The German Press Responds To Draghi: "Vengeance Will Be Bitter"

Tyler Durden's picture

And, as expected, it's not happy. The punchline:

The central bank is to become subordinate to finance ministers in crisis-stricken countries. In Draghi's homeland Italy, such a situation was the norm for decades -- and the result was chronic inflation. Now, he is accepting a repeat of history. On the short term, it will create relief in the debt crisis. On the long term, vengeance will be bitter." 

As a reminder from March: Mario Draghi Is Becoming Germany's Most Hated Man

More from Spiegel:

Germany has long been wary of ECB bond purchases and opposition has only grown since the Frankfurt-based central bank largely ceased buying sovereign bonds last year. Jens Weidmann, head of Germany's central bank, the Bundesbank, has been particularly vociferous in his criticism of bond purchases, saying they rewarded debt-ridden countries without demanding reforms in return. Draghi even mentioned Weidmann's opposition to the program in his Thursday press conference.

Still, the widespread resistance in Germany to ECB action, and to many other euro-crisis proposals that could increase German taxpayer liability, has painted Merkel into a corner. With the opposition in Berlin showing a decreased willingness to rubber stamp her euro-crisis measures and a growing rebellion within the ranks of her own government, her ability to respond to the worsening crisis may become increasingly limited.

German media commentators take a closer look at the ECB's approach to the crisis on Friday.

Center-left Süddeutsche Zeitung writes:

"The greatest challenge for ECB head Mario Draghi is to make it clear to the people of southern Europe that he will only help if they continue to make radical reforms to their economy. On Thursday he chose a clever dual strategy. He spoke of the possibility of bond purchases and other measures, but only if the governments in question fulfil certain conditions. In other words: there is no free money."

"It is not a problem that investors have reacted with disappointment due to their hopes for something more concrete. It is even helpful. Draghi's insistence on conditions shows that he is aware of the risks to taxpayers. It is also helpful that, in Jens Weidmann, he has a man in the ECB's Governing Council who is seen as a representative of the people in donor countries."

"The ECB Governing Council enjoys even less democratic legitimization than the European Council, which is why the ECB really should only offer temporary help. But it must offer help nonetheless as long as the euro zone is unfinished. If the government and the Fed in the US debated for months … following the Lehman Brothers bankruptcy in 2008, the global financial system would have collapsed."


Center-right Frankfurter Allgemeine Zeitung writes:

"Even if the ECB intervention hasn't yet arrived, it will eventually. Central bankers in Europe believe it is very likely that the ECB will ultimately jump in -- at the latest in September, following the German high court ruling on the bailout fund, the European Stability Mechanism. Ultimately, the ESM will make direct purchases of sovereign bonds and the ECB will fire the monetary cannon."

"The actual mandate of the ECB, price stability, has faded into the background during the crisis. So far, the ECB has taken its duty of combating inflation seriously. Now, though, dangers are growing on the mid- and long-term. The greater the quantity of questionable sovereign bonds on the books, the higher the potential losses. Even worse is the potential damage to the bank's reputation: The central bank is to become subordinate to finance ministers in crisis-stricken countries. In Draghi's homeland Italy, such a situation was the norm for decades -- and the result was chronic inflation. Now, he is accepting a repeat of history. On the short term, it will create relief in the debt crisis. On the long term, vengeance will be bitter."


Conservative daily Die Welt writes:

"The ECB would be well-advised to give way to politicians this time. With his grandiose announcement that he would save the euro at any price, Draghi has already come dangerously close to a red line that a central banker should never cross. The border between fiscal and monetary policy -- which has already been blurred to the point of being unrecognizable -- would be completely nullified if the ideas being discussed were to become a reality."

"It is also sham for politicians to reject the collectivization of debt or any form of a transfer union, only to leave it to the ECB to finance sovereign debt through the back door by printing more money -- to everyone's detriment. Draghi and his colleagues are responsible for the euro, but they are not democratically elected officials. Within their constraints, they can certainly help save the currency union. But the decision is a political one. … Fresh billions alone, regardless of their form, won't solve the problem."


