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Was Merkel's Surprising "Defeat" Merely A Gambit For A German Referendum?

Tyler Durden's picture


As details from Thursday's European Memorandum of Understanding, which has all the binding power of a 'highly confident letter' issued by a third tier investment bank, continue to be non-existent, the questions, and conditions, are accumulating fast. While the ESM passed with a solid majority in both the lower and upper houses of German parliament yesterday, its fate is now in the hands of the German constitutional court which as reported previously has requested extra time to study the bailout plan, before it gives the all clear for a presidential signature. Sound familiar? And barely did the ESM pass the ratification vote, before lawsuits alleging its unconstitutionality start pouring in. But probably more importantly, Focus magazine reported overnight that the first clear condition from Germany will be the enactment of a Financial transaction tax for all countries where the ESM would be operational in order to minimize the burden on German taxpayers. In other words, banks would effectively pool their profits, in order to fund the bailout of other banks (or their own). In retrospect, it does not sound like a bad idea. It may even pass the recently conceived "fairness doctrine" of the Great June Socialist Revolution. Most importantly, however, it appears that events over the past week may have been merely a gambit for something that Schauble and Weidmann have already hinted at: a popular referendum that decides the fate of Europe once and for all, washing Merkel's hands and letting the people decide if they want the European experiment to continue or not.

From Dow Jones:

The German government wants to tie using the funds from the permanent bailout fund to directly aid banks to the financial transaction tax, German news magazine Focus reported on Saturday citing sources. 


The German government intends to push for the condition that only banks belonging to the countries that institute a financial transaction tax would be able to directly access funds from the European Stability Mechanism, the magazine said. The countries would then use the additional revenue from the tax to fund  the ESM, reducing the burden on German taxpayers. 

So which countries will find their sovereign bonds tied to a transaction tax? From Reuters June 22:

Finance Minister Wolfgang Schaeuble said 10 countries were prepared to use an EU process known as 'enhanced cooperation' to push ahead with developing the tax, which Britain and other states, including some in the euro zone, oppose.


Enhanced cooperation requires at least 9 EU countries to agree to work on a proposal. France, Italy and Spain are all behind Germany with the initiative, German Chancellor Angela Merkel said after a meeting with her counterparts in Rome.


Revenue from such a tax, which some analysts estimate could raise more than 50 billion euros a year depending on the number of countries that participate, could be used to finance initiatives such as a fund to wind down bad banks.


"My impression is that quite a number of member states strongly support the proposal of an FTT (Financial Transactions Tax) in principle," Schaeuble said after a meeting of EU finance ministers in Luxembourg. "We should give it a try."

Which basically means that banks in countries that have no choice but to agree to a FTT effectively become utilities: something that should have happened in the US years ago. It also means that the banking sector will see itself "divested" of numerous jobs as remaining workers will scramble to go to those areas in the Eurozone where the FTT does not put a cap on bonuses.

Yet the other question is even if €50 billion can be raised each year from the FTT, where will the balance came from? Obviously, the bulk of it, will have to be sourced from Germany. Which then presents an interesting case: has Merkel's move over the past week been nothing but a gambit, to let a referendum, or a public vote on a European bailout, come into play? Should the constitutional court find a snag with the ESM it is very likely that Germany will have to resort to the popular measure, whose outcome will remove blame from Merkel for her actions once and for all.

One may say: "Preposterous, what referendum?" After all Greece's G-Pap was sacked by banker interests for even daring to propose such a thing. Actually, in the case of Germany it is not preposterous at all, and may be precisely the final showdown that Merkel and Schauble have in mind. Recall from Spiegel last week:

German Finance Minister Wolfgang Schäuble kicked a political hornets' nest when he suggested to SPIEGEL that a referendum on efforts to save the euro will have to be held sooner or later. German commentators jumped into the debate on Tuesday.


Merkel immediately distanced herself from Schäuble's comments, saying through her spokesman Steffen Seibert on Monday that any such referendum wouldn't be coming any time soon. But several other politicians indicated their support for the idea, including Social Democratic bigwig Peer Steinbrück and Patrick Döring, general secretary of Merkel's junior coalition partners, the Free Democrats. Steinbrück told the Stuttgarter Zeitung on Monday that "if you have been listening carefully to the Federal Constitutional Court, you would realize that there is no way around" a referendum.


Indeed, the decision over a referendum may ultimately not be a political one. Germany's Constitutional Court, the highest in the country, has recently indicated that the limits of the country's constitution have been reached when it comes to efforts to save the common currency. Already, the court is fielding several legal challenges to the European Stability Mechanism (ESM) and last week it controversially asked German President Joachim Gauck to delay signing the law until the court could fully examine the challenges. Last September, Constitutional Court President Andreas Vosskuhle said that further European integration would require a new constitution, making a referendum unavoidable.


"It is remarkable how quickly the CDU wants to stifle a debate that started with its own finance minister, Wolfgang Schäuble. His boss Angela Merkel called referendums over constitutional amendments dealing with Europe's future as a step for 'the day after tomorrow' … Sure, but actually, why not? … In recent months the tempo of political integration has accelerated. The fiscal pact, a banking union and joint liability -- all of this was unthinkable even just a short time ago. But so far politicians and citizens have been acting more as followers than framers. Often because leaders have delayed decisions until there were no other options."


"Politicians and citizens alike must be able to debate the alternatives in peace, weighing the pros and cons -- and to vote on them. Otherwise the EU loses its legitimacy. But this can't happen in just a few hours, as Merkel would apparently prefer. Instead we need a long and intensive discussion, both in parliaments and in the public. But for this to happen, one can't wait until the day after tomorrow. It should begin today."

