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Schadenfreude Is a German Word

Tyler Durden's picture





 

Via Peter Tchir of TF Market Advisors,

Is the German Pot Calling the PIIGS Kettle Black?

We seem to get the daily barrage of messages and soundbites out of Germany demanding that countries stick to existing plans and that “austerity” is the only way forward.  Germany continues to love to point the finger at the other countries and accuse them of borrowing too much and that these countries need to suck it up and pay what they owe.  For now we will ignore the fact that Germany itself was one of the first countries to break the Maastricht Treaty. What Germany seems to be forgetting is that they jeopardized their own credit quality.  With bunds at record lows, this may not be obvious, but for the past 2 years, Germany has been throwing around guarantees and commitments like they meant nothing. 

I have argued since the beginning that all these guarantees were dangerous.  Guarantees are more dangerous than CDS since it is truly impossible to figure out how much debt has been guaranteed or how likely the guarantees are to be honored.  Zerohedge and Mark Grant (amongst others) have done a lot of work on the true size of various countries’ obligations.  Here is an estimate of what Spain's read indebtedness is. <http://www.zerohedge.com/news/fighting-spanish-windmills-or-how-spains-debtgdp-ratio-double-what-reported>   I don’t completely agree with the numbers, but the point is extremely valid.  Looking at just the debt outstanding for these countries is very misleading.  Some account of their off-balance sheet, unfunded commitments and obligations needs to be taken into account.

Which brings us to Germany.  Germany is the ultimate backstop and seems to have forgotten that debt exists in two states. 

Debt is either Repaid or It Isn’t

There are only two outcomes when you lend money.  You either get repaid what you lent based on the original contract or you don’t.  It doesn’t matter why you don’t get paid what you expected, whether it is because of forced redenomination, restructuring, or default.  What matters is that you don’t get paid.

So while Germany is drawing a line in the sand, they seem to have forgotten the borrowers have two choices.  Germany seems to be under the impression that no matter what they say or do these other countries will pay their debt.  That Germany can cave in and let the other countries spend and grow and let the ECB provide immense liquidity and get paid.   Or that Germany can remain firm on austerity and a deal is a deal rhetoric and still get paid back.  But what if they are wrong?

What if at some point Greece, or worse, Spain or Italy finally say they have had enough of the finger pointing and blame game and are going to redenominated and stop certain payments altogether?

How much is Germany on the Hook For at the ECB?

If countries are leaving the Euro and the ECB is no longer going to be their central bank, the bonds held by the ECB in the SMP portfolio will be hit.  With over €200 billion of SMP bonds, a 40% loss due to redenomination seems reasonable.  That is an €80 billion hit to the ECB.  The ECB cannot handle a loss of that size without either printing massive amounts of money or making a capital call on the member states.  It would be ironic and nonsensical to print money to fund the loss, since the ECB could have printed less money and not had the loss in first place.  On the capital call side, obviously the PIIGS aren’t making it.  I think a lot of the other smaller members may choose not to as well, since the ECB is joint and several.  I’m not sure even France would participate.  The uproar in France that Germany drove the situation to this point may be enough to get them to demand that Germany pick up the lion’s share of the tab?

Then what happens to all the bonds being held at the ECB via LTRO and other facilities?  The ECB holds government bonds, they hold bank bonds guaranteed by the government, and may even hold bank bonds outright.  They will need to make margin calls on these facilities.  Will all the banks be able to meet the margin calls?  No.  The weakest banks have already used the LTRO more than other banks. They are extremely leveraged and have no money left to meet those margin calls.  If any governments had provided guarantees on their debt, now would be a great time to revoke those.  Why take more losses for a bank that’s going down, when you can change the law and jam the loss onto the ECB?

I find it hard to believe that the losses at the ECB won’t be at least €100 billion and could easily be more.  The liabilities are joint and several but could fall heavily on Germany.

How much is Germany on the Hook For via the EFSF and EU and IMF?

The EFSF has €110 billion of debt outstanding.  That money in theory has been lent out to various countries.  The EFSF will have losses and I expect those losses would be greater as a % of notional than the ECB’s since more of the EFSF exposure is to Greece where the losses will be highest.  In theory Germany is only obligated to make good on their “portion” of the debt.  But if they do that, will other countries honor their commitments?  I cannot imagine Spain and Italy will make payments on the debt that is outstanding even though they are guarantors, once they have gotten to the point of leaving the Euro. 