Financial daily Handelsblatt writes:

"Because politicians have failed in their fiscal policies, they are leaving it up to monetary policymakers. Certainly it is easier to wash their hands of it. … But this won't help. The governments must govern. They have to figure out how much solidarity there is, and how much they can get their voters to suffer. Then they need to find common ground on how the euro can be rescued without printing new money. One thing is clear: Monetary policy alone cannot replace these decisions. It will only delay them. Merkel, Monti, Hollande and the other leaders must get their hands dirty, as uncomfortable as it may be."


The Financial Times Deutschland writes:

"It would be nice if (everyone could agree on the course communicated by Draghi on Thursday) so as not to limit the psychological effect of the announcement. But there was opposition from Germany, once again from Bundesbank head Jens Weidmann, who apparently was the only one on the Governing Council to vote against Draghi's plan. Draghi isn't the only one who is disgruntled. It is indeed inadvisable to sacrifice ECB unanimity. The Bundesbank head is fostering distrust where the opposite is needed…."

"With Weidmann isolated, there is more: Not just the central bank heads from Austria, Luxembourg and Finland -- who have often voted with him in the past -- were of a different opinion this time. The second German on the Governing Council, Jörg Asmussen, was as well. It will be interesting to see how Weidmann positions himself in coming weeks. If he remains opposed to the plan, its credibility would be threatened. In such a case, hopes for a half-way peaceful late summer on the markets would be dashed."

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Caggge's picture

The central banks are a tool to keep the elite the elite. Nothing more.

WTFx10's picture

"The central banks are a tool to keep the elite the elite"

The central banks are a tool to keep the Organized Criminal elite the Loan sharks of sovereign nations so they may stay the organized criminal elite.

Just criminals who happen to be mostly jewish.

Popo's picture

The 99.99% of Jews that aren't bankers would probably take issue with your comment.

Wjunk's picture

...but those who always seem to mix the words 'Jews' and 'Monay' or 'bankers' into the same sentence don't really care about reality now, do they?

Bigotry and irrational fears are simply two fingers in the same glove.

AldousHuxley's picture

central bankers are appointed by the president who is selected and groomed by the elites.

StandardDeviant's picture

Don't forget gullibility.

Since this ridiculous topic comes up here with depressing frequency, maybe it's a good place to recommend Umberto Eco's latest novel, "The Prague Cemetery".

He's visited the subject of conspiracy theories, and theorists, before in "Foucault's Pendulum", arguably a better book.  "TPC" is considerably less subtle, telling, through the eyes of a thoroughly loathsome but always piously self-justifying character, the evolution of an extraordinary chain of forgeries and lies over the years and centuries, unfortunately including our own.

It's not nearly as long or complicated a read as some of his other works, so don't be put off if you were unable to make your way through, say, "Kant and the Platypus".

Of course, it'll be lost on the mouth-breathers who insist on degrading this site with their off-topic hatred; but maybe one or two of the more literate people here will find it interesting.

hugovanderbubble's picture

Germany has one fear.

-LOSING AAA Rating ...Austria must be worried.

(where the money will go, yes to gold where the HNW germans has allocated their money last decade)

+Debt Haircuts in Spanish and Italian Bonds so German, French and Swiss banks gonna suffer hard next weeks-

Remember LBBW is in current default, + Commerzbank needs to raise capital and worries about Deutsche Bank + AAREAL

(EBA-Stress Tests are the biggest farce ever done)


* Look the 10yrs bonds completly illiquid and untradeable in most cases the subgovernment bonds in technical default


We have Euro A : 

and EURO B league: 

Be careful next days with big volatility coming.


