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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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Sun, 08/05/2012 - 10:36 | 2679319 Caggge
Caggge's picture

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

Sun, 08/05/2012 - 12:27 | 2679515 WTFx10
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.

Sun, 08/05/2012 - 18:20 | 2680275 Popo
Popo's picture

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

Sun, 08/05/2012 - 19:20 | 2680388 Wjunk
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.

Mon, 08/06/2012 - 03:54 | 2681038 AldousHuxley
AldousHuxley's picture

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

Mon, 08/06/2012 - 05:42 | 2681088 StandardDeviant
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.

Sun, 08/05/2012 - 10:39 | 2679322 hugovanderbubble
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% 



Sun, 08/05/2012 - 12:11 | 2679478 bank guy in Brussels
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 ...

Sun, 08/05/2012 - 14:36 | 2679841 Peter Pan
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.

Sun, 08/05/2012 - 16:25 | 2680085 zhandax
zhandax's picture

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

Sun, 08/05/2012 - 17:50 | 2680212 anonnn
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.


Sun, 08/05/2012 - 12:43 | 2679546 A Man without Q...
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.

Sun, 08/05/2012 - 10:40 | 2679323 CunnyFunt
CunnyFunt's picture

Hopes dashed, indeed.


Sun, 08/05/2012 - 10:42 | 2679324 Eireann go Brach
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!

Sun, 08/05/2012 - 10:43 | 2679328 CunnyFunt
CunnyFunt's picture

squid pro quo

Sun, 08/05/2012 - 14:25 | 2679816 LULZBank
LULZBank's picture

Its just good business, nothing personal.

Sun, 08/05/2012 - 10:46 | 2679325 The Count
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. 

Sun, 08/05/2012 - 11:43 | 2679426 i-dog
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.

Sun, 08/05/2012 - 11:54 | 2679446 CrashisOptimistic
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.

Sun, 08/05/2012 - 12:05 | 2679457 i-dog
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.

Sun, 08/05/2012 - 12:08 | 2679468 The Count
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. 

Sun, 08/05/2012 - 13:00 | 2679530 i-dog
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....

Mon, 08/06/2012 - 04:15 | 2681048 AldousHuxley
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.




Sun, 08/05/2012 - 12:22 | 2679505 WTFx10
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.

Sun, 08/05/2012 - 18:23 | 2680281 Popo
Popo's picture

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

Mon, 08/06/2012 - 07:19 | 2681133 StandardDeviant
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?

Sun, 08/05/2012 - 10:43 | 2679327 Caggge
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.

Sun, 08/05/2012 - 10:44 | 2679329 dumby
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.

Sun, 08/05/2012 - 10:47 | 2679332 tu-ne-cede-malis
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. 

Sun, 08/05/2012 - 10:51 | 2679341 Uncle Remus
Uncle Remus's picture

Your bank may not share your perspective.

Sun, 08/05/2012 - 11:43 | 2679425 falak pema
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.

Sun, 08/05/2012 - 11:57 | 2679451 Haole
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. 

Sun, 08/05/2012 - 12:14 | 2679482 disabledvet
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.

Sun, 08/05/2012 - 12:00 | 2679449 Element
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

Sun, 08/05/2012 - 10:57 | 2679349 dumby
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?

Sun, 08/05/2012 - 13:15 | 2679621 knukles
knukles's picture

Dead Fucking WRONG

Customer DDA's are Lilabilities

Sun, 08/05/2012 - 14:56 | 2679885 tu-ne-cede-malis
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.

Sun, 08/05/2012 - 15:50 | 2680010 Uncle Remus
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.

Sun, 08/05/2012 - 10:45 | 2679330 tu-ne-cede-malis
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.

Sun, 08/05/2012 - 10:46 | 2679331 Haager
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.

Sun, 08/05/2012 - 13:40 | 2679695 disabledvet
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.

Sun, 08/05/2012 - 10:49 | 2679334 Uncle Remus
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.

Sun, 08/05/2012 - 10:49 | 2679335 TahoeBilly2012
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.

Sun, 08/05/2012 - 10:49 | 2679337 SeverinSlade
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.