While Germany may decide to pay the ECB money regardless of the cost, it might be easier to let EFSF bond holders take losses rather than adding more debt and taking on more responsibility than they are legally obligated to pay.  The EFSF bonds remain horribly over rated as they don’t account for how likely the guarantees are likely to be revoked or not paid when called upon.  The EFSF will only make calls against guarantees once the situation has turned nasty, so the rating should reflect that.  If you believe the countries are going to leave the EU, the EFSF bonds are a great short.

There are EU direct loans.  More losses for Germany and France.  There are costs of running the EU, to the extent one still exists.  More of those expenses will have to be picked up by the remaining members (somehow it feels like there won’t be any remaining members once this process starts).

The IMF is likely to come out best in terms of any loss on existing holdings, partly because they have been more conservative in their lending practices, but mostly because the countries will need them to provide additional loans after they exit.

 almost forgot the EIB and EBRD.  Hard to believe that this won’t create more demands for money from Germany?  Possibly small, but the hits against Germany are starting to add up pretty quickly.

How bad will German Bank Losses Be?

The partially state owned bad bank, Commerzbank had big write-downs in Greece.  Hard to imagine that they avoided even taking bigger exposures in Spain and Italy.  Then there are the German worse banks or Landesbanks.  They had some of the largest exposures to Greece.  It would be simply shocking if they didn’t have even bigger exposures to Spain and Italy.

These banks had enough “capital” or government support to make it through the Greek PSI process, but can they withstand hits of 10%-50% on their Spanish and Italian holdings?  I highly doubt that without another huge infusion from the German government.

Then what about Deutsche Bank?  By far in the best shape, but maybe you remember they were the first bank that Spain provided verbal guarantees in respect of regional debt.  Why would Spain possibly honor that guarantee when they are abandoning the Euro and need all the money they can spare?  What is Deustche Bank going to do?  Repossess Catalonia? 

The PIIGS will all walk away from any guarantees they have made.  That is even easier than stopping payment on bonds or forcing through a new currency.  This will hit banks more than countries, but the losses may be so big that it makes it back up to the country level.

How bad is the Target2 hit?

I have read a decent amount on this and remain confused.  At one end, are arguments that the risk is massively overstated and losses would be minimal.  Frankly I have found those article rely too much on the same hope that was evident during PSI, where ECB bonds get paid par, because that’s what they get.  I think once countries are in full on exit mode, niceties like that will be thrown out the window.  At the other extreme is arguments that the full size of Target2 balances would be at risk.  Those articles honestly seem to be more realistic.

Target2 could cause more massive losses, and at the same time could force trade to grind to a halt.  I think the trade disruptions in any case will be critical and the Target2 system breaking down would add to that problem.

Countries in Glass Houses Shouldn’t Throw Stones

No wonder Josef Ackermann came out in favor of more support for Europe.  He has the good sense to see how bad this is.  I have focused on Germany here since they alone seem to believe that they can push the situation to the brink, get paid, and have no trouble, but if the defaults start (whether payment defaults or currency redenomination) then France and the other countries will be hit hard.  France has its own set of Dexia guarantees and who knows what exposure their banks have to Spain and Italy?

 


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Tue, 06/05/2012 - 10:40 | Link to Comment JamesBond
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master plan bitchez

Tue, 06/05/2012 - 10:46 | Link to Comment Marginal Call
Marginal Call's picture

The solution is easy.  Every month, every man, woman, and child in Greece takes a 20 Euro note, wipes their ass with it--and sends it to Germany.  Everybody happy.  Germany gets da money, Greeks get revenge.  Win win. 

Tue, 06/05/2012 - 10:56 | Link to Comment JPM Hater001
JPM Hater001's picture

Just another inch to the left Mrs merkel...keep going...dont worry about the ledge it's feet away...now take a nice big step

Tue, 06/05/2012 - 11:58 | Link to Comment OttoMBMP
OttoMBMP's picture

So, dear Peter. What do you want to tell us?

That Germany should have never engaged in "saving the Euro"? I fully agree!

But you know, Peter. We are the bad guys (worldwars and stuff - as you know, only (!) the baaaad Germans have been responsible for these baaaad things). And of course we had to "save the Euro", this great invention of Jacques Delors. And bail out the banks and "social" systems and mediterranean lifestyles German workers never had dreamed of.

And the German politicians had to somehow sell these guarantees and payments to the German voters. That's how "austerity" has come into play. "We pay, but not without demanding disciplined behaviour."

