Merkel Party Lawmaker Says Greece Must Leave Eurozone

Tyler Durden's picture


Even as we are drowned by yet another avalanche of lies and cow feces that the Greek private sector bailout negotiation is going well, despite everyone knowing very well by now that various hedge funds like Saba, York and CapeView are holding the entire process hostage and the culmination will be a CDS trigger, the underlying dynamics of the Greek "bailout" once again resurface, which are and always have been all about Germany and the tensions within its various political parties. And unfortunately at this point things are looking quite bad for Greece. As Bloomberg reports, "Greece will have to exit the euro area as it struggles under a mountain of debt, unable to regain its competitiveness without having its own currency to devalue, a senior lawmaker in Chancellor Angela Merkel’s party said. The comments by Michael Fuchs, the deputy floor leader for Merkel’s Christian Democratic Union, contradict the chancellor’s stance in a sign of the domestic headwinds she faces in leading Europe’s efforts to keep the 17-member euro area intact. With the debt crisis into its third year, Merkel is due to join CDU lawmakers at a two-day policy meeting beginning tomorrow in the northern German city of Kiel." The truth hurts: "For Greece, “the problem is not whether they are capable of paying their loans -- they will not, not at all, never." So, why are we optimistic on Europe again? Oh yes, because European banks issued tons of equity and now have a capital buffer to the imminent hurricane that will be unleashed once the Greek restructuring finally enters freefall mode and the country leaves the Eurozone. No wait, that's not right: only UniCredit tried that and its stock collapsed by 50%. Must be something else then - oh yes, Italy successfully sold debt maturing in one year!

From Bloomberg:

Merkel’s Bavarian sister party, the Christian Social Union, last week reinforced its position that member states unwilling or unable to commit to necessary reforms should be given the chance to exit the euro area.


Merkel said at a joint press conference Jan. 9 with French President Nicolas Sarkozy that they would ensure no country leaves the euro, while urging Greece to finish negotiations for a debt writedown with creditors as soon as possible to win its next tranche of aid.


Fuchs dismissed the prospect that letting Greece go would trigger speculative attacks against indebted countries such as Spain or Italy. Italy is a “rich” country and banks would be able to withstand any contagion effect, said Fuchs, who also coordinates economic policy for the CDU caucus in the lower house of parliament, or Bundestag.


Fuchs also contradicted Merkel’s support for a financial- transaction tax among euro-area members. The Bundestag would probably veto any such levy that doesn’t include the U.K., the lawmaker said.


Asked about the chancellor’s position on Greece, Fuchs said his prediction of a Greek exit from the single currency is a matter of arithmetic.


Merkel “is also capable of calculation,” he said. “She studied physics. And to study physics you need mathematics as well.”

And the posturing parade continues on.

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Thu, 01/12/2012 - 09:20 | 2057840 Oh regional Indian
Oh regional Indian's picture

Meanwhile, news says poor greeks are abandoning their kids on the streets.

As an aside, A Saudi money lender is face-book selling his cute little son for $20 million.

World gone mad?



Thu, 01/12/2012 - 09:20 | 2057842 zorba THE GREEK
zorba THE GREEK's picture

Pack your suitcases patrioties, you're being evicted.

Thu, 01/12/2012 - 09:22 | 2057844 roy10
roy10's picture

I can't see why a default should lead to a Eurozone exit. The current bailout plan needs to be scraped since it has clearly failed and the PSI is a joke.

Greece needs to go into a hard default and re-emerge with no more than 150B Euros of debt (i.e. debt held by Greek banks only). They should then run a balanced budget until they are able to return to markets.

That the right way to do it and I see no reason for Greece to leave the Eurozone. That makes no sense.

Thu, 01/12/2012 - 09:28 | 2057864 agent default
agent default's picture

Because a default would mean that the government would not be able to pay civil servants. In order for the political system to save its ass and esure their survival, they will have to revert to some sort of local currency which they can print at will and pretend to pay the domestic expenses of the government.

Thu, 01/12/2012 - 09:41 | 2057909 roy10
roy10's picture

They can run a balanced budget after the default. It will free a ton of cash from interest payments. This has been done before.

Thu, 01/12/2012 - 10:20 | 2058059 agent default
agent default's picture

Yeah sure, and  the Bernank could tell the banksters to fuck off and die, right?  You are completely missing the true nature of the global political/financial crony capitalist system here.

