mon, 01/16/2012 - 00:06 | 2067876 economics1996
economics1996's picture

"All ethnic groups are not equal."

 

How long did it take you to figure that one out?

Mon, 01/16/2012 - 06:30 | 2068208 Oliver Jones
Oliver Jones's picture

Some people still haven't figured it out. If you have figured it out - and are foolish enough to say so - that makes you a racist, apparently.

Mon, 01/16/2012 - 07:02 | 2068220 Instant Wealth
Instant Wealth's picture

For geostrategical reasons:

Greece = Southeastern flank of NATO

Mon, 01/16/2012 - 23:38 | 2070091 Tompooz
Tompooz's picture

"All ethnic groups are not equal."

Greek Untermenschen, eh, Trav?

You are talking about the ethnic group right at the foundation of your civilization.

Ethnic groups do adopt new cultures, you know.

Sun, 01/15/2012 - 20:40 | 2067373 Jack Burton
Jack Burton's picture

Really? What about the Republican candidate Romney? Will he not reverse the Obama socialist agenda and return America to free enterprise, low taxes, prosperity and world domination?

Romney is Republican, they can and will save America. Everything will change the day Romeny is sworn in. He is no puppet of "the street" nor will he cave in to all those willfully unemployed bums who refuse to get a job. He will stop the greedy old people form taking all that social security money and instead turn that money to good account in increased military spending.

America is headed for brighter days under the great republican president "Romney".

Sun, 01/15/2012 - 21:01 | 2067442 LooseLee
LooseLee's picture

Romney is 'Obama-Lite'.....Ron Paul is our ONLY hope. Huntsman would be better than Romney...

Sun, 01/15/2012 - 22:03 | 2067609 pods
pods's picture

No, our only hope is that enough of the populace become familiar with the reasons why Ron Paul is so popular amongst learned people.

Until I hear the phrase "fractional reserve banking" on a daily basis in real life we are still doomed.

pods

Sun, 01/15/2012 - 23:18 | 2067790 YBNguy
YBNguy's picture

If I ever hear rehypothecation on a daily basis Ill nut myself.

Mon, 01/16/2012 - 00:01 | 2067866 StychoKiller
StychoKiller's picture

Mr. Huntsman is now looking for a different gig...

Sun, 01/15/2012 - 22:01 | 2067603 pods
pods's picture

An a new horse is breaking out of the pack and is moving up on MDB fast....................

 

Sun, 01/15/2012 - 23:33 | 2067821 Milestones
Milestones's picture

Good tongue in cheek--dear Gawd thats what I hope it is!!!          Milestones

Mon, 01/16/2012 - 00:00 | 2067864 StychoKiller
StychoKiller's picture

Bwahahahaha...you're joking, right?

The Republicons and Decepticrats are two sides of the same coin, the Leviathan Party.

Mon, 01/16/2012 - 00:08 | 2067880 economics1996
economics1996's picture

Jack your kidding, right?

Mon, 01/16/2012 - 03:29 | 2068113 Ms. Erable
Ms. Erable's picture

I laughed so hard reading that I nearly crapped my pants. Romney = AFP (Another Fucking Puppet); parts are interchangeable with the Obamatronic '08 model.

Sun, 01/15/2012 - 20:51 | 2067419 aquagreen73s
aquagreen73s's picture

I think what you meant to say was: "Greece is what the U.S. will become no matter which one of the Wall Street puppet parties wins in nov 2012 unless it's Ron Paul in office."

Sun, 01/15/2012 - 18:21 | 2067068 StockProdigy
StockProdigy's picture

Obama wins we become Greece sooner. Romney wins it will be delayed a year or two.

Sun, 01/15/2012 - 18:44 | 2067100 surf0766
surf0766's picture

We are already Greece and worse.

Mon, 01/16/2012 - 00:11 | 2067884 economics1996
economics1996's picture

We have lots of bombs.

Sun, 01/15/2012 - 20:31 | 2067342 Central Bankster
Central Bankster's picture

Mittbush Romnobama is a change of pace?

Mon, 01/16/2012 - 06:20 | 2068203 Whatsoever
Whatsoever's picture

The US, UK, Japan are in much worse state than Europe will ever be.

And this won't change for a long time, no matter what obstacles the american or british financial industry tries to implement for us.

 

Note, that e.g. Italy is in far far far better state than what is reflected by american and british crowds and media.

Reading knowledge helps, sometimes at least.

Greetings from Vienna.

 

Sun, 01/15/2012 - 17:11 | 2066939 mattu13048
mattu13048's picture

Who cares about these morons. Let's trade, man. Enjoy this shit: http://t.co/Itk2Q1v8

Sun, 01/15/2012 - 20:25 | 2067324 Stoploss
Stoploss's picture

The Euro is dying an ugly and painful death.. WHO KNEW!!??   LOL!!

Sun, 01/15/2012 - 17:26 | 2066958 Zero Govt
Zero Govt's picture

He did deliver "Hope & Change" pre-election in Berlin

He didn't deliver "Hope & Change" post-election..

..it was more like "More the Same.... only Worse"

Ho hum, that's politicians for ya

Mon, 01/16/2012 - 03:47 | 2068124 PY-129-20
PY-129-20's picture

I remember that one. He was very popular over here. He had no achieved anything. Did that matter? But as a Berliner I know what they were hoping for back then. Another Kennedy.

I think Obama could've won the election over here too. Not that Merkel would be the better candidate. That's the dilemma. We Germans don't have a good candidate. At least you have Ron Paul and a choice. Me? Nothing. Just the same crap over again.

I will probably vote for the Pirates. But even in that case I'll gain no hopium in exchange. What a country! Ha! I guess Robotrader would love it. All these record numbers in the MSM now - and they matter nothing and will matter nothing and it will dawn upon the ignoro.

Mon, 01/16/2012 - 07:09 | 2068228 Instant Wealth
Instant Wealth's picture

Warning PY !

Pirates party plans to forbid trading of derivatives

... and, of course, Greetings to Berlin from a former FU student

Sun, 01/15/2012 - 17:44 | 2067008 americanspirit
americanspirit's picture

Followed by Timmy to kick ass and get those Krauts in line

Sun, 01/15/2012 - 18:26 | 2067073 cossack55
cossack55's picture

Not too tough when you are holdin' all of the Krauts gold.

Sun, 01/15/2012 - 22:31 | 2067693 non_anon
non_anon's picture

yeah, whatever Obama touches turns to shit

Sun, 01/15/2012 - 16:38 | 2066848 Eireann go Brach
Eireann go Brach's picture

Fucking Double post.. Or just lend Merkel his TelePrompTer!

