The PIIGS Are Rapidly Losing Their Leverage Over Germany

Tyler Durden's picture


While everyone awaits Germany's bowing to European pressure to share in the supposed wealth, the sad truth is that the clear line between core and peripheral economies is blurring every day as the lead-boots of Portugal, Spain, and Greece, drag 'until-recently high-fliers' Germany and France down to the bottom. The release this week of European Manufacturing Confidence data shows that all the nations are now contracting as core converges DOWN to periphery in a vicious circle. This is critical as suddenly the clock for a Euro-break-up is speeding up: every day that Germany delays to intervene and acquiesce bailout the PIIGS, the PIIGS implied-leverage declines as Germany is being dragged to their level - and thus 'unable' let alone 'unwilling' to share some burden.


At the end of December 2010, the difference between the weakest and strongest (Greece and Germany) manufacturing confidence was 35 points apart - easily the widest on record - as hope for a decoupling and strong core supporting the periphery prevailed.


Now that difference is down to a measly 12 points and rather notably all the euro-are members are now negative.


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Wed, 08/01/2012 - 13:18 | 2669311 LawsofPhysics
LawsofPhysics's picture

....and yet the Euro remains strong, stupid sheep.

Wed, 08/01/2012 - 13:19 | 2669317 Neethgie
Neethgie's picture

You are quite clearly forgetting draghi has promised to do everything possible, the fact he has failed every other time means this time he'll suceed, markets love tryers.

Wed, 08/01/2012 - 13:25 | 2669327 Ahmeexnal
Ahmeexnal's picture

Mittenwalde about to sue Germany for trillion euro debt from 1562. Mittenwalde's claim on the debt is PERFECTLY legal.
This is the dark swan that will sink the globalist pipedream.

Mittenwalde will collect the money and break away from the Eurozone, declaring itself an independent city-state.

Wed, 08/01/2012 - 13:25 | 2669337 SWRichmond
SWRichmond's picture

every day that Germany delays to intervene and acquiesce bailout the PIIGS, the PIIGS implied-leverage declines as Germany is being dragged to their level

I keep thinking about MBIA, ACA Capital and the rest.  Eventually, guarantors meet the same fate as their clients.

Wed, 08/01/2012 - 13:26 | 2669339 magpie
magpie's picture

The best part is that the debt is denominated in gold and silver.

Wed, 08/01/2012 - 13:27 | 2669341 Ahmeexnal
Ahmeexnal's picture

Very true. Since the debt was issued in GOLD guilders, it must also be paid back with GOLD!

Wed, 08/01/2012 - 13:34 | 2669363 magpie
magpie's picture

Those medieval contracts tended to have clauses which made town mayors collateral too.

Wed, 08/01/2012 - 13:38 | 2669379 Caviar Emptor
Caviar Emptor's picture

In a Biflationary spiral every one ends up on the floor save for those with big capital

Wed, 08/01/2012 - 20:55 | 2670781 old naughty
old naughty's picture

Is Knight Capital what you consider one of "those with big capital"?

Wed, 08/01/2012 - 13:43 | 2669390 LawsofPhysics
LawsofPhysics's picture

yes, so were all city/county officials and citizens.  To be offered as endentured servants until the debt was repaid.  It seemed to actually work best with unarmed/uneducated societies.

Wed, 08/01/2012 - 13:49 | 2669416 magpie
magpie's picture

Actually it also went both ways. If the rich burghers lent to clerics and aristocrats, the loans were also expected to be secured by their person - in reality mostly some unimportant relative or underling.

Wed, 08/01/2012 - 13:42 | 2669391 NotApplicable
NotApplicable's picture

Funny, you use the word "legal" as if it meant something real.

Simply put, EVERYTHING is subjective. Especially when it is all based upon the ideology of "might is right."

Oh, and neither Mittenwalde or Germany exist, but rather they are just labels for different groups of individuals with shared fantasies.

Wed, 08/01/2012 - 13:44 | 2669397 LawsofPhysics
LawsofPhysics's picture

Correct.  Moreover, in the absence of any rule of laws and contract, possession is the fucking law.

Wed, 08/01/2012 - 13:46 | 2669400 piliage
piliage's picture

From what I understand, they have been trying to collect on the debt for years and have a paper trail with receipts going back for centuries. This is brilliant! It's like the old Woody Allen joke that intellectuals are like rats as they eat their own kind.