So the question is: was the Vaffanmerkel cover nothing but a very Pyrrhic victory for the Italians? Because if indeed this is the chosen sequence of events, ultimately Merkel merely put the decision in the hands of the people. Correction: the angry people. Now that events are in motion, we will get the answer very quickly. As Focus write the lawsuits challenging the ESM are already piling in:

The first lawsuits against the consent laws for the European fiscal pact and the euro rescue ESM went immediately after adoption in the early hours of Saturday at the Federal Constitutional Court, the first law suits. Around midnight, was a messenger from the constitutional complaint of the CSU politician Peter Gauweiler at the gate of the court. The appeal of the "more democracy" that had attached themselves to the information about 12 000 citizens, was submitted to the highest German court. This action is supported by the former Justice Minister Herta Daeubler-Gmelin (SPD) and represented the Leipzig constitutional lawyer Christoph Degenhart. A lawsuit was faxed to the left, according to a party spokesman also immediately after the Federal Voting to Karlsruhe.


A total of five complaints against the actions in Karlsruhe announced. Federal as Federal had passed laws to multi-billion euro rescue package and the fiscal pact for more fiscal discipline before, each with two-thirds majority. The Federal Constitutional Court had asked President Joachim Gauck, to delay the signing of consent laws to ESM and Fiscal Pact, to the judgment of the decided Eilanträge the plaintiff. It is expected that this still happens in July.


"We complain of the contracts, because they mean a dismantling of democracy in two ways," said Däubler-Gmelin. "For one thing forever budgetary powers and sovereignty rights of the Bundestag to Brussels to be delivered. Thus, the Bundestag election is canceled. On the other hand, the ratification is quite hectic and over in the population. " In a press release Gauweilers it was said that fiscal pact as ESM would "cast in serious breach of the principle of democracy." So wear the ESM contract to dispose of hundreds of billions in tax dollars on a "democratically legitimized not organization"

In other words, was Merkel's surprising "defeat" on Thursday just a brilliant gambit to get her off the hook, and let the people decide where the chips may fall? It wouldn't be the first time Germany has fooled Europe about its true motives.


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Sat, 06/30/2012 - 11:35 | 2576956 slaughterer
slaughterer's picture

Without a referendum, Merkel's future in Germany is over, but she may have a future in Brussels.  All signs point to the fact that she is aware of this fact and preparing her office alongside von Rompuy and Barrosa for when she gets voted out of Chancellor office in Germany.  

Sat, 06/30/2012 - 11:40 | 2576978 Colombian Gringo
Colombian Gringo's picture

Merkel knows she will be politically destroyed in Germany if she agrees Germany backstopping the PIIGS.Besides, working in the EU will be easy since all she will have to do is collect a check and do nothing like the rest of the EUcrats.

So a referendum makes sense.

Sat, 06/30/2012 - 11:58 | 2577048 Richard Chesler
Richard Chesler's picture

If you believe banksters will allow the little people to decide anything, you haven't been paying attention.


Sat, 06/30/2012 - 12:35 | 2577137 MillionDollarBonus_
MillionDollarBonus_'s picture

Referendums have been totally discredited. After the first Greek referendum, I distinctly remember a sharp sell off in Greek bonds that effectively lead to the current crisis. Referendums are a very dangerous idea indeed. The idea of referendums is sold as a harmless forward-thinking initiative, but the reality is that referendums are a very new and radical idea. 

Sat, 06/30/2012 - 12:53 | 2577159 Pure Evil
Pure Evil's picture

Ah yes, I can see the newsreels of old now, "Communism marches on!"

Just think if good ole Joseph Stalin were alive now he'd be kicking himself for not seeing it earlier.

Instead of wasting money on vast armies of tanks and men all he had to do was loan the PIIGS billions of rubles to live, how did the old communists put it, decadent lives.

Then he could hold them hostage by promising to bail them out with the vast reserves of Russian oil, natrual gas, gold and diamonds, only if they would surrender their national sovereignty to form an expanded USSR.

What was it you said before about communism equaling progress, liberty and what else?

Too bad the follow on communists fucked up so bad the whole thing imploded, kinda of reminds me of the bang up job the current marxist is doing.

Sat, 06/30/2012 - 12:35 | 2577138 MillionDollarBonus_
MillionDollarBonus_'s picture


Sat, 06/30/2012 - 14:56 | 2577385 sablya
sablya's picture

Yeah, MDB, you're a real man of the people.  Don't let the people have a say in how their money is used.  Very nice.

Sat, 06/30/2012 - 12:35 | 2577141 Sudden Debt
Sudden Debt's picture

the only thing people get to decide with the banks is if they want to pay on a monthly or weekly basisi.

Sat, 06/30/2012 - 13:01 | 2577178 macholatte
macholatte's picture


In other words, banks would effectively pool their profits, in order to fund the bailout of other banks (or their own).


Let me see if I got this right.......

Isn't "pooling of resources" what led to the "cirses" in the first place and the so called "contagion"?  (Each country has to pay a proportional share of the cost to bail out the other countries so that Greece is obliged to pay up money to a pool to bail out Greece. Then Greece has to pay money to help bail out Portugal while Portugal is helping to bail out Greece. Then Greece has to pay money to help bail out Spain while Spain is helping to bail out Greece and Portugal....and so on and so forth and all of it with money created from nothing.)

So now, they want to implement the same failed concept but it will be the banks doing the circle jerk.

