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

Tyler Durden's picture


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???


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Sun, 08/28/2011 - 16:58 | 1609929 freethinker4now
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Going going...

Sun, 08/28/2011 - 17:01 | 1609933 French Frog
French Frog's picture

Should be bullish for the Euro lol

Sun, 08/28/2011 - 17:17 | 1609962 DonutBoy
DonutBoy's picture

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.

Sun, 08/28/2011 - 17:28 | 1609981 Bananamerican
Bananamerican's picture

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....

Sun, 08/28/2011 - 19:06 | 1610236 Ahmeexnal
Ahmeexnal's picture

You'reOwned was complete idiocy from day one.


Sun, 08/28/2011 - 20:01 | 1610367 valuetrader
valuetrader's picture

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!

Sun, 08/28/2011 - 21:57 | 1610578 Freddie
Freddie's picture


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.

Sun, 08/28/2011 - 22:02 | 1610591 bankruptcylawyer
bankruptcylawyer's picture

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, 08/28/2011 - 23:09 | 1610741 sun tzu
sun tzu's picture

They can't buy EU debt unless there are Eurobonds

Mon, 08/29/2011 - 04:52 | 1611091 French Frog
French Frog's picture

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?

Sun, 08/28/2011 - 17:31 | 1609993 knukles
knukles's picture

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.

Sun, 08/28/2011 - 17:41 | 1610018 DoChenRollingBearing
DoChenRollingBearing's picture


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

Sun, 08/28/2011 - 22:57 | 1610634 TruthInSunshine
TruthInSunshine's picture

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.




The Rescue That Missed Main Street


By 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




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?

Sun, 08/28/2011 - 19:32 | 1610306 Dick Fitz
Dick Fitz's picture

Knukles, I love you.

Got gold, bitchez?

Sun, 08/28/2011 - 22:46 | 1610676 PulauHantu29
PulauHantu29's picture

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

Sun, 08/28/2011 - 17:12 | 1609951 DosZap
DosZap's picture

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!!!!

Sun, 08/28/2011 - 16:59 | 1609931 The Deleuzian
The Deleuzian's picture

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!!

Sun, 08/28/2011 - 17:50 | 1610036 macholatte
macholatte's picture

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?

Sun, 08/28/2011 - 20:00 | 1610365 espirit
espirit's picture

Fin's want gold as collateral.

Sun, 08/28/2011 - 22:01 | 1610586 Freddie
Freddie's picture

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.

Mon, 08/29/2011 - 01:18 | 1610963 Ahmeexnal
Ahmeexnal's picture

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

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

Sun, 08/28/2011 - 17:06 | 1609940 Cyrano de Bivouac
Cyrano de Bivouac's picture

Teutonic, I think.

Sun, 08/28/2011 - 17:25 | 1609977 Sunshine n Lollipops
Sunshine n Lollipops's picture

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

Sun, 08/28/2011 - 17:28 | 1609985 DoChenRollingBearing
DoChenRollingBearing's picture

LOL.  Maybe both!  Caught that too.

Sun, 08/28/2011 - 17:07 | 1609941 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

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.

Sun, 08/28/2011 - 19:08 | 1610242 LeBalance
LeBalance's picture

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

/that would be the Ponz and Richie C./

Sun, 08/28/2011 - 17:08 | 1609942 Mongo
Mongo's picture

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

Sun, 08/28/2011 - 19:10 | 1610248 LeBalance
LeBalance's picture

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?

Sun, 08/28/2011 - 17:09 | 1609944 Jack Sheet
Jack Sheet's picture

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.

Sun, 08/28/2011 - 19:38 | 1610321 jakethesnake76
jakethesnake76's picture

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

Sun, 08/28/2011 - 17:10 | 1609945 interbanker
interbanker's picture

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

Sun, 08/28/2011 - 17:32 | 1609997 DoChenRollingBearing
DoChenRollingBearing's picture

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).