Thu, 01/12/2012 - 09:46 | 2057921 Azannoth
Azannoth's picture

I remember as a child we tried playing 'bank' or some other type of shop game with my buddies and realizing that we needed 'money' for this game, quickly we decided that tree leaves would be a good substitute, but then even quicker we realized that because you can have as many tree leaves as you can pick they are completely useless as a currency so finally we played tag and 'hide and seek' realizing that we could not imitate Real Money with tree leaves or anything else we could just pick up. Now why can't adults realize you can't play Economy with Fiat Paper?(this is a true story not a metaphor)

Thu, 01/12/2012 - 09:23 | 2057846 Oh regional Indian
Oh regional Indian's picture

Children are being abandoned on Greece's streets by their poverty-stricken families who cannot afford to look after them any more.

Youngsters are being dumped by their parents who are struggling to make ends meet in what is fast becoming the most tragic human consequence of the Euro crisis.

It comes as pharmacists revealed the country had almost run out of aspirin, as multi-billion euro austerity measures filter their way through society.




Thu, 01/12/2012 - 09:31 | 2057868 LawsofPhysics
LawsofPhysics's picture

ORI, if this is the case, then the people of greece are not only financially bankrupt, they are also morally bankrupt.  While driving into one of our plants in the countryside I saw a police officier pull over to shoot a deer in the head that had been hit by a truck and was flooping around in extreme pain as most of it's spine was clearly fructured.  You tell me, who is getting the more humane treatment, the deer or those children in Greece (if the story is true).

eCONomists fail to tie their "work" to reality and honestly the laws of Nature and physics make no promises regrading your survival.  Hedge accordingly.

Thu, 01/12/2012 - 09:38 | 2057898 Oh regional Indian
Oh regional Indian's picture

See below for link LOP.

And yes, MORAL HAZARD..... what a time eh?


Thu, 01/12/2012 - 10:26 | 2058082 StychoKiller
StychoKiller's picture

Moral Hazard == Ignoring Dharma

Thu, 01/12/2012 - 09:24 | 2057849 doomandbloom
doomandbloom's picture

oh Fuchs!

Thu, 01/12/2012 - 09:25 | 2057853 Oh regional Indian
Oh regional Indian's picture

:-) Was wondering where on the thread that would show up...


Thu, 01/12/2012 - 09:24 | 2057850 tradewithdave
tradewithdave's picture

On today's menu at the Timma's Treasury Sole Food Cafe:


Thu, 01/12/2012 - 09:25 | 2057855 LawsofPhysics
LawsofPhysics's picture

Stay focused people, will this or won't trigger a CDS payout or not already?

Thu, 01/12/2012 - 09:26 | 2057856 Peter K
Peter K's picture

Yes, but Merkels father was a Protestant minister. So she also understands the power of prayer ;)

How else can you explain her behaviour?

Thu, 01/12/2012 - 09:27 | 2057859 Jim in MN
Jim in MN's picture

Depends which flavor of Protestant.  Was it all predestined?

Thu, 01/12/2012 - 09:46 | 2057925 Peter K
Peter K's picture

sure was ;)

Thu, 01/12/2012 - 09:27 | 2057861 roy10
roy10's picture

He listens to Sarkosy way too much. She should tell Sarkosy and his banker army to STFU and do thing sthe right way. Stop pretentding and stop the short-term fixes - they are not doing anybody any good.

Thu, 01/12/2012 - 09:26 | 2057857 Jim in MN
Jim in MN's picture

BOOM shaka-laka-laka

Nigeria oil union says it will start systematic shut-down of oil and gas starting on Sunday according to the Associated Press


Thu, 01/12/2012 - 09:31 | 2057874 Oh regional Indian
Oh regional Indian's picture

nice Jim, forced oil austerity for the world. And what that will do to industrial agribusiness.

Oil = Conflict!!! For which there will always be plenty of oil.

Look SPRy, be SPRy.


Thu, 01/12/2012 - 09:32 | 2057878 LawsofPhysics
LawsofPhysics's picture

Awesome, time to start avoiding population centers around the world.

Thu, 01/12/2012 - 09:32 | 2057875 ThatThatcher
ThatThatcher's picture

1 year rate edges at slightly less excruciating levels and rumours of Kazakhstan sovereign fund interest and Unicredit shares suspended limit up (12.28%)!!! 