Did I get that right?

And this is supposed to be a solution to a problem caused by insolvent banks. Right?

Or did I miss something?



Sat, 06/30/2012 - 13:31 | 2577230 Pure Evil
Pure Evil's picture

Shhhh.....don't let the cat out of the bag and ruin it for the European bankers.

Its almost unfathomable to imagine the number and amount of bonuses the bankers will be able to collect off the financial transaction fees while they circle jerk each other off. If things go well, the shpliz will never run dry.

And you can bet Goldman will be there right from the start with their finger in each sphincter pie.

Sat, 06/30/2012 - 14:00 | 2577256 pkea
pkea's picture

At least Germans know how to file a lawsuit for the right cause within a day unlike some in the US has yet to learn 



The first lawsuits against the consent laws for the European fiscal pact and the euro rescue ESM went immediately after adoption in the early hours of Saturday at the Federal Constitutional Court, the first law suits. Around midnight, was a messenger from the constitutional complaint of the CSU politician Peter Gauweiler at the gate of the court. The appeal of the "more democracy" that had attached themselves to the information about 12 000 citizens, was submitted to the highest German court. This action is supported by the former Justice Minister Herta Daeubler-Gmelin (SPD) and represented the Leipzig constitutional lawyer Christoph Degenhart. A lawsuit was faxed to the left, according to a party spokesman also immediately after the Federal Voting to Karlsruhe.

Sun, 07/01/2012 - 07:30 | 2578252 andrewp111
andrewp111's picture

I'm sure Merkel has a plan for the German banks to win regardless of the outcome of a German referendum. Whether a new DM or a EU fiscal union results, the bankers will win either way. It will be heads I win, tails you lose. 

Sat, 06/30/2012 - 13:42 | 2577247 zilverreiger
zilverreiger's picture

May I remind you ESM already passed german parliament 3 votes to 1? It's hardly Merkels work alone.

Wish we could look into her head and see what her real strategy is? what conclusions she has already drawn.

Sat, 06/30/2012 - 14:46 | 2577372 odatruf
odatruf's picture

Or maybe - and I understand how radical this would be and why anyone might scoff at the notion - but just maybe Merkel has been saying what she thinks all along.  No means no.  No further backstop without a corresponding transfer of additional controls.  And spending reforms must be actual and not just promised.

But perhaps that would be too far down the rabbit hole to ponder...

Sat, 06/30/2012 - 12:09 | 2577076 Newsboy
Newsboy's picture

The Financial Transaction ("Tobin") Tax is a very good idea, and even the banks may accept it as a bit of cover for what is about to take place. Expect a really low level tax , much ballyhood, if it does go through.

Sat, 06/30/2012 - 13:12 | 2577200 Martin T
Sat, 06/30/2012 - 23:37 | 2578004 zhandax
zhandax's picture

I got as far as "Dr." before recognizing it as regurgitated bankster horseshit.

Sat, 06/30/2012 - 15:05 | 2577404 Clever Name
Clever Name's picture

I thought everyone was making too big a deal over an FTT because I thought the proposal was pennies per transaction, then I looked at the Tobin tax and its a percent of the transaction! Oy!


And as all are saying, as if the little people will be the deciding factor. Good luck with that. Gerexit anyone? What are they waiting for anyway? I would think if that in itself was put to a referendum, they would bail immeidately, no?

Sat, 06/30/2012 - 12:34 | 2577139 Sudden Debt
Sudden Debt's picture

that's the fucked up part of it all!
Brussels, the place where hated politicians go to die for 50k a month!

Sat, 06/30/2012 - 19:46 | 2577744 No OB Wan Kenobe
No OB Wan Kenobe's picture

Tax free!!!!

Sat, 06/30/2012 - 13:21 | 2577217 Randall Cabot
Randall Cabot's picture

"It wouldn't be the first time Germany has fooled Europe about its true motives."

Enough with the canards please.

Sat, 06/30/2012 - 15:24 | 2577458 PontifexMaximus
PontifexMaximus's picture

Will never happen

Sat, 06/30/2012 - 15:29 | 2577463 Nachdenken
Nachdenken's picture

Without Germany will there be a European Union ?  Merkel will join van Rompuy and Barroso as an advisor to ... your guess.

Sat, 06/30/2012 - 17:09 | 2577618 Peter Pan
Peter Pan's picture

Even better than a referendum will be to allow the free market to remedy the ills we are suffering from. The longer we resist the free market the greater her vengeance will be regardless of what hare brained politicians, bankers and economists come up with.

Sat, 06/30/2012 - 11:39 | 2576980 Cognitive Dissonance
Cognitive Dissonance's picture

You can "lose" several battles and still win the war. We ain't seen nuttin' yet.

Just saying.

Sat, 06/30/2012 - 11:58 | 2577047 vast-dom
vast-dom's picture

All I can say at this stage of the game is THANK GOD for MERKEL! 

Sat, 06/30/2012 - 16:03 | 2577528 darkpool2
darkpool2's picture

Except i am undecided whether she is a good or bad thing.....does she actually simply delay the timing of the necessary ultimate reset? If so, will it be worse then?

Sat, 06/30/2012 - 16:21 | 2577560 DeadFred
DeadFred's picture

Merkel is playing this crisis for Germany's advantage. Who on ZH really thought she caved to Monti's theatrics, or at least still thinks she caved after reflecting on it? Whatever the game is that's being played the Germans had all the cards.