Of course, this could not work. And of course Germany will go down with the rest of the EUSSR empire.

But how do you explain your Schadenfreude, Peter?

Tue, 06/05/2012 - 12:04 | Link to Comment malek
malek's picture

You know, it's all Bush's... err, I mean ze Germans fault!   <roll eyes>

Tue, 06/05/2012 - 12:30 | Link to Comment RMolineaux
RMolineaux's picture

In my opinion, the only course of action that might forestall total collapse is to take the following steps, which must begin in the U. S.:

1.  Nullify and outlaw all credit default swaps.

2.  Arrest and prosecute those bankers who have failed in their fiduciary duty and confiscate their bonuses.

 

Tue, 06/05/2012 - 10:42 | Link to Comment FranSix
FranSix's picture

Ok.  So Germany will be facing the same banking sector crisis as some of the other Eurozone countries.  And, as we are hearing that the proposed solution is to provide gold-backed bonds out of the ECB with the underlying asset formed out of Eurozone gold bullion contained in various central banks, then Germany, in order to participate,will be required to repatriate its gold from NY vaults.

Tue, 06/05/2012 - 10:45 | Link to Comment Slope of Hope
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Won't they be surprised when they go to get their gold and find out the locks have been changed!

Tue, 06/05/2012 - 10:51 | Link to Comment mayhem_korner
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Or that they find a "caution: wet paint" sign in a distinctive shade of yellow hanging on the door...

Tue, 06/05/2012 - 10:51 | Link to Comment FranSix
FranSix's picture

Or, after months of wrangling finally get their gold, but with 2012 or later refinery dates stamped on the bars.

Tue, 06/05/2012 - 10:49 | Link to Comment bigdumbnugly
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"Germany is the ultimate backstop and seems to have forgotten that debt exists in two states - Debt is either Repaid or It Isn’t"

c'mon, haven't you heard of schrodinger's debt?


Tue, 06/05/2012 - 11:00 | Link to Comment JPM Hater001
JPM Hater001's picture

"Okay, I have a solution for your problem, but it only works with spherical chickens in a vacuum."

Tue, 06/05/2012 - 10:42 | Link to Comment mrktwtch2
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the market is getting bored with the euozone is collapsing stories..how about ufo's over new york..lol

Tue, 06/05/2012 - 11:21 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

Look at US treasury prices and USDX.  The market is clearly not bored with the eurozone collapse.

Don't ever forget, the USDX is a weighted geometric mean...

Euro (EUR), 57.6% weight
Japanese yen (JPY) 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight and
Swiss franc (CHF) 3.6% weight

Synchronized diving means we must all go down TOGETHER.

Mark my words, Timmy Geithner and Ben Bernanke will be considered early American heros of the Great Resource Wars.  Don't believe me? Just compare gasoline prices in Europe and America.

God save the petrol dollar!

Tue, 06/05/2012 - 14:16 | Link to Comment Lednbrass
Lednbrass's picture

The main reason for the price difference is taxation, the Europeans put  massive taxes on it to fund their social programs.  Theoretically they could choose not to and reduce the price but their governments use energy as a cash cow.  Many in the US government would love to move in that direction, there is a segment of the American left that very much wants to make it prohibitively expensive.

Tue, 06/05/2012 - 17:55 | Link to Comment smb12321
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US government?  There's a huge segment on ZH that trashes any form of energy stronger than campfires (the Luddites / anti-industrialists / survivors).  We've had horror stories of possible nuclear plant problems, fracking problems, oil spills, gas leaks - you name it.  GW excels in such agitprop.

Tue, 06/05/2012 - 10:54 | Link to Comment giovanni_f
giovanni_f's picture

When the squids will have finished unloading their long used toilet paper alias us treasury instruments to the extent of being materially net short used toilet paper alias us treasury instruments you will know that the "markets" alias globalized run-by-squid casinos anticipate a "solution" to be at hand in the not too distant future. Until then the "markets" will continue to bash Europe. And fuck you, NSA.

Tue, 06/05/2012 - 10:43 | Link to Comment t_kAyk
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Debt is either Repaid or It Isn’t

It isn't. 

Tue, 06/05/2012 - 10:51 | Link to Comment LawsofPhysics
LawsofPhysics's picture

correct.  This is what "borrowing from the future" looks like when you finally get to the "future".  History has shown how this ends time and time again.  Just once it would be nice to see the paper pushers lose their heads again.

