German Coalition Partner CSU To Propose Bankruptcy Procedure To Kick Out Chronic Eurozone Debtor Nations

The news out of Europe just keeps getting worse. While earlier we described how the squabbling within Merkel's own party could scuttle her political career, not to mention hopes for ongoing German funding of European bailouts, next we learn that she has not only outright rejected Finland's demands for loan collateralization out of Greece (which would in turn make Greece a selective Debtor In Possession lender, or, in other words, a prepack bankruptcy candidate 101), a move which Finland will likely balk over and very likely unilaterally exit from the second Greek bailout (remember that whole "Greek Bailout #2 is Dead on Arrival" from June 5?), but what is worse, according to Der Spiegel, tomorrow CDU coalition partner CSU will likely propose several "explosive ideas" which not only reject a common "economic government" for the eurozone (thereby slapping Sarkozy fully across the face), but also consider "creating a bankruptcy procedure to kick out of the euro countries that aren't willing to stick to the debt limits laid out in the euro zone's Stability and Growth Pact." In other words zero steps forward, and as many steps back as it takes to get us to before not only the July 22 Greek bail out, but all the way back to the beginning of the year. Only this time, the market is fully aware that both Italy and France are also on the hook: that can not be unwound with any paper.

From the WSJ:

Greece has moved away from attempting to reach a bilateral deal with Finland, under which it would have provided collateral in exchange for fresh aid, Ms. Merkel told German newspaper Bild am Sonntag.

"The creditworthiness of the country would suffer further" if some aid is collateralized and other aid isn't, Ms. Merkel was cited as saying by the paper on Sunday.

The proposed bilateral collateral deal between Finland and Greece was effectively taken off the table last week after several euro-zone member states, including Germany, opposed it. Officials from the 17-member currency bloc held talks last week in an effort to find a new solution that would be acceptable to all euro-zone members. Talks are expected to continue this week.

Finland's collateral demands have opened a new rift within the currency bloc, threatening to derail a second €109 billion bailout package for Greece. Under the bilateral deal, Greece would provide several hundred million euros' worth of cash collateral to Finland in exchange for the Finnish contribution to the bailout.

While we now look forward to the Finnish (no pun intended) response, more interesting will be the market's response to Germany pulling out all the scabs on still festering wounds, and reminding Europe that countries that habitually misrepresent their economic condition will liekly, finally, feel the consequences of their repeated lies. Speaking of does anyone even keep track how by many billions the 2011 Greek budget deficit will miss the Troika's projections, oh so critical in making Bailout #2 possible? Or is the only focus now on what the monthly bank run out of Greek banks has lowered deposits to?

CSU leaders are set Monday to discuss a paper co-drafted by CSU General Secretary Alexander Dobrindt that rejects a so-called common "economic government" for the euro zone as recently suggested by French President Nicolas Sarkozy, and implied in Ms. von der Leyen's proposals.

The paper contains other explosive ideas. CSU leaders, according to Der Spiegel, consider creating a bankruptcy procedure to kick out of the euro countries that aren't willing to stick to the debt limits laid out in the euro zone's Stability and Growth Pact.

More for our Teutonic readers in Der Spiegel.

So what is Merkel left with? Not much - the same as what Obama has copious amounts of in stock: unabashed, Kool Aided, hopium:

Despite the internal squabbling, Ms. Merkel told Bild that her current center-right government will stay in power not only until the next elections in 2013, but beyond. The coalition currently trails the opposition Social Democrats and Greens by a wide margin in recent opinion polls.

Ms. Merkel also said she is confident she will persuade lawmakers from the CDU and from her junior coalition partner, the Free Democrats, to approve changes to the euro zone's rescue fund. 

Ms. Merkel also told Bild that common bonds for the euro zone are the wrong measure to overcome the current debt crisis.

That's swell... Now, what happens if Plan A fails. Surely there is a Plan B. Right.... Right???

Comments

[freethinker4now]

Going going...

[French Frog]

Should be bullish for the Euro lol

[DonutBoy]

It is actually.  It means someone is getting real about the path they are on.  An actual default and Euro exit for the PIIGS would strengthen the Euro.

[Bananamerican]

kicking out the Eurowe trash takes some of the "fun" out of even having a "common currency"....

maybe they should just call it the "Francfurter" instead....

[Ahmeexnal]

You'reOwned was complete idiocy from day one.

[valuetrader]

I absolutely agree that kicking some of the PIIGS out will be good for the EUR. Of course, the ECB as well as the European banks will have to be recapitalized but this has to be done anyway. There will be money printing for sure. Still, if they keep the PIIGS in the EUR, there will be more money printing than if they kick some of them out. Hey, lets slaughter some PIIGS for the holidays! We can leave one or two PIIGS around for next year!

[Freddie]

+1

You are correct.  The CSU in Bavaria is pretty sensible.  They are on the right path.  After the euro came into being - most Germans missed the euro and Italians missed the lira.  It was a stupid police state things to do - forcing the EU on people who did not really want it.

[bankruptcylawyer]

the resulting euro, confined to a few core countries, will take a few years to restrengthen, and then no-one is going to buy american debt, and we will officialy be left with a japanese economy. with citizens forced to 'save' by buying treasuries. 

eentually people will just spend all their money and behin hoarding physical wealth. 