Sat, 06/30/2012 - 12:10 | 2577087 Miles Kendig
Miles Kendig's picture


Time to send a new Chancellor over

Sat, 06/30/2012 - 11:43 | 2576999 HyperLazy
HyperLazy's picture

A Germanic referendum?

Would that turn out like the Grecian Formula referendum? You remember, when Papandreou got knocked over the head and replaced with a Goldmen Sucka technocratic CoFR muppet master Papademos. Oh what a graceful coup d'etat that was.

Watch yer back Merkelette, unless of course its all scripted and part of the show.


Sat, 06/30/2012 - 12:51 | 2577164 Pure Evil
Pure Evil's picture

Shakespeare couldn't write a better tragi/comedy than this cuckolded kabuki theatre.

Sat, 06/30/2012 - 13:47 | 2577252 kikkoman
kikkoman's picture

I think you mean bukkake.

Sat, 06/30/2012 - 11:47 | 2577020 China
China's picture

Geryman and France are up to something. Hollande's plane was struck by lightening on the way to see Merkel after being elected. It was a warning for them.

Sat, 06/30/2012 - 12:37 | 2577143 Marginal Call
Marginal Call's picture

Lightning strikes planes all the time, on average every plane in service get's hit once a year.  It has usually harmless, and hasn't brought a plane down all by itself. And I'm not conviced we've mastered targeted lightning  

just yet either.

I'm not buying the "warning" theory.

Sat, 06/30/2012 - 15:29 | 2577465 Jake88
Jake88's picture

it could only be a warning if they were superstitious idiots.

Sat, 06/30/2012 - 19:49 | 2577747 DrewJackson
DrewJackson's picture

You mean something like, if we keep printing everything will work itself out....

Sat, 06/30/2012 - 11:54 | 2577038 Hedgetard55
Hedgetard55's picture

Rearranging Titanic's deck chairs.


The debt has been incurred, it cannot be paid back, the only questions left are who gets stuck with the losses and do they have enough juice to cover them?

Sat, 06/30/2012 - 15:32 | 2577475 Nachdenken
Nachdenken's picture

..."who gets stuck with the losses and do they have enough juice to cover them?..."

Easy - you and I and Joe who also works and pays taxes.  Ask Joe.

Sat, 06/30/2012 - 11:54 | 2577040 falak pema
falak pema's picture

back peddling logic does not make for sound forward looking policy. She will get hung worse for being a false shill if she hides behind a legal decision. Its make or break time for German banks. And Euro banks. Lets never forget that. Does she want to start financial armageddon? 

If she does it will go global and there is no telling where it will end. Awesome call. 

Sat, 06/30/2012 - 11:59 | 2577045 slaughterer
slaughterer's picture

The liberal career politician muppets and Champagne socialists in the German Bundestag will vote for anything that "helps the EU" so the positive vote for the ESM on Friday was no surprise.  But the decision-making in Karlsruhe over the ESM and the court cases have a good 50% chance of leading to a referendum, even more is it a possibility if more voices than Steinbrueck (perhaps the next Chancellor after Merkel) and Vosskuhle start pumping for a referendum.  What we have here is the starting of another phase of instability, not unlike the whole bailout/anti-bailout question in the Greek elections, here reproduced at the very center of European power: Germany.  German popular opinion has become increasingly negative against Greece, so if the Greek "negotiations" are timed alongside such a referendum, I imagine the two events might lead to a NEIN on ESM.    

Sat, 06/30/2012 - 13:02 | 2577180 Jack Sheet
Jack Sheet's picture

Comments on the largely tax-free earning German Bundestag members (who can fix their own cast-iron inflation-proofed salaries and pensions in addition) well taken. I find it naive, however, to pin hopes on a referendum occurring or on the results if it were to take place.

Sat, 06/30/2012 - 13:40 | 2577243 slaughterer
slaughterer's picture

If the Greeks were to be unreasonable in their demands in the renegotiation of their bailout, it could spin German public opinion towards a NEIN on the ESM.   Without the "corrupt, lazy" Greeks in the German public eye, I agree, the German referendum will pose no serious threats to the ESM.  The two parts of the story need the proper sequencing.    

Sat, 06/30/2012 - 11:58 | 2577049 sangell
sangell's picture

I see the Germans have learned from Nancy Pelosi that you have to pass a bill before you can learn what is in it! And how is the German High Court to discern if the ESM is legal or not when its very provisions and purposes change from summit to summit? The "LAW" is a pretty malleable thing in Europe these days.

Sat, 06/30/2012 - 15:30 | 2577473 Jake88
Jake88's picture

or anywhere for that matter. remember the us constitution?

Sat, 06/30/2012 - 12:03 | 2577063 Gloomy
Gloomy's picture

This is a real game changer. Like TARP in the US. I hate to say it, but Dow 15,000 here we come!!!

Sat, 06/30/2012 - 12:43 | 2577153 i_call_you_my_base
i_call_you_my_base's picture

You may be right, but from a reality POV, this won't change the downward move in the global economy, with a recession in the US, Europe, and Asia on the horizon. It will deteriorate whether Europe is "saved" or not.

Sat, 06/30/2012 - 12:04 | 2577066 slaughterer
slaughterer's picture

What is amazing is how little European politicians have learned from the US TARP disaster from a  few year ago.  You would think that historically-oriented and critical political cultures would not import this US "swindle the taxpayers" programme into their borders.  But import it they did.  

EU Finance crisis for dummies:

First, the "stupid Germans" bought the MBSs from MS/GS, et. al.  and bankrupted their banks. 