Anyway, hedge accordingly.  If only we knew what the Dollar to SDR exchange rate was ahead of time.  That is where this is all going, well that or WWIII.

Tue, 06/05/2012 - 13:40 | Link to Comment Soul Train
Soul Train's picture

fight now, zero hedge.

If you can't fight, then flush and wash.

Tue, 06/05/2012 - 11:17 | Link to Comment DaveyJones
DaveyJones's picture

 "but for the past 2 years, Germany has been throwing around guarantees and commitments like they meant nothing"

you mean financial contracts still mean something?

Tue, 06/05/2012 - 12:13 | Link to Comment t_kAyk
t_kAyk's picture

HO HO HO!!  Presents for ALL the good little boys and girls! 

Although in Germany, and all Alpine countires, they also have the 'Krampus'... 

Krampus is a mythical creature recognized in Alpine countries. According to legend, Krampus accompaniesSaint Nicholas during the Christmas season, warning and punishing bad children, in contrast to St. Nicholas, who gives gifts to good children. When the Krampus finds a particularly naughty child, it stuffs the child in its sack and carries the frightened child away to its lair, presumably to devour for its Christmas dinner.

http://en.wikipedia.org/wiki/Krampus 

Tue, 06/05/2012 - 11:24 | Link to Comment Peter Pan
Peter Pan's picture

The word debt contains the word bet. The lenders now have to recognise that they have lost their bet. Can we now move on to the other issues such as demographics, corruption, totally skewed income and wealth distribution?

Tue, 06/05/2012 - 11:40 | Link to Comment Tirpitz
Tirpitz's picture

Rolled over. After a voluntary haircut, which still brings the vultures that scooped it up for pennies on the dollar a two to three hundred percent gain. Taxfree and offshored.

Tue, 06/05/2012 - 10:45 | Link to Comment Colonial Intent
Colonial Intent's picture

"you have enemies? good, that means you stood up for something in your life"

Winston Churchill

 

Tue, 06/05/2012 - 10:48 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Germany is simply the more buoyant turd in the toilet bowl at the moment. That will change soon enough.

Just keep flushing boyz. Sooner or later you'll realize you need to use the hard core bleach.

Hard core cleaning

Tue, 06/05/2012 - 10:46 | Link to Comment wcvarones
wcvarones's picture

"Schadenfreude Is a German Word"

 

So is Scheisse Porn.

Tue, 06/05/2012 - 11:20 | Link to Comment Nussi34
Nussi34's picture

and Franzosenschwuchtel!

Tue, 06/05/2012 - 10:46 | Link to Comment junkyardjack
junkyardjack's picture

I learned from Michael Lewis' Boomerang that Germans are fascinated with shit.  Well they are about to get a storm....

Tue, 06/05/2012 - 12:06 | Link to Comment Sandmann
Sandmann's picture

Michael Lewis is a twerp who think Americans say "Shit" and that is okay but if Germans say "Scheisse" it has some psychological aspect.  Then again Lewis used to be obsessed with big swinging dicks

Tue, 06/05/2012 - 10:47 | Link to Comment Let The Wurlitz...
Let The Wurlitzer Play's picture

The analysis of Germany has been long overdue.  I personally dont believe they are as stong as their bond yields imply.

 

Tue, 06/05/2012 - 11:43 | Link to Comment Tirpitz
Tirpitz's picture

Actually Germany may be way stronger than most of us expect. They carried Europe after the first world war, after the second world war, and now again. If the banking system could be thrown into the gas chambers and instead manufacturing had some say, success would be within reach.

Tue, 06/05/2012 - 12:03 | Link to Comment Sandmann
Sandmann's picture

They carried Europe after the first world war

 

You have a Doctorate in Counterfactual History ?

Tue, 06/05/2012 - 12:16 | Link to Comment BudFox2012
BudFox2012's picture

They are simply the best of a bad lot, and their bonds are strong for the same reason the dollar has been gaining strength: no other viable alternatives.

Tue, 06/05/2012 - 10:50 | Link to Comment adr
adr's picture

Along with other mysteries I would like to know the answers to:

Why did Facebook pop $.60 this morning on no news?

Why does oil seem to sell of by $3 every night between 12AM and 7AM only to drive all the way back up by noon?

Natural gas now really trades based on weather forecasts?

Debt is actually wealth?