Sun, 08/28/2011 - 22:06 | 1610601 Freddie
Freddie's picture

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-. 

Mon, 08/29/2011 - 01:37 | 1610635 Manthong
Manthong's picture

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

Sun, 08/28/2011 - 17:33 | 1610002 knukles
knukles's picture

But we'd get lonely.  

Sun, 08/28/2011 - 17:10 | 1609947 Long-John-Silver
Long-John-Silver's picture

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

Sun, 08/28/2011 - 17:55 | 1610026 Soul Train
Soul Train's picture

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.


Sun, 08/28/2011 - 21:27 | 1610523 Joy on Maui
Joy on Maui's picture

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

Sun, 08/28/2011 - 23:42 | 1610809 StychoKiller
StychoKiller's picture

"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!"


Sun, 08/28/2011 - 17:13 | 1609953 gwar5
gwar5's picture

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. 





Sun, 08/28/2011 - 18:44 | 1610172 sqz
sqz's picture

Then you don't know many Europeans.

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

Sun, 08/28/2011 - 17:13 | 1609954 DCon
DCon's picture

Is shit getting real yet?


Sun, 08/28/2011 - 17:33 | 1609999 DoChenRollingBearing
DoChenRollingBearing's picture


Sun, 08/28/2011 - 20:48 | 1610465 ping
ping's picture


Errol, run VT!

Sun, 08/28/2011 - 17:14 | 1609957 Akrunner907
Akrunner907's picture

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.

Sun, 08/28/2011 - 17:19 | 1609964 narnia
narnia's picture

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?

Sun, 08/28/2011 - 17:19 | 1609966 lolmao500
lolmao500's picture

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...

Sun, 08/28/2011 - 17:22 | 1609971 monopoly
monopoly's picture

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.

Sun, 08/28/2011 - 17:24 | 1609972 Sudden Debt
Sudden Debt's picture

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...



Sun, 08/28/2011 - 17:35 | 1610006 DoChenRollingBearing
DoChenRollingBearing's picture

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!

Sun, 08/28/2011 - 17:49 | 1610035 Sudden Debt
Sudden Debt's picture

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


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



Sun, 08/28/2011 - 18:29 | 1610122 DoChenRollingBearing
DoChenRollingBearing's picture

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.......

Sun, 08/28/2011 - 18:42 | 1610162 Hulk
Hulk's picture

You missed one DCRB

What are eye doctors called in Alaska?  Optical aleutians.

Sun, 08/28/2011 - 22:49 | 1610684 DoChenRollingBearing
DoChenRollingBearing's picture

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


I did not hear that joke!

Sun, 08/28/2011 - 17:26 | 1609980 DoChenRollingBearing
DoChenRollingBearing's picture

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

Sun, 08/28/2011 - 17:28 | 1609983 sunny
sunny's picture

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.


Sun, 08/28/2011 - 17:50 | 1610037 topcallingtroll
topcallingtroll's picture

Socialism is dead now.

The funny thing is that socialists killed it!

Sun, 08/28/2011 - 19:44 | 1610332 malek
malek's picture

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

Sun, 08/28/2011 - 22:52 | 1610693 Mec-sick-o
Mec-sick-o's picture

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.

Sun, 08/28/2011 - 22:12 | 1610615 Freddie
Freddie's picture

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.

Sun, 08/28/2011 - 17:29 | 1609987 epwpixieq-1
epwpixieq-1's picture

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.


Sun, 08/28/2011 - 17:40 | 1610017 nodhannum
nodhannum's picture

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.

Sun, 08/28/2011 - 20:46 | 1610463 ping
ping's picture

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

Sun, 08/28/2011 - 17:32 | 1609995 Sunshine n Lollipops
Sunshine n Lollipops's picture

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

Sun, 08/28/2011 - 17:32 | 1609998 CrashisOptimistic
CrashisOptimistic's picture

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

No one to vote for there.

