German Economy Minister: "Greek Default Can't Be Ruled Out" And "We Need A Bankruptcy Procedure For Countries"

Tyler Durden's picture

Greece may not file for bankruptcy this weekend... But its time is coming - it is a 100% certainty. And throwing just that little more fuel into the fire is Germany's Economy Minister Philipp Roesler who in an op-ed posted in Die Welt, is once again planting the seeds for the inevitable day when that perpetual transgressor Greece (which just announced yet more tax hikes, and as a result can now shut down its economy as the tsunami of 24 hour strike will be unprecedented) is finally kicked out of the union. The question then, as now, will be: what next?

From Bloomberg:

An “orderly insolvency” for Greece must not be ruled out for the sake of stabilizing the euro, Die Welt reported, citing German Economy Minister Philipp Roesler.


“To stabilize the euro there must be no taboos,” the newspaper quoted Roesler as saying in an article to be published in tomorrow’s edition. “If need be, that also includes an orderly insolvency of Greece, provided the instruments needed for that are available.”

And the full Roesler op-ed, Google translated:

Europe needs a bankruptcy procedure for countries

Instead communitising government debt, private creditors have become more involved. We also need the possibility of an orderly bankruptcy States.

The idea of ??a common currency for Europe was and remains both necessary and right. We Germans have benefited from the advantages of the common currency area - with more growth, more jobs, more stability. The euro has advanced the integration of Europe as a whole and depth far beyond economic issues also.

Without doubt we are currently facing difficult challenges. In countries like Greece , there is still insufficient consolidation efforts. The people's trust and undermined market in our common currency. The Greek government must know that we will make the planned aid dependent, that Greece committed itself reformed. Basically, in order to stabilize the euro, it must also give no thought control more quickly. Necessary to also include a secondary insolvency of Greece, when the necessary instruments are available.

Europe does not grow by centralized bodies diversity

In addition, however, the rules must also be determined for our new common currency permanently. Important stability instruments of the early years, about the rules of the Maastricht debt criteria, were soaked to red-green government irresponsible times. Lasting solutions can only succeed if we stabilize the euro at this central point. The short-term measures necessary for euro rescue EFSF and ESM stabilization mechanism are therefore only a first step. They do not replace a long-term goal of integration, can be based on the lasting confidence in the euro. The crucial question is: How can this be achieved in more integration?

Many - far into the Christian democratic camp - answer this question by placing a striking faith toward a centralized European planning and control of the day. Anyone who thinks only of new institutions like a European economic government, writes the mistakes of the past continue. Europe is growing together not by centralized bodies diversity, but by shared beliefs.

Europe needs a stable code

We need a consensus on values, on the long term, building up a European economic and financial condition. Europe must establish a policy foundation of values, are stable to withstand storms and be able to. This includes not only the goal of stability in the price level, but also competitiveness and fiscal soundness. The roots of the culture of stability in the Member States and in perspective in an economic and financial condition essential.

I'm for a Europe of democracy and subsidiarity, and against a Europe from above. Spain has these days with the anchoring of a debt brake shown that progress can be self-responsible. Each Member State is invited to go down this path. Europe needs a stable code of the Member States must set an example in their national regulations and their own economic and financial policy. This can arise democratically legitimized fixed rules and sanction mechanisms.

We need binding sanctions proceedings

On the way to the stability of the Union plays a crucial role in market pressures. Interest rate differentials on government bonds, promote fiscal discipline. In particular, there can be no Euro-bonds and hence no pooling of sovereign debt. We need binding sanctions proceedings. Wherever possible, to a system of automatic sanctions be established to avert the danger of political dilution. For violations, it must be hard constraints, such as a conditional approval for the disbursement of EU funds from Structural Funds. For continuing violations may also be necessary, a temporary withdrawal of voting rights in the EU Council of Ministers no longer taboo.

We also need the possibility of an orderly bankruptcy States. Tellingly, the term "Resolvenz" is. Because the goal of this process is to restore the functioning of the State concerned, possibly by the temporary limitation of sovereignty. The Resolvenzverfahren should be conducted by an independent body, such as a continuously developed stabilization mechanism (ESM), the act would then be comparable with the International Monetary Fund.

Important elements are objective rules for the determination of debt sustainability, a clear recovery prospects for the economy affected by the restructuring program and for example, automatic term extension of government debt. Also, a substantial involvement of private creditors is one of them. The path to a Staatenresolvenz is only the last step, but it must be determined in advance credible. Europe is at a crossroads. It is now important, a constricting centralism a Europe of people who oppose the values ??and rules. A Europe of economic rationality. This is our future.