Liabilities are actually assets?

 

I don't recognize the world.

Tue, 06/05/2012 - 10:52 | Link to Comment Bartanist
Bartanist's picture

From what I recall, Bush/Paulson & Obama/Geithner & Berstinky threw around a lot more in guarantees than slop at a pig farm. Germany has a bunch of catching up to do to be in the big league.

However, unlike the US, Germany is a net creator of value. Maybe they can actually afford it without spending $1.5 trillion more than they have each year to support the banking and military crime syndicate.

Tue, 06/05/2012 - 10:51 | Link to Comment walküre
walküre's picture

I know what's going on here. Germany is being forced into another TOTAL CAPITULATION!

Give it all up Germany, give it all up so the rest of Europe can feed off your every man's, woman's and children's BLOOD.

3rd time is the charme. Wall Street's endgame is always to fuck Germany and take all their stash. The parasite is obviously going after the meatiest host after all the other hosts are devoured and turned into zombies. Germany has to fight the zombies and kill the parasites. I see many sequels to this ancient story.

Tue, 06/05/2012 - 14:00 | Link to Comment Lednbrass
Lednbrass's picture

Yep, that about sums it up.  I just hope the Germans still have enough left in them to give the rest the finger after being bombarded with guilt for 60 years and propagandized into the same state as the US population.

The US pursued the same postwar strategy in Germany that they did the American South- denationalize the young, effeminize the males, take over the schools and tell them their history and culture are very very bad, hammer them with propaganda and undermine anything traditional or family based.

My grandfather used an old expression for needing some luck and would say "Du musst schwein haben" (dont know if that is still in use over there), its time for the Germans to reverse that and now say "Wir mussen keine schweine haben" and let the PIIGS gorge themselves on the food of whatever fools give them money.

Tue, 06/05/2012 - 10:51 | Link to Comment Mercury
Mercury's picture

I mentioned yesterday that Soros's point that it was first  Germany who insisted, after the Lehman collapse, that each sovereign was responsible for it’s own banks, which is when non-German EU (particularly Italy and Spain) sovereign debt started to trade wide. 

 

This also had the effect of defining the limits of the EU project, which is still in a state of confusion: what exactly are sovereign liabilities and what are (or should become) those of the EU.

Tue, 06/05/2012 - 10:54 | Link to Comment walküre
walküre's picture

Saving Lehman would have been allot cheaper than putting trillions of bailout cash into the manure spreader to feed the pigs at the trough.(not PIIGS).

Tue, 06/05/2012 - 11:05 | Link to Comment Mercury
Mercury's picture

It just would have let the music play a bit longer.
There are still way more asses than chairs circling the world and not much has been fixed or even addressed in the way of the size, cmplexity and collateral moneitzation of our now even Too Bigger To Fail financial institutions.

But eventually the music will stop.

Tue, 06/05/2012 - 10:51 | Link to Comment BandGap
BandGap's picture

Coming soon to a theatre near you.

Spain isn't going to pay squat. You know it, I know it and Germany knows it.  This is like your jobless brother in law coming back for another loan (hit) while you stupidly thought he was going to come by and square your previous loan with him. The asshole just can't find a job, has tapped out his friends and family and knows you are holding.  And it happens again and again. At the same time you cancle your vacation with the wife and kids, you put off that new car and start worrying about the costs for retiring.  And he not only doesn't repay you, the SOB is asking for more. Eventually the SHTF, right?

 

Tue, 06/05/2012 - 11:13 | Link to Comment Treeplanter
Treeplanter's picture

Yeah, and the jerk reeks of pot smoke and  ddn't even bring a joint over.  Now he's high grading your fridge. 

Tue, 06/05/2012 - 10:54 | Link to Comment CatoRenasci
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So, the Germans either take a bad hit now when the PIIGS renege, or a much greater hit later when the PIIGS renege after the Germans have pledged even more of their future and sent more of their money and creditworthiness to enable the PIIGS to live high on the hog a bit longer.

Hmmm. When you're in a hole, the first thing is to stop digging. Germany should leave the Euro first and be done with them. Lend only against gold or other movable collateral.

Tue, 06/05/2012 - 11:02 | Link to Comment Marginal Call
Marginal Call's picture

Movable collateral?  Germany has been trying to move it's borders for a 100 years.   Everything is "movable". 