Second, the "stupid Germans" put into effect a Euro-TARP and bankrupted their Treasury.  

Sat, 06/30/2012 - 12:12 | 2577088 Gloomy
Gloomy's picture

You are wrong. They have learned. Yeah, its all crony fascism, but oh look how the markets responded to our TARP. Damn the legality or what is right for the people. Equities now to the moon!!!

Sat, 06/30/2012 - 12:16 | 2577098 slaughterer
slaughterer's picture

Markets had a nice crash after TARP.  Remind me, what exactly triggered the crash from Nov. 2008 to March 2009?

Sat, 06/30/2012 - 12:07 | 2577073 JR
JR's picture

Raul Ilargi Meijer on Market Oracle says: “First off, all those people talking about a solution for the eurozone need to finally understand there ain't no such thing,” and, "If Angela Merkel is half as smart as she appears to be, she's ready for about all of them."

Here is an excerpt from Meijer’s post yesterday: “Angela Merkel Is Playing You for Fools”:

… A thought experiment: how would you solve the euro crisis if Germany were not part of the equation? If you would have to put the de facto German contribution to the puzzle at zero, neutral? What would you be left with then, and what steps would have to be taken to come to a solution? If the sole remaining big players were, let's see, France, Spain and Italy?

That changes the picture, doesn't it? Take Germany out and all you're left with is pretty much roadkill. Plus a motley crew of comparatively small barely breathing rodents like Holland, Finland and Austria.

See? With bailouts for Spain and Italy now all but inevitable, if you leave Germany out of the picture for the moment, you're left with no-one at all to pay for those bailouts. Not even a complete and immediate move towards a fiscal, banking and political union would do anything to resolve Europe's financial quagmire if Germany is not present.

In other words: it all comes down to Germany. Berlin is on the hook for everything. The required funding for the EFSF and ESM emergency funds would, with Spain and Italy moving into roles as debtors instead of creditors, have to come from Germany to the tune of what would fast approach 50% or so.

Does anyone think that is realistic? That Germany can make the markets truly, as in for more than a day or so, believe it has that kind of money lying around, and is willing to gamble it? Or is it perhaps more likely that, if the Germans would even try it, the markets would turn on Berlin the next morning? If you look at bunds right now, there's no doubt they're perceived as a safe haven. But what are the chances that perception would last if Merkel agreed to take on the Savior Of All Of Europe part? …

Sat, 06/30/2012 - 12:36 | 2577120 algol_dog
algol_dog's picture

Ah ... Those crafty Germans ~ Who would of thunk it


(Excellent Article)

Sat, 06/30/2012 - 14:38 | 2577359 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Recall that the "euro project" was initiated without any popular vote or referendum in almost all the eurozone countries, Germany included. Now that it has revealed itself for what it is, a transfer payment scheme, I wonder what mood the Germans would be in to ratify it?

In the end the Germans must decide whether they are Germans or Europeans. I think they'd answer that they are Germans.

It's as if Virginia, Georgia, Alabama etc had to decide whether they were "Americans" or "Southerners". Seems to me they asked that same question in 1861, when they all put on grey uniforms.

Now imagine that the Virginians etc didn't share the same language or race or culture or history with the North. And that most of them had been flattened several times by the North very recently.

OK, so if tanks will have to roll before this gets decided, where exactly would they roll from? Brussels? OK, Berlin? They'd have to be pretty damned determined that they were Europeans, not Germans. Or...we'd be right back where we started: 1870, 1914, and 1939. Only today we'd probably have the blue helmets on the ground to keep it from happening. And...just to finalize the Kafka-channeling here....many of the blue helmet wearers would be Germans.

Answer: cluster, for the foreseeable future. Muddle-through that could last another decade. Nice tradeable zone between $1.40 (fantasy) and $0.82 (reality).

Sat, 06/30/2012 - 15:07 | 2577420 JR
JR's picture

Or, as Louisiana Governor Bobby Jindal said in an expression of opposition to a healthcare requirement exchange by 2014 in his state:

"Here in Louisiana we have not applied for the grants, we have not accepted many of these dollars, we're not implementing the exchanges. We don't think it makes any sense to implement Obamacare in Louisiana. We're going to do what we can to fight it."

“Whensoever the general government assumes undelegated powers … a nullification of the act is the rightful remedy.” -- Thomas Jefferson in the 1798 Kentucky Resolutions

Sat, 06/30/2012 - 15:31 | 2577471 Socialized Losses
Socialized Losses's picture

TJ +1

Sat, 06/30/2012 - 15:05 | 2577407 bank guy in Brussels
bank guy in Brussels's picture

This premise that Germany is a 'rich, finally sound country' might be totally false ...

As ZH articles have been pointing out, scenarios of EU break-up, GIIPS leaving the euro, etc., are all a recipe for catastrophe for the German banks, insurers, and pension funds, loaded up (sometimes 60-to-1) with GIIPS bad debt. Not to mention most of a trillion in TARGET2, etc.

And that is perhaps why Merkel and Germany are, in the end, going along with 'save the euro-zone' strategies'. Even Spain and Italy agree it helps the whole EU to keep up the fiction of 'rich Germany' ... but in the end the whole euro-zone are all as vulnerable as their banks, and the banks are sh*t in Germany as much as everywhere.

What makes more sense is what Jim Sinclair has been saying for a few years ... it's game and farce for as long as possible ... but in the end it's QE to infinity across the Western world.