Sun, 01/15/2012 - 16:51 | 2066893 Ghordius
Ghordius's picture

Dear ol Wolfgang Reitzle is not exactly the most representative source, he made aquisitions in the UK and is cherishing his contacts with the Guardian. The way he posed it is also telling...
But hey, it's The Guardian, it has to cater to it's reader's tastes and prejudices - one of them is that the diabolical EUR has to die...

Sun, 01/15/2012 - 17:05 | 2066909 The Big Ching-aso
The Big Ching-aso's picture

 

 

Newsflash:   The still magnificently productive Germanic people aren't gonna let any more FUBAR foreigners play 'Let's Bury Our Carbunkled Schnitzelgrubens Up Their Heinies' without a hefty reciprocal price.    Who in phuck can blame them?  That gig's kaput.

Sun, 01/15/2012 - 17:23 | 2066966 Zero Govt
Zero Govt's picture

Ghordius, have you ever met/read the Guardian newspaper???

a bigger bunch of Pro-EU progressives/Marxists you could never meet

Sun, 01/15/2012 - 17:41 | 2066998 Ghordius
Ghordius's picture

The British version, yes, sometimes, the American version, never.
"Pro-EU progressives/Marxists"? A bit more moderate than this I'd say. The convictions I am writing of are National, though. As I find out whenever I am on dear old Blighty...

Sun, 01/15/2012 - 16:41 | 2066863 847328_3527
847328_3527's picture

great metaphor for the global economy:

 

http://media.tcm.ie/media/images/c/CostaConcordiaSinking2_large.jpg

 

 

Sun, 01/15/2012 - 16:49 | 2066883 navy62802
navy62802's picture

That's the collateral backing Italian bonds. Haha.

Sun, 01/15/2012 - 17:54 | 2067029 Tyranny is Love
Tyranny is Love's picture

What the price tag on the Ship?

 

And which company owns it?

 

An asset that big will be on someones books, and with hyper-rehypothecation in the City of London its likely to be an asset backing a lot of paper.

Please correct me if I'm wrong and the shipping industry operates differently, As this is new to me. Thank you of MF Global.

Sun, 01/15/2012 - 18:28 | 2067075 Reese Bobby
Reese Bobby's picture

Q. Why does the new Italian Navy use glass bottomed boats?
A. So they can steer clear of the old Italian Navy.

Sun, 01/15/2012 - 20:27 | 2067335 Al Gorerhythm
Al Gorerhythm's picture

Germany being the rock; Satellite nations the ship of fools?

Mon, 01/16/2012 - 23:43 | 2070094 Tompooz
Tompooz's picture

"Shipwrecked off the Island of Ponzi"

Sun, 01/15/2012 - 16:44 | 2066866 Ag1761
Ag1761's picture

You will succombe to German discipline, now where/when have we heard that before.

Sun, 01/15/2012 - 16:46 | 2066872 Dick Darlington
Dick Darlington's picture

Meanwhile in Hungary the EUSSR flag gets it.

http://storyful.com/stories/1000018731

Sun, 01/15/2012 - 16:56 | 2066905 Ghordius
Ghordius's picture

LOL - and what kind of reaction is this supposed to cause?
It's not one of the holy ones...

Sun, 01/15/2012 - 17:37 | 2066993 Zero Govt
Zero Govt's picture

they're shouting "Burn it, burn it, burn it" ...awesome

the EU flag should be Commie red with a fascist Nazi symbol in the corner to be accurate ..Brussels is a toilet of humanity, can't wai for the shithole to collapse

..and I'm down in Budapest tomorrow, hope to burn one myself if the protest is still going

Sun, 01/15/2012 - 17:44 | 2067004 Ghordius
Ghordius's picture

Don't forget to go to the spa baths. Really worthwile.

Sun, 01/15/2012 - 18:29 | 2067077 cossack55
cossack55's picture

Will you be spending more time in Buda or Pest?

(sorry, I couldn't help myself. History freak, ya know.)

Sun, 01/15/2012 - 18:50 | 2067103 bombimbom
bombimbom's picture

gnashing of teeth... LOL

ps i just boiled a hungarian flag as an act of cruel revenge!!

 

 

 

 

Mon, 01/16/2012 - 04:11 | 2068139 Ghordius
Ghordius's picture

you monster!

Sun, 01/15/2012 - 16:46 | 2066873 TheSilverJournal
TheSilverJournal's picture

Germany's not leaving the Euro. The new German currency would be crushed by all of Germany's banks going under, which are very intermingled with the rest of Europe and with the US for that matter. German bankers and politicians are not yet ready to give up control over the printing press.

ThesilverJournal.com

Sun, 01/15/2012 - 17:25 | 2066970 hognutz
hognutz's picture

You are mostly correct. The only thing I can see causing the banksters in Germany any grief is if the people rise up.   Don't underestimate the masses, especially the German ones......

Sun, 01/15/2012 - 18:36 | 2067087 reload
reload's picture

Much cheaper for the Fatherland to recap their banks and start them off again purged of toxic assets, than to indefinitely backstop the welfare states of Europe.

Mon, 01/16/2012 - 06:30 | 2068207 The Reich
The Reich's picture

"Don't underestimate the masses, especially the German ones......"

 

I'd argue it's irony/sarcasm.

 

There haven't been any 'German masses' after WWII!

 


Mon, 01/16/2012 - 23:58 | 2070108 Tompooz
Tompooz's picture

Agree broadly. Moreover, even if the Germans would contemplate leaving the "lazy perifery" on its own, they would never make any unilateral moves. They would co-ordinate with the Netherlands and that would end up meaning a new Euro that would surely include France.

They would sell the move as "temporary" (10 to 15 years?)  and promise to create and test the new institutions that a reborn future eurozone would need.

Sun, 01/15/2012 - 16:47 | 2066874 Popo
Popo's picture

This is the fracturing dynamic that is occuring in the USA as well among the Republican party.  The problem for the banking elite is that they do not represent 100% of the elites.   There are dozens of CEO's and industry leaders who are finding themselves at odds with the cartel.  Ultimately as power begins to consoldate towards the bankers -- there will be an increasing number of non-banker elites who find themselves at odds with a smaller and smaller set of insiders.  At which point there will only be two ways to go:  Towards singularity (autocracy) or systemic breakdown.   Let's hope it's the latter.

 

 

Sun, 01/15/2012 - 17:10 | 2066937 Heyoka Bianco
Heyoka Bianco's picture

WHAT!? That's outrageous! Everybody knows that "elites work together" in complete harmony and secrecy to create the One World Government. They're only self-absorbed, self-serving, egotistical, utterly ruthless prickasauruses to the rest of us. Haven't you been reading the internet lately?