Tue, 06/05/2012 - 11:44 | Link to Comment CatoRenasci
CatoRenasci's picture

All the European powers have tried to move their borders, using war, for hundreds of years. The only European states that haven't are the Swiss - pretty much content in their mountain redoubt - and the various 'postage stamp' states like Andorra, San Marino, Liechtenstein, Luxembourg and Monaco.

The Germans are hardly more culpable on that score than anyone else.  Alsace and Lorraine were very much German from the time of the beginning of the Holy Roman Empire until Louis XIV took them for France in the late 17th century. They'd been French for only a couple of hundred years when the Germans took them back in 1871.

The Austrians, the Italians, the Spanish, the Poles, the Russians, the Turks, the Hungarians, the Swedes and the other Scandinavians, have all busily tried to move their borders for centuries, with more or less temporary success.

This time the Germans should just insist on the gold.

Thu, 06/07/2012 - 09:52 | Link to Comment antin
antin's picture

In fact, all movings of borders in central Europe in the last 100 years have been territorial losses of Germany, with the last big one moving the Polish border 100 km to the east of Berlin. So much for that.

 

Tue, 06/05/2012 - 10:57 | Link to Comment rwe2late
rwe2late's picture

Debt is either Repaid or It Isn’t!

Is it really so simple as that?

If some entity could "print" dollars at virtually no cost,

then lend it to me at near zero interest with no collateral,

and after which I could loan it to you at, say 8% interest for real collateral,

As long as you paid the interest (forever), I wouldn't really care whether you repaid the principal or not, unless perhaps I wanted to possess whatever you  signed off as collateral. 

 

Tue, 06/05/2012 - 10:59 | Link to Comment The Reich
The Reich's picture

 Merkel is our new 

 

VERGELTUNGSWAFFE

 

to finally destroy the City.

 

You're not scared, are you?

Tue, 06/05/2012 - 11:50 | Link to Comment Tirpitz
Tirpitz's picture

Highly scared of the Ferkel's looks.

Tue, 06/05/2012 - 11:53 | Link to Comment koperniuk666
koperniuk666's picture

Er, No.

You clearly haven't been in the City recently. Everything fine here.

Although I can't say Im looking forward to the War phase.

 

Tue, 06/05/2012 - 11:00 | Link to Comment oldgasII
oldgasII's picture

I fought the debt in the hot sun

Now all I've got to eat is a worthless bund

All the leaders said we'll make it right

They all left the country overnight

The only ones left are babbling fools

Now I know they were ignorant tools

Tue, 06/05/2012 - 11:03 | Link to Comment Treeplanter
Treeplanter's picture

Germany is standing by an open door.  When the defaults come they will step out of the burning house of Euro Utopia. 

Tue, 06/05/2012 - 11:05 | Link to Comment gaoptimize
gaoptimize's picture

Alternate picture caption: "Many Bothan spies died to bring us this information".   I wish WB would do the ready-room of the rebel alliance attack on the "DebtStar" with Merkel as the briefer and various EU and central banker officials as the rest of the cast.

Tue, 06/05/2012 - 11:09 | Link to Comment JR
JR's picture

The big banks are working with the international bankers to hold the Eurozone together, not for the benefit of Europe’s people, but to use the Eurozone for continuous collection on their high pressure political loans and as the puzzle piece to fit into world government which they would control.

 “Without the government money,” said Bloomberg in April of ‘09, “Goldman, Merrill Lynch & Co., Morgan Stanley, Deutsche Bank AG (literally German bank) and other firms could have become some of the biggest creditors in a bankruptcy filing by AIG, the world’s largest insurer, because of the billions in losses on subprime bonds and corporate debt…"

Deutsche Bank is a global banking company and Germany's largest bank, and is the largest private bank in the Eurozone; it is headed by Paul M. L. Achleitner, a former Vice President of Mergers & Acquisitions of Goldman Sachs & Co., New York, and partner of Goldman Sachs Group. He recently took over the reins from Josef Ackermann. Ackermann is the man who has helped former ECB head Jean-Claude Trichet “shape Europe’s economic and financial future.”

It was Ackermann, according to theNY  Times last year who “has insisted that providing some sort of debt relief for Greece would be a huge mistake…

“European banks, including German ones like Deutsche Bank, hold many billions of euros in Greek government bonds, and the banks would lose big if those debts were restructured. For the moment, Europe’s solution for Greece is, essentially, Mr. Ackermann’s: more bailout money and more austerity — an approach that some economists say only buys time without offering any hope of recovery….” -- Deutsche Bank’s Chief Casts Long Shadow in Europe

Tue, 06/05/2012 - 12:02 | Link to Comment Sandmann
Sandmann's picture

Sorry JR but you will find that Paul Achleitner was heavily involved in the mess - Allianz does after all own PIMCO and Paul Achleitner did try to buy AIG.

