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Is German Anger Finally Coming To A Boil? Even Local CEOs Say Time To Exit Euro May Have Arrived
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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If you look at volume - it's clear that there are very few participants left in the market.
food inflation > 12%. With jews, we all lose.
Right now Etrade is advertising during Packers/Giants game. They still hope they can sucker more idiots in.
His name is Reitzle not Rietzle.
Who cares how it's spelt, all you have to know is it rhymes with pretzel.
As lnog as teh fisrt and teh lsat ltteer are set crrocetly, it's raedalbe !
Now, what do WE do about OUR Fed and housing markets? Nothing is working here either.
Can The Fed Salvage The Housing Market After Clinton’s “Great Leap Forward in Home Ownership”?http://confoundedinterest.wordpress.com/
Any attempts to a "solution that envolves no loss" is idiotic. The Fed members are either psycopaths or sth else behind the scenes lurks. Fact is that Fannie and Freddie creditors were paid 100% by the Fed after China started claiming south china see and Russian attacked Georgia. Right after that both China and Russian which were major holders of FannieFreddie crap were paid 100% by the bailout by the Fed.
The Fed is taking the notion of overstepping their mandate to a completely different level. The Fed has absolutely no mandate to intervene in the housing market. That mandate belongs to the white house/congress and the fact that government is dysfunctional does not give the Fed the right to step into their shoes. Bernanke needs to remember he’s an appointed official, not an elected one.
The decision whether to intervene in the housing market is a political decision that should be made only by elected officials. Personally, I’m in favor of allowing bankruptcy court to reduce principals – that’s a solution that could be best for homeowners and banks. I don’t think it should be done through Fanny and Freddie – that opens the door to crazy moral hazard and manipulation.
Corruption €urosis is the number one virus for the European project to fall apart; thanks Marginal Parallel Knowledge (MPK)!
Rating of Europe’s bailout fund rests on Germany – S&P
don't let the door hit you in the ass on the way out
communism has gone global. shared misery and horrible equal outcomes await all.
Thanks, jews.
Were Germany to exit the Euro, it would become a country with the combined virtues of Australia, Japan, China and Switzerland: a net exporter, democracy & (appearance of) transparency, an open market, growth with low inflation AND its own currency. The second it goes back to the DEM, SNB's problems with the ever-rising frank will seem like a walk in the park in comparison. It would become the default currency to invest in. We're talking about an economy that's far bigger than Switzerland's, that's based on apparently legit industrial production (and not tax-haven give-me-your-money-and-I'll-wire-it-to-Singapore-no-questions-asked UBS/CS wonders), that's just here on your doorstep, run by people who speak English with that sweet secure-sounding accent...
They will never, ever quit the Euro. Because the skyrocketing DEM would break them in a couple of months, as they are right now enjoying a true free ride, with no forex to adjust for the increased competitiveness. Because the tumbling pesetas and liras would erase a big part of their banking assets, and would result in one of the biggest transfers of wealth in history, from Germans to the PIIGS. Their positive balance-of-payments led to investments abroad, and if they ever want to get them back, they should do all that is in their power to keep Italy alive.
People tend to forget too quickly that it's actually the Germans who started the credit bubble in the early 2000's, by allowing the Landesbanks to borrow a ***load of money (500b would be an estimate) in 2002, right before the end of the state guarantees, for zero spread, and nice AAA ratings. That money had to be invested somewhere, anywhere. They were the nr 1 go-to guy for anyone who had crappy subprime CDOs to unload. They bought the peripheral European debt, and made Greek spreads go to zero. Helaba was the only bank to refuse to pass the EBA stress tests, as convenient as they were. So all this tough talk is just face-saving pirouettes. The Greeks should have left the Euro two years ago, that would have saved them. But no, the Germans (and the French) had to save their banks, and for that, they had to keep Greece in the EZ somehow, while the IMF channeled its money to their banks through "bailouts", so that the bonds they were holding would be repaid. What a joke.
They have to chose, either they print, or the world ends. They are printing already anyway, just not calling it that way. The Fed is. Everyone is. Except for the ECB. They should just cut the crap and stop pretending. That would bring the confidence boost Europe needs so much.