Sun, 08/28/2011 - 17:54 | 1610000 agrotera
agrotera's picture


Sun, 08/28/2011 - 17:33 | 1610001 Caviar Emptor
Caviar Emptor's picture

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. 

Sun, 08/28/2011 - 21:09 | 1610502 Bobbyrib
Bobbyrib's picture

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.

Sun, 08/28/2011 - 17:34 | 1610004 Sequitur
Sequitur's picture

Gold to the fucking moon.

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

Sun, 08/28/2011 - 17:38 | 1610010 DoChenRollingBearing
DoChenRollingBearing's picture

Sequitur, you already answered your own question: gold!

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

Sun, 08/28/2011 - 17:38 | 1610012 Soul Train
Soul Train's picture

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

Sun, 08/28/2011 - 17:39 | 1610014 MoneyWise
MoneyWise's picture

"Gold to the fucking moon."

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

Sun, 08/28/2011 - 17:37 | 1610011 MoneyWise
MoneyWise's picture

"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


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


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

Let them have haircut and better sooner than later..

Cut them lose..

Sun, 08/28/2011 - 21:53 | 1610571 disabledvet
disabledvet's picture

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?

Sun, 08/28/2011 - 17:41 | 1610019 smore
smore's picture

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!

Sun, 08/28/2011 - 18:42 | 1610163 arizona11912
arizona11912's picture

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

Sun, 08/28/2011 - 21:17 | 1610510 tallystick
tallystick's picture

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.

Sun, 08/28/2011 - 23:02 | 1610718 Mec-sick-o
Mec-sick-o's picture

Agree.  Serfdoms after all.

Mon, 08/29/2011 - 01:30 | 1610978 Ahmeexnal
Ahmeexnal's picture

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.

Sun, 08/28/2011 - 17:45 | 1610025 papaswamp
papaswamp's picture

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.

Sun, 08/28/2011 - 19:09 | 1610245 IBelieveInMagic
IBelieveInMagic's picture

Hence this has no chance of happening!

Sun, 08/28/2011 - 17:45 | 1610027 topcallingtroll
topcallingtroll's picture

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.

Sun, 08/28/2011 - 20:44 | 1610457 ping
ping's picture

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

Sun, 08/28/2011 - 17:48 | 1610033 LookingWithAmazement
LookingWithAmazement's picture

"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.

Sun, 08/28/2011 - 18:24 | 1610112 PY-129-20
PY-129-20's picture

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.

Sun, 08/28/2011 - 18:35 | 1610140 DoChenRollingBearing
DoChenRollingBearing's picture

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.

Sun, 08/28/2011 - 19:21 | 1610275 PY-129-20
PY-129-20's picture

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.

Sun, 08/28/2011 - 20:08 | 1610385 espirit
espirit's picture

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

Mon, 08/29/2011 - 03:13 | 1611048 Shylockracy
Shylockracy's picture

Well played, Sir!

Sun, 08/28/2011 - 18:59 | 1610214 LookingWithAmazement
LookingWithAmazement's picture

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

Sun, 08/28/2011 - 19:49 | 1610337 PY-129-20
PY-129-20's picture

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.

Sun, 08/28/2011 - 20:06 | 1610379 LookingWithAmazement
LookingWithAmazement's picture

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.

Sun, 08/28/2011 - 21:05 | 1610495 lewy14
lewy14's picture

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?

Sun, 08/28/2011 - 19:26 | 1610282 Roger Knights
Roger Knights's picture

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.

Sun, 08/28/2011 - 17:52 | 1610034 CTG_Sweden
CTG_Sweden's picture


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.

Sun, 08/28/2011 - 17:50 | 1610038 MoneyWise
MoneyWise's picture

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..

Sun, 08/28/2011 - 17:51 | 1610039 The Onion Of Tw...
The Onion Of Twickenham's picture

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.

Sun, 08/28/2011 - 17:53 | 1610041 insidious
insidious's picture

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?


Sun, 08/28/2011 - 17:58 | 1610050 MoneyWise
MoneyWise's picture

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..