[sun tzu]

They can't buy EU debt unless there are Eurobonds

[French Frog]

Replying to Donutboy:

That's an over-simplistic view: maybe a correct one in the very long term but not a tradeable one to say, enact a long euro-position when/if it happens.

How can kicking the PIIGS out of the EU be bullish for the Euro? Many banks would have to take a big haircut on govt bonds held and would need to be recapitalised again: that's only likely to happen with more QE (ie money printing). On top of that, the kneejerk reaction would most likely be $ positive (Euro negative) as it's always the case when the shit hits the fan. After all, the weakness in the $ in the last 2 years has been well documented in here as being a primary effect of US QE, so why would a ECB/EU-wide QE program lead to a stronger Euro when the same action across the Atlantic has the opposite effect?

[knukles]

Gold, gold, gold, gold, gold, gold, spam, gold.

But don't worry, the Special August (get it son, August, I mean, August) Committe Representing the Special Needs Countries of the Once Maybe Pretend To Be Great EU and Beyond Debate and Obfuscation Organization (La Loadasnot) will meet in Emergency Planetary Session again and announce that all will be well after everybody pledges to make an extra special more than token effort to beggar thy neighbor only modestly before impending doom.  Ms LeGrandeLegarde's special insights shall prevail when as she announces that she'll select "Bullshite for $100 trillion, Alex." In response, it is expected that the PPT will rally the ES, euro and EM debt sharply Monday before the Long March to Hell continues to be realized for the rest of the week.   
And now back to the Intense Unbelieveable Coverage of the Non-Event of the Year We've been Save From by REMA, BigSis and all the politicians on Recess Break.

[DoChenRollingBearing]

:)

Oh, OK, I feel better that a committee like that with an agenda like that will solve everything!

[TruthInSunshine]

In the mean time, The New York Times (of all papers), comes out with a major piece by Grethchen Morgensen, saying "oh noes! The bailouts didn't help Main Street, and Paulson, Geithner & Bernanke have lied to the American People" -

- but wait for it; Morgensen says the Bernank WILL DO IT AGAIN, but that this may be a "tough sell" to the American People.

DUH!

The Rescue That Missed Main Street By GRETCHEN MORGENSON Published: August 27, 2011

The Federal Reserve lent billions to banks during the financial crisis, but has done little for taxpayers, Gretchen Morgenson writes.

The Rescue That Missed Main Street By GRETCHEN MORGENSON Published: August 27, 2011

FOR the last three years we have been told repeatedly by government officials that funneling hundreds of billions of dollars to large and teetering banks during the credit crisis was necessary to save the financial system, and beneficial to Main Street.

But this has been a hard sell to an increasingly skeptical public. As Henry M. Paulson Jr., the former Treasury secretary, told the Financial Crisis Inquiry Commission back in May 2010, “I was never able to explain to the American people in a way in which they understood it why these rescues were for them and for their benefit, not for Wall Street.”

The American people were right to question Mr. Paulson’s pitch, as it turns out. And that became clearer than ever last week when Bloomberg News published fresh and disturbing details about the crisis-era bailouts.

Based on information generated by Freedom of Information Act requests and its longstanding lawsuit against the Federal Reserve board, Bloomberg reported that the Fed had provided a stunning $1.2 trillion to large global financial institutions at the peak of its crisis lending in December 2008.

The money has been repaid and the Fed has said its lending programs generated no losses. But with the United States economy weakening, European banks in trouble and some large American financial institutions once again on shaky ground, the Fed may feel compelled to open up its money spigots again.

If the Fed reprises some of its emergency lending programs, we will at least know what they will involve and who will be on the receiving end, thanks to Bloomberg.

For instance, its report detailed the surprisingly sketchy collateral — stocks and junk bonds — accepted by the Fed to back its loans. And who will be surprised if foreign institutions, which our central bank has no duty to help, receive bushels of money from the Fed in the coming months? In 2008, the Royal Bank of Scotland received $84.5 billion, and Dexia, a Belgian lender, borrowed $58.5 billion from the Fed at its peak.

Walker F. Todd, a research fellow at the American Institute for Economic Research and a former assistant general counsel and research officer at the Federal Reserve Bank of Cleveland, said these details from 2008 confirm that institutions, not citizens, were aided most by the bailouts.

“What is the benefit to the American taxpayer of propping up a Belgian bank with a single New York banking office to the tune of tens of billions of dollars?” he asked. “It seems inconsistent ultimately to have provided this much assistance to the biggest institutions for so long, and then to have done in effect nothing for the homeowner, nothing for credit card relief.”

Mr. Todd also questioned the Fed’s decision to accept stock as collateral backing a loan to a bank. “If you make a loan in an emergency secured by equities, how is that different in substance from the Fed walking into the New York Stock Exchange and buying across the board tomorrow?” he asked. “And yet this, the Fed has steadfastly denied ever doing.”

If these rescues were intended to benefit everyday Americans, as Mr. Paulson contended, they have failed. Main Street is in a world of hurt, facing high unemployment, rampant foreclosures and ravaged retirement accounts.