Sat, 06/30/2012 - 15:41 | 2577488 Nachdenken
Nachdenken's picture

Great perspective.  The Bunds are no longerr fast asleep on their flat bed.  The present bounce in the markets is contrived and covering, the search for when the stops dont hold  has begun.

Sat, 06/30/2012 - 12:15 | 2577081 slewie the pi-rat
slewie the pi-rat's picture

has angela had enuf of the hot seat?

this is a great summary and analysis so once again:  thxz, tyler

the macro-political seems to be simply about the zombies at this point;  apparently they still can't be cashiered b/c then the wrong people would be poor

so the transfers of wealth must continue in order to "recapitalize" them

earth to itsPeoples:  this is fuking bullshit on toast;  the clown show needed to keep people from noticing/mentioning this is amazing

this isn't too complex:  frauds are based on lies;  ponzies are based on lies;  almost everything which has ever happened in any court in the herstory of the world is based on lies;  legal boilerplate = most 'defensible' and 'winning' lies

on a planetary level, the biggest problem is that gresham's law applies to lies and bullshit too:  the bad drives out the good and we are left with shitty lies instead of good lies

here i come to save the daaay!  Hahaha!

Sat, 06/30/2012 - 20:26 | 2577784 John_Coltrane
John_Coltrane's picture

Bingo!  "b/c then the wrong people would be poor".  That says it all.  And who are the wrong people to be poor?  Bank equity and bondholders.  As ZH and others stated in a different article, its time for bail-in, not bail-out.  (Yes, it violates the primary principle, bailout and debt, for whose purpose modern banking cartels like the FED were created)  Wipe out equity holders, cram down bank bond debt into equity to recapitalize the bank and those "wrong people" who were also stupid people such as other /banks/pensions/insurance companies, suffer the losses.  Finally, real capitalism!  Could it happen?  Dare we hope that future banks function as utilities rather than giant hedge funds backstopped by central banks?  We at ZH and libertarians in general have such a dream.  Such a development might make me as happy as if RP become the next president.

Sat, 06/30/2012 - 12:15 | 2577094 slaughterer
slaughterer's picture

BTW, a financial transaction tax in Spain and Italy will ultimately sap the profitability of all investment bank operations in their national borders.  Say hello to a massive exodus of HFT to its new European headquarters: LONDON.   

Sat, 06/30/2012 - 20:29 | 2577788 John_Coltrane
John_Coltrane's picture

I think you meant to say its CURRENT European headquarters:  LONDON

Sat, 06/30/2012 - 12:21 | 2577107 alien-IQ
alien-IQ's picture

"letting the people decide"

It was difficult to read past that line...I was laughing too hard.

Sat, 06/30/2012 - 12:41 | 2577151 Marginal Call
Marginal Call's picture

"letting the people think they have decided"



Sat, 06/30/2012 - 15:13 | 2577417 LongOfTooth
LongOfTooth's picture

I used to think he was a nut case but now it's beginning to look like he's right.  bwdik 


Sat, 06/30/2012 - 12:21 | 2577109 thegreygrater
thegreygrater's picture

As the great general(George S. Patton) once said:"If everyone is thinking alike, then somebody isn't thinking."

Let me tell how it is. Frau(d) Merkel is just playing the same game she has since the Euro scam began to unravel. Germany will not bailout the irresponsible countries of Southern Europe unless they agree to severe measures of austerity -- blah, blah, blah. No I wouldn't! We must have gurantees! We want it in writing! Yet, in the end, Frau(d) Merkel agrees to one form of bailout or the other. It's all about the banksters. The rest is window dressing -- pour la galerie.

Sat, 06/30/2012 - 14:51 | 2577379 earleflorida
earleflorida's picture

yeah, the great MacArthur [   ]  and Ivory-Handle P[45] atton... real patriots!

my kinda guys


Sat, 06/30/2012 - 17:19 | 2577623 falak pema
falak pema's picture

you don't get it...if she says NEIN, ONCE MORE, the German banks FOLD BIG TIME; its Kaput eurobanking. Now swallow that, take a deep breath before you open your eyes and ears, assuming your mind is functioning in between. 

As, what was not on the Euro council agenda was Greece...and its gonna start looming big time now that they've pushed Italy/spain on the back burner temporarily.

Sat, 06/30/2012 - 12:25 | 2577111 GlomarHabu
GlomarHabu's picture

From The Prince.

"A wise prince never lacks legitimate reasons to break his (her) promise"  Niccollo Machiavelli 

This should be followed by another NM quote, " Before ALL else, be armed"

Do any of you believe we the people will ever regain our rights peacefully? We are being set up for destruction. What about hope you say.

Ben Franklin got it bloody well right, saying, " He that lives upon Hope dies farting"

Pass the beer and Beenie Weenies.

Sat, 06/30/2012 - 12:33 | 2577135 tony wilson
tony wilson's picture


  • merkel is just a cake  and pussy loving puppet that also sometimes takes a bit of meat.
  • a double or triple agent.
  • she is irrelevant and following a script.
  •  this is the reality.

a  list of nonredacted us rothschild bases in germany


Sat, 06/30/2012 - 15:12 | 2577430 LongOfTooth
LongOfTooth's picture

Why bother to attach hyperlinks if so many of them aren't working?