Sun, 08/28/2011 - 17:55 | 1610046 The Deleuzian
The Deleuzian's picture

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....

Sun, 08/28/2011 - 18:09 | 1610064 Pretorian
Pretorian's picture

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.

Sun, 08/28/2011 - 18:11 | 1610073 Volaille de Bresse
Volaille de Bresse's picture

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

Sun, 08/28/2011 - 19:47 | 1610338 malek
malek's picture

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.

Sun, 08/28/2011 - 18:12 | 1610076 The Deleuzian
The Deleuzian's picture

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!!

Sun, 08/28/2011 - 18:38 | 1610147 PY-129-20
PY-129-20's picture

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.


Sun, 08/28/2011 - 18:15 | 1610084 drider
drider's picture

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?

Sun, 08/28/2011 - 20:20 | 1610410 Lord Welligton
Lord Welligton's picture

It's over.

The Euro Scum lost.

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

They'll be lucky to stay alive.

Sun, 08/28/2011 - 18:22 | 1610101 The Deleuzian
The Deleuzian's picture

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

Sun, 08/28/2011 - 19:27 | 1610293 Freewheelin Franklin
Freewheelin Franklin's picture

(thereby slapping Sarkozy fully across the face)


Slap that beeatch.




Now, send me Carla.

Sun, 08/28/2011 - 19:50 | 1610342 PulauHantu29
PulauHantu29's picture

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 now, pay later....or even better, don't pay at all!

Sun, 08/28/2011 - 19:59 | 1610362 bugs_
bugs_'s picture

so whose not chronic?

Sun, 08/28/2011 - 20:13 | 1610390 Two Towers AU AG
Two Towers AU AG's picture

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.

Sun, 08/28/2011 - 20:17 | 1610401 Lord Welligton
Lord Welligton's picture

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.

Sun, 08/28/2011 - 20:56 | 1610482 Yen Cross
Yen Cross's picture

  So true.  That took guts to make that comment.

Sun, 08/28/2011 - 20:32 | 1610432 PulauHantu29
PulauHantu29's picture

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.

Sun, 08/28/2011 - 20:32 | 1610433 Ursa Major
Ursa Major's picture

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! 

Sun, 08/28/2011 - 20:38 | 1610446 Lord Welligton
Lord Welligton's picture

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.

Sun, 08/28/2011 - 20:38 | 1610445 Big Ben
Big Ben's picture

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.

Sun, 08/28/2011 - 20:41 | 1610453 Lord Welligton
Lord Welligton's picture

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


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

Using fiat money.

Sun, 08/28/2011 - 20:51 | 1610472 Big Ben
Big Ben's picture

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.

Sun, 08/28/2011 - 21:02 | 1610490 Lord Welligton
Lord Welligton's picture

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.

Sun, 08/28/2011 - 20:54 | 1610473 Yen Cross
Yen Cross's picture

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

Sun, 08/28/2011 - 21:33 | 1610538 Gromit
Gromit's picture

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

Sun, 08/28/2011 - 21:43 | 1610553 Founders Keeper
Founders Keeper's picture

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.


Sun, 08/28/2011 - 21:48 | 1610562 Gromit
Gromit's picture

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.

Sun, 08/28/2011 - 21:51 | 1610568 Bobbyrib
Bobbyrib's picture

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

Sun, 08/28/2011 - 21:58 | 1610580 IMA5U
IMA5U's picture

if it s so bad then why are futures rippin

Sun, 08/28/2011 - 23:01 | 1610715 markar
markar's picture

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?

Sun, 08/28/2011 - 23:52 | 1610838 keating
keating's picture

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.

Mon, 08/29/2011 - 01:54 | 1611002 Merrekie
Merrekie's picture

@ Freewheelin Franklin

Well, for your convenience, here she is: ('Someone told me')

Enjoy (Sarky also did)

Mon, 08/29/2011 - 11:23 | 1611773 TK7936
TK7936's picture

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

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