Sun, 08/05/2012 - 10:49 | 2679338 fonzannoon
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?

Sun, 08/05/2012 - 11:00 | 2679352 booboo
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.

Sun, 08/05/2012 - 11:49 | 2679438 NoTTD
NoTTD's picture

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

Sun, 08/05/2012 - 10:51 | 2679339 Nussi34
Nussi34's picture

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

Sun, 08/05/2012 - 10:57 | 2679347 resurger
resurger's picture


Sun, 08/05/2012 - 11:04 | 2679354 Bokkenrijder
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!

Sun, 08/05/2012 - 11:16 | 2679375 fiddy pence haf...
fiddy pence haff pound's picture

IT's interesting how little communication there is between German people and websites in other languages.

The writers of web texts could have their own twisted politics at play.

Suffice it to say, I think MerkeSchauble are planning to change

German law to allow for Eurobonds and more debt for everybody!

MOre fake economy and uncertainty, ctrl-p ad infinitum.


Enjy life.

Sun, 08/05/2012 - 11:31 | 2679398 Son of Loki
Son of Loki's picture

"most Germans are distracted"


same in most places. Malls not as crowded and very few are buying anything except stuff discounted 80%. People with good-to-great credit trying to preserve that (make their mortgage payments, cc payments, etc)....the other fairly large group with poor credit no longer has access to credit cards so you see them paying with cash at the registers and many simpy have stopped paying any former cc and any mortgage they had since foreclosures now take 1-3 years...even evictions take a very long time while the bank/landlord losses $$$$'s a mess but by and large people are uninformed as to the causes.

Sun, 08/05/2012 - 11:51 | 2679442 Haager
Haager's picture

The common citizen, either dutch, german or from the US, remains still ignorant, I agree. Standard media (MSM) in either country is still relative relaxed and keep the sheeples blind. 

But I know of some more people and some more media around here and elsewhere, and there they can feel and smell the bad weather arriving.

Waar kom jij vandaan, trouwens?

Sun, 08/05/2012 - 11:01 | 2679355 RobotTrader
RobotTrader's picture

Any inflation expectation can be simply and easily "jawboned" back down by Draghi and Bernanke with a few choice words in a prepared statement.

If that doesn't work, then even the smallest of interest rate hikes at the Fed will cause an instantaneous crash and liquidation of all commodities and an epic surge in the U.S. Dollar.

Sun, 08/05/2012 - 11:19 | 2679377 fonzannoon
fonzannoon's picture

Hahaha a small interest rate hike Hahaha because if they hike hahaha.... I can't I'm sorry give me a see Robo if the hike intere....hahahaha....I can't I'm sorry someone else take this one I am doubled over....

Sun, 08/05/2012 - 11:33 | 2679402 Bobbyrib
Bobbyrib's picture

They would have to hit Ctrl P to pay the debt until hyperinflation takes down the economy.

Sun, 08/05/2012 - 11:44 | 2679429 dow2000
dow2000's picture

I disagree the US does not have the ability to control inflation via raising interest rates as Volcker did back in the late 70's. The US is now saddled with so much debt we cannot move away from a ZIRP. Every nominal 1 point increase in IR's adds another 160 Billion in interest expense that Is required to service the existing debt, let alone any new debt issuance.

What is the real cost of the U.S. government's nearly $16 trillion debt? 
"The debt crisis is likely bigger than you think," a new report issued last week by Deloitte, one of the world's largest accounting firms, concluded. 
That's because interest payments add a whole new level of fiscal pain to the country's debt problem. Interest payments on the national debt alone, it noted, are expected to total some $4.2 trillion over the next decade. 
And that number could fluctuate depending on rates. 
'The debt is not something that is going to go away . . .'
- Bill Eggers
The lead author of the Deloitte study, director Bill Eggers, stressed the way that U.S. government debt could quickly spiral out of control if investors become less willing to lend more money. 
"If interest rates go up by simply 3 percent over the next decade, the additional cost to the Treasury, just for interest payments, would equal the peak combined cost of the wars in both Afghanistan in Iraq," he said. 