Sun, 01/15/2012 - 18:06 | 2067047 Tyranny is Love
Tyranny is Love's picture

They believe in Social Darwinism. When TPTB roll one of their own it is because He/She was weak and didn't belong.

The globalist "elite" are very small in number, the rest are hangers on, the hired. To clarify what I mean... If a person works for a living, then their the hired help. If your talking TPTB then your talking way less than 0.1% of the population. Its a very narrow pyramid at the top.

Sun, 01/15/2012 - 20:44 | 2067393 q99x2
q99x2's picture

Imagine it is endgame and the elites have made it to their life rafts. The Clinton's, Bush's and Obama's among them. Quicker than you can say, "The only good politician is a ..." and those dudes would be shark bait. What the hell use would a new world have for crocked old world politicians? None.

Sun, 01/15/2012 - 16:49 | 2066884 agent default
agent default's picture

Don't think they will.  Germany is the country that has benefited the most from the Euro, and if they leave first, it will be seen as a confirmation of what many Euroskepticists have been claiming all along.  Namely that the Euro was just a wealth transfer mechanism from the periphery to the center, and a vehicle for the banks to scoop up liquidity at almost 1% interest rates and lend it back at 5%.  There will be a lot of spite, trade barriers and import tariffs will set overnight, and Germany will find itself enclosed by  a Europe feeling cheated.  Germany is not very AAA when the rest of Europe slaps something like 50% import tax on German imports.

Sun, 01/15/2012 - 17:06 | 2066930 Desert Irish
Desert Irish's picture

Disagree. Germany managed to be the world's exporting powerhouse prior to the Euro. What's changed? No doubts about it, the Euro has been very very good to them but at he end of the day Germany exports to more than just southern Europe and Ireland and really that's where the contagion lies. Take it down to a pure profit / loss scenerio is it worth watching your economy implode to save a few countries who can't afford your exports anyway?

Sun, 01/15/2012 - 17:14 | 2066947 ucsbcanuck
ucsbcanuck's picture

Agreed Desert Irish - problem is the exposure of the German banks to those countries. Maybe what will happen is Merkel will just back her banks, and let the others go to the wall.

Sun, 01/15/2012 - 17:54 | 2067028 Desert Irish
Desert Irish's picture

According to German officials Merkel has made plans to recapitilize German banks in case of a Greek default as of early September. The mechanism is already in place. We all here know Greek is going to default and it's becoming increasingly obvious to even the most retarded EU politicians we are not talking a 50% haircut here. Germany's banks are screwed regardless. The pains coming it's just a matter of short term pain versus long term pain.

 

http://www.bloomberg.com/news/2011-09-09/germany-said-to-prepare-plan-to-aid-country-s-banks-should-greece-default.html

Sun, 01/15/2012 - 21:53 | 2067579 ShoeShineBoy
ShoeShineBoy's picture

"...Germany managed to be the world's exporting powerhouse prior to the Euro..."

 

i say bullcrap,

 

go check the German net exports PRE-EU and come back, i dont even bother to post a chart for you.

Mon, 01/16/2012 - 04:09 | 2068138 PY-129-20
PY-129-20's picture

It's wrong to believe that we depend entirely on any country or region in the world. Our trading partners in the EU are of great importance - no question about that - but we also export things to the rest of the world and have industry leading companies.

If you think that the ordinary German benefitted - you're wrong. It's absurd but most Germans have lost wealth during that time. Why is that? Well, because they work for less money now. And since they have less money (some lost 22 % of their income since the introduction of the Euro) in their pockets they spend less than what they've spent before (including foreign goods). Our domestic market is in shambles. The little companies are dying and the big ones are getting in their place. You also see this in the UK... (I love to watch the UK and their MSM - we are not that different - like cousins)

The MSM here is applauding over and over and over about this fact (Cheap work = more people are working = winning!). Of course you don't read too many critical articles about the (entirely) export driven country and all the negative aspect of people getting poor while the companies are having the best time in more than thirty years. Remember: Companies are people. Of course, the German ignoro is not that different than his American, English or Chinese counterpart. And trust me, I am German, and there is one thing that is true: It's German anger. Furor teutonicus. You are supposed to suppress anger. If you want to follow the Leitbild and be a good German. And that might work for a time. But beware of the volcano and anger boiling over. And with every day we are getting closer to that.

 

Mon, 01/16/2012 - 07:29 | 2068244 Instant Wealth
Instant Wealth's picture

X-actly, esp. regarding the loss of wealth for "Otto Normalverbraucher" (Joe Average).

 

Despite consumer prizes that doubled (some tripled), wages seemed nailed to a 1999 level.

Sun, 01/15/2012 - 22:14 | 2067521 Rynak
Rynak's picture

WILL RETARDS WHO HAVE NEVER LIVED IN GERMANY PLEASE STOP REPEATING THE RETARDED PHRASE, THAT "GERMANY" (IMPLYING "THE GERMAN POPULATION") HAS BENEFITED FROM THE EUR?

THE GERMAN POPULATION IS NOW 66% OR MORE POORER, THAN PRE-EUR. YES, THAT'S RIGHT.

And this is NOT counting defaults of the nations that got bancrupted by the eur, just so you know!

Got that you fucking retard morons? Yes? Kay, thanks for being "smart" enough, to differentiate profits of multinationals from profits of nationals (kinda high bar in terms of intelligence nowadays, i know!).

P.S.: Yes, i'm pissed. You see, i just read a few "germany has been the biggest benefiter of the euro"-posts/articles a day... and every few weeks, i get pissed enough to bluntly and with a lot of allcaps and bold state the actual facts, to non-europeans..... where instead, i should probably write more of such posts with less allcaps and less bold.... but then again, given the onslaught of MSM propaganda and tools who repeat them, that would become an unpaid fultime job, and contrary to banksters and CEOs of multinational megacorps, i still need to work to pay my rent, you see?

Sun, 01/15/2012 - 22:27 | 2067681 ShoeShineBoy
ShoeShineBoy's picture

 At the expense of raging your retarded perception of the economy in aggregate versus wage decline (read: cheap-er Labor), let me repeat.

 

 German economy was ALREADY fucked up before joining the EU/EUR in 1990s with the collapse of Berlin Wall and financing YOUR BROTHERS' at a time where DM was still strong (FX is all bout relativity, you moron), and GERMAN NET EXPORTS (pun very much intended) were NOT GOOD (read: BAD) on a high unemployment, low productivity and high wages along with HUGE UNFUNDED PENSION LIABILITIED (read: your fucked up future retirement wage, moron)

 

 Come EU, come CHEAPER currency along with GOVERNMENT ENDORSED (read: your effed up GERMAN government imposing on its corporates and labors to not to jack up the wages so that government will guaranty you guys will keep the jobs, in return, cappiche??) and bunch of other policies IMMENSLY helped the GERMAN economy to tremendously improve its NET EXPORTS, lower the unemployment.