Sat, 06/30/2012 - 22:55 | 2577957 Cosimo de Medici
Cosimo de Medici's picture

It’s the thought that counts.  That the links do not work is completely immaterial.  It’s not like any of these “revelations” came from his own research.  He’s a sheeple, and he has found a product he wants to own, while the snake oil salesman peddling this product has found another consumer, or when the product is a belief system, a disciple.  Websites are bookmarked, and visited daily or hourly by the communicants so that it is less a visit and more a pilgrimage.  He will never check the “research“, because that would imply doubt, and doubt borders on heresy.  In the circles within which he runs, the Inquisition never stopped.  It’s believe or face the Iron Maiden.  And frankly, what’s not to believe?  It’s on the internet, isn’t it?  Q.E.D. The Dead Sea Scrolls should be so absolute and infallible.

On Zerohedge, far too many people are of the view that they have discovered the one and only species of sheeple, that single one being the fast-food chomping, iPod-wearing, Idol-watching, F-150-driving primus ovinus americanus.  A plethora of subspecies and mutations are out there, however, each with its own spiritual leader, each owning the one and only truth, and each with its own fanatic practitioners.  The subspecie, lunaris chiropteras, do differ from the majority, though, in that they are without humor and without tolerance, adopting a style that closely mimics the most virulent Islamists or Bible-wielding Apocalyptic Preacher.  The Tylers, while not adherents to the faith, know it to be a demographic a businessman cannot ignore, and like a Moslem immigrant to Italy who hawks rosary beads outside the Vatican, they’ll occasionally spill some nectar for the subspecies to lap up.

Sun, 07/01/2012 - 07:45 | 2578259 tony wilson
tony wilson's picture

hyperlink distractors : )

numb nuts who is the sheep,the dog and the shepherd.

you sound like you are a camp guard obeying orders.

my point was simple this is all a puppet show.

why has the us got so many bases in japan and germany fuckwit.

 bin laden is dead so is herr hitler and stalin.


are we really to believe these mild mannered german suits run the show

get back to your troll work @ 8 euros and hour.

and if you are in italy keep your gold hidden the money changers will be coming for it soon.


i here you meatheads are gonna vote the bunga bunga party animal back in.

talking of the vaticans gold

Sun, 07/01/2012 - 02:02 | 2578118 Non Passaran
Non Passaran's picture

Why bother to post (I'm talking about that post with URLs) when most of it doesn't make any sense?

No good answer either. 

Sun, 07/01/2012 - 07:48 | 2578264 tony wilson
tony wilson's picture

why distract with question about  bullshit hyperlinks.

what are the reasons for that many bases that is the question mr fluoridated head

Sat, 06/30/2012 - 12:36 | 2577142 fractal trader
fractal trader's picture

Should the FTT be enacted, ECB could most likely remain the only financial institution in Frankfurt. I wonder what will the socialist (formal and informal) political elite in Germany and other euroFTTland countries do to get back all the financial industry once that it flees elsewhere forgood.

Sat, 06/30/2012 - 12:46 | 2577156 Marginal Call
Marginal Call's picture

Uh, I don't know, maybe they'll throw a party.  The financial industry is the problem we're looking for a solution for.  Getting rid of it is the answer everyone is ignoring. 

Sat, 06/30/2012 - 13:03 | 2577184 i_call_you_my_base
i_call_you_my_base's picture

Agree. Good riddance. Let them ruin some other country under the guise of "value".

Sat, 06/30/2012 - 13:25 | 2577223 fractal trader
fractal trader's picture

Although I may agree with you in principle, pragrmatically thinking, not only shall those states eventually tax no transactions at all (no institutions, no transactions) but will also lose both corporate and capital gain tax revenues. Therefore, again from the pragmatical standpoint, I am not so sure it's a wise decision to decimate own capital markets. I guess they shoul ask the Swedes about their experience.

Sat, 06/30/2012 - 20:33 | 2577793 John_Coltrane
John_Coltrane's picture

Let me suggest a subtopic, The "financial industry" is neither financial nor industry.  Discuss amongst yourselves.

Sat, 06/30/2012 - 12:48 | 2577158 ArkansasAngie
ArkansasAngie's picture

The banksters are in charge. Merkel is but the public persona crafted to calm the sheeple. When the banksters turn on themselves then we will have our opportunity to knock'em upside their head

Sat, 06/30/2012 - 13:02 | 2577181 ISEEIT
ISEEIT's picture

The 'PLAN' is going precisely as intended.

If you don't get that then you are dumb.

Sat, 06/30/2012 - 15:16 | 2577439 Plausible Denia...
Plausible Deniability's picture

Well said. Exactly right

Sat, 06/30/2012 - 13:08 | 2577191 Martin T
Martin T's picture

"The only possible Nash equilibrium is to always defect".

In other words, German seems to be craftily preparing their escape from Europe. The prisoner's dilemma at play in true game theory fashion...

Sat, 06/30/2012 - 15:14 | 2577434 Plausible Denia...
Plausible Deniability's picture

LMAO!!! Anyone else find it interesting that the "fix" to the Euro Crisis is "fiscal integration"? In simpler terms, rather than being 17 nations with shitty credit ratings and massive deficits accompanied with huge debt overhangs, they can combine forces and immediately be considered a more solid and feasible structure. So, combine a bunch of small garbage economies and they become a solid and investment worthy economy?

Is it just me or is does this sound eerily similar to a CDO? A sovereign CDO? Haven't we seen that play already? To hell with it. Im thinking too much. Slap em together and have Moodys and S&P give them a AAA rating. What could possibly go wrong?! HAHAHAHAHAHA

Sat, 06/30/2012 - 16:20 | 2577558 itstippy
itstippy's picture

Well said.  Thank you.