Read more:


Sun, 08/05/2012 - 11:56 | 2679450 Manthong
Manthong's picture

Heh heh..  just wait till the reality of shortening duration and the amount of rollover the US is facing right now becomes understood.

The party is just starting.

Mon, 08/06/2012 - 22:46 | 2683604 MeelionDollerBogus
MeelionDollerBogus's picture

interest-rate hikes will bankrupt them all, they can not and will not.

Inflation isn't "expected" it's here.

Sun, 08/05/2012 - 11:38 | 2679411 TIMBEEER
TIMBEEER's picture


Sun, 08/05/2012 - 11:06 | 2679361 PMakoi
PMakoi's picture

"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."  Oh, geez, if only!  It should have!  And, in time, it will.

Sun, 08/05/2012 - 11:09 | 2679364 Wakanda
Wakanda's picture

"On the long term, vengeance will be bitter."

Sounds like a Wagner opera.  Oh wait...

Sun, 08/05/2012 - 13:07 | 2679606 grekko
grekko's picture

Yep, Dance of the Valkyries.  And the vampire bankers are dancing.  Hopefully soon at the end of a gallows rope.

Sun, 08/05/2012 - 11:11 | 2679368 Never One Roach
Never One Roach's picture

I say we move the Headquarters to the Eagle's Nest over Berchtesgaden.

Sun, 08/05/2012 - 11:13 | 2679371 Snakeeyes
Snakeeyes's picture

Probably right. Spain and Italy are beyond hope. But Draghi wants Germany to bail out Socialism. (or bad housing loans in Spain).

Sun, 08/05/2012 - 11:46 | 2679374 slewie the pi-rat
slewie the pi-rat's picture


alles swappen ze spitz

angela ready to come back to werk?

Sun, 08/05/2012 - 11:22 | 2679382 fonzannoon
fonzannoon's picture

Sunday humor?

Stockton, California, Police Chief Tom Morris was supposed to bring stability to law enforcement when he was appointed to the job four years ago.

He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000 -- the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries.

“We didn’t have very many people looking out for the taxpayers when these deals were negotiated,” San Jose Mayor Chuck Reed, 63, said in a telephone interview

Sun, 08/05/2012 - 14:10 | 2679774 Bay of Pigs
Bay of Pigs's picture

no wonder people hate cops

Sun, 08/05/2012 - 14:33 | 2679835 Uncle Remus
Uncle Remus's picture

We didn’t have very many people looking out for the taxpayers when these deals were negotiated,” San Jose Mayor Chuck Reed, 63, said in a telephone interview

Understatement of the decade.

Sun, 08/05/2012 - 11:25 | 2679385 Dareconomics
Dareconomics's picture

After reading all of the quotes and analysis, I am convinced of two things.

First, the ECB will eventually print lots of money in an attempt to halt the crisis. As I have written before, money printing only works in the short-term. Of course, no one knows exactly how long the short-term is.

Second, the Merkel is wholeheartedly behind this action. Her ECB head Weidmann is playing the bad cop to extract reform concessions in exchange for the money printing. These concessions include austerity and closer political union.

After firing Bismarck, Kaiser Wilhelm dreamed of a United States of Europe under German leadership. German dreams of political domination die hard. They also end in disaster.

Sun, 08/05/2012 - 11:27 | 2679388 fonzannoon
fonzannoon's picture

Why print when you can talk and rumor the crisis down? Apparently everyone IS that stupid after all.

Sun, 08/05/2012 - 11:31 | 2679396 RiverRoad
RiverRoad's picture

The German people will say, "999 before they'll swallow a 666".

Sun, 08/05/2012 - 11:38 | 2679409 dcb
dcb's picture

interesting you saw this, I was going to hit tip it to ZH

Sun, 08/05/2012 - 11:38 | 2679412 falak pema
falak pema's picture

draghi the magicien, draghi the trailblazer....

GOLDMAN: The ECB Will Save The Day With 'Creative New Policy Instruments' No One Is Expecting - Business Insider

Now we know that only the Oligarchs understand Draghi. And Mutti Merkel is not in THAT club.