The author is the Federal Minister of Economics and Chairman of the FDP.

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Construct's picture

Indeed what a joke. What is the interest rate on 1yr's? 100%? They already defaulted.

EscapeKey's picture

...and I thought some episodes of Lost were drawn out, but this "Greece Defaults" show is by far the most ludicriously drawn out affair, despite the inevitable conclusion being obvious to anyone who's paid more than 5 minutes of casual interest.

Construct's picture


capitalism without default is impossible. we desperately need to get back to something that resembles capitalism.
Hot Apple Pie's picture

Thanks for putting it that way. I always thought in terms of moral hazard, but not everyone understood when I'd try to explain. The notion that "Capitalism requires default as one of the outcomes" is very succinct.

Construct's picture

Thank you mr hot apple pie.

Spirit Of Truth's picture

Please don't use potentially upsetting terms like "default" or "bankruptcy" anymore. The new nomenclature is "orderly insolvency".

Thank you.


Construct's picture

Oh right I am sorry dear Europe. Please don't retribute by: Making me lose my job. Stalking me on the streets. Contacting family, friends, neighbors and tell them I am a terrorist. I was just talking about general economic theory that was understood even during Adam Smith's era. Thats all.

wisefool's picture

Sarc: Add Adam Smith to Construct's list of freinds on the shadow facebook. It uses the same technology as the one that gives you sweet coupons for cool stuff.

TheFourthStooge-ing's picture


You're not laughing during the carefully orchestrated official nineeleven-01 tenth anniversary holiday/media event/somber celebration/marketing angle, are you? That sounds suspiciously terra-like, if not on the threshold of terrism itself.

Please register at the Fatherland Security office in your precinct.


Hephasteus's picture

"...and I thought some episodes of Lost were drawn out, but this "Greece Defaults" show is by far the most ludicriously drawn out affair,"

You have to enter the bank codes in every 24 hours or the island explodes.

LowProfile's picture

You mean every 108 minutes, soon to be every minute on the minute.

Spaceman Spiff's picture

Steve Liesman will probably be the smoke monster.

wisefool's picture

Would that make Santelli the "Echo" character? "I am not afraid of you (ivory tower keynseanism)"

"You should be"

TheFourthStooge-ing's picture

Greece did it for the lulz.


asteroids's picture

OPA! The party is just getting started! Greeks may be lazy, but they aren't stupid. Consider that they have taken all the billions offered them and would take MORE today if offered. Eventually, the math catches up with them. Take note of that lessone everyone. In the mean time the tavern is open late and the ouzo is fine.

sambro's picture

Money is not the object here.


got it?

Greece should hurry up and default then exit the "limitation of sovereignty" trap.

Waffen's picture

~Sigh~ So Greece fixed again?

knukles's picture

Me too, Slewie.
Now here's what an orderly default entails:
Greece doesn't pay on principal or interest when due.
Nobody but the politicians act surprised.
Everybody ignores the politicians.
Everybody else just goes about their business as normal.
Until further notice, the Euro remains the currency of Greece.
Internationally, fear abounds; flight to quality.
US dollar, non-US dollars rally.
Treasuries rally.
Gold and silver rally.
Stocks get throttled.
The banks have Major Big Time Shitfit Conniptions about marking to market.
The regulators tell them they can hold at book until sold or default worked out.
Fed and ECB stuff infinite amounts of reserves in system.
Some banks get runs, fold.
Can kicked.
Another day, another dollar.

Blame machine works overtime attempting to tag everything and everybody other than the real culprits that caused this Shit Eating Festival of Mankind, the politicians.  (For the central banks come under their purview....)

Q: Difference between orderly and disorderly bankruptcy/default?
A:  Amount of screaming and yelling.


TheFourthStooge-ing's picture

This sounds more plausible than anything put forth by the usual cohort of "experts" on CNBS. (Oddly enough, though, I'm hopeful for the accuracy of the New Year's Douggie Kass prediction of gold going under $1000 sometime this year. Should this winning-lottery-ticket-like event happen, both my Chase credit card and my HELOC will be fully transmuted into gold eagles and buffaloes.)

I can only add one thing to your analysis:

Now here's what an orderly default entails:
Greece doesn't pay on principal or interest when due.

The politicians, bankers, and bureaucrats will do anything, no matter how ridiculous, to define this event as "notadefault" in their desperation to avoid triggering a cascade of CDS fuckery.