This important topic of bailout inequities came up in Congress earlier this month. Edward J. Kane, professor of finance at Boston College, addressed a Senate banking panel convened on Aug. 3 by Sherrod Brown, the Ohio Democrat. “Our representative democracy espouses the principle that all men and women are equal under the law,” Mr. Kane said. “During the housing bubble and the economic meltdown that the bursting bubble brought about, the interests of domestic and foreign financial institutions were much better represented than the interests of society as a whole.”

THIS inequity must be eliminated, Mr. Kane said, especially since taxpayers will be billed for future bailouts of large and troubled institutions. Such rescues are not really loans, but the equivalent of equity investments by taxpayers, he said.

As such, regulators who have a duty to protect taxpayers should require these institutions to provide them with true and comprehensive reports about their financial positions and the potential risks they involve. These reports would counter companies’ tendencies to hide their risk exposures through accounting tricks and innovation and would carry penalties for deception.

“Examiners would have to challenge this work, make the companies defend it and protect taxpayers from the misstatements we get today,” Mr. Kane said in an interview last week. “The banks really feel entitled to hide their deteriorating positions until they require life support. That’s what we have to change. We must put them in position to be punished for an intent to deceive.”

Given the degree to which financial regulators are captured by the companies they oversee, prescriptions like Mr. Kane’s are going to be fought hard. But the battle could not be more important; if we do nothing to protect taxpayers from the symbiotic relationship between the industry and their federal minders, we are in for many more episodes like the one we are still digging out of.

EVALUATING bailout programs like the Troubled Asset Relief Program and the facilities extended by the Fed against “the senseless standard of doing nothing at all,” Mr. Kane testified, government officials tell taxpayers that these actions were “necessary to save us from worldwide depression and made money for the taxpayer.” Both contentions are false, he said.

“Bailing out firms indiscriminately hampered rather than promoted economic recovery,” Mr. Kane continued. “It evoked reckless gambles for resurrection among rescued firms and created uncertainty about who would finally bear the extravagant costs of these programs. Both effects continue to disrupt the flow of credit and real investment necessary to trigger and sustain economic recovery.”

...Government officials rewarded imprudent institutions with stupefying amounts of free money. Even so, we are still in economically stormy seas. Doesn’t that indicate that it’s time to try a different tack?

https://www.nytimes.com/2011/08/28/business/economy/the-feds-rescue-miss...

[Dick Fitz]

Knukles, I love you.

Got gold, bitchez?

[PulauHantu29]

Bankers never, ever take losses. Only shareholders  and sheeples do.

[DosZap]

Well, looks,good,sounds good,feels good, Uhmmmmmmmmmmmmm is good.

Alas poor Euro, we knew the well...........................

Quick, into the Benny Bux, back up to 78!!!!

[The Deleuzian]

It's crystal clear...  Leaders in the EU don't know what they're doing...

@ best, IMHO I don't see how humpty dumpty will be put back together again... But somehow this will be spun as bullish!!

[macholatte]

Under the bilateral deal, Greece would provide several hundred million euros' worth of cash collateral to Finland in exchange for the Finnish contribution to the bailout.

What does that mean?

[espirit]

Fin's want gold as collateral.

[Freddie]

The Finns have among the highest IQ's in the world.  My guess is they are waking up (finally) to the Euro/EU/EUSSR scam.

[Ahmeexnal]

The Finns have among the highest IQ's in the world.

Is that why they have the highest rates of alcoholism and suicide?

[Cyrano de Bivouac]

Teutonic, I think.

[Sunshine n Lollipops]

Maybe he meant the news was 'earth-shaking'. ;o)  

[DoChenRollingBearing]

LOL.  Maybe both!  Caught that too.

[Vampyroteuthis ...]

The news out of Europe just keeps getting worse.  

How is this bad news? It is time to stop this charade known as the EU and find a more solid economic system for the biggest developed economy in the world.

[LeBalance]

Bad as in those walking on air off the cliff finally look down.

/that would be the Ponz and Richie C./

[Mongo]

Angela Merkel should ask herself, What would Jesus do...

[LeBalance]

with respect to moneychangers Jesus' choice is in: turn over the tables.

he got nailed for that one.

as far as Frau Merkel, she's an agent of the banksters so she will do what she's told.

cause she read the Bible?

[Jack Sheet]

About fucking time the CSU pulled their finger out and actually present a position with regards to EU bailouts. Up to now their primary electoral issues have been momentous ones such as schools and freeway tolls. Unfortunately however, they are only a state party and are joined at the hip with the CDU regarding representation in the Bundestag after general elections.

[jakethesnake76]

Remember the S&P downgrade , even a tiny bit of truth is unwelcomed...

[interbanker]

The same thing will happen is the USA, but within their own states of the Union, starting with Calfornia.

[DoChenRollingBearing]

Yes, that's a real concern.

Barron's this weekend gave the lowest ratings to California (A-) and Illinois (A) of the 50 states.  They used complicated criteria to rate the states that I did not fully understand even when carefully reading the article.

