Hyper Mario And Germany On Verge Of All Out Warfare

Tyler Durden's picture

Back in March we wrote "Mario Draghi Is Becoming Germany's Most Hated Man" for one reason: a few months after the former Goldman appartchik was sworn in to replace Trichet with promises he would not "print" Draghi did just that in a covert way via $1.3 trillion in LTROs, that immediately hit the economy and sent inflation across Europe soaring. We said that: "Slowly but surely the realization is dawning on Germany that while it was sleeping, perfectly confused by lies spoken in a soothing Italian accent that the ECB will not print, not only did Draghi reflate the ECB's balance sheet by an unprecedented amount in a very short time, in the process not only sending Brent in Euros to all time highs (wink, wink, inflation, as today's European CPI confirmed coming in at 2.7% or higher than estimated) but also putting the BUBA in jeopardy with nearly half a trillion in Eurosystem"receivables" which it will most likely never collect."

It now appears that the simmering hatred between the two is about to upshift to a whole new level, with the threat of open escalation finally arriving. Because if Sueddeutsche Zeitung is correct, via Reuters, in precisely 12 hours, Draghi will proceed with a plan that has neither Germany's nor Buba's blessing, in the process effectively isolating the only remaining solvent country in Europe, and its de facto paymaster, and forcing Germany to take a long, hard look at the exit sign (which, however, as reported earlier, with each passing day that drags Germany's economy is becoming less of an unthinkable outcome). To wit: "Draghi is planning concerted action using both the ECB and the future euro European Stability Mechanism (ESM) to purchase sovereign debt from Spain or Italy in order to help push down borrowing rates for those two countries." There is one problem: "highly doubtful that the German government would agree to Draghi's approach. The Bundesbank also is likely to reject the idea, the paper added."

In essence what Draghi will do tomorrow is what Monti did a month ago when together with Rajoy, he presented Germany with one option, and would not back down else risk disintegrating the Eurozone. Merkel then took the diplomatic way out and pretended to agree that the ESM would lose its seniority status, something which as Finland confirmed today, never actually happened after the Nordic country said the ESM still and will always have explicit seniority status. The problem however is that the June summit was political theater. What happens tomorrow will have all too real consequences if and when Monti injects another €1 trillion into the economy. How soon afterward can Germany again expect to once again pay a record amount for a liter of unleaded. And how quick until the latest iteration of attempted inflation fizzles and has to be replicated with a €2 trillion bond monetization episode. Then €4 trillion. Then €8. Etc.

You get the picture.

More from Reuters: which doesn't tell us anything really new, but merely confirms (allegedly) that Draghi will indeed openly go where so few have gone before - openly against the will of Germany, its Chancellor and banking head, Herr Weidmann:

The ESM would purchase sovereign debt in smaller amounts directly from both countries while the central bank would resume its purchase of debt in the secondary market, the daily wrote in an advance released on Wednesday evening. The Bundesbank has opposed further ECB debt purchases.

 

The ECB Council will meet on Thursday and the Sueddeutsche Zeitung said it looked like a majority was emerging in favour of the ECB resuming its purchases of sovereign debt. It added there will most likely not be any official decision on such a measure.

The ECB's role would be a stopgap until the ESM is approved by the German constitutional court. Which it very way may never happen.

There is a greater likelihood that Draghi will spell out in more concrete terms what he said last week - that the ECB will do everything within its mandate to support the euro, the paper said. A final decision is not expected until after Sept. 12, after the German Constitutional Court rules on the ESM.

 

The daily said Draghi's plans could lead to the ESM taking part directly in the auctions of state debt by those countries affected, leading to a reduced interest rate for the auction.

 

The ECB's task would to be to work before the auctions to push the interest rates down to an acceptable level and to keep them fixed at that lower level for the longer term.

The delusion continues because not only have we shown that the impact of each SMP episode is weaker and weaker, but that absent the ECB officially denouncing its senior status, and thus fears of bondholder subordination, the ECB will achieve absolutely no incremental interest in bond purchases by private investors who are convinced both Spain and Italy will conclude merely as yet another Greece.

Sueddeutsche said it is hoped the plan would restore private investors'
confidence in the bond market. The ESM would probably only have to allot
relatively small sums of money for this or could bow out of bond
auctions at the last minute if the interest rates had fallen to an
acceptable level.