 

 Yet, while these were helping German GDP/Economy and relatively lowering German Debt/GDP ratio with bunch of other what have you's, the labor felt poorer and poorer each day, because the cost of living DID NOT change much for the poor labor as most of everything simply had gottn priced with still the same numeric numbers with only a change in the currency symbol, which would be great normally, had it been the case that salaries got adjuted notionally at 1Dm = 1.5EUR, but no, it stayed the same number just like the costs. 

 

 Here we are, ten years later and wages never got a bumped while cost of living and inflation had eaten up that said wages

 

 Now go fuck you self!

 

Mon, 01/16/2012 - 22:42 | 2070008 Rynak
Rynak's picture

German economy was ALREADY fucked up before joining the EU/EUR in 1990s with the collapse of Berlin Wall and financing YOUR BROTHERS' at a time where DM was still strong (FX is all bout relativity, you moron), and GERMAN NET EXPORTS (pun very much intended) were NOT GOOD (read: BAD)

Irrelevant, because my point was NOT, that everything was wonderful pre-eur, but instead that the eur-phase involved an additional impoverishment so vast, that any historian reading such numbers must think "how the hell did THAT not result in civil war? This is completely insane" (how else would an outsider expect a population to react, that get's it's living standard cut by 2/3 in just ten years???).

on a high unemployment, low productivity and high wages

Liar. The actual problem behind unemployment has NOT gone down at all! What instead happened, is that together with the introduction of the eur, the agencies that deal with unemployment got completely overhauled, just as the methods of how unemployment is MEASURED (sounds familiar, US citizens? If you thought your gov is fudgeing numbers, then imagine what your gov could do, if it would completely replace the agencies that deal with unemployment, with something else). Secondly, additionaly jobs were aquired by plain wagedumping..... that is: stealing jobs from neighbour countries, by engaging in a price war (what, you thought those PIIGS have such high unemployment just because they don't want to work? You really believe that racist shit?)

So in short: Germany did go for number magicks and becoming a mini-china. Result being, that the overall wealth of the population actually DECLINED..... BUT you have a LOT of ridicuously discounted mcdonalds jobs now, as well as people in practice doing the work of what normally would be distributed across 50 manhours per week. Or in short: We're now working, eating sleeping 7/24 just to make pay existencial living costs..... while the domenstic market has been ruined in just 10 years, just as the job markets of our neighbours. Our overloads have made out nation as a whole behave like turbo-slaves that killed most fair market participants in entire europe! Germany THE destrutive economic force in europe now, racing everything to the bottom.

But yeah, i'm sure you asshole think that this is a good thing! When in fact, it is WHY the rest of europe is broke now, and it is why germany now a nation of rockbottom pseudo-china slaves. WE HAVE SOLD OUT EUROPE TO BANKERS AND MEGACORPS!

Come EU, come CHEAPER currency along with GOVERNMENT ENDORSED (read: your effed up GERMAN government imposing on its corporates and labors to not to jack up the wages so that government will guaranty you guys will keep the jobs, in return, cappiche??) and bunch of other policies IMMENSLY helped the GERMAN economy to tremendously improve its NET EXPORTS, lower the unemployment.

Please, for the benefit of mankind GO KILL YOURSELF, ASSHOLE! GO FUCKING DIE YOU PSYCHOPATHIC ASSHOLE!

Slavery is freedom! Impoverishment is wealth! GO FUCKING DIE YOU PIECE OF SHIT!!! And make sure that someone burns your toxic radioactive corpse, and burries it 10km below the surface.

Yet, while these were helping German GDP/Economy...

GDP == ECONOMY ?????

 

AHAHAHAHAHAHHAWAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA!!!!!

Go kill yourself already, BANKSTER BITCH!

 

Sun, 01/15/2012 - 16:50 | 2066886 Manthong
Manthong's picture

Tobias, Dirk, and Heike do not have to worry..

The US has Ben to make sure that every Tom, Dick and Harry over here will pick up the slack.

Barry and Timmay have said as much.

Gee, it's great that everybody is on a first name basis.

Sun, 01/15/2012 - 17:03 | 2066925 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

UST yields to move lower this week, can you believe it?  The US had to not go through with the joint war games with Israel because it is broke.  This is the first time this admin has uttered the words, especially considering there has not been a budget since Hopey took office.  USTs have been getting dumped on the open market for months now.  This all seems to correlate but I can't quite put my finger on it?

What is the real reason the US stepped off the pedal concerning Iran?  Was it China threatening to dump even more USTs?  Is the trap set for a false flag?  Maybe the US wants to watch Europe burn a little longer before they usher in a war with Iran, because then USTs will remind priced high.

SO many variables now.  The string is epically tight.  Anyone care to push on it?  Didn't think so.  Not yet anyway....but give it a few weeks and we will see how everybody is doing.

Until then, it's all priced in!

Sun, 01/15/2012 - 18:57 | 2067111 reload
reload's picture

2 points made by posters on the thread about this stood out.

1st, the US hasfilledd the ME with military assets in preparation for an excercise. Now they are there, why bother with a magazine depleting exercise? Assets are in place, full of dry powder-job done.

2nd, The US is slapping isreal on the wrist because Mossad framed the CIA for the recent murder of an Iranian nuclear scientist.

Sun, 01/15/2012 - 16:55 | 2066887 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It's either dump the euro or shred their wealth by "loaning" tens of billions of dollars to the failed concept that is a monetary union between European States.

Sun, 01/15/2012 - 17:02 | 2066916 Ghordius
Ghordius's picture

"failed concept" ? Are you just parroting or is this a cogent conclusion?

The bloody thing is *working as designed*.

Sun, 01/15/2012 - 17:05 | 2066926 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Yes, well, you have me on a Bildeberger technicality then, don't you?  Touche

Sun, 01/15/2012 - 17:10 | 2066934 Ghordius
Ghordius's picture

No, I am seriously interested in what you think. What is wrong with the bloody eurozone that makes you think it's a failed concept? Because it has been often discussed at Bilderberg meeting?

Sun, 01/15/2012 - 17:22 | 2066962 ebworthen
ebworthen's picture

Trying to blend 17 disparate nations only 66 years (within three generations) after the last World War - fought over many of the same nations and interests.

Sun, 01/15/2012 - 17:41 | 2067000 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The Eurpean debt load is unsustainable.  The given solution to the problem is to create more debt.  Germany will shoulder this debt burden because they are still AAA (in a race to the bottom, this is too bad for them).  The other States will need haircuts even then of 50% to 70%.  Bond holders will get run over, all while the Central Banks print the debt issued to cover the old issuances.