Sun, 08/05/2012 - 11:42 | 2679423 NoTTD
NoTTD's picture

We will invade Poland to show our displeasure.  Same as usual.

Sun, 08/05/2012 - 12:02 | 2679458 bank guy in Brussels
bank guy in Brussels's picture

Given that Polish people themselves have given the opinion that Poland is the most corrupt nation in Europe (some other peoples in the old Communist East countries think the same about their own lands) ...

And given the Poles are still mad at the Russkis, maybe they will welcome the Germans ...

Or not

Sun, 08/05/2012 - 12:37 | 2679534 WojtekSz
WojtekSz's picture

Last week there was a big woodstock festival opened on German/Polish border with both Presidents present and some 50% visitors from Germany - if this is what you have in mind than you are welcome. We can even have a beer together - we have very good beer here :)


Sun, 08/05/2012 - 11:53 | 2679444 slingshot
Sun, 08/05/2012 - 12:36 | 2679533 q99x2
q99x2's picture

Any nation that declares war against central banks is a nation that supports democracy.

Sun, 08/05/2012 - 13:03 | 2679597 grekko
grekko's picture

Are you kidding?  Democracy?  Mob rule?  Let's support the Republic instead, with the rule of law!

Sun, 08/05/2012 - 12:39 | 2679541 ebworthen
ebworthen's picture

When the Germans use "vengeance" and "bitter" in the same sentence Europe should pay attention.

Sun, 08/05/2012 - 12:48 | 2679564 grekko
grekko's picture

Yep, mostly Jewish, but that isn't a prerequisite to joining the elite.  You have to be a bold faced lying crook...religeous background doesn't matter at all.

Sun, 08/05/2012 - 13:04 | 2679599 doc_in_the_house
doc_in_the_house's picture

vengeance will be SWEET

for those calling the QEorganizer nothing but a stupid empty suit, LIE-beral underwater degree "elite".

uuuh, uuuh, PRINT BABY PRINT !!!

super-hyper inflation to commence in gold @ $250 then and ride to $8k+...22nd ammendment to be repealed by odummer = he can take ALL the blame.

Sun, 08/05/2012 - 13:08 | 2679605 stevealways
stevealways's picture

Actually Goldman, JP Morgan, and the like wield much more political. power than the Fed. The Fed has the power, which is fairly substantial to flood the market with liquidity, print money. But eventually the Fed will lose the longer maturity treasury bond market, meaning the the bond market is nott bound by the Fed's rates. the yield curve is set by the bond market. The This could happen tomorrow or it could happen in 20 years. The economic principle is really simple actually. As long as buyers namely China and Japan will continue to overpay for the US's long term bonds, then rates across the board will continue to stay low -supply and demand. Regarding the Fed could control inflation as iit could do what what Volker did. It is my honest opinion that nobody could get away with what Volker did 30 years ago. Fiirst there aren't too many people in public life that are brave as Volker to choose from. Greenspan and Bernanke were/ are puppets of politics. Secondly, they aren't going to appoint anyone like Volker. Most everyone in Congress hated Volker. But Reagan (and I'm not his biggest fan) didn't like Volker either (he was a Democrat), but he reappointed Volker iat the begining of his 1st term, because he knew that Volker's strategy would kill inflation. Once inflation was under control, he didn't need Volker anymore, so at the begining of his 2nd term he appointed Greenspan.

Getting back to The political power of the banks outside The Fed, the way I see it when the crisis of 2008 hit the Treasury called the major bankers in and asked "what should we do?". the banks told them and that is exactly what theTreasury did.

Sun, 08/05/2012 - 13:10 | 2679612 knukles
knukles's picture




                          (sound of Leopard 2's idling)

Sun, 08/05/2012 - 15:43 | 2679994 Uncle Remus
Uncle Remus's picture

as strains of eerily disconcerting martial music waft in and out on the dry sullen winds of change...

Sun, 08/05/2012 - 13:47 | 2679673 Lore
Lore's picture



The solution is childishly simple. Banks will crank out debt paper as long as idiot nations keep accepting it.