OT somewhat, perhaps someone can answer a question I've always had. A German municipal city hall is a Rathause. A beer hall under said city hall is a Ratskeller. Are these expressions, ie the diminutive of German politicians, from where we derive the term "rat"?

Seems an appropriate question these days.

Wed, 08/01/2012 - 14:24 | 2669530 magpie
magpie's picture

No it comes from council/counsel.

I am however fascinated by the 'ratking' phenomenon which could be an appropriate metaphor for our situation.

Wed, 08/01/2012 - 16:17 | 2670131 Wolferl
Wolferl's picture

The German word "rat" has the same indogermanic roots like the English "read". It meant "reading the future out of the runes and draw a decission". In English this word became "reading" in a general sense. In German the word is still pretty close to it´s original meaning. The English "rat" is a "ratte" in German and pronounced differently. 

Wed, 08/01/2012 - 13:51 | 2669427 agent default
agent default's picture

They will not see a penny.  Simple as that.

Wed, 08/01/2012 - 14:17 | 2669556 Arthur
Arthur's picture

Uhm, Germany did not exist back in 1562.

Wed, 08/01/2012 - 15:48 | 2670032 Wolferl
Wolferl's picture

Germany exists since the year 843.

Wed, 08/01/2012 - 14:49 | 2669763 Nachdenken
Nachdenken's picture

The Mittenwalde claim was settled in June, the little commune was loaned a gulden from 1539 for six weeks.  It was displayed in the local museum and returned to the Bode Museum in Berline.  The Mayor Pfeifer said it was all over, and there is no trillion Euros outstanding.  He added in a Press statement that his commune had no debts, unlike Berlin today.

Wed, 08/01/2012 - 15:34 | 2669957 Linus2011
Linus2011's picture

how many troops has mittenwalde?

how many troops has the esm?

enough said.

Wed, 08/01/2012 - 13:24 | 2669334 Ralph Spoilsport
Ralph Spoilsport's picture

Time for some "technical issues" to happen on the other side of the Atlantic.

Wed, 08/01/2012 - 13:20 | 2669322 Ray Bones
Ray Bones's picture

I wonder who is next.

Wed, 08/01/2012 - 13:23 | 2669333 stocktivity
stocktivity's picture

probably us

Wed, 08/01/2012 - 13:21 | 2669324 iDealMeat
iDealMeat's picture
  • Get to know some of your ECB Banker Critters:

  • Luc Coene
    Governor, Nationale Bank van België/Banque Nationale de Belgique
  • Jens Weidmann
    President, Deutsche Bundesbank
  • Patrick Honohan
    Governor, Central Bank of Ireland
  • George A. Provopoulos
    Governor, Bank of Greece
  • Luis María Linde
    Governor, Banco de España
  • Ardo Hansson
    Governor, Eesti Pank
  • Christian Noyer
    Governor, Banque de France
  • Ignazio Visco
    Governor, Banca d'Italia
  • Panicos Demetriades
    Governor, Central Bank of Cyprus
  • Yves Mersch
    Governor, Banque centrale du Luxembourg
  • Josef Bonnici
    Governor, Central Bank of Malta
  • Klaas Knot
    President, De Nederlandsche Bank
  • Ewald Nowotny
    Governor, Oesterreichische Nationalbank
  • Carlos Costa
    Governor, Banco de Portugal
  • Marko Kranjec
    Governor, Banka Slovenije
  • Jozef Makúch
    Governor, Národná banka Slovenska
  • Erkki Liikanen
    Governor, Suomen Pankki - Finlands Bank
Wed, 08/01/2012 - 13:23 | 2669328 Ancona
Ancona's picture

At least the Snorg Tees camel toe girl is back! See, if you just take the time to look around, there is always something good to be found.

Wed, 08/01/2012 - 13:31 | 2669352 Vergeltung
Vergeltung's picture

they have some natural, sexy models for sure. my fave is Ashley Pridgen. Mmmmmmm.

Wed, 08/01/2012 - 13:35 | 2669369 Ying-Yang
Ying-Yang's picture

Dammit.. my pages are only showing "Happy Birthday Obama" No camel toes anywhere???

Wed, 08/01/2012 - 13:46 | 2669401 Hype Alert
Hype Alert's picture

I'm so tired of hitting refresh to get that crap off my screen.  I hope it cost them to load it each time, they should have to pay me to look at it.

Wed, 08/01/2012 - 13:54 | 2669455 Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

Free on-tap porn is just two clicks away, man!