Tue, 06/05/2012 - 12:18 | Link to Comment JR
JR's picture

Thanks, Sandmann. More grist for my mill.

Tue, 06/05/2012 - 11:12 | Link to Comment Village Smithy
Village Smithy's picture

Germany can compete with any industialized nation in the world. They should just call it quits with the EU and start rebuilding. It will be an infinitely easier rebuild than the last time.

Tue, 06/05/2012 - 11:13 | Link to Comment magpie
magpie's picture

Heck, yesterday Welt had a stirring picture of a very dejected Merkel - i couldn't stop myself from captioning it with "Merkel placed under arrest after Chancellor Sarrazin declares Germany's exit from Euro."

Tue, 06/05/2012 - 11:18 | Link to Comment Temporalist
Temporalist's picture

"What Germany seems to be forgetting is that they jeopardized their own credit quality"

Merkel just needs to hire Larry Summers as a consultant to fix this problem by borrowing more.

Is "fatass-lying-statist-kelptocrat" an English word derived from German?

Tue, 06/05/2012 - 11:19 | Link to Comment IMA5U
IMA5U's picture

when all else fails

 

get the Fed to start jawboning scaring the shorts

 

The Gnomish Magic Show by The Bernak is On

Tue, 06/05/2012 - 11:20 | Link to Comment tmosley
tmosley's picture

Avenue Q song on the subject: http://www.youtube.com/watch?v=t9B-ZoS0wvU

Tue, 06/05/2012 - 11:23 | Link to Comment msjimmied
msjimmied's picture

5 looooong years, all we've talked about is banks dying, needing more money to stay alive. But they hang in there with infusions of cash and promises that are never kept. Notice how the tone changes when the conversation is about dead beat home owners trying to hang on to the roof over their heads, or people reduced to food stamps because they have no other way to put food on the table. Austerity seems awfully one sided. I have more sympathy for the neighbor who is suffering than for faceless banks who got us into this mess to begin with. Fuck 'em. 

Tue, 06/05/2012 - 11:37 | Link to Comment ONO47
ONO47's picture

My favorite link from this site. Thank you to whoever originally posted it.

A musical representation of Schadenfreude

http://trololololololololololo.com/

 

 

Tue, 06/05/2012 - 11:53 | Link to Comment Rat King
Rat King's picture

Peter, another great piece. Thanks for your contributions.

Tue, 06/05/2012 - 11:53 | Link to Comment rwe2late
rwe2late's picture

Help! We have all fallen into a language trap, and can't get out.

It is NOT the average German citizen vs. the average Greek citizen.

Most everyone has been conned by empty promises, showy but misdirected economies, "patriotic" but criminal military excesses, and deceptive financial ripoffs.

Divide and rule. Hand out the "melamine"-laden crumbs arbitrarily and inequitably. Blame those who got some crumbs for others not getting their share. But never, never, step back and notice the few who mixed the cake and licked off all the good frosting.

Meanwhile, over and over, we will be told, and it will be repeated, "Greece" is robbing "Germany".

Tue, 06/05/2012 - 11:57 | Link to Comment koperniuk666
koperniuk666's picture

Repossess Cataluña?

Now you're talking!

Warm up the Panzers!


 

Tue, 06/05/2012 - 12:00 | Link to Comment Sandmann
Sandmann's picture

Yes, you have explained clearly why Bernanke will print and print and print because otherwise the Banks will not be able to repay the Fed and the Us Government will be bust with $16 Trillion in Debt. So if it keeps going to $40 Trillion in DEbt maybe the economy spark plugs will ignite the magic potion that will repay all that Debt and we can say Ben is a Superhero who saved American Values by adding a few Exponentials.

What you say about Germany is what you should say about every other capital in the OECD. Germans have lost everything 3 times in the past 100 years. How many times has the Us Dollar been replaced as a currency or the Supreme Court or the White House ? How many times has the British Pound been replaced ?

What happens if the Germans have a far deeper understanding of what going further entails than you give them credit for ?