Finally and most crucially:

The daily said it was at the same time highly doubtful that the German
government would agree to Draghi's approach. The Bundesbank also is
likely to reject the idea, the paper added.

And with that the open warfare between the ECB and Germany will begin. The only question remaining is does Draghi, even if he is truly merely a figurehead for Goldman, really want to launch all out war against Germany?

Especially with his office located in downtown Frankfurt.

Oh, and don't call him Super Mario any more. The proper prefix now is HyperTM.

Then again, just like today's violent disappointment by the Fed, all of the above could be merely well positioned media propaganda, and the reality is that Draghi will do absolutely nothing.

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reader2010's picture

"By 2050—earlier, probably—all real knowledge of Oldspeak will have disappeared. The whole literature of the past will have been destroyed. Chaucer, Shakespeare, Milton, Byron—they'll exist only in Newspeak versions, not merely changed into something different, but actually contradictory of what they used to be. Even the literature of the Party will change. Even the slogans will change. How could you have a slogan like "freedom is slavery" when the concept of freedom has been abolished? The whole climate of thought will be different. In fact there will be no thought, as we understand it now. Orthodoxy means not thinking—not needing to think. Orthodoxy is unconsciousness."

George Orwell (1949). Nineteen Eighty-Four.

Future Tense's picture

There is $15 trillion in government debt that must be rolled over in the next 3 years. That money must be printed Weimar style in order to be funded. The following article goes through the details. The numbers are staggering:

http://www.ftense.com/2012/08/the-15-trillion-adjustable-rate-loan.html

reader2010's picture

It is one of the most important parts for them to bring out the NWO.

FreedomGuy's picture

I have never been a fan of worldwide conspiracies but the linkage of central banks and all of us tieing our sinking ships together in socialist desperation may well bring it about. With the final fall of the USA to collectivism there really won't be any significant places to run nor anyone big enough to make a way out.

engineertheeconomy's picture

Don't shoot until you see the whites of their eyes...

The Monkey's picture

Crude, soft commodities and precious metals.

Either the Fed or the ECB has to print now. Global PMI's are too poor. Even Germany's economy is getting hit.

reader2010's picture

It's all about the artificially-engineered Depression 2.0 that is designed to devastate the world's proles financially so that they would be willingly begging for the scrapes that the NWO promises them. Welcome to the Hotel Oceania, where "WAR IS PEACE, FREEDOM IS SLAVERY, and IGNORANCE IS STRENGTH."

The Monkey's picture

Don't you mean to say:

Janet Yellen and the California Fed need for the United States of America to conduct open market operations on behalf of CALPERS and state budget assumption for trickle-down Facebook tax revenue?

Fuck you if you live in Mississippi. You are all southern trash (white, or black).

Joe A's picture

Don't let them take your guns then.

RobertMugabe's picture

For as great a site as ZH is, its comment section is populated with more jackasses than Yahoo finance. I +1 you btw because your delusion seems sincere and it makes me giggle

flacon's picture

What time is Hyper-Draghi  supposed to make his announcement?

flacon's picture

I found this (Eastern time USA):

 

0700 am Bank of England rate announcement

0745 am European Central Bank rate announcement

0830 am Initial claims

1000 am Factory orders

flacon's picture

Here's the famous speech from Draghi last week. 

 

Listen to the whole thing, especially at 7:00, and again at 10:15.

 

Global Investment Conference - Mario Draghi, President of the European Central Bank

http://www.youtube.com/watch?v=hMBI50FXDps

 

 

JohnG's picture

Leeeeeeeroy Jenkins!!

Element's picture

lol .. like they're going to come up with some other 'solution', but to print trillions of a rapidly depreciating cognitive meme ... called the 'euro'.

The death of a really bad idea.

AbelCatalyst's picture

Draghi: there are these sovereign bonds... Yadda, yadda, yadda... Germany says no... Yadda, yadda, yadda. Can hits the wall... Yadda, yadda, yadda... It's all good... See, that was easy!!

Details are not needed. Math is irrelevant. Things always work in the end. No worries... Life is good!

dark pools of soros's picture

"Orthodoxy is unconsciousness."