The can kicking is getting a little late.  It is almost midnight, Europe missed its supper, it is snowing outside, and they forgot their coat.  Would you stay outside kicking the can and risk an illness, or go inside, eat some soup, and sit st the drawing table to find a new solution?

If they stay with the Euro they will shred their wealth and savings.  The dialectic pits this againsts exports, but if someone wants a VW, they will buy it if it is $16k or $20k.  Exports will stay intact, even if they go down marginally.  What is important for Germany, and all Nation-States, is to have a currency that trades with value (intrinsic value or not, as long as the game is played).  Germany, and EUrope for that matter, are facing either going back to each Nation-State having full control of their money supply, or letting it fall in the hands of a cabal known as the ECB.  So what is the right choice here?

Mon, 01/16/2012 - 00:18 | 2067897 StychoKiller
StychoKiller's picture

Hmm, doing what is easy vs. doing what is right...gonna have to go with the definition of insanity on this one.

Sun, 01/15/2012 - 23:48 | 2067845 Popo
Popo's picture

Separation of monetary and fiscal policy into distinct autonomous entities is a massive fail. The national ability to create debt will always trump the centralized mandate to manage the monetary union. Europe cannot possibly work as currently constructed.

Sun, 01/15/2012 - 17:43 | 2067005 Marco
Marco's picture

A countries wealth is it's infrastructure, productive and human capital ... not some pieces of paper, or even pieces of gold. They don't shred their wealth by making loans, they just don't use it for their own citizen's benefit. That's what it means to run a trade surplus.

Really this isn't something new, it's what they have been doing since the formation of the Euro. Nothing much has changed, the debt offsetting the trade surplus was known to never be repaid 10 years ago, it's known to never be repaid now. Why should they stop now?

If they did decide to dump the Euro and start running a trade balance they would still need massive wage inflation internally to not suffer a catastrophic deflationary collapse. Wage inflation in today's day and age is highly unlikely, the industrial leaders are no Henry Ford's ... and government is owned by them.

Of course that would be assuming the rest of the EU allowed to let them stay in the single market ... which is highly unlikely, Norway gets to do it because they have oil but Mercs are infinitely less powerful leverage than oil. More likely if they tried to take the initiative to dismantle the Euro they would be kicked out of the European single market and face massive trade barriers as someone else already said. They would be up shit creek without a paddle.

Sun, 01/15/2012 - 18:10 | 2067054 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

So you discount savings.  Why?  Why when it is in nature to save?  Animals do it, and so do we.  We work and save for a rainy day, or to further developement.  How would we have built the infrustructure if it wasn't saved for?  How would we have labor if their wasn't something to pay?  You are discounting savings to your own peril.

And your arguement that 'this is the way it's been so it will continue' is flawed logic.  Just because something is in movement doesn't mean it won't stop.  Could the downgrade serve as a force to change the direction of the Fiat Ponzi (something that is ficticious by nature anyway)?  What a bout a war?  Or a decision to change monetary policy?

As far as them leaving the Euro, they would go back to a currecy that was tronger, the Mark.  So the labor force will be paid in Marks, which were worth more than Euroes.  There is your wage inflation.

Sun, 01/15/2012 - 19:30 | 2067181 Marco
Marco's picture

I don't discount savings, but it's all just part of the individual incentives which make capitalism work ... a means to a cause. A means to a cause which stop being relevant at higher levels, which in fact become dangerous.

Germany as a whole "saved" by buying foreign bonds ... which unlike personal savings in the end did not represent deferred consumption at all, since those bonds are now going to be defaulted upon. By "saving" the Germans dug a hole for Europe, their "savings" made the Greece profligacy inevitable.

I'm not saying the current situation will continue, I'm saying the current situation is not fundamentally different to the situation 10 years ago ... nothing has changed, so there is no reason to hurry into splitting off. In the mean time all they are eroding is paper and not wealth. That's all savings are at a national level, so much paper.

Sun, 01/15/2012 - 19:54 | 2067242 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I guess the only thing I disagree with you on then is that one can not save with gold, because I can agree that buying debt is not exactly saving when the debt has no intrinsic value in the first place.  For what it is worth, nothing can have a number arbitrarily put onto it.  It is all a game, after all, but I like your points on infrustructure and labor capability.  Still, as much as infrustructure does have value, it is a depreciating asset.  And labor is one that is not static (the labor force can grow and shrink), and therefore the only thing that keeps its value, whatever value means, is PM.

Sun, 01/15/2012 - 18:23 | 2067065 Kayman
Kayman's picture

Marco

The European Common Market was around and worked successfully, long before the introduction of the common currency, the euro. Sometimes lending your brother-in-law your credit card, doesn't work out.

And if the Wealth of nations is a function of trade surpluses, and I don't disagree with the concept, then what future does a nation have that is running a $1.5 trillion operating deficit and a $500 billion trade deficit ?

 These deficits represent 13% of GDP against purported GDP growth of 2%.  With these deficits carrying on, or increasing, well into the future ?

 

Sun, 01/15/2012 - 19:44 | 2067218 Marco
Marco's picture

The common market is highly successful, but that's exactly where the danger lies for Germany ... EU big wigs have already said that if Greece would try to get out of the Euro they would be kicked out of the EU as well. Why should Germany expect any different? As a luxury goods producer they just don't have that much leverage.

I'm not saying the wealth of nations is a function of trade surpluses ... I'm saying capital (real capital, not paper or even pieces of shiny metal) and human/natural resources are a Nation's wealth.

The US is special in that there is are an huge factor not included in it's official trade balance ... a lot of it's debt is bought to buy protection (both in the nice sense and in the Mafia sense) from the US military.

Sun, 01/15/2012 - 20:34 | 2067350 Kayman
Kayman's picture

Marco,

Correct me if I am wrong, but isn't Germany one to the world's largest exporters of the tools that make tools ?

Mon, 01/16/2012 - 07:45 | 2068254 Instant Wealth
Instant Wealth's picture

The machine-tool industry is said to be one of the pillars of the German export industry.

Sun, 01/15/2012 - 16:52 | 2066895 Dick Darlington
Dick Darlington's picture

Increasing talk from politicians and esp business world that eurozone is kaput and now we get the early whispers from Germany of some sort of capital controls... Hmmm, usually when there's smoke there's fire...

Sun, 01/15/2012 - 16:54 | 2066897 xamax
xamax's picture

According to Spiegel Online today, Jürgen Stark , former EZB Economist, massively criticizes the buying of sovereign Bonds by the EZB, saying the Central bank cannot solve the fiscal and structural problems in the Erozone.

  http://www.spiegel.de/wirtschaft/soziales/0,1518,809199,00.html 

Sun, 01/15/2012 - 17:01 | 2066919 in4mayshun
in4mayshun's picture

Seems pretty obvious to me that we will see tandem collapse of the Euro and Dollar at approx the same time. This could be a coincidence. Or, more likely, it is the final epic collapse engineered to reset the world economy with a new global currency.