I do not see how California avoids an apocalypse.  And Illinois is so corrupt (I believe Mish is from IL, and he chronicles lots of sleaze from that state).

[Freddie]

Barrons went easy.  They are an obama/Al Waleed/murdoch shit paper now.  They said Ron Paul's gold stock portfolio was a bet again America or some other shit.  Mish Shylock is probably from Il cause he is a slimeball too.  CA and IL are toast.  They should be CCC-. 

[Manthong]

To say that Illinois is as politically disgusting as fresh warm diarrhea, vomit or puss is to be disrespectful of legitimate human body secretions.

[knukles]

But we'd get lonely.  

[Long-John-Silver]

Bernanke will save the day by opening the FED spigot with unlimited digital bailout dollars.

[Soul Train]

not quite that easy for Bernanke to do, unlike last time. Lot of his tools have either been lent out already, or not fit for purpose.

Plus, freedom of information act has already gone to the Supreme Court, and the Fed will have to disclose much more quickly bailouts to Europe bank mafia. Next time, the fireworks in the USA will really sparkle the sky as Americans start to get the picture.

--  and also don't forget politics/ this is real.

The Fed doesn't need more politics. That path always ends in ruin for the players. Always. And the Fed doesn't want to openly play that game.

Once Americans understand the BIG LIE of the Fed, and banksters, then it's end game.

And don't think for a second that more and more of these politicians won't try and leverage anti-Fed talk to swing votes to awakening sheople in america.

Banksters shun publicity. Fed knows their shareholders want to keep veiled best possbile from public understanding and outrage.

I tell you, the political election and increasing focus on the Fed is significant. Never before have I SEEN SUCH DAILY FOCUS ON THE FED.

[Joy on Maui]

I agree - this is potentially the catalyst to the game changer, and people are underestimating it.

Never underestimate the magnetism of certain kinds of reasonings toward a scapegoat, deserved or not.

Especially in politics.

Signed, a german expat

[StychoKiller]

"By their fruits shall ye know them!"

Very damaging evidence:

a. US Govt and the Fed spend $Trillions and

b. Citizens see NO BENEFIT, only inflationary effects!

Couldn't come up with a more worthy scapegoat than the Fed at this point!  "Get the Senator back on the bus!"

[gwar5]

This is Bullish for democracy and self government. Unwind the damn EU altogether. They can thank us later for the advice. I know of very few Europeans that actually want EU anymore. Most now see it as an encroachment upon their liberties by the unelected elites and bureaucrats who have carved out an unaccountable new autocracy for themselves. 

[sqz]

Then you don't know many Europeans.

There's a huge difference between the failed Eurozone experiment and the EU.

[DCon]

Is shit getting real yet?

[DoChenRollingBearing]

SJGR!

[ping]

Yeeeaaaaahhhhhhhh!

Errol, run VT!

[Akrunner907]

I can hear the timbers cracking on the house of cards.  Maybe this will be the event horizon that begins to disassemble the world economy.  Let's see, checklist:  food, check;  guns, check; bullets, check; water system; check, alternate power source, check; medical supplies, check; communication devices, check.  Yep, I am set; let the party begin.

[narnia]

do these guys have hank paulson on retainer yet?  it's about time for the doomsday, end of the world, we have to do whatever it takes to keep the Euro together speech. this is ultimately just about the banking system at this point, right?

[lolmao500]

Germans should kick that commie witch out of there (she was a high ranking politicians in East Berlin) and put CSU in charge...

CSU seem to have a minimum of common sense...

[monopoly]

This is great news. Bet spoos futures up 9 or 10 points. The more lies they tell the higher the markets go. America, land of the ____. Fill in the blank.

[Sudden Debt]

No reason at all to not start buying PM's with your Euro's my Eurofriends...

Nop, all is fine... it's just a bad dream which might still have a happy ending... a final destination ending...

[DoChenRollingBearing]

I would encourage my American friends to buy PMs as well.  You Europeans are just a little further down that trail than we are.

Think of this way: Europe is our canary in the coal mine!

[Sudden Debt]

Let's see what the little canary says in about 20 minutes :)

http://www.cx-portal.com/metal/silver_en.html

And how was your trip man? Shot any grizzly's in Alaska? :)

[DoChenRollingBearing]

Our daughter "shot" a picture of a moose and her calf.  Also whales, eagles and a caribou (= reindeer, but untamed).

---

Genuine Alaska jokes:

Q:  What do grizzly bears call bicyclists?

A:  Meals on Wheels!

Q:  What do you get when you drop a piano down a mine shaft?

A:  A-Flat Minor!

---

Maybe I deserve RED for the bad jokes.......

[Hulk]

You missed one DCRB

What are eye doctors called in Alaska?  Optical aleutians.

[DoChenRollingBearing]

You see?  God exists, loves us and wants us to be happy (Ben Franklin, I believe).

Proof:

I did not hear that joke!

[DoChenRollingBearing]

Well, thank you Tyler for putting up another European article again so quickly.  I much appreciate it.

