Germany Rumbling As Spiegel Leads With "Euro Endangers German Economy"

Tyler Durden's picture

Objective analysis, or media spin to gauge popular reaction to Plan Z? Whatever it is, today's staff lead article in the English section of Spiegel has a piece that will likely raise more than a few eyebrows: "The common currency union was supposed to benefit the economy of the entire European Union. Now that the euro is struggling, however, it is bringing growth down with it. Germany's economy, once seemingly immune to the crisis, is now facing mounting difficulties."

From Spiegel:

When the board of Commerzbank met last Tuesday, Stefan Otto was supposed to make an appearance. The chairman of Deutsche Schiffsbank, a Commerzbank subsidiary based in Hamburg and focused on the shipping industry, had been summoned to Frankfurt to present the bank's financial results. But the presentation was cancelled; Commerzbank had no need for the numbers, having previously decided it no longer wanted anything to do with German shipping.


The executive board of Deutsche Schiffsbank was not notified in advance of the parent company's reversal. The supervisory board was also taken by surprise. Only three months earlier, Commerzbank CEO Martin Blessing had declared the financing of ships and commercial real estate to be part of the bank's core business. And although it was expected to shrink, Germany's second-largest bank intended to create a separate segment for the business.


But the executives had underestimated the risks that the European sovereign debt crisis presents to Commerzbank, and how much capital the ship and commercial real estate business ties up. Now Blessing has slammed on the brakes. Deutsche Schiffsbank Chairman Otto characterized the parent company's about-face as the "decision of a cautious businessman and not of a skydiver."


Commerzbank has recently made a huge effort to satisfy and even exceed the capital requirements set by the European Banking Authority (EBA). But if the euro crisis worsens, new gaps could soon open up, say banking industry insiders.


In Spain alone, Commerzbank is exposed to the tune of €14.2 billion ($17.9 billion) via investments in banks, companies and the government. The lower the rating agencies assess the creditworthiness of these borrowers, the more capital the bank will have to place in reserve for these investments in the future -- to say nothing of potential defaults.


Commerzbank isn't alone with such problems. The euro crisis and the higher capital requirements being imposed by regulators have adversely affected almost all European banks. And because of growing fears within the banks of a collapse of the euro zone, they are preparing for the worst by withdrawing to their home markets and winding down many investments.


This has serious consequences for the economy, not just along the periphery of the euro zone, but also in Germany, which had proved to be crisis-proof and was in fact booming until recently.


The euro crisis hasn't yet reached the German labor market. Last week, Frank-Jürgen Weise, head of the Federal Employment Agency (BA), announced a new jobless low: With 2.8 million people out of work, the unemployment rate had declined to 6.6 percent, the lowest level in 21 years. But in the economic cycle, the labor market is considered a "trailing" indicator. In other words, when things go up or down in the economy, it takes up to six months before jobs are affected.


Indeed, even though the German job market remains robust, BA head Weise says he sees "signs of weaker development." Month after month, the BA surveys all 176 employment agencies throughout the country about early indicators, so as to forecast labor market developments for the coming months. According to these indicators, the jobs situation will not deteriorate until autumn. But "we are nervous about 2013, because of all these risks relating to sovereign debt in the euro zone," says BA chief Weise.

Why is all of this relevant? Because as we get closer each day to the German ESM/Fiscal Pact constitutional court ruling, now expected on July 10, or a day after the ESM was supposed to go into operation, passions will rise. In fact, the Germany CSU chief Seehofer is already making waves with several announcements that put the bailout MOU achieved by Monti over so much blood and tears under question:

  • German CSU chief says the CSU can't back limitless German Euro aid
  • German CSU chief says concerned markets may question German Euro strenth
  • German CSU chief says the CSU doesn't want new constitution for Germany
  • German CSU chief says CSU rejects transferring powers to EU "Monster State"
  • German CSU chief says Merkel has no majority without CSU lawmakers

In other words, politicians are already preparing for the fallout from what this latest compromise will mean for Germany once the euphoria from last week's still completely unclear MOU fades, and with Spanish bonds having topped at 6.33% we wonder: was this it?

So when all fails, Germany will need a plan Z. The plan is outlined above, and it involves what Ray Dalio and increasingly more people say is a very real option: Germany just getting the hell out of Dodge first.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
LULZBank's picture

Das ist nicht gut Bitchezz!!!

Colombian Gringo's picture

Deutcheland, Deutcheland, unter Alles.

Linus2011's picture

As a german with insight information i must declare our inofficial plan:

Starting on the 1st of January 2013

(1) the EU will be renamed into "Deutsches Reich"

(2) the Euro will be converted into "Reichsmark"

(3) the capital of the new Reich will be moved from Brussels to Berlin

(4) the language all within Europe will be "deutsch"

(5) all european assets are belong to the Deutsches Reich

Lebensphilosoph's picture

Don't make me laugh. Half of Germans now speak Denglisch instead of Deutsch.

Linus2011's picture


Ganz Europa spricht jetzt deutsch. As our famous politician Mr. Kauder pronounced.

Sandmann's picture

Herr Kauder ist ein Trottel. Deutschland hatte eine Waehrung und hat sie einfach weggeschmissen um mit Italien und Griechenland auf der Abwaertungsrampe zu stehen. Pleitegeier ist ein Deutsches Wort Herr Kauder

noses's picture

You might start learning the language of your masters before it is required by law. It will make your life easier.

aleph0's picture

Was it King Charles or Frederick the Great who said :


"I speak Spanish to God, Italian to women, French to men and German to my horse."