Nobody is leaving the Eurozone. The currency is completely unrelated to the debt problems. Stop repeating this idiotic mantra. The entire Eurozone can default without anybody leaving.
Also - printing is completely unnecessary – simply restructure the debt. I promise you that the world won’t end if Italy and Spain restructure. The current problems are arising from trying to pretend these countries are solvent.
1000000% agree. Restructuring or bank collapses seems to be the only solution rather than Greece defaulting. Greece is too important on the strategic and military side since geographically controls the mediterraneans. I think very very soon, like days or weeks, few banks will have to collapse.
No bank has to collapse. If needed, you nationalize them if needed and recapitalize. Restructuring = default.
Nationalization is collapse of private ownership. Ok, just different wording.
Call it whatever you want to. The semantics are irrelevant. If banks are insolvent, you nationalize them, clean them up and then privatize them again. This is a formula that has been successfully implemented countless times in the past. Why are people acting like this is something we haven’t seen before?
If you are an woman, I love you.
On the serious side of the question, I think GS, MS, JPM and other big european banks are trying to lure suckers to unload to in order to avoid losses. No wonder it was them who "strongly advised the world bankers" to do sth against what it should have happened in December 2011, clean up as you call it. Moreover, just listened to an interview of Steve Forbes to Porter Stansberry. He said that Bloomberg is making no money with Bloomberg TV. Knowing that CNBC is making no money either, something tells me a lot about the main media coverage.
Pass the bill onto the citizens whose jobs, salary, and/or pension are being cut and whose cost of living is going up at the same time?
Yes, we have seen revoltuions before.
Entitlements and social programs are always the first to get cut. The days of living beyond our means is coming to an end. Everybody will have to share the pain of the adjustment.
Does that include hanging the arrogant 1% elitists who caused the whole problem to begin with by sucking the blood of government AND the citizens by using 40 times leverage on the backs of both to give themselves million dollar bonuses for year after year like a tick on an Ox or draft horse?
I sure hope so.
No bank has to collapse. If needed, you nationalize them if needed and recapitalize.
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Had we done that in 08-i believe we would be on the road to recovery now-painful-but manageable-
Nationalize the banks-wipe out the bond and shareholders-print enough to make the depositors whole and enough currency to carry commerce and then lock the damn money supply down and let everything adjust to that fixed supply of money-
The losses are not nearly as bad as that. The losses do not exceed the bonds (i.e. run into deposits).
The losses are not nearly as bad as that. The losses do not exceed the bonds (i.e. run into deposits).
***************
I'm not so sure-remember any capital that sits on balance is likely taxpayer funded bailout money-
That would need to be discounted before we knew the scope of losses and also-all off balance sheet losses ie: absorbed by the ECB and here--the Fed-
I love this bit "wipe out the bond and shareholders".
Wouldn't that be fabulous!
Wouldn't that be fabulous!
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Yes it would be fabulous-but it;s just a pipedream in this upside down world-
The problem is that wouldn't be nearly enough.
Roy, are you saying:
1. Nobody is leaving the Eurozone.
2. The currency is completely unrelated to the debt problems
3. printing is completely unnecessary
4. simply restructure the debt
Are you fucking serious? My head is going to explode. Are you a govt. controlled softeware entity? Please elaborate on which dimension your are living in?
Please explain to me why a country that defaults has to leave the Eurozone? That's the biggest fallacy that has been repeated throughout the crisis. If California defaults, does it have to succeed?
I have not seen a single person that was able to make the argument of why countries should leave the Eurozone if they default (or why Germany should leave).
Cool question. Anybody has an answer, since I haven't found one it's been few months already.
There is no answer. People are simply repeating what they hear in the media without thinking. The Euro currency has been a huge success in terms of trade. The debt problems will not be solved by abolishing the Euro – they will become much worse.
People are talking as if we've never had sovereign defaults in world history. We’ve had them before and their effect on the world economy has been negligible. The panic over Sovereign defaults has reached absurd levels.
I could be wrong but, the way I see it, previous sovereign defaults didn't involve trillions of dollars of credit default swaps that will be triggered, resulting in the takedown of the writers of the swaps (AIG, anyone?), which results in failure or bailout. Given the precarious nature of the global financial system, it has the potential to be catastrophic.