[sunny]

I sit here reading all the news from Europe and marvel.  Hey, this is history in the making!  Watching all those nice folks run out cans to kick is an absolute hoot.  Watching the collapse of the countries on the other side of the pond as they sink in a pool of their own, homemade ooze has a certain strange entertainment aspect.  I suppose it is also educational and I should be taking notes.  We aren't all that far behind and soon the good old US of A will be in the same boat. 

I wonder if the folks in Europe will be watching us with the same fascination when it's our turn.

sunny

[topcallingtroll]

Socialism is dead now.

The funny thing is that socialists killed it!
ROFTLMFAO!

[malek]

...they are just running out of other people's money, as forecasted long ago.

[Mec-sick-o]

It was never intended to last forever...

The smart ones that want a longer reign, have a kingdom or something similar.

The wannabes such as Hitler's proposed 1000 year Reich dominance or Napoleon Empire...  1000 years is A LOT for common man.

[Freddie]

Well at leats the europeans do not elect muslims to destroy their countries.  I have more faith in Europe getting their act together.  Here in the USA the sheep are gettin ready for college football and other meaningless shit.

[epwpixieq-1]

This is how you deal with people/organization/systems/states/countries unable to pay what they have already spent without remorse or consideration how the wealth borrowed will be returned back. You kick them out of the place where they otherwise are sheltered and can get easy money from . Bravo to Germany. The process will be painful but will bring some sanity to the entire insane borrowing expansion.

[nodhannum]

Right on epwpixieq-1!  The beginning of my wisdom and self dicipline is when my dad through my bad and a $20.00 bill and the door with me not far behing. To paraphrase Dr. Samuel Johnson..."nothing concentrates a mans thoughts like the knowledge that he will be hung in a fortnight".  I grew up fast and that is what the Greece and the other PIGS need to do.  They will thank the Germans after a few years just as I thanked my father before he died for showing me some tough love.

[ping]

I salute Europe's new masters. I am already hanging a signed, framed photo of The Hoff.

[Sunshine n Lollipops]

As the EUR/$ teeters on 1.45. How far can she plummet?

[CrashisOptimistic]

Merkel's oppostion parties are more bailout inclined than even her.

No one to vote for there.

[agrotera]

deleted

[Caviar Emptor]

Unwinding even a farce of an economy is never without pain. Unwinding a big farce is sure to be very painful. Stay tuned as the entire developed world is entangled in interdependencies. There will be many surprises in areas nobody even considered. 

[Bobbyrib]

Germany is Europe's China, except they don't produce cheap, flismy, shit that breaks fairly easily. They are a creditor nation that outproduces other economies, but takes the excess money and buys other countries' bad debt (who happen to buy their products). If the Germans kick out the PIIGS, they would have less consumers to buy their products (this will happen sooner or later anyway). Much like China, I'm not too sure they will want to rush to trading out of the bad debt instruments they bought.

[Sequitur]

Gold to the fucking moon.

Someone: what is the counterparty risk to U.S. banks once this shit goes tits up?

[DoChenRollingBearing]

Sequitur, you already answered your own question: gold!

I would not count on puts and shorting the banks, just paper or electrons (worse)...

[Soul Train]

yep, gold and don't forget silver - up up and away.

[MoneyWise]

"Gold to the fucking moon."

Not so fast, Bob, it's already on the Mars..

[MoneyWise]

"German Coalition Partner CSU To Propose Bankruptcy Procedure To Kick Out Chronic Eurozone Debtor Nations"

Good idea, long overdue, Greece and Portugal should

be booted like yesterday. I just don't get it, why EZ should

be

so worry about Greek Debt holders (Including Banks)????

They want 40% return without risk or what????

F*kers collecting

45% Interest, this should be absolutely normal, if they

lose

at least 60% off Principal.. No free lunch out there.

Let them have haircut and better sooner than later..

Cut them lose..

[disabledvet]

I imagine youre hoping to charge them 60 % and "go for the record!" anywho leaving aside that the current rate has to be some type of record and the correct response is to go full on Goodfellas in Greek on Europe i would argue the last thing you would want is for them to leave and immediately devalue. Indeed that is the whole point is it not? To kill all the other economies with an hysterically over valued currency?

[smore]

It's all good.  Good for Europe, good for Gold, good for Freedom. 

Bad for bankers, bad for fiat money, bad for the New World Order - in fact, we might even have to change the name soon to the OLD World Order.  Hail Eris!

[arizona11912]

Give it time. A unified Euro-bond will be created.

[tallystick]

The little spoken secret is that the "New World Order" actually is the Old World Order.  It's many of the same banking, and aristocratic families of past centuries reasserting themselves.  The want their old feudalistic system installed on a global scale.

[Mec-sick-o]

Agree.  Serfdoms after all.

[Ahmeexnal]

Yes, the "Holy Inquisition" is also being prepared for a "resu-erection".

Euro-lackey heads of state are repeating the "multiculi has failed" mantra.

Ratzinger pulls the strings, and the piglets (Merkel, Sarkozy, Cameron) start squealing.

[papaswamp]

Hope they do the right thing for themselves and the Greeks. Default is the only otion to rapid recovery. Otherwise it will be slow death.

[IBelieveInMagic]

Hence this has no chance of happening!