Sun, 01/15/2012 - 17:22 | 2066956 s2man
s2man's picture

Bingo. You nailed it.

Every soveriegn is bankrupt.  Every large bank is insolvent. And they are so intertwined that when one goes down they all go down.  What a coincidence.  Its just a matter of when do they decide to let it all crumble...

Then, the solution to this terrible, no-one-could-have-seen-this-coming crisis will be a new global currency.

Edit: I've got late September in the ZH Global Financial Collapse pool.

Sun, 01/15/2012 - 17:35 | 2066990 Waterfallsparkles
Waterfallsparkles's picture

2012?  Maybe the Mayans were right.  A new World comming.  Maybe one without the huge Debt overhang but it will be a hell of a ride.  Will anything be safe?  Stocks, Bonds, Money in the Bank?

Sun, 01/15/2012 - 18:05 | 2067045 New World Chaos
New World Chaos's picture

2012 is about a global spiritual awakening, and death of the old system/birth of a new system.  It is a key turning point in history, a major branch in the World Tree, a point at which we as a species must choose between freedom or eternal slavery.  I think 2012 will ultimately turn out be a good thing, and the debt will be burned away, but the Illuminati will certainly try to warp 2012 for their own purposes.

The winter solstice will occur on exactly 11:11 UTC on Dec. 21, 2012.  The Illuminati believe the number 11 represents something sinful that is ripe for destruction, so the timing of the solstice is a powerful signal for them to do something especially nasty at this time.  Even if you think the occult is a load of crap, you must still consider it because the Illuminati are powerful enough to MAKE their beliefs real.  My guess is:

COMEX pulls an MF Global Dec. 2012.  The whole financial system goes dark on Friday, Dec. 21.  They will make the announcement that the new system based on the SDR will be reborn three days later.  This will be done so that their anti-Jesus (the monetary system) can mirror Jesus with a three-day death and subsequent rebirth. 
Homeland Security VIPR teams will stake out key choke points on the highways to intercept people who are bugging out.  Anyone who seems "too prepared" will go straight to the FEMA camps, because such people obviously cannot be trusted.  Have a dirt-road route planned in advance.  Bug out a couple days BEFORE Dec. 21 so you don't look suspicious.  Texas will secede shortly thereafter and then the fun really starts.

Near term, I believe the date to watch for is the Feast of Moloch (Apr. 19-20).  Moloch demands that children be sacrificed by fire during his feast, hence Waco, Oklahoma City and other nasty surprises.  I am guessing this year it will be an attack on Iran.  The Feast of Moloch comes with a new moon this year.

Sun, 01/15/2012 - 18:29 | 2067076 Kayman
Kayman's picture

Jeez.... now I will have ta take my cricket outta my matchbox for some future prognostications.

Like some effing murdering Mayans dreamt of  pinstriped Wallstreet criminals, while they were sacrificing their children to their angry gods.

Sun, 01/15/2012 - 18:42 | 2067096 New World Chaos
New World Chaos's picture

Regardless of how they started, occult beliefs can take on a life of their own.  People believe the date has occult significance therefore it does have occult significance.  The puppetmasters will try to exploit this.  Kind of like fundies thinking Jesus needs a little help with the fire and brimstone prophecies before he can return.  When enough powerful people believe a prophecy, it can become self-fulfilling- therefore it doesn't matter if the Mayans dreamt of pinstriped crimminals (they probably didn't).

Sun, 01/15/2012 - 21:23 | 2067472 Captain Kink
Captain Kink's picture

@NWC--seriously?  People believe something has significance, therefore it does?  Wasn't there some jerkoff who believed the world was going to end last summer and all of his followers were preparing, etc.  When it didn't pan out, he moved the date to October or someother.... he and his followers believed... no significance.  And your post above this one leaves me speechless.

Remind me not to read anything you write here...ever.

Sun, 01/15/2012 - 22:27 | 2067534 New World Chaos
New World Chaos's picture

Powerful people look for real-world ways to turn their beliefs into reality- that's all.  Thank God that guy last summer didn't have any nukes at his disposal.  OTOH, the Christian Dominionists do have nukes at their disposal, thanks to their targeted infiltration of the Air Force.  Watch out for high-ranking people with warped ideologies, because they tend to see themselves as the Hand of God/Lucifer/Moloch/whatever. 

Also, popular 2012 beliefs are crap but these beliefs are still common enough to leave the mass mind ready to be hypnotized by events staged on Dec. 21.  This is another reason why the puppetmasters will pull something then.  People believe the date has significance, therefore it does.

Tue, 01/17/2012 - 00:30 | 2070161 kekekekekekeke
kekekekekekeke's picture

do you have a blog

Sun, 01/15/2012 - 21:55 | 2067586 kekekekekekeke
kekekekekekeke's picture

I think you argued your point well

Sun, 01/15/2012 - 17:22 | 2066963 holdbuysell
holdbuysell's picture

FWIW, Lindsey Williams stated last April on his radio show that, from his insider contact source, the Euro would collapse first. One would then have 2-3 weeks to get out of the dollar before its collapse.

Sun, 01/15/2012 - 18:14 | 2067057 holdbuysell
holdbuysell's picture

Shortcut to the Williams video.

Some call him a crackpot; others state he's been quite accurate with his calls from speaking to insiders. Time will tell on these calls.

http://www.youtube.com/watch?v=9d2K-px80yc

 

Sun, 01/15/2012 - 19:26 | 2067170 Randall Cabot
Randall Cabot's picture

He lost his credibility with his input on the BP disaster, he made a fool of himself...or maybe his sources made a fool of him.

Sun, 01/15/2012 - 17:33 | 2066985 Pinktip
Pinktip's picture

Quote Lindsey Williams....

"You have 2-3 wks it get your money out of the bankonce the Euro collapses"

Sun, 01/15/2012 - 17:43 | 2067007 Waterfallsparkles
Waterfallsparkles's picture

Many have already started to take Money out of the Banks.  Just to have cash on hand. 

And do not think that all of the Hedge Funds pulling together to buy all of the Fanny May, Freddy Mack Forclosures is just a coincidence.  They want to take their Money out of the Market and put it into Hard Assets like Real Estate.  Regardless of what happens people will need a place to live.

Sun, 01/15/2012 - 17:06 | 2066928 Waterfallsparkles
Waterfallsparkles's picture

Why is this different from the US?  Where American Taxpayers are being used to Bail Out not only the Banks (many of which were foreign Banks) but Europe as well thru the IMF.