... & wasn't Naopleon supposed to have added ...:  "and English to my ministers" ?

Linus2011's picture

French to men...

...he must have been gay then

piliage's picture

I'm pretty sure it was Charles V, and I always assumed he spoke German to his whores. My mistake.

TheFourthStooge-ing's picture

Der Spiegel, Seite zwei: Der Himmel ist blau.

GeneMarchbanks's picture

Germany just getting the hell out of Dodge first.

That sounds very definitive and final, not exactly what I've seen from the European electorate so far.

One can always dream I suppose.

Nachdenken's picture

Genemb: your up arrow is blocked. So 1 up for you.

Elections in Greece, the referendums Ireland for one, all ended well away from the initial positions - opposition to EU Eurozone proposals.  Policy statements in the Netherlands, France and Germany have tacked to keep against the headwinds of reality. But (we) dream on. 

The Euro will end, it is a matter of how and just when.  Some see August.  2013 I presume.

cherry picker's picture

Countries are not much different than individuals.

If a person is always pulling out his or her wallet to pay for gatherings at a restaurant as his or her "friends" cannot pay and later the "friends" badmouth the generous benefactor, the group will discover the benefactor became wise to what is going on and declined future invitations for lunch, leaving no one to go to the restaurant which went broke in the end.

Joe A's picture

So long and thanks for all the fish.

Irish66's picture

All I can picture is the Italian cruise ship on its side and sinking

EL INDIO's picture

Captain Scatino just before he abandoned ship:

…Everybody be cool, the situation is under control...

That must be what Angela did on Friday.

Laretes's picture

CSU chief Seehofer is known to make any kind of statement that is in agreement with popular sentiment. Not saying he is wrong, but he will change his mind within 30 seconds if needed.

Nachdenken's picture

He will stay with an opinion if it is right, or until he can negotiate advantages for the Bavarian region where his party rules.  He may well be right on the Euro, the 30 second turn-round may not apply here.

fadgadget's picture

even NPR is covering this angle now, though they insist it is a bad idea for germany to leave the euro.

Iam_Silverman's picture

"they insist it is a bad idea for Germany to leave the euro."

Well, it is a bad idea...... for the continuation of the Euro.

Carl Spackler's picture

This just in...NPR also reports  "the sky is blue" !

(their lazy "journalists" just borrow the story from Page 2 of Der Spiegel, and the like the Greeks and Spanish they don't pay anything back)

noses's picture

Bad idea. Maybe. But bad for whom?

slaughterer's picture

Seehofer is one of the most two-faced German politicians.  Betting he will act on these statements is like betting Iran will act on its Homuz Strait shut-down bill. 

TWSceptic's picture

Ultimately it's the people of Europe who decide what the future will be. Will they trust the eurocrats or will they continue to revolt and put a stop to the shenanigans?

timbo_em's picture

Correction: the German Constitutional Court has scheduled a public hearing for next tuesday, July 10th. It then will take weeks until they come up with a decision. So, late July early August would be the earliest for the ESM to go into operation.

insanelysane's picture

I think that those of us from the US fail to understand is that the citizens of other countries actually give a rats ass and will do something about it when they get screwed over.  Greeks riot in the streets and more quietly, refuse to pay taxes when their government spends too much.  The Germans will not let their politicians sell them down the river.  By the end of summer we will see them return to their own currency.

Vince Clortho's picture

Anyone who thinks Americans are too fat to get off their couch just needs to go to Walmart on Saturday.  Even Fat America can act if the motive reaches a critical point.

noses's picture

Only if they find one of those electric carts to get their asses moved around. Yes, there are times when is be the most dangerous place for peole walking on their own legs.

genr8n's picture

possible....not probable. Would need a referendum to decide, and that wouldnt happen until far more focal / popular opinion wanted it.

eigenvalue's picture

The Germans are just wimps and cowards. They don't have the balls to say "NO" to more bailouts or get out of the Eurozone. Just look at how the German football team played against the Italians during the Eurocup 2012. A bunch of tossers.

OttoMBMP's picture

What are you then, sir? Where do you come from?

i-dog's picture

I'm guessing he's from a country full of wimps, cowards and tossers who have also not yet rejected government bailouts of banks and local governments. Just a wild guess....

Toolshed's picture

Wherever he is is not Uganda. Nigeria maybe?

Karl Napp's picture

No one here in GER really cares what Spiegel is writing as this is MSM with absolutely no competence in economics.

Toolshed's picture

I agree. I used to read the English version of Speigel every day until a few years ago. They seemed to transform into another gibberish spewing tool of the MSM, so I stopped. Very sad.

LeisureSmith's picture

To bail would be the best thing for Europe and Germany, but there is way to many mad asshatters invested in this "Monster State" for that to happen. Plenty of pain to go around either way. 

Dr.Strangeschauble or: how i learned to stop worrying and love the Euro VS. Dr.Strangeschauble or: how i learned to stop worrying and love the D.Mark.

Bad choices galore.

ghenny's picture

People love to catastrophize.  Nothing earth shaking will happen. Just more Europe muddling through.  There will be screaming and yelling on all sides but in the end Germany will pony up, the PIIGS will accept greater supervision and cotinued though slightly less austerity and France will claim and get the credit. ' Same as it ever was.'

Grand Supercycle's picture

Rally Warning Confirmed.

As mentioned earlier, further equity strength and USDX weakness expected this year according to my analysis.