[topcallingtroll]

If I had to choose between depression versus permanently handing over to the greeks part of my weekly paycheck.....well.....bring on the collapse.

It probably isnt logical for the germans to think the same way, but apparently they do.

Only the usa gets a free ride.

[ping]

If I had to choose between depression and a Greek restaurant I'd opt for the depression. 

[LookingWithAmazement]

"The coalition currently trails the opposition Social Democrats and Greens by a wide margin in recent opinion polls."

Most funny political deadlock ever. The europhile Social Democrats and Greens want just one thing: to fully surrender the German taxpayers to the bankrupt Southern European debtmakers. Bailouts, eurobonds, one Euro government, you name it, they want it. And the eurohating Germans seem to be willing to vote for them! Who needs theatre anyway? But ok, it's time for a German real anti-euro party, like Geert Wilders' Freedom Party and the Socialistic Party in The Netherlands, or the True Finns, which could change the scene dramatically.

[PY-129-20]

Could, but it won't. You are forgetting that we Germans made some bad experiences with voting the wrong people into office. If someone would appear that would be like Wilders, he instantly would be named the next Hitler. And I guess every newspaper in Europe would print that story too - true or not.

Even Merkel is compared with Hitler by newspapers in Europe - in Italy, England, France...

No, there won't be any other party that could stand a chance. You have no choice - vote for...well...CSU/CDU, FDP, GRUENE, SPD, LINKE.

And that's the whole problem and why the situation is even worse and more dangerous than anything else - because when people realize that - and many are realizing this at the moment - society could break into parts. We Germans love order - it's not only a stereotype, it's true. But this will change and rioting will break out. I am absolutely sure about that.

[DoChenRollingBearing]

Europe and America.  We are bound together in so many ways.  It grieves me that Europe is stumbling..., right before we do over here.

I do not know Greman politics well.  It looks like no easy for you guys either.  No easy way for us.

How sad that neither Europe nor America can man-up to our problems.  NO easy way out.  Pain and suffering from here on.

[PY-129-20]

Couldn't have said it better, DoChen. It is frustrating.

There is a German saying - it goes like that:
Besser ein Ende mit Schrecken, als ein Schrecken ohne Ende.

Commonly translated as:
It's better to make a painful break than draw out the agony.

But literally it says:
Better to have an end with horror than to have horror without an end.
---

And no, there is no easy way out. Let's hope the best. It will be a though fight, but a necessary one.

[espirit]

Perhaps that is a different translation of "Sunk Costs Fallacy".

[Shylockracy]

Well played, Sir!

[LookingWithAmazement]

Interesting remarks you make. Which kind of rioting, by whom? Along which lines could society break into parts?

[PY-129-20]

Anger is rising in our society. And frustration. More and more people are claiming that our constitution is endangered. A constitution that is still seen as something sacred after the horrors of WWII. The current situation breaks that constitution into pieces - a constitution that was born after a horrible, horrible war that left our society on the brink of collapse. Our nation ceased to exist - parts were lost forever, the country divided, the cities in ruins, millions dead and a guilt that cannot be erased. I am not complaining about that. We deserved most of it. After that we swore that the new Germany would never commit such mistakes again and we created a better constitution than the ones we had before.

For now - people are still sitting back and looking what the Bundesverfassungsgericht will do. But I don't know any German that is satisfied with the current political climate. Under every crisis article you will find now hundreds and hundreds of commentators that are furious. I've never seen anything like that before. Sure you will always find commentators that are not happy and are moaning about everything - but this feels different. People are already beginning to organize protest. It is coming. The longer this situation goes on and the longer the political class in Germany ignores the common mood it will get to the point where there will be rioting.

One day a ZEIT ONLINE reporter noticed that there were so many furious commentators on one of his articles about saving Europe that he chose to visit one of them. He admitted in his article that he had expected to see an unemployed man or someone from a lower class - but he was surprised to see a man of the middle class. And that man told something that almost everyone had experienced so far - utter frustration to be in a society where the souvereign has no power anymore and is doomed to stand on the sideline and watch how everything goes down.

[LookingWithAmazement]

Thank you very much for your inside story. All of this mess and call for a super-EU-government was planned, by the French in particular. They simply wanted to get rid of the Deutschmark, which layed bare the enormous French spenthrift/money creation, which in turn led to various embarrasing devaluations. They wanted debt making on a European level. The 1990 reunification was the turning point to achieve this. You Germans have been robbed of your great currency, f*cked up at purpose, to the comfort of Southern Europe, with an implicit bailout promise. See for all this and more the highly critical and sharp-to-the-bone book "The Tragedy of the Euro" by German economist Philipp Bagus.

http://mises.org/books/bagus_tragedy_of_euro.pdf

[lewy14]

Sad sentiments, poigniantly expressed. Many thanks. Not German myself, though my mother was, and I got some measure of the experience of the last century transmitted directly - so I have some knowledge of what you speak of.

Question - PY, or anyone - are the True Finns at all responsible for the collateral demand from Greece?

[Roger Knights]

But there could be an alternative for the German voter if the Free Democrats pulled out of the coalition with Merkel and ran on a single plank: Opposition to bailouts. Because the party is unpopular, it would have to pledge to resign after achieving this goal, and/or to offer to appoint opposition members to head most ministries.