Repudiate the debt. Shut down vast swathes of bloated government. Live within your means. Shore up your currency with real reserves. Let markets work.

The alternative is collapse and war. Banksters LOOOVE war: the greatest misallocation of capital ever -- even better than "carbon tax."

Sun, 08/05/2012 - 14:21 | 2679807 dolph9
dolph9's picture

If the rest of Europe decides to fuck with Germany, they'll get exactly what they asked for.

It is possible humans never learn?

Sun, 08/05/2012 - 14:40 | 2679844 Uncle Remus
Uncle Remus's picture
"[T]he very essence of the banking industry, [is] to make us all, whether we be nations or individuals, slaves to debt." - Umberto Calvini character, The International (2009)
Sun, 08/05/2012 - 15:35 | 2679977 vinu02
vinu02's picture

Everyone likes free money before it was just bank now its countries.

Sun, 08/05/2012 - 16:07 | 2680051 4 wheel drift
4 wheel drift's picture

"On the long term, vengeance will be bitter."

wait....    i thought the moto was.....


in a long enough time line, the survival rate for everyone drops to ZERO...

[so any effort is futile]



Sun, 08/05/2012 - 17:37 | 2680201 sandhillexit
sandhillexit's picture

Deposits flee Italy and Spain, contracting the local money supply.  The money is parked in German bills and bonds, and in bank deposits, expanding the money supply in the North. That makes the Germans even crazier about the coming inflation.  The ECB, repo-ing bank loans in the north is doing nothing to halt the crisis in the South, and may not even have a framework for inter-regional analysis of the money supply relevant to each country's economy.

Lincoln, during the Civil War, faced enormous pressure from the gold market, because the price of US currency kept dropping in London.  He addressed the problem, not by arguing with the market, but by printing greenbacks, something which he had the authority to do.  The greenbacks covered procurement for the army and were valid to extinguish taxes. PA, Ohio, Michigan and Illinois factories kept working, oblivious to the unhappiness of London bondholders. The greenbacks were not for the payment of international interest. 

The US states do not have the authority to do this, per the Constituition. California tried to finesse the contraint with IOU's in 2009, selling very short term bills, and the short-term paper proved so popular that in recent years GS has soaked all California's revenue anticipation notes  up for themselves rather than allowing the state to sell them directly to local taxpayers.  Given that California's economy and tax base continues to carry the rest-of-the-country you would wonder why California has to borrow at all.  Demand creates supply.  The definition of the good life is a house in La Jolla, a 1980 property tax rate  and California double-tax-free bonds paying 5% on a spare $1 bln (see Romney, McCain, Pelosi, et al.) 

If may be that Spain could issue local scrip, valid for government purchases, government wages and the extinguishment of local taxes.  This scrip could trade in parallel to the Euro, and the country would not have to default on any Euro denominated debt.  Tourists could buy the scrip on the street, attracting foreign exchange, and discounting the cost of a Spanish holiday.  Exports would be sold in Euros which would really favor the establishment of export industries.  Just halting the contraction of the domestic Spanish money supply would bring this melodrama to a halt.  Businesses could afford to pay local workers.  Watch how fast Londoners/Russians move back into Spanish real estate.  (this model would also smooth out the problem in the US where the reserve banks try to manage the money supply for the Coasts by looking at data from North Dakota and Jackson Hole, Wyoming). 

How long could the Northern banks keep the South in debt servitude?  Well take a look at Haiti, the early test case for the power of compound interest. 

Sun, 08/05/2012 - 17:58 | 2680238 Satan
Satan's picture

Vengeance is a dish best served often...

Sun, 08/05/2012 - 21:58 | 2680734 Tommy Gunner
Tommy Gunner's picture

Why in gods name doesn't one of these shooters in America, instead of taking aim at innocent people as they always do - instead walk into the morning rush on wall street and open up with 50 clips?    They could be a hero instead of a villain.  Everyone would cheer some vigilante justice no?

Mon, 08/06/2012 - 09:01 | 2681316 David Wooten
David Wooten's picture

I suspect that Merkel's government will go along with piece meal bailouts until the US election is decided.  After that, things will get nasty - no matter who 'wins'.

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