Everyone is fed up with bailing out the the Banks and the European Nations that have failed to balance their own budgets.

Sun, 01/15/2012 - 17:13 | 2066932 hugovanderbubble
hugovanderbubble's picture

Germany is not AAA (dont trust SP,Fitch and Moodys)...

EFSF is not AAA

KFW is in default 3rd Biggest German Bank - Hybrids Exposure over 19.280 mn euros

Commerzbank will be nationalized.

Aareal bank is underwater 7.000 Mn loan losses

 

Can any one tell me hows possible Germany can hold AAA?....its impossible.

 

Well. on the other hand, the key will be the divergence between Bund vs Eurostoxx

Bund Easily can hit 1.2-1.3% (which means 150-160) As super flight to safety next weeks when big institutionals has to sell all austrian and france non AAA bonds./paper.

Lets c how much can equities be neutral before a massive sell off.

 

The Key Trade for 2012-2013 will be UK losing AAA ...no more printing in london...transaction tax will kill The CITY,

 

Regards,

Taconic

Sun, 01/15/2012 - 17:33 | 2066983 ucsbcanuck
ucsbcanuck's picture

Yes - that's the problem - when the big institutional investors have to start selling their non-AAA paper. Then SHTF...

Sun, 01/15/2012 - 20:49 | 2067411 The Reich
The Reich's picture

Where's the news?

Sun, 01/15/2012 - 17:10 | 2066936 Alpacanio
Alpacanio's picture

The year of destiny for the Euro is not 2012, but 3 or 4 years down the road? Thats bullish...

Sun, 01/15/2012 - 17:11 | 2066938 Sudden Debt
Sudden Debt's picture

He who exits first wins the game.

 

Sun, 01/15/2012 - 17:25 | 2066971 roy10
roy10's picture

What are the benefits from exiting?

Sun, 01/15/2012 - 17:44 | 2067010 css1971
css1971's picture

You keep all the money you've got.

Sun, 01/15/2012 - 18:21 | 2067067 roy10
roy10's picture

You can keep your money without existing. Simply exercise the no bail-out clause in the constitution.

Sun, 01/15/2012 - 18:52 | 2067110 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Aand....it's gone!

Sun, 01/15/2012 - 22:52 | 2067726 Non Passaran
Non Passaran's picture

(reply to wrong post, deleted)

Sun, 01/15/2012 - 17:50 | 2067020 sampo
sampo's picture

Get your gold and enjoy the show!

Sun, 01/15/2012 - 18:25 | 2067072 Alpha Monkey
Alpha Monkey's picture

You can buy more gold/dollar.

Sun, 01/15/2012 - 17:15 | 2066944 ebworthen
ebworthen's picture

Deutschmarks!  Deutschmarks!  Deutschmarks!

Jubilee!  Jubilee!  Jubilee!

Review of events of 1988 from CKCO T.V. of Canada.

Set to DEVO's "Some Things Never Change".

An interesting perspective since this was 23 years ago and - some things never do change:

http://www.youtube.com/watch?v=yvMjC2H40V8

"I saw the news today o boy
a thousand stories that we've seen before
small minds play at some big time games
and everybody else pays
make no mistake they're on the take
they like to keep it that way."

Sun, 01/15/2012 - 17:15 | 2066948 bnbdnb
bnbdnb's picture

This euro keeps dropping...how are companies in Europe not falling out left and right? With costs going up, there has to be a breaking point.

Sun, 01/15/2012 - 17:18 | 2066954 slewie the pi-rat
slewie the pi-rat's picture

the year of destiny for the euro is not 2012, but three to four years down the line, Reitzle said.

sooo..., maybe this week or next, eh?

Sun, 01/15/2012 - 17:20 | 2066959 BadKiTTy
BadKiTTy's picture

Here is my fab plan for Germany - charge double for all the goods they sell to these out of control countries and use the extra to help them out!

Oh wait, German exports would plunge and they would be in recession!!!!

Stupid me!

Profilgacy works both ways when vendor financing to those who can't pay comes to an end!

Just my 2c

K@

Sun, 01/15/2012 - 17:57 | 2066968 roy10
roy10's picture

 

Again, the simple question remains - why does Germany or any other country need to exit the Eurozone? Why not have the countries that need to restructure their debts do so and move on. There is no need for the EFSF, ESM or ECB printing.

Let Italy, Greece, Spain and Portugal restructure their debts and move on with a stronger and more stable Euro.

Nobody needs to leave the EZ. This crisis has nothing to do with the currency and everything to do with excessive debt.

 

Sun, 01/15/2012 - 20:04 | 2067267 Marco
Marco's picture

The problem is leverage in the financial system ... if Italy, Greece, Spain and Portugal restructure most banks, pension funds and insurers will go bankrupt. Countries won't be able to afford bank deposit guarantees either.

Sun, 01/15/2012 - 20:12 | 2067287 roy10
roy10's picture

It’s not as bad as advertised. You use the ECB to backstop the banks and then do a TARP-like recapitalization. Assuming the total haircut would be 1T Euros, how big would the losses to banks be? 500 Billion? After wiping out existing equity, it's probably 300 billion or less. It's perfectly manageable. This is the only plan that can provide a credible solution. It’s going to be painful, but the pain will be short-lived. Continuing the charade is the worst option since the size of the problem increases exponentially as we’ve seen with Greece.

Sun, 01/15/2012 - 17:25 | 2066972 Peter Pan
Peter Pan's picture

I do not believe that the Triple A rating of Germany has translated into a AAA rating for the German worker's standard of living. And this is where the problem lies in part. German workers have been squeezed pay wise and performance wise for the last decade with great results for German finances but not great results for its workers.

The Euro will only have a chance if it fails at this point. It can then re-assemble as some future point (long or short term) with a more viable working constitution/arrangement and a much better compliance regime.

Sun, 01/15/2012 - 17:41 | 2066999 roy10
roy10's picture

 

Here's a better plan - keep the Euro exactly as it and don't bail-out sovereigns. Whoever needs to default should default and then you move on. People are acting as if the Germans didn’t see this coming. They saw this coming – that’s why they had a no bail-out clause put into the Euro constitution.

The Germans should stop listening to Sarkozy and do what they knew was right all along – let all the insolvent nations restructure and move on. No need to scrap the Euro or even change the constitution (not to mention the idiotic new deficit rules).

This thing was anticipated long ago by the Germans. For some reason, they are backing out of the mechanism that was setup to deal with this situation.

 

Sun, 01/15/2012 - 19:54 | 2067239 Marco
Marco's picture

The problem of course is that if the PIGS default most European banks will default ... including in Germany.