* My target for 10yrs German Bund = 1,03% 



bank guy in Brussels's picture

Indeed, as you say, « ... German, French and Swiss banks gonna suffer hard ... »

Seems from the excerpts above, that the German media is slowly getting Germans ready for the fact the ECB will print

To try and 'save' the German banks, insurers and pension funds ... whose weakness is the 'dirty' secret, behind the 'get their hands dirty' comment in the German media

Germans in fact 'lost' their ability to trust the Bundesbank years ago, when they let Deutsche bank and the other German financial institutions lever up 60-to-1 and gorge on Mediterranean debt as 'investments' ... even though it was 'vendor financing' for German exports to the rest of the euro-zone ... German submarines to Greece and other great 'sales' of the German economy

It has long been in the cards ... QE ... the only tool to keep the game going a little longer once things get rough ...

The German voices opposing Draghi, at the highest levels, are just play-acting ... 'Save our German banks, and insurers, and pension funds ... please PRINT' is their already-logged secret plea and demand to him ...

Peter Pan's picture

Draghi and the debt stricken nations of Europe are leeches. If they were confident and responsible they would each mortgage sufficient national wealth to act as collateral for any Eurobond issues. The fact that they don'tdo this is clear evidence that they are nothing more than debt junkies with no intention of repaying.

zhandax's picture

It's already mortgaged four times over.  That is the problem.

anonnn's picture

"Draghi's insistence on conditions shows that he is aware of the risks to taxpayers."

Please explain what "taxpayers" means. It is a fraudulent generality that hides the 2 different classes of "taxpayers", The privileged  and the unprivileged as defined by  tax code loopholes/exceptions/etc and the selective enforcement of such.

The very best sociopaths define for the rest of us which criminal activities are to be tolerated and which get prosecuted.


A Man without Qualities's picture

I think Germany has another fear, which is tied into the idea of the ECB acting as a unified regulator, which is that certain other nations (France, Spain, Italy, Portugal esp) have a large amount of hidden public debt, either directly at sovereign level, regional govt or in the myriad state owned businesses.  The fear is that these nations are waiting for debt pooling in some form, before coming clean that there is another 10% of GDP or more they didn't know about.

I think they are wise to be concerned.

Now, Draghi has made a mess, because he has politicized the ECB and appeared to come down on the Southern side and also shown that he is willing to pull a few tricks (broken transmission mechanism as a result of convertibility fears - what a bunch of crap - it's credit risk, pure and simple).  

Weidermann represents a group that simply doubts the credibility of some governments and he has strong support in the Buba and the constitutional court.  Merkel, I suspect, knows he is right, but she does not know what can be done.

CunnyFunt's picture

Hopes dashed, indeed.


Eireann go Brach's picture

Dragi is another tentacle of the Goldman squid! Which means the guy will sell his own grandmother down the river to maintain the status quo!

LULZBank's picture

Its just good business, nothing personal.

The Count's picture

The Int. baning system has been outed as a criminal conglomerate, yet they continue to operate with impunity. HSBC's huge money laundering operation. Has their banking license been suspended? Any managers been indicted? Of course not! First of all, those billions of drug profits are an integral part of our money system. It is partially what is keeping the US banking system afloat. The entire war on drugs rhetoric is a sham. Corzine losss of memory where the millions went? In a normal world he would be sitting in jail without bail, but not a big donor of the Democratic party. Rigged Libor rates? Just a handful of traders...yeah sure! Anybody that knows how a bank/ hierarchy works knows that such a thing cannot go on for years without top clearance. Yet the media feeds us BS stories on all these events, a true cesspool of incompetence, greed and outright organized crime. The only way we can get rid of these bloodsuckers is by some huge natural disaster which will unfortunately also make the totally innocent suffer.


PS Monti should keep his big mouth shut since nobody elected him, essentially there was a coup d'etat in Italy but the US did not say a word. 

i-dog's picture


"The only way we can get rid of these bloodsuckers is by some huge natural disaster"

Nonsense. A group of well-heeled citizens, scattered through a number of countries, could mount a barage of legal challenges to all of the banking and political shenanigans. It would not be possible for the MSM to hide a well-financed and noisy challenge by righteous citizens concerned about the nightmare world being created for their offspring.

CrashisOptimistic's picture

haha Legal challenges?

Suppose the court hearing them is defunded?  That takes care of your legal challenge.  What happens if the judge comes to work and his office is padlocked, and the courtroom too?  What happens if courtroom staff are not paid?

