German ESM Ratification Vote To Be Delayed?

Tyler Durden's picture

While Italy is already celebrating the double whammy of its victory over Germany in football and in the corridors of bureaucracy (read the following from Spiegel for the German perspective: "How Italy and Spain defeated Merkel at EU Summit"), Germany may have some other plans. While the ESM ratification vote has planned to take place later today, many are now saying this vote should be delayed as its represents a "180 degree" shift in previous commitments. Die Welt reports: "Given the confusion over the results at the EU summit in Brussel, speculation has been raised in Berlin to postpone the vote on the euro rescue ESM. Several Members of the CDU-FDP coalition also called for a dismissal of the agenda item on the evening, it was said from the CDU and FDP immediately before the start of a special meeting of the Budget Committee. Point of contention is that Chancellor Angela Merkel in Brussels more concessions for easier credit to ailing banks in Europe has been as expected." And more: "The Budget Committee of the Bundestag will hold a special session on the summit resolutions. The government must explain its turn through 180 degrees, called the SPD budget expert Carsten Schneider. With the decisions on permanent euro rescue ESM "means any obligation of a country are only a paper tiger," Schneider criticized with regard to that ailing banks are to receive direct assistance ESM. The meeting will take place on Friday afternoon." In other words while the CDU conservative budget expert is calling for an all normal vote, the SPD is getting worried. The question now is what happens to the ESM ratification vote today: that is the key catalyst for the time being.

For all the latest news on this topic, follow this man on Twitter: Carsten Schneider as he appears to be the most vocal opponent to Merkel's switcheroo from last night.

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Ghordius's picture

tactics. just tactics. dangle the carrot but keep it in reach to take it away

GetZeeGold's picture



Can we just bundle it and get to the mother of all ratifications?


Let's do it just one more time....and then that's freakin it!


OttoMBMP's picture

If they want us to pay they should at least occupy the Rhineland.

What does happen here is just humiliating.

HelluvaEngineer's picture

These Germans need to man up and grow a pair.

GetZeeGold's picture up and send me some money!


Doubleguns's picture

Printer ran out of paper. It will be up shortly.

magpie's picture

Just a sham to make you believe the parliament and the 'opposition' still mean anything.

Stoploss's picture

I don't buy it, they didn't ask for any gold.

GetZeeGold's picture



They'll end up with it.....just a matter of time.


caimen garou's picture

that did'nt take to long now did it, spending that lotto money before the check was written.

lizzy36's picture

Quelle Suprise....German lawmakers thought they were voting on ESM1.0 turns out 8 hours bebore the vote it became 2.0 and nobody knows exactly what 2.0 is, just that Germany is paying for it.

Of course Monti learned his bullying skills at Goldman, so in theory they should be in top 10%/. In fact, all the concessions he got for ESM 2.0 might have been a tad more effective had the ESM actually existed.

But end of quarter and end of month - any excuse to send out less bad monthly statements.Booyah

falak pema's picture

surprise, surprise...Sally met Harry and it didn't go according to the script.

milanitaly's picture

I told you Tyler, never bet on Germany when Italian people get pissed off.


falak pema's picture

Are Germans bad losers?

Do they renege the word of their Chancellor?  We'll soon find out!

And this heading that ZH posted before the late nite accord :   Horkel Divide Growing

What to make of this TD statement in the current about turn!

I think that Hollande, Rajoy and Monti pulled this one off collectively, when they met in Rome; and Merkel said, "Ciao, I'm going to see Germany play Greece".

She didn't know then that Monti had greased the Italian team with Iniesta steam !

Now this three card Monti ! She is stymied. And Hollande is smiling "cheese".

Until the next Greek nite-mare!

Roller coaster is first world's ONLY play, until it goes into the deep deep blue.



the not so mighty maximiza's picture

Yeap looks like the Germans will take one for the team.  they will never see that funding again.

Popo's picture

The whole thing was an act. There's no opposition to the banking cartel in any government, anywhere. The biggest loser on the world stage is the middle-class taxpayer who will be raped repeatedly until the cartel achieves its endgame of a two-classed polarized world of lords and serfs.

insanelysane's picture

You got to pass it to find out what's in it.  Where have I heard that before?

China's picture

Please support China's candidates this election. We support Romney and Obama.

kristian01's picture

Must be some dark hours in the hallowed "offices" of the ZH founders in their parent's basement in Paramus...'how the fcuk are we gonna get people panicked again?'  Think quick guys--pull out an asset correlation story, Fed balance sheet chart from 2007-now, Matt Taibbi link, or maybe the old reliable, obscure-boilerplate-risk-commentary-which-we'll-wildly-extrapolate-from-MS's-10K!

Just so predictable...LOL

Popo's picture

Well... To be fair: to any perceptive analyst in 1950 the Soviet Union was doomed. But anyone preaching it's imminent downfall was decades early.