Germany has a perfectly functional economy, unlike say Greece, but the financial system is one giant clusterfuck waiting for the first domino to fall ... everywhere without exception.

When the dominos fall only countries with a printing press will be able to compensate ... without a printing press you get bank runs, riots and crippling deflation ... and probably fascism.

Sun, 01/15/2012 - 20:05 | 2067257 roy10
roy10's picture

 

No bank will collapse since they are all backed by the ECB. I also don't believe the Germans will run on the banks. Once you figure out what the haircuts are, you immediately nationalize and recapitalize banks. If you look at TARP, it's a strategy that has worked very well and is far less costly than propping up the insolvent countries forever.

 

BTW - I'm not ruling out using the ECB printing press – I just think that using it to prop up insolvent sovereigns is a very bad strategy (as we’ve seen in the Greek tragedy). You can use the printing presses to temporarily inflate, but never to solve an insolvency crisis. 

 

Sun, 01/15/2012 - 17:27 | 2066974 Xnuke
Xnuke's picture

Deutschmark 2 USD 1

Deutschmark 6 Drachma 1

Deutschmark 1.5 Pound 1

Deutschmark 5 Lira 1

Deutschmark 1 Yen 1

Deutschmark 14 Yuan 1.....

 

Good luck with those exports

 


Sun, 01/15/2012 - 17:34 | 2066986 jimmyjames
jimmyjames's picture

The solution for the east bloc nations might be to follow the Icelandic model-

Tell the bankers to stuff it and start from scratch-it seems to be working-

************

The Gross Domestic Product (GDP) in Iceland expanded 4.7 percent in the third quarter of 2011 over the previous quarter. Historically, from 1997 until 2011, Iceland's average quarterly GDP Growth was 0.74 percent

http://www.tradingeconomics.com/iceland/gdp-growth

Sun, 01/15/2012 - 18:16 | 2067060 roy10
roy10's picture

Iceland has emerged from its recession much faster than Ireland who had similar problems. The Icelandic model has proven to be superior. Throwing good money after bad money is a strategy that consistently fails and will continue to fail in the future.

Sun, 01/15/2012 - 17:35 | 2066989 no life
no life's picture

The Germans always did have a lot of national pride..

Mon, 01/16/2012 - 04:27 | 2068150 PY-129-20
PY-129-20's picture

What? I must have missed that one. You could not show a sign of national pride for a long time here. It was schizo, you know? Of course, people were proud that they're work was acknowledged in the world and they were proud to be part of that success story. But they were also aware that they had done terrible things in the past.

When I was ten years old I was accused to be a Nazi - just for being a German. It followed me through the years. And you know what? The true Nazis were still running around and leading the country. That is the true shame.

One day I was ill. Nothing serious. Just a little Schnupfen. I went to a doctor. And I was not probably not in a good mood. Maybe you know what I mean? Everyone has such a day. So I went to a doctor here. I never visited him before. And I was curious back then. A curious man. That's not good. It's better to be ignorant.

So I asked him - "Who was your professor?"
And he answered: "Kiesselbach."
I replied: "Ah..." and paused.
He asked: "You know him?"
I said: "Anton Kiesselbach?"
And he: "Yes, that's him."
I: "You mean that Anton Kiesselbach who helped to select jews in Auschwitz for Dr. August Hirt?"
He: "I don't know. Please, you must go now."

Most of our doctors after WWII had worked with the regime. Most of them had blood on their hands. Most of them continued to be influential. Their knowledge is still shared. Not only in Germany, worldwide. Everything they achieved through their horrible experiments.

This doctor was proud of his profession and he ignored the dark side of it. Yes, he had studied hard to become a doctor in the first place. And that is certainly something to be proud of. To have mastered an art or to help people - which wasn't even true in Hippocrates times.

Sun, 01/15/2012 - 17:37 | 2066995 hugovanderbubble
hugovanderbubble's picture

Spain is Junk Bond

Italy UltraJunk

Sun, 01/15/2012 - 17:38 | 2066997 ekm
ekm's picture

No solution. If nobody is lending to nobody, business will suffer. Either greece defaults of few european banks collapse and soon. A Lehman is needed to unclog the lending. Give it until March, but it may be very conservative. This coming week looks probable.

Sun, 01/15/2012 - 17:44 | 2067006 Alexmai
Alexmai's picture

OT: US Store Closings & Layoffs & Bankruptcies – Latest Casualty Count – Jan. 9 – 13, 2012

http://investmentwatchblog.com/us-store-closings-layoffs-bankruptcies-latest-casualty-count-jan-9-13-2012/#.TxNIWW9STDO

Sun, 01/15/2012 - 17:45 | 2067012 besnook
besnook's picture

the eurozone is damned if they do and damned if they don't.  so they are damned or, in simpler terms, fucked. the usa is fucked, also, if the eurozone is fucked so we are all fucked. let's go to war and fuck them that aren't fucked yet. fuck 'em.

Sun, 01/15/2012 - 17:53 | 2067023 ekm
ekm's picture

This one actually sums it up in a raw way.

Sun, 01/15/2012 - 22:06 | 2067278 Tedster
Tedster's picture

Fuck! The fucking fucker's fucking fucked, bitchez!

Mon, 01/16/2012 - 00:14 | 2067892 Stuck on Zero
Stuck on Zero's picture

You are so uckingfay udecray.

Sun, 01/15/2012 - 17:52 | 2067021 hugovanderbubble
hugovanderbubble's picture

Tyler,

Remember 19th French Auction....:)

Who´s gonna be the domestic buyer?:..oh la la la¡

Sun, 01/15/2012 - 17:53 | 2067022 Stuck on Zero
Stuck on Zero's picture

The export powerhouses of the world are going to be in for hard times.  China, Japan, Germany, Korea, Taiwan, etc. are going to face countries that are no longer going to be suckers in trade.  Mercantilism only lasts until your export destinations learn they can become just as protective.

Sun, 01/15/2012 - 17:54 | 2067026 ekm
ekm's picture

In other words, read Besnook a little further down.

Sun, 01/15/2012 - 17:55 | 2067030 Waterfallsparkles
Waterfallsparkles's picture

Just think what is going to happen with all of those pension and 401K funds.  Especially with a Market Crash.  No one will be able to retire if their Pensions and 401Ks end up worthless.

Bankers get rich and they start food lines for the Elderly.

Sun, 01/15/2012 - 17:59 | 2067035 ekm
ekm's picture

Seeing the continuous outflows, a lot of 410k money has already been withdrawn and placed in savings accounts as per Trim Tabs. Right now it looks like GS is trading against MS which is trading against JPM which is trading against BAC and sombody has got to lose.

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