That's what happens when you think law trumps money.

i-dog's picture

Not one legal challenge ... a barrage of well-financed and publicised challenges ... across many countries ... in local, district and federal courts.

Shutting down the courts would show the peasants what is going on ... which is exactly what we need to do. From there, traction would build. The peasants still think we actually have a legal system.

The Count's picture

You are naiv, sorry to tell you. When it comes to the innermost workings of the system (let's call it the Matrix, just for fun), you are running against brick walls. How many well funded guys were defrauded by Corzine (this is just one example). Is he in jail? Will the money ever show up? What came out of the congressional hearing? Nada, zippo, nichts. 

i-dog's picture

Those defrauded by Corzine are probably still deluded into thinking they'll get their money back - eventually. That keeps them quiet. Congressional hearings are held by congressmen ... duh!

The upper middle class has the most to lose. They will be stripped bare by the oligarchs when the switch is flipped. Pension funds, 401Ks, brokerage accounts, CDs ... all gone. They are the enemy of the oligarchs, because they are the only ones with the means to fight the oligarchs.

It was the wealthiest barons that obtained the Magna Carta, not the peasants ... precisely because they had the most to lose and saw it all threatened.

The peasants don't give a fuck who's in charge, so long as somebody will employ them and pay them enough to eat and sleep. They'll work just as happily in a FEMA kamp as in a Walmart, a government agency or a multinational.

It is only the entrepreneurs and the independently wealthy that are truly threatened by the NWO ... apart from the hundreds of millions of all classes who will die of starvation when the food distribution chains are broken....

AldousHuxley's picture

but upper middle class has one weapon.....they are the most valuable resource which elites depend on.

when the upper middle class turns on the elites, that's when revolutions happen.


Napoleon wasn't some dumb schmuck, he was upper middle class.

Marx wasn't some dumb schmuck, he was upper middle class.

Kings are overthrown by their own bodyguards, generals, courts.....thus dictatorship and totalitarian rule can't exist.


loyalty of the upper middle class is paramount to the ruling class. So far American upper middle class are waking up.

For every Paris Hilton, you need stock brokers, portfolio managers, trust fund lawyers, chefs, hotel executives, etc....

when upper middle class gets laid off, they use their brains and power to rip off the rich.




WTFx10's picture

The USA say anything? We had our coup on 9/11 thats when complete zionist control took over. Or we just like fighting arab countries surrounding the terrorist state of israel. You decide.

Popo's picture

Every one of your comments has the same theme. Issues, much?

StandardDeviant's picture

Exactly.  One thing that would improve ZH no end is a way to let you set up a personal blacklist: to read this site while ignoring any comments (and, optionally, replies to comments) by individuals whose earlier content-free posts have proven beyond the shadow of a doubt that they're trolls, idiots, and/or off their meds and probably a danger to themselves and others.  What do you think, Tyler?

Caggge's picture

Has the ECB taken its duty of combating inflation seriously? It's central banks that cause inflation. Maybe better stated, The ECB has taken its duty of promoting inflation seriously.

dumby's picture

Read Murray Rothbard: The Mystery of Banking:

Murray explains, very simply, why central banks exist: to pool the debt obligations of banks, and thereby shield them from having to cough up cash when depositors make withdrawals, and to continue the fraud and deception, ad infinitum.

Many of the Founding Fathers understood this quite well, as did Andrew Jackson, and, yes, even the arch-enemy of freedom, Abraham Lincoln, who lost the war to his most formidable enemy: the bankers.

tu-ne-cede-malis's picture

Phenomenal book.  I'm still baffled with the idea that a demand deposit was/is treated as an asset of the banks.  If I deposit jewelery in a safety deposit box, does it then become an asset of the bank?  Obviously not. 

Uncle Remus's picture

Your bank may not share your perspective.

falak pema's picture

don't forget the insurance company who is on the line if that deposit box gets robbed. But it all ends up in the lap of the consumer as banks n insurances normally always have the last word; unless they are where they are today; in debt hell. And we with them.