ZH isn't wrong. But it's entirely possible ZH will be right long after we're all dead. Which of course severely downgrades the value of the assessment...

kristian01's picture

the website slogan really should be "On a long enough timeline the accuracy rate for all our lame forecasts rises to 1."

Catullus's picture


In connection with certain OTC trading agreements and certain other agreements associated with the Institutional Securities business segment, we may be required to provide additional collateral to certain counterparties in the event of a credit ratings downgrade. Our long-term credit ratings by Moody’s Investor Services, Inc (“Moody’s”) and Standard & Poor’s Ratings Services (“S&P”) are currently at different levels (commonly referred to as “split ratings”). At December 31, 2011, the amounts of additional collateral or termination payments that could be called by counterparties under the terms of such agreements in the event of a downgrade of our long-term credit rating under various scenarios were as follows: $919 million (A3 Moody’s/A- S&P); $3,989 million (Baa1 Moody’s/ BBB+ S&P); and $4,743 million (Baa2 Moody’s/BBB S&P). In addition, we are required to pledge additional collateral to certain exchanges and clearing organizations in the event of a credit rating downgrade. At December 31, 2011, the increased collateral requirement at certain exchanges and clearing organizations under various scenarios was $118 million (A3 Moody’s/A- S&P); $1,183 million (Baa1 Moody’s/ BBB+ S&P); and $1,775 million (Baa2 Moody’s/BBB S&P).

So what part about that is "wildly extrapolated"?

Catullus's picture

These things called "customer deposits" are liabilities to a bank. Therefore including them as part of risk exposure to a certain geographical region is both relevant and material. And none of analysts "taking on" ZH seem to be denying that. They're just saying the move in the stock price is overdone and that MS doesn't have as much risk at the end of last year as they did during the middle of credit crisis.

Again, missing the part where this is wildly extrapolated.

kristian01's picture

You're right, there was no extrapolation, per se, just representing without context or explanation that they were reprinting a chart of *notional* exposures--which are almost completely irrelevant from the risk management perspective. "Extrapolation" was a poor word choice on my part.

Now you can say, "well it's up to the readers to interpret, ZH just presented the facts"--you must realize how disingenuous that sort of statement is.  Let me respectfully ask you a reasonable question--when you paste a chart from the 10K, completely without context or a complete explanation, with an alarmist headline comparing a specific exposure in that chart to book value, and then your out is "we never said actually that that was a net exposure, now did we?" me, that's irresponsible and clearly an action taken by those with a specific agenda.  

If I post a chart of Citi's geographic loan distribution and it illustrates that they have $1.2 trillion or 80% of their loan book inexplicably in North Dakota and write a headline "Citi shockingly exposed to oil shale industry--$1.2 trillion of loans based in N.D.!" but don't add that, indicidentally, this is just a function of their North American bank sub being incorporated in North Dakota (which *was* explained in the 10K footnote but I just chose not to include it for some reason) I performing a positive service to the market?

Anyway, back to the point, as MS itself explained on its subsequent conference call:

"Let me turn to what is being called [FFIEC] data. As many of you know and have written about, FFIEC regulatory data present notional amounts outstanding in a country, rather than providing a real measure of risk. In essence, the FFIEC data are reported on some combination of notional and growth asset basis, and do not reflect the liability side of the balance sheet, and thus do not reflect offsets for short positions or collateral.

For example, reverse repo positions are reported growth, with no deduction of collateral. In some cases, OTC derivatives are presented on a notional basis. And in addition, they are presented without the netting of collateral or without the benefit of offsetting trades that may have occurred in a different jurisdiction.

In certain countries, the FFIEC data are particularly not reflective of risk exposure because the data include all volumes that go through a central clearinghouse that is located in that country. It thus captures transactions taking place outside of a country. I will share with you a couple of items in our June data for France so you can get a sense for how it differs from what we would consider risk.

 20% to 25% of the FFIEC amount is a gross-up of derivatives between fair value and notional. Approximately 55% of the amount reflects reverse repos through a French subsidiary of LCH Clearnet, where we clear our reverse repos as well as other cash and collateral. 

...Using the same approach with France, at September 30, net exposure was less than zero, and excluding hedges, the total was $1.5 billion. Approximately $1 billion of that amount includes our guarantee fund contribution and initial margin at a clearinghouse. Excluding the clearinghouse amounts, we get to approximately $500 million."


uh, $500 million isn't exactly $40 billion, is it?

lizzy36's picture

So judging from when you joined you got long close to the April highs and have been wearing depends ever since.

Good luck with that.

kristian01's picture

good write that yourself?

lizzy36's picture

No, my 7 yr old nephew.

I figured he was best positioned to craft a comeback. He is generally able to sling mud,loves a good poop/fart joke and it unable to debate points on their merits.