Tue, 06/05/2012 - 12:04 | Link to Comment Joe A
Joe A's picture

If the debts are not repaid to Germany, Germany will pull the plug on the EU. Then they will look eastwards. To Poland, Russia and Asia. Germany is already making a lot of money there.

Tue, 06/05/2012 - 12:40 | Link to Comment silverserfer
silverserfer's picture

I think operation "cash for gold" scam was started back in 1913. We are alomst finished with the program. Just a few more months.There has to be just an awsome bunker out there with MASSIVE amounts of shiney.  

Tue, 06/05/2012 - 12:50 | Link to Comment Gloeschi
Gloeschi's picture

Ze Germans might not be so stupid after all. EFSF is a privately owned company registered in Luxembourg. When the sh1t hits the fan, ze Germans will just shrug and the bondholders can see how they get their money.

Tue, 06/05/2012 - 12:58 | Link to Comment trilliontroll
trilliontroll's picture

"I know what's going on here. Germany is being forced into another TOTAL CAPITULATION!

Give it all up Germany, give it all up so the rest of Europe can feed off your every man's, woman's and children's BLOOD."

If Germany is in the State of capitulation (giving up sovereignty) , what about switzerland

or Japan ? They shoukd be paradise on earth with their national currency and enjoy

the fruit of good purchasing power.

Germany was a boom nation with the dollar about € 2,10 back in the 60s .

Tue, 06/05/2012 - 15:16 | Link to Comment janus
janus's picture

yup!

just to be clear, i'm not out to beat down the boys in berlin; that being said, pardon me as i proceed to beat down the boys in berlin:

the swagger and blinkered brinkmanship emanating from the hives of teutonic wunderkind are, in a word, staggering.  they're issuing either/or diktates to the continent, and the outcome of both is mori'bund'.  not that there are any good options; but when you consider the composition of this apoplectic union, and further understand that this is quickly becoming a zero-sum grudge match (with ancient enmity seeping through the cracks of this blithe facade), wherein both are inevitably goose-egged and the winners are cackling wildly in places like, say, the city of london, ny-ny, singapore, and the cantons of the swiss...you'd think the uber-clever deutch would at least pause.  but this is not the german way.

you see, the germans like to teach lessons.  it's a compulsion they cannot seem to shake.  it seems every generation will be vexed by some new-fangled, rigidly enforced and half-baked german 'system' that, while it looks good to those who cannot reconcile the clean crisp world of theory to the messy menagerie that is our flesh-and-blood/fear-and-greed world (read: academics), is yet another lesson in scripture (read: pride proceedeth a downfall and a haughty heart cometh before destruction).  and when the freshly minted german system inevitably fails (and history is littered with examples of failed german machinations), the german mind says: 'das is grumble-making! dese nincompoopenstrossen vont do vat vie kommand! dat is die failure -- failure to obey'.  

so, germany, while it may be your undying hope that all the world finally yeild to reason and adopt the methods and mannerisms that make you the piss-soaked-blanket of every social occasion, perhaps there is good reason to here reflect on what it means to be german: in short, it isn't any fun -- not for the germans, and especially not for those who find their necks suddenly squished by das boot.

all of which is to say: we don't begrudge you your mirthless existence, just don't go around thinking that the rest of the world does, or will ever, appraise the world outside in such a cold and utilitarian calculus.  

but, if markets are expecting a textured and nuanced consideration on behalf of the german voter, THINK AGAIN.  there is a lesson to be taught to these profligate periphiaries!  not that the germans were unfamiliar with the charecter of their neighbors; i mean, hell, they've been sermonizing, moralizing and evangalizing to their less effiecent cousins for at least 150 years.

some people never learn, do they germany?

http://www.youtube.com/watch?v=35IEkEwMqzg&feature=related

well, sorry for the above...i know it makes the skin of many crawl -- but, german fuckers, i think you are challenging us; and on such an auspicous occasion.

congrats, Elizabeth on the D-Jubilee.  so what? i said it.  am i supposed to be ashamed to be anglo saxon?  we've kept these harsh minded hordes at bay for more than 20 generations.  you're welcome, world.

janus

 

Tue, 06/05/2012 - 16:19 | Link to Comment Lednbrass
Lednbrass's picture

Say what you will, at least they are more honest and up front about it than the Anglos seeking domination through trickery, playing one against the other (English strategy in Europe for centuries), and financial shennanigans.

I suppose the English were in India for the good of the native population, bringing them the gifts of Anglo benevolence?

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