[CTG_Sweden]

CSU leaders, according to Der Spiegel, consider creating a bankruptcy procedure to kick out of the euro countries that aren't willing to stick to the debt limits laid out in the euro zone's Stability and Growth Pact.

This is a very reasonable idea.

I think that Sarkozy wants a EU system that punishes Germany for what they could have done to his mother during WWII.

A bankruptcy for Greece that would bankrupt some banks would also be great. But I still think that Germany and ECB should consider the option to print money and lend that money at near zero interest rate to Greece and some other EU countries. The question is how much ECB can print without causing hyper inflation.

[MoneyWise]

Cutting those losers off EZ, will be positive for everyone

#1, Greeks start to print their own money and then tourism

to their Country will be booming since everything going to

be at least twice as cheaper.. Devaluing Greece Currency

to EUR will have blowout effect for Greece economy..

Cheap wine, Olive Oil, cheese, tourism, you name it..

Instead of selling 1 pizza for 10 EUR, better sell 50 at the

half price, simple as that.. All those south Countries are

have to go, probably Spain included..

[The Onion Of Tw...]

Let's be clear. The CSU is not "a coalition partner of the CDU". The CSU is the CDU as organized in Bavaria. They are telling you what rank-and-file members of the CDU actually think.

There is absolutely no prospect that the German Parliament will ratify an increase in the budget of the EFSF. Even if they did, the Finns will never countenance it and the Austrians are itching for a reason to vote against. No one thinks that the Euro is dead, just that the feckless periphery needs to be kicked out. We'll see how that works out.

Greece will be in default by September 15th. Once the ECB is told to back off then yields in Spain and Italy will resume their previous upward climb - although probably not reaching the 46% currently on offer for 2 yr Greek debt - and then we can all start thinking about just how many cans of spam we've got in the larder.

[insidious]

Bloomberg -

Lagarde Urges Recapitalization of Europe’s Banks

Without an “urgent” recapitalization, “we could easily see the further spread of economic weakness to core countries, or even a debilitating liquidity crisis,” Lagarde said. Bolstering banks’ balance sheets “is key to cutting the chains of contagion.”

Someone remind me: When did they do the last European bank stress test? And what was the result? Seems like a few banks were found to be in trouble but most were OK. Sure didn't sound like we were on the brink of systemic catastrophic banking failure and weakness at the core of the European Union. Oh well, who'd of thought they might not have been completely honest with the results of the assessment?

[MoneyWise]

I don't see how couple of F*d UP EZ banks can hold whole

world hostage. f* it, let them blow up, if I buy BK stock

nobody will bail me out, should be no exception for those

crooks as well. It might cause initial Sell off, but overall

it's all good..

[The Deleuzian]

Are SDR's coming!!  If so...

Questions... What will be the reaction of the peasantry? (of congress even?)

What will the gold-backed component look like?...

The banksters will do anything and everthing to maintain their power junkie status....

[Pretorian]

Moving retiring age to 67 in Germany was just a honeymoon I bet that those Germans can take 85 as a retiring age AND still 1. not complain 2. Make Greeks to afford retiring less than 57.

[Volaille de Bresse]

And my Dad's too dumb to convert his Euros into PMs... Shit!

[malek]

Keep working on him. My mom finally did put 15% of her Euros into PMs last year, after 18 months of outlining the situation and persuasion.

[The Deleuzian]

Ya!  It's hard to see the German peasantry retiring @ 67 and allowing "my big fat greek bailout peasantry allowed to retire in their 50's...

I find that hard to believe...

Even taking into account that the "masses demand their own repression and tyranny!!

[PY-129-20]

It is hard to believe. But it already is out in the public and people know that. They are not happy about this. What I found fascinating was the brainwashing that some newspapers did.

Like German newspaper "DIE ZEIT ONLINE" - they printed an article that stated two things. First - it's a prejudice that Greek people retire earlier than German people and second - they even work longer and harder and retire later than German people. So stop complaining! That's what they basically said.

But they are also the mouthpiece for the EU cleptocratic class and they've claimed so many things in the recent months that they lost all credibility - or should've. But people are still reading the bullshit and I personally know people that would believe anything coming from them.

[drider]

Back to basics again: "politics is the art of the possible"

How the hell are German and France ruling classes going to explain to their people that their Euro project has failed? 

Expect polititians to do everything in their power to extend and pretend... They were successful so far, what will hinder them now?

[Lord Welligton]

It's over.

The Euro Scum lost.

They can't explain anything to their "people".

They'll be lucky to stay alive.

[The Deleuzian]

drider.  That is the 14.6 Trillion dollar question or should I say $100,000,000,000,000

[Freewheelin Franklin]

(thereby slapping Sarkozy fully across the face)

Slap that beeatch.

::SLAP SLAP SLAP SLAP SLAP::

Now, send me Carla.

[PulauHantu29]

Just as Deadbeats are living for free in their houses throughout the USA ("free" meaning the Taxpayers pay for them via The Fed Bailouts), Germany should adopt the same Socialist entitlement mindset and simply work lots harder (how about retire at 92?) so they can support the fun-loving, ouzo drinking, sun bathing Olive Nations....