Nobody but the politicians act surprised.



Manthong's picture

I really wouldn't mind being able to have a cool Greek Amstel and a hot Souvlaki for 30 Drachma in Glyfada once again. 

MS7's picture

So then the Greek Finance Minister was right that the rumors of default this weekend were just for game playing/ speculating? If every weekend someone predicts Greece will default, sooner or later they will be right.

agent default's picture

How will those socialist assclowns over there deal with the coming and inevitable tax strike all these tax hikes and incompetence will bring about?  There are limits to the patience of the people in any country you know.

LawsofPhysics's picture

Good question.  But more importantly, who will be delivering the power, water, and food while all these assclowns are sitting around striking?  Personally, I am long black markets.

augmister's picture

The global Depression is leaving the station... and ALL will be aboard.  You won't need NOAA weather to predict the Kondratieff Winter ahead....


spiral_eyes's picture

Kondratieff winter, you say?

Print more gold. (I'm not joking, they will try this in the name of raising aggregate demand) 

LawsofPhysics's picture

Fucking halarious.  You would think that putting a bankrupcy provision in place would have been done BEFORE you invite a coutry like Greece to the party.

oogs66's picture

almost all sovereign debt has no real bankruptcy protection - lenders have no enforceable rights - idiotic - but that's how it is

Bicycle Repairman's picture

"Instead communitising government debt, private creditors have become more involved. We also need the possibility of an orderly bankruptcy of States."

Rules for an orderly bankruptcy proceeding ?  Just for Greece?  Just for Europe?  LOL.

WestVillageIdiot's picture

It reminds me of all of the housing developments I saw popping up in the early 2000s.  They would build a shitload of McMansions, putting many of them on boneheaded cul-de-sacs.  After all of these developments had been built the "planners" would start thinking about infrastructure.  Roads were an after thought as if they one day said, "oh, yeah, people drive".  I think the EZ is realizing that, "oh, yeah, some countries might have problems". 

Whatever happened to Ireland?  I can't remember the last time we got an update on Ireland.  How are they faring with their economic problems? 

Alvaro de Esteban's picture

At least with a more balanced budget & better GDP outlook than others, but still ugly

Ag1761's picture

No problems there any more, everyone has fookin left.

Ancona's picture

There will be hell to pay this weekend, when Asia opens and a bloodbath on Monday.

DoChenRollingBearing's picture

I'll be manning the computer tonight, at Battlestations!

FederalReserveBankofTerror's picture

I'll be manning the popcorn bowl and trying not to choke on it as I attempt to eat and laugh simultaneously.

DosZap's picture

DoChen,@ 13:36

Your take on the metals mkt when Asia opens this afternoon?.

This Grease(lol) crap is getting be like the story of " The Little Boy who Cried Wolf".

StychoKiller's picture

In that fairy tale, the wolf DOES eventually show up!

deepdish's picture

Another gap down tomorrow? Would do good for my SPX short :)


This bear flag will probably send the S&P down towards 1040 area (if we fall monday, otherwise we will probably get a nasty short squeeze):



And here is an interesting article:


on a theme that ZH has covered quite a bit.

cossack55's picture

I think the question is not "What next.", but "Which next".

kaiten's picture

Greece will default, the only question is when. I think they´re waiting until the new EFSF is functional, so that they can plug the holes in the banks. (with new funds available)

unununium's picture

Greece will stop making bond payments when it stops getting more infusions. That's when.

StychoKiller's picture

The ECB/IMF (etc), is busy trying to refill a collander -- sooner or later, dey arms be getting tired of pouring in liquidity only to see the Greeks lapping at all the holes.

Long-John-Silver's picture

I wonder if the Gold and Silver Suppression Team (GSST) will come in Sunday afternoon for market open.

I'm sure they have carte blanche presigned margin paper work needing only the date and time filled in.

WmMcK's picture

That reminds me -- why can't i find (hardly) anybody to accept my Carte Blanche or Pfeister Barter cards anymore? :)

StychoKiller's picture

Trade'em in for a "Diner's Card™!" :>D

knukles's picture

Hah! You betcha! No fucking way they'll let this get "out of hand" (as if it isn't already...pretend and pretense) first open of the week.  Gotta try to hold back the tsunami as best they can, so to speak.
Suppression of gold and silver, hockey stick equities....

WestVillageIdiot's picture

Gold is just too expensive.  Just ask anybody that doesn't own any.