Corporate Culture 101

TruthInSunshine's picture

+1 If you think Germany doesn't relent and tells PIIGS to get bent

-1 If you think Germany relents and radically debases living standards of Germans

 

LetThemEatRand's picture

Merkel relents because German bankers will benefit.   They own the place (by which I mean bankers own/control the world).

SHEEPFUKKER's picture

Isn't Angie on holiday?  I find it hard to believe that Draghi does anything tomorrow unless she has already signed off on it, which, is highly unlikely. Check back to B. Bernanke. Your move. 

TruthInSunshine's picture

Maybe.

However, consider that there is a long running battle between England & Germany, whereby England supports destroying real economic growth and things of actual value (subsidizing London banks & financial institutions at the cost of massive taxation/parasitic draining of the rest of Brits is but one example) to keep the fractional reserve banking fiat Ponzi scheme alive, and Germany is genuinely more hostile to this system, instead preferring to see actual, real economic growth created by companies that make tangible things of value, whether optics, chemicals, vehicles, semiconductors, etc.

England is an example of the parasite-host economic model of starving/penalizing the general population to keep the banking/financial wards of the state and central ponzi bank propped up (just as the U.S. has become, with New York City as our London), while Germany has historically preferred a model based on real economic output based on the merit of real goods drawing real purchasers based on the natural laws of supply & demand.

England (and increasingly, the U.S.) has perfected the production of derivatives, while Germany has mastered the craftmanship and production of tangible things.

 

When was the last time England made anything of actual value that the world clamored for? 

Jaguar, Rolls Royce, Bentley, Land Rover, Mini - all foreign owned.

Hell, even Dyson vacuums are overrated pieces of shit made in Chinese sweatshops.

LetThemEatRand's picture

Agreed in that there are at least competing factions in Germany.  We shall see soon who is the strongest.  I'm guessing the bankers win out.  They have a good track record of destroying real economies and enriching themselves.

TruthInSunshine's picture

This could be the reason England only half-footed into the Eurozone and kept the pound as its "own" currency, and explain the deep friction between Cameron and Merkel (or their respective underlings) at all stages Eurodebtocalypse.

Cameron wants any ECB rescue of the EU (and euro), that will necessarily have to financed by German taxpayers, predominately, to bail out London banking and financial institutions (that are severely impaired), first and foremost.

LetThemEatRand's picture

Growing up in small town U.S.A in the 60's, who would have thought a guy like me would ever be rooting for Germany's industrial complex to win a "war."

TruthInSunshine's picture

Every rational person should wish for and work towards the goal of curbing all subsidization by government (i.e. taxpayers, present and future) of all banking, financial or Wall Street institutions, which at present represent disproportionately massive % of GDP,  and that are collectively tantamount to a massive, parasitic drain on the real and productive sectors of the economy that produce real and beneficial products and services.

In 1968, which one of the last periods of time whereby the U.S. did not run national deficits, and actually had a fiscal surplus, manufacturing accounted for 41% of U.S. gross domestic product.  Financial services and banking accounted for 14% of U.S. gross domestic product at that time.

Today, flip those numbers around, which is where things stand in terms of respective share of gross domestic product, and it becomes easier to see exactly how and why the U.S. is following Britain path to debt servitude.

FreedomGuy's picture

TruthInSunshine, I think you are correct. I have seen arguments that are persuasive that it is the financial shenanigans we play with money that destroy real wealth and move real production overseas. Oversimplifying the argument it goes that money is relatively cheap and easy to create and things are difficult and expensive to produce. Therefore, in economies like the USA it is more profitable to play with money here which is cheap and move manufacturing overseas where it is cheaper. If you look at how much Wallstreet, banks, and the financial sector have risen as a part of economy since that 1968 you tend to give credence to the argument. Money comes here, manufacturing goes "there". It is all a fraud and a result of our monetary policies including fractional reserve banking.