You're not wrong, but that fear is also overblown. The CDS is collateralized and Italian/Spanish CDS has been trading with high spreads for a while. So, a default by these countries shouldn't be a big shock to the system. These are things that have been enhanced since Lehman. If France CDS spreads skyrocket, it may cause a problem, but PIIGS CDS should not bring a collapse.
Phew! Big hopium/dopium smoker here.
I'd give you a pot of coffee and a cold shower but it wouldn't help.
Please, buy BAC and Citi stock this week; go all in, and get some Greek and Italian two year bonds while you are at it.
You're completely ignoring what I'm saying here – Italy and Spain are going towards a default and no- it will not be the end of civilization as we know it.
Stop repeating mindless mantras and start thinking.
Perhaps we agree.
I'm not panicking over sovereign defaults, I just believe the banks and bankers should pay for it, not the citizens who were not making millions on CDS, MBS bullshit.
I believe we need hangings for the malfeasance committed because the type of theft leads to starving old people, children, and eventually war and depravity.
Well, because it can't pay it's debt?
And unless it works for less, which in practice requires a cheap currency, it can't get out of trouble.
If a country defaults, its financial institutions default, and without its own currency, the country would not be able to recapitalize them. A big chunk of the deposits goes, so companies & individuals default as well. The problem is, everyobne has liabilities, not only the fovernment, and everyone is lleveraged somehow, so a restructuring of the government alone is useless without the restructuring of private debt. That's just a horrendous task
If the country has its own currency, they can manufacture a soft default, where the central bank lends the government a large amount of money so it can recapitalize anything it needs; currency is devaluated / falls in this process, as there is dilution of its value. The government's books don't have to balance - they can have as much liabilities as they want, that's the trick.
I don't see how a country could default and stay in the EZ. The political pressure would be too great. The citizens would be presented with a choice: either we leave, or you lose xx% of your savings. Obviously, the savings would lose a comparable amount of value in the leaving scenario as well, but at least all private liabilities would be reduced as well.
If a country defaults, its financial institutions default, and without its own currency, the country would not be able to recapitalize them. A big chunk of the deposits goes, so companies & individuals default as well.
*************
So you say this and yet above you count balance sheet expansion as "printing"?
Sorry-you can't have it both ways--
Methinks you meant 'secede,' as default is typically viewed as a negative trait...LOL
Nobody is leaving the Eurozone. The currency is completely unrelated to the debt problems.
********
Exactly-the Euros are printing very little-
It is the ECB balance sheet expansion ie: debt that is the problem-
http://www.acting-man.com/blog/media/2011/11/Euro-area-TMS.png
ECB's balance sheet expansion IS printing. It has to abide by accounting rules, where liabilities are offset by assets. Or maybe you have this cute image in your mind where they actually have printing presses, and churn out paper Euros out of nowhere.
Or maybe you have this cute image in your mind where they actually have printing presses, and churn out paper Euros out of nowhere.
**************
Computer entries levered to the actual amount of hard currency-
They appear as if by magic-
They can and "will" disappear in the same way-
All balance sheet expansion is--is debt-
Not "printing" and if you could properly interpret that chart i posted and "understand" the difference you wouldn't be spouting such ridiculous comments-
Someday it "might" be counted as printing-but-it also might not and by the looks of the probabilities of the EU staying together-I suspect you will be proven wrong-
I suspect by your understanding of this--you are another one of those delusional hyper-inflationists--
"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."
I know that 50% writedowns are not considered a default as long as they are voluntary. What about a 100% write down? Could that be considered a default eve if it is voluntary?
As the president of ISDA clarified, "never comment about CDS until you've read the contract". Most contracts are not templates from ISDA and can be challenges in any court. It's just media misleading the masses. Nobody has read any contract. Nobody knows.
ZH is starting to overreact or they shorted every single EU bond in the world.lol
Hello, I'm Jerry from the IMF.. Let me shuffle thru some papers before I talk about Europe
http://www.imf.org/external/mmedia/view.aspx?vid=1386345888001
Don't worry about any advanced MSM mission reports.. These MSM parrots have to wait until the Davos Economic presser.