It's the trend now.... a Fad...buy now, pay later....or even better, don't pay at all!

[bugs_]

so whose not chronic?

[Two Towers AU AG]

if this is bullish.. what happens to all those trillions worth of CDS guaranteed by banks.. wont a restructure or direct default trigger those.. once that happens what will remain of the financial world to be called "GOOD" ,,,, yes maybe gold.

[Lord Welligton]

The Euro is dead.

Let's hope the scum who invented it die a slow and painful death.

After all. They have visited such on many of the people of Europe.

[Yen Cross]

  So true.  That took guts to make that comment.

[PulauHantu29]

Gold historically is THE collateral so that's what the Germans shujould ask for (and take into possession). A "promise" to pay is worth as much as Barry's "promise" to end the wars and reform banks....worth as much as Timmy's "promise" to maintain a strong dollar...and so on.

Promises are worthless. Take the Gold as collateral.

[Ursa Major]

Of course, all of this conveniently omits (redacts) the fact that, if the CDU fell, then the two parties which would take its place - Greens and CDS - are unabashadly pro-European and pro-common Eurobond! 

[Lord Welligton]

You are correct to a point.

However, just like the USA, people are waking up to the stupidity of "paying the bondholders".

The Greens could get wiped out.

The entire political class of Europe and the USA are now seen for the selfish scum that they are.

Greens included.

[Big Ben]

I don't understand why countries would need to be kicked out of the Euro if they cannot pay their debts. Why can't they just default, but continue using the Euro if they choose to do so?

After all, no one is considering kicking US states out of the USA if they end up defaulting.

[Lord Welligton]

They would be stuck with an crippling exchange rate relative to Germany.

Simples.

The Germans would be able to buy every square inch of land within 25 years.

Using fiat money.

[Big Ben]

I don't understand that explanation. What exchange rate are you talking about? If both countries are using the Euro, wouldn't the exchange rate be 1:1?

Also, are you saying that if (for example) California defaults, then Texans will be able to buy up every square inch within 25 years?

As I see it, if Greece defaults the creditors would take a big loss, no one would be willing to lend to the Greek government anymore, and so the Greeks would be forced to balance their budget by virtue of not having anyone to finance their deficits.

[Lord Welligton]

The 1:1 is the problem.

Greece cannot make itself fiat competitive at 1:1.

The Germans could buy all of Greek olive oil production for a few BMWs and a couple of bribes.

The Euro is a piece of Fascist shit invention.

It was designed for Germany and "Northern" Europe to occupy the rest.

The Euro is not a currency.

It is a "Political Project".

Ask the people who invented it.

[Yen Cross]

Now you are talking!  ( Deutschmark) and [ Autobahns]    .....>>>>>>

[snowball777]

http://www.youtube.com/watch?v=NSNuqX3EY70

http://graphics8.nytimes.com/images/2011/08/22/business/jp-euro/jp-euro-...

[Gromit]

Shades of Calvin Coolidge. "They hired the money didn't they?".

[Founders Keeper]

Going back to Bernanke's JHole non-QE3 announcement.  Perhaps the Fed plans to be too busy bailing out Europe over the next 3 weeks to undertake a new QE program for the US.

Just a thought.

[Gromit]

Coolidge demande repaytmetn of First World War debts and reparations.

But due to Smoot Hawley import protections, the debtors could not pay back even if they wanted to.

And so Europe plunged into depression in the 20s. And the rest is history.

[Bobbyrib]

Uh Oh, blaming a Republican will get you lots of red arrows..

[IMA5U]

if it s so bad then why are futures rippin

[markar]

Don't write off the Euro just yet as China won't sit back and watch their multi-billions investment in EU go down the toilet.They have a vested interest in a strong Euro to export to. Greece will definitely go so what happens with the smaller Central &E. European countries in the EU but not yet in the monetary union?

[keating]

Southern Europe Financial Zone

1.Portugal, Greece, Spain, Italy and Ireland all leave the Eurozone at once, and default on their loans

2.They establish their own currencies, at once.

3.Each currency is backed by a basket of commodities and vouchers from that country. These commodities would represent the goods and services required by the elderly or poor population such as wheat, olive oil, dairy, wood, bricks, vouchers for routine dental and medical care, and energy. In this fashion, each new currency would actually be backed by commodities such that if there were a run on that currency, it would produce jobs and prosperity.

4.Each country would have a tax rate very favorable to corporations, and a small free port, in the manner of Hong Kong.

5. Travel within the zone is passport required but unlimited tourist visa. Major limits on work permits and residence permits. Assimilation expected. Work permits mostly for folks who start businesses and create jobs.

6. Tax policy is set to reimburse zone corporations for currency transaction expenses within the zone. Even though there are five different currencies, it should be almost expense free to do business in the other zone currencies.

[Merrekie]

@ Freewheelin Franklin

Well, for your convenience, here she is: http://www.youtube.com/watch?v=mFD9YXF3uFI ('Someone told me')

Enjoy (Sarky also did)

[TK7936]

The worse things get the more bullish it is for euro bonds