Here is an idea...if ZH is so wrong, submit a well crafted post on why, suggesting an alternative (bullish) point of view. I can guarantee it will be posted.

My bet is you are more "bully" less well crafted argument type. Yeah for Cramericans!

Catullus's picture

The elite are more afraid of this referendum that anything else.  They want the banking union before this goes to a vote.

Silvertrader's picture

Markets are up. It's time to pick up some precious metals with a Contract For Difference 

elwu's picture

Don't know if you have read the ESM? It is an enabling act for the finance industry and the spendthrift Club Med to plunder the core european countries taxpayer's pockets without any limitation in volume and duration.

The ESM executives enoy absolute immunity. The ESM can't be terminated. Well, there is one possibility: a war. Which will happen once the people in Germany, Finland, the Netherlands and Austria have to pay substantially higher taxes to finance the lifestyles of aliens.

Thus, the ESM and tonight's high treason by Merkel in Bruxelles is the 1st step for the next war in europe: the Club Med against the rest.

Major Priapus's picture

A most important and significant event occurred less than two weeks ago that constituted a significant game-changer in this Euro-debacle!,,16035506,00.html
Germany's constitutional court has ruled that parliament must be given an adequate say in the government's position in negotiations regarding the eurozone. The ruling doesn't affect previous measures.

One other factoid is relevant to a proper understanding ow what is really going on here:  The ESM in its current form is anathema to the FDP the closest thing Germans have to Libertarians and the coalition partner permitting Merkel's continued grip on power.

Here is my take:  Merkel had no intention of caving in and surrendering hard-earned German tax-euros to bailout Club-Med profligacy without oversight or any strings attached.  Merkel also had no intention of being recorded in the history books as a Teutonic Margaret Thatcher whose iron fist single handedly brought down the ill-conceived and misbegotten Euro experiment!
Merkel is manipulating the arc-reflex reactions of her political opposition and coalition partners to her advantage and played her eurokleptocrats like fiddles.   The Bundestag approval for the ESM is not stillborn – it was aborted!
Well played Angela!

Major Priapus's picture

Most recent German Headlines:

Berlin: vote on ESM Berlin wobbles

SPD and FDP politicians to postpone voting

Definitely NOT a slow-news day in Germany...

CrashisOptimistic's picture

They will pass it.

The alternative is the opposition takes power, and they are MORE willing to pass it than Merkel's coalition.

Major Priapus's picture

I beg to differ.

Germany operates on a parliamentary model!  Losing this particiular vote does not force a re-election.  As a matter of fact - losing this vote boosts Merkel's political future by boosting the fortunes of the FDP who should manage to steal the SPD's thunder.

It's almost Byzantine!

Major Priapus's picture

Damn!  I called that one wrong!!!

For reasons that completely escape me - it looks like the ESM & Fiscla Pact may fly in the Bundestag!


Major Priapus's picture

Here is a minute by minute play on the vote in the Bundestag.

Remember that this neither the fiscal pact nor the Esm will fly unless 2/3 of the Bundestag says "Ja"

That means Merkel requires support from the opposition.

Major Priapus's picture

  Meanwhile - this all speculation may be rendered moot, given the fiscal pact is almost certainly unconstitutional. So even if it does pass in the Bundestag – Germany will need to rewrite its constitution in order to enact the Fiscal Pact  Merkel has left nothing to chance...  

Major Priapus's picture

This last link is most pertinent:

Germany's Supreme Court is subject to unbelivable political pressure to live up to its "responsibities: to both its country and to Europe!

The Supreme Court is pushing back - indicating it has already gone probably too far in bending the letter and the principle of constitutional law in accomodating the wishes of their politicians and the eurocrats.

This vote is just one domino:  the president will not sign the two bills into law until the Supreme Court (aka Karlsruhe) rules in favor and that appears ever less likely.  A negative ruling by the Supreme Court means the game is over!  It would be too late to change the constitution in time to rescue the Euro.

It appears I may have been correct for all the wrong reasons!

I still stand by my original contention:  Merkel had no intention of caving in and surrendering hard-earned German tax-euros to bailout Club-Med profligacy without oversight or any strings attached.  Merkel also had no intention of being recorded in the history books as a Teutonic Margaret Thatcher whose iron fist single handedly brought down the ill-conceived and misbegotten Euro experiment!
Merkel is manipulating the arc-reflex reactions of her political opposition and coalition partners to her advantage and played her eurokleptocrats like fiddles.   The Bundestag approval for the ESM remains stillborn until signed into law by the president.   Merkel is counting on the Supreme Court in Karlsruhe to abort the ESM and ultimately the Euro!

malek's picture

That should be all posturing by the SPD. In the end they are much more willing to spend OPM than the already not conservative at all CDU/CSU.

Major Priapus's picture

It would appear that the EMS will pass with 2/3 in the Berlin

onto Karlsruhe!