Thu, 01/12/2012 - 09:46 | 2057899 YHC-FTSE
YHC-FTSE's picture

AIG and BAC will no doubt be sending a car bomb to Michael Fuchs. Default trigger will wipe them out. 

At this point, it is inevitable (DavidPierre did a good summary post of what we've been talking about for a year somewhere).


Edit: Here it is

Thu, 01/12/2012 - 09:50 | 2057940 westerman
westerman's picture

If there is a credit event that will be more catastrophic than the actual loss of bonds. The CDSs are worthless. However issued them are NOT going to cough up 300 000 000 000 Euros. They will either claim they don't owe anyone money or they will default. When people realise that all these financial instruments are worthless the price of CDS will tumble world wide and risk sensitivity will increase when people realise there is no insurance for sovreign defualts.


Thu, 01/12/2012 - 10:23 | 2058072 ZeroPower
ZeroPower's picture

Wrong. This credit event you speak of is actually a relief for those who do the "right thing" and, you know, hold GRE bonds. It will merely act as a facilitator for those who sold protection (CDS) and have to accept delivery of a bond (underlying) at par where real price will be ~.20.

Nice try at a prediction though.

Thu, 01/12/2012 - 10:02 | 2057983 BLOTTO
BLOTTO's picture

EU is not going to fail - they need that baby to survive in order to carry the illuminati agenda of a One World Government.

The EU is crucial to that plan and having the EU break apart would be going in a backward direction and its not going to happen.

What will happen is that the weaker countires will leave and in some cases be replaced with stronger ones. In the end, the creme de la creme of EU member countires will be united.

What we have taking place is the new modern day version of the Holy Roman Empire.

History is merely repeating itself.

Thu, 01/12/2012 - 10:19 | 2058052 holdbuysell
holdbuysell's picture

"Even as we are drowned by yet another avalanche of lies and cow feces that the Greek private sector bailout negotiation is going well,"

Spot on.

Someone needs to show them the bank run graph ZH has...while the talking head leaders are saying 'nothing to see here...all is well' no one is listening because they're too busy taking their money out of Greece and its banks.


Thu, 01/12/2012 - 10:59 | 2058215 keating
keating's picture

Merkel's Ph.D. is in quantum chemistry, so, like Schrodinger's cat, mebbe it's there, mebbe not. We'll see.

It seems that everyone is getting ready to cast Greece off, and they simply need to give folks time to get ready. I note that both Italy and Spain are being made strong enough to withstand the loss of Greece, and when it turned up that the Greek bailout would be wasted on military hardware and the associated kickbacks, I think this greases the skids for Greece to be shown the door. The Euro survives, everyone who bet on Greece loses, and the Greeks begin their new life in mud huts, living on foreign aid food rations and their own home grown fruits and veggies.  Big opportunity to get cheap real estate and vacation deals in Greece when this all settles down.

Thu, 01/12/2012 - 11:41 | 2058389 The Count
The Count's picture

I'm a buyer of an oceanview apt. in Mykonos for $50K! 


Thu, 01/12/2012 - 11:58 | 2058452 Watson
Watson's picture

Can anyone provide links to reliable sources for:

a) Total (nominal) CDS written on Greek government bonds?

b) The writers of a) (who and how much each)?

c) Total (nominal) outstanding Greek government bonds?


Thu, 01/12/2012 - 12:05 | 2058483 mktsrmanipulated
mktsrmanipulated's picture

Ya jnow I am a big believer that eurozone is in trouble but I am becoming more and more skeptical as the event has now been dragged out for over 3 years.....their liquidity crunch -- as it seems to me is not as severe as the U.S. in 2009 because as we may recall the corp mkts were frozen here along with the banking industry as in europe the corp debt mkt is no where near the size of ours.....I have been waiting and waiting for the shoe to drop and am now staring to become skeptical...and why the hell is the euro up any comments would be great


Thu, 01/12/2012 - 14:47 | 2058592 toomanyfakecons...
toomanyfakeconservatives's picture

"...and when it comes to debt, you know what they do? That's right - they trade it! They actually buy and sell debt for profit. From credit default swaps and collateralized debt obligations for consumer debt to complex derivative schemes used to mask the debt of entire countries, such as the collusion of investment bank Goldman Sachs and Greece which nearly collapsed the European economy..."

From Zeitgeist Moving Forward starting at 1:13:45 -

This entire documentary should be required reading for all Zero Hedgers!



Sat, 01/14/2012 - 12:11 | 2064552 sara29
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