What we see now in the USA and most of the world is the visible divorcing of the financial-monetary world from the real world of products and services.

knukles's picture

Same background (albeit 50's) whodathunk that our Arch Nemesis and Central Bastion of Unholy Turrderism, Iran, which the West is Trying to Destroy, would be the folks committing bankers to death for fraud.... and some Great Financial News would be Provided by RT (Russian Telly)

The NWO is doing a magnificent job, Hegelian Dialectic wise.
Bloody Brilliant

 

crawldaddy's picture

sorry to break it to you, there is no plan, there is no NWO.  The world is going into the shittier because there has been no long term planning, just drunken spending on debt.  All that is happening now is the credit lines are being closed and the bill is coming due.

There isnt some fucking dr. evil is some evil lair plotting all this.  Its rather a bunch of o greedy fucking humans being stupid.

FreedomGuy's picture

Crawldaddy, I am inclined to agree with you. I tend not to go for the conspiracy theories. However, I would see the world's central banks, therefore governments uniting in some fashion to "fix" this when it all breaks.

I would add to your observation of "greedy humans being stupid". I would add "and we gave them power over the rest of us."

Renewable Life's picture

I think I fall somewhere in the middle, there is without question an organized "war" against independent sovereignty, planet wide......but on the other hand, if you think these idiot bankers and Ivy league elitist, who don't speak the same language, have somehow formed a workable conspiracy, that would lead to a governorable NWO, your smoking some good shit!!!!

It's one thing to sit at Davos and Jackson Hole and talk about fantasy dreams, while you get blown by a super model, it's quit another to execute and fund a planetary coup!!!!

Haager's picture

Err, not exactly. The conspiracy-theory about illuminati is one issue, but the new world order is more or less planned, to some extend. Just look at the think-tanks AEP and Heritage about it, look at their theories about the middle east, look at the paragraphs of the UN-convent.

Furthermore, the european union tends to create one big europe, with one souvereign (the EU-government) and heavily reduced national souvereignity. At the end of the road any souvereignity other than the EU will be vanished.

decon's picture

In total agreement crawldaddy, this is all the result of billions of humans individually acting on their greed and fear.  Not to say that certain individuals or groups don't have an outsized influence on outcomes but this is enabled by leadership always taking the short-term path of least resistence.

In a system that is even partially open to flows of capital between countries/cultures, wealth acts like water and seeks equilibrium.

What we're lacking are true leaders willing to make short-term painful decisions but with long-term sustainable benefits.

rwe2late's picture

Crawldaddy

There is confluence of interests between the heads of global corporations, certain global organizations (such as NATO and the IMF), various corrupt politicians, dependent dictators and sheikhs, and the world's wealthy elite.

The "conspiracy" element enters in when their plans and policies are formulated behind closed doors, out of the public eye, and typically presented in a deceitful manner to the public.

canardo's picture

Same here, my dad fought against the Germans in WWII, he hated their guts, and now here I am hoping the Germans will win this one. It feels weird.

CompassionateFascist's picture

Your daddy was a sucker: WW II was a deathblow to Western Civilization. And Hitler didn't start it. Churchill and his Zionist handlers forced Chamberlain to backstab the Germans when they, as per prior instructions, went East.  

Calmyourself's picture

LTER, make up your mind guy or gal??  We need to know how to ridicule you properly..

rwe2late's picture

LetThemEatRand

lest anyone forget, one of the "competing factions" in militarily-occupied Germany is the USA. US banking/financial interests will certainly demand consideration.

On a lighter note, perhaps Obama can use his popularity among Germans to convince them to "take one for the team."

Tippoo Sultan's picture

I clamour for a wedge of Stilton upon occasion, served with a box of Carr's.

Apostate2's picture

I crave a chunk of nealsyard Wigmore with a hunk of St John's sourdough. Far East doesn't do edible cheese or bread.

Circuses yes.

Apostate2's picture

Dysphemism is bankers' blood. I crave a good local cheese and bread-staff of life. But lamb shanks and spinach ricotta tonight. Jeuk (congee) for breakfast. Da da mien for dinner or jeu yim sha (only phonetics available).

Bon appetit.

 

Son of Loki's picture

TIS, funny you bring this up. My friend was in China, and he tells me people prefer firstly German made goods...then Dutch....lastly, Hecho in USA saying, "they break too easily." 

 

As the World Turns, eh.

moonstears's picture

Notice China made goods didn't make the list.

stocktivity's picture

Doesn't matter...China is at the top of Walmart's list