Haole's picture

Every bank safe deposit box terms of usage agreement I've ever seen (Canadian banks) clearly indicates that the items "deposited" are unconditionally uninsured and the bank is not responsible for theft, loss, etc. 

disabledvet's picture

Was there private insurance for the account holders at MF Global? Something Corzine could have said at hearing actually. Could have offered the product actually.

Element's picture



"Outside zee vault is a steady predicable Newtonian cosmos, but inside zee vault, it becomes indefinite, and very, vwery whacky."
- neil's Bore, 1932

dumby's picture

That is a really astute observation.

Most people think that a 'deposit', like 'segragated funds' are equivalent to a safe deposit box.

MF Global anyone?

knukles's picture

Dead Fucking WRONG

Customer DDA's are Lilabilities

tu-ne-cede-malis's picture

Correct. Debit the asset (cash), credit the liability (demand deposit). The argument I'm attempting to make here is that no entry should be made at all. Is any entry made when i deposit jewelry in a safety deposit box? No. The same goes for demand deposits in gold/etc. The only entry that should be made is a debit to cash, credit to rental revenue, as I will pay a fee to the bank in exchange for safe keeping of my gold/jewelry/etc.

Uncle Remus's picture

As I am sure you have noticed, this is not your fathers America nor are most of the institutions in it.

tu-ne-cede-malis's picture

Hurry up and start issuing Euro bonds already. The German court is more than likely bought-and-paid-for.  They will rule the eurobonds constitutional.  That will give Europe maybe a few more years of "stability."  Meanwhile, attention will shift over the U.S. towards the end of this year as the fiscal cliff approaches.  Then the real fun starts.

Haager's picture

FTD often writes pro Keynesian but to me Handelsblatt looks to be the most honest in this approach.

Welt deserves (again) the disarranged-card, they're heating up the moods - on purpose?

The situation on the board of the ECB makes any thought of a completely independent and immune ESM-board more and more unpleasant in my view.

disabledvet's picture

None of them seem to be reporting the news actually. After the Thurasday cataclysm obviously the debt got monetized on Friday. So how's it going would be me question.

Uncle Remus's picture

I don't know which is worse, not having any Hopium to shoot up with or lack of a decent vein to pump it into.

Pity there's no export market for such an overabundance of palpable desperation.

TahoeBilly2012's picture

Okay fine Draghi, keep your Euros then, we are going back to Lira and gold backed at that. Goodbye! He would never work again.

SeverinSlade's picture

What's going to be funny is if Germany's high court rules using the ESM/EFSF buying sovereign debt constitutional...only to see each fund max out its credit card and Euro finmins demand a new fund be created or the ECB to monetize debt.

fonzannoon's picture

Everyone on here yesterday was pressing the argument that Germany will eventually give in and let the ECB print their balls off. If you play it out and Germany allowing the ECB to print is still not enough to prop up the Eurozone and likely takes Germany down with them, why would they? Why not just recap their banks, exit the euro and save themselves?

booboo's picture

There you go, thinking like a prole, You want to keep you and yours safe you better start thinking like a criminal cut throat thieving rat bastard, or gentle as a dove, wise as a serpent if you want to tone it down a bit.

NoTTD's picture

Paraphrasing Hillary Clinton, Germany needs to give up all those things for the common good.

Nussi34's picture

End the ECB! Germans get your "Euro? Nein Danke!" sticker now!

Bokkenrijder's picture

"Mario Draghi is becoming Germany's most hated man?"

Really? That's strange, I must live in another Germany then, because you barely hear anything negative about the Euro, Draghi and all the other EUSSR bureaucrats on the German MSM.

To the contrary, most Germans are distracted and brainwashed into thinking that there is no cloud on the horizon and that exports will cure all their problems. Of course the German economy isn't doing too shaby but the one thing that truly matters (i.e. that Germans end up paying dearly for the Euro experiment wth their productivity, skyhigh taxes and savings) is carefully brushed under the carpet here.

Business as usual, nothing to be seen here, keep on walking!