Anyone that played the EUR/Yen trade, all the power to you.
OK PIIGS, time to head North and OCCUPY GERMANY!
Don't forget the drum circle!!!
I mean, what the hell, they occupied everybody else in the good old days. It's their turn.
Break out the bongos!
You can always find a local CEO to say anything you want said. You don't need to coach them, just select which one is saying what you want. Meaningless.
When I was stationed in Europe (Bavaria, Germany), prior to the intro of the Euro, one could buy a case of beer on the local economy (20 0.5L bottles, or 10 liters) for the equivalent of about eight bucks.
Good beer.
Even going to the gasthaus and biergardens, one could get thoroughly hopped up with pocket change, as they even made 5 Mark coins. I seem to remember during "happy hour" a half liter if Hefe Weissen was 1.75 Marks. An excellent dinner, dessert, drinks, tip - maybe $20 US.
I do remember the locals complaining "the dahlair... Ist too high..."
To quote a REALLY REALLY REALLY horrible Billy Joel song from way back when: "We will all go down together....."
Germans angry? Gulp!
"Beware, we Germans are not all smiles and sunshine."
http://www.youtube.com/watch?v=8eSKhAegCPk&feature=related
Germany should invade themselves, hang any EU shill in power, then get the hell out the EU, force the bankrupt banks to default, send the top tier bankers to jail for fraud, make CDS illegal, go to Deutchmark backed by gold and tell the globalist to suck it.
When Europe's original middle class, the German burger and French bourgeois, start to squeal, it's time to throw in the towel and call it quits. They may be culturally boring, but they are ultimately the nut that holds the whole United Euro farce together. Remove the burger, and it's game over for the EU.
Even Beatrice Weder di Mauro, member of Germany’s Council of Economic Experts confirmed that a breakup of the euro in 2012 "cannot be excluded."
Makes you wonder with all of the Companies with their Money overseas if that Money is safe.
It is probably not a good idea to "assume" a new Deutsche Mark would be much stronger then the current Euro. What many forget is should the Euro breakup the Germany would have to recap it's banks due to all the resulting defaults.....resulting in devalutation. While many may rush to the assumed safety of the currency.....that would likely be short lived.
http://www.wallstreetrant.com/2011/12/currency-analysis-euro-breakup-current.html
Nawww...nuttin going on here....move along please to another distraction...war!
Huny, turn up the Geiger counter and throw another steak on the barbie will ya...war is on the TV tonight!
How's those oil related stock thingies stuff money changing etc stuff going? Up you say? Maggin dat.
(Snarkin for big game)
Ok so let's say they all exit, EU crashes etc. What's the elites next retard plan to fuck everyone raw? It didn't work with a few countries, we better just put the whole world in one gov't. I'll die first. Probably not by choice though lol.
Sarko already started the fearmongering.
never got in. easily avoided.
http://expose2.wordpress.com
Its too sad that a blog such as ZH doesnt understand the problems that surplus countries like Germany have caused in the EZ. Zero Hedge has never mentioned the scandals of the german industrial military complex, the loans that the surplus countries were giving away to the periphery so they could buy their products and keep them their debt slaves. Supporting CEOs like the one of Linde (many scandals as well) is really sad...
Surplus countries like Germany that have propped up agricultural basket cases like Greece and Portugal and Ireland with billions in Transfer Payments so their elites could get elected by promising more EU Economic Aid and could bask in the glory of buying votes just like Yassir Arafat did on the West Bank. It is just like Edvard Gierek in Poland in 1970s who borrowed from The West to import consumer goods to buy off disgruntled Poles and then had no means to pay back the loans so Solidarnosc was formed and toppled his regime.
It is the age of story of boosting living standards for a generation and failing to pay back the funds. Long before the ECB was formed, Greece was living on Structural Funds, Agriculrural Price Supports, and bilateral aid. The Euro and its low interest rates was just the cream topping
Germany is pissing up the wrong tree: Events have shown that it is clearly not possible to discipline the banks, Then why the hell does the Germans get into this silly project of "disciplining" countries?
Germany brought this on herself because she so desired to control the rest of Europe via the monetary union.