Wed, 08/01/2012 - 14:54 | 2669779 Obnoxio
Obnoxio's picture

Has anyone clicked on the Tuc and Wes broke chicks add? I've been worried that I'll click on it and find out they're lady-boys or something.

I wonder if I can still get a Spider-Man beach towel.

Wed, 08/01/2012 - 13:36 | 2669372 TrumpXVI
TrumpXVI's picture

Germany is in a codependent relationship with dysfunctional Euro members.  The only two options for Germany are to leave the Euro or stay in and be dragged down to the common dysfunctional level and then get beaten by experience.

Wed, 08/01/2012 - 13:50 | 2669425 Winston Churchill
Winston Churchill's picture

Exactly right.

Germany is the enabler of the club Med holiday resort.

Tough love is the only answer.

Wed, 08/01/2012 - 13:37 | 2669374 Mad Mad Woman
Mad Mad Woman's picture

Germany will not be able to save the PIIGS. Germany might have enough money to save itself and that's it. It's time to break up the EU. These nations need to try to save themselves on their own. It's time for the powers that be in these countries to "man up" and do what needs to be done. But will they? They know what they have to do, but these leaders lack the courage and/or will to do so. If they can't do it then they deserve to crash and burn. Idiots!! 

Wed, 08/01/2012 - 13:39 | 2669381 lunaticfringe
lunaticfringe's picture

I just flip the chart upside down and everything is good.

Wed, 08/01/2012 - 13:44 | 2669396 NotApplicable
NotApplicable's picture

I like to turn it sideways and visualize how we're muddling-through.

Wed, 08/01/2012 - 13:40 | 2669386 Brother Sebastian
Brother Sebastian's picture

But it's also very possible Germany wants to own the PIIGS.  A lot easier than going to war.

Wed, 08/01/2012 - 13:41 | 2669389 Caviar Emptor
Caviar Emptor's picture

Germany in truth was simply less worse off than neighbors. As far as debt to GDP, deficits and banking issues, there was never lots of room for maneuvering. They were in it like everyone else. And the economy being heavily export dependent didn't help

Wed, 08/01/2012 - 15:18 | 2669880 TIMBEEER
TIMBEEER's picture

But the good thing is that the Tylers have started writing about it. That Germany of today is only a hollow promise, a country with vast ghettos, decaying infrastructure and a completely failed immigration policy.

Good luck with that.

Wed, 08/01/2012 - 13:45 | 2669398 slewie the pi-rat
slewie the pi-rat's picture

just turn up the "melting pot" heat another notch, emeril? 

Wed, 08/01/2012 - 13:52 | 2669432 Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

One month until S Gorog's 'three months to save Europe' D-day. I can't wait!

Wed, 08/01/2012 - 14:27 | 2669624 Haager
Haager's picture

Don't count Germany out, it's way too early. I stay awake, waiting for their rabbit out of the hat trick.

(correct thread, this time, once in a lifetime...).

Wed, 08/01/2012 - 15:22 | 2669893 alfman
Wed, 08/01/2012 - 15:27 | 2669921 TIMBEEER
TIMBEEER's picture

I would like to suggest ZeroHedge to write an article on the true state of the AAA countries of Germany, Netherlands and Finland. There would be a lot to write about so people would realize that even these countries have utterly failed with their finances. The window dressing still works, but that is pretty much it.

I think the MSM and even ZH is giving too much attention to the Club Med, while they should review the Club AAA.

Btw, I read today that since Merkozy is past, the new Power-Duo is Hollande and Monti, HoMo.

Wed, 08/01/2012 - 15:30 | 2669934 Linus2011
Linus2011's picture

european aaa countries are actually in a much better shape than the us, japan and england which are basically the ugliest pigs of all!

they will get their attention as well.

Wed, 08/01/2012 - 15:27 | 2669923 Linus2011
Linus2011's picture

only stupid people believe that there is something like manufacturing in greece.

stupid statistics from stupid eurocrats.


Wed, 08/01/2012 - 15:47 | 2670017 Wolferl
Wolferl's picture

Germany exists since the year 843.

Wed, 08/01/2012 - 16:43 | 2670198 Remington IV
Remington IV's picture

Obama's fault

Wed, 08/01/2012 - 18:27 | 2670496 GoldRulesPaperDrools
GoldRulesPaperDrools's picture

Angela Merkel: "Squeal like a PIIGS!!!"


Deutchland Uber Alles bitchez!! ;}

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