Sat, 06/30/2012 - 20:40 | 2577803 John_Coltrane
John_Coltrane's picture

The whole can be more than the sum of its parts (Ha Ha) Worked with Bankia for awhile until didn't it.  And the effect of BAC buying Countrywide wasn't understood by such brainiacs as Paulson who then proceeded to lose the profits he made by shorting subprime by buying BAC then seling at a 50-75% loss when he finally realized it would be sued into obvilion for the Countrywide fraud.  This is the "smart" money?  The smart money has been running for the exits for the last three years and its now at a fast jog out of Italy and Spain.

Sat, 06/30/2012 - 15:27 | 2577461 Grand Supercycle
Grand Supercycle's picture

More Equity Rally Expected.

Any traders predicting a multi month equity rally apart from me ?

As of today I am.

Last week was the turning point.

Further equity upside and USDX weakness expected this year according to my analysis.

However the SPX big picture remains very bearish and unfortunately this will not change.

Sat, 06/30/2012 - 15:49 | 2577505 Plausible Denia...
Plausible Deniability's picture

I would agree. As a matter of fact, I'm tempted to get long. Only problem is the volumes are so thin and it can slam back on you too fast. Just going to keep a big pile of cash on hand, trade the vix, and keep rolling our put contracts until we get the fall.

Sat, 06/30/2012 - 15:42 | 2577493 Jake88
Jake88's picture

this failure was predictable when the euro was created. you can't have multiple fiscal policies and one currency. the original intent of the euro to me seemed to be to force implementation of one government. if that was the plan wouldn't it stand to reason that it will be the outcome. first a bank holiday and then a new currency under one government and maybe a war in between. 

Sat, 06/30/2012 - 16:41 | 2577587 GlomarHabu
GlomarHabu's picture

Previously in this thread I referenced beer and Beenie Weenies.

Reminds me of a Saul Alinsky method he used against Eastman Kodak in Rochester,NY.

The workers were grumpy and wanted more, more, and EK management wasn't moving,so they called on Alinsky. Alinsky knew  the season opening of the Rochester Philharmonic Orchestra was THE social event in town and heavily attended by EK pooh bahs. What did he do?

He purchased several hundred tickets to the opening and let the EK pooh bahs know  he would hand them out to the workers, AFTER they had gorged themselves on a bake bean dinner washed down with mass quantities of beer.

EK management, like Merkel, capitulated.

Sat, 06/30/2012 - 19:12 | 2577716 Grimbert
Grimbert's picture

Cunt Cameron won't give us a referendum on EU membership. I fucking voted for him too for that fucking reason. Not any more. Cunt. I might even join UKIP, let alone vote for them. Stuck up bastard cunt wanker shit for brains.


where on earth are you from?

We're from England

Where you come from

Do you put the kettle on?




Sun, 07/01/2012 - 08:44 | 2578307 PoorByChoice
PoorByChoice's picture

Up arrow for your desire for the referendum but sorry Grimbert, you really were VERY naive.....

I haven't voted for the big parties for 15 years+

Independant thinkers in sufficient numbers (to break the executives stranglehold via the whips) is the only chance now.

Be rather more fussy in casting your vote in future LOL!

And no offence intended friend, at least you took the Red pill and came here.......

Sat, 06/30/2012 - 19:35 | 2577735 q99x2
q99x2's picture

Referendum. I'm for referendums run as open source projects.

And open source projects used for banking, and elections and so on.

The main reason people don't use technology for politics and banking is because they can't control it.

IT would level, democratize, the playing field. Stop war, lower medical costs, make a lame run. Sure missing plenty if you ain't had none.

Sat, 06/30/2012 - 20:15 | 2577772 SwingForce
SwingForce's picture


Was Merkel's Surprising "Defeat" Merely A Gambit For A German Referendum?


NO She was merely giving free ice cubes to the eskimos.  In other words, what she conceded will be meaningless in the fullon default that we ALL know is coming for the RECIPIENTZ. And the unanswered question du jour is, "If Spain & Italy contribute 30% to the ESM bailout fund, who will make up those contributions once Spain & Italy become broke?  A Kyle Bass moment... However, Ms. Merkel is confident that these 2 sovereigns will go bust long before Germany ever sends a single Euro their way... why else is all this stalling, er, bureaucratic incompetencies, er circus sideshows unfolding the way they are? To paraphrase Biderman, "BS-1 in the air, circling target". 

Sat, 06/30/2012 - 21:44 | 2577894 sunny
sunny's picture

"Was Merkel's Surprising "Defeat" Merely A Gambit For A German Referendum?"


I'm sorry but the whole concept of allowing the great unwashed masses have a say via an open and free election which might result in a vote against the current crop of nannycrats will simply not be allowed, can't be allowed.  It hasn't been allowed in the past, and I can see no reason for it to be allowed in the future.  Hell, the people of Germany never had a say from the git-go, why break that tradtion?  


Sun, 07/01/2012 - 01:35 | 2578100 slackrabbit
slackrabbit's picture

"Was Merkel's Surprising "Defeat" Merely A Gambit For A German Referendum?"


Yes, and that was the idea all along.

Hence Fridays hopium will be short lived, but the EU got to live another day.

Sun, 07/01/2012 - 02:18 | 2578124 Fort
Fort's picture

She should have had the balls to stay put. Not doing it that way is a demonstration of the lack of leadership from which the EU and its member states are collectively suffering. A system is created of consensus. All this political maneuvering is becoming annoying. I do think neither Schauble nor Merkel want to hang the rest of Europe to Germany. They are also quite certain on the outcome of any referendum in Europe today. People have had enough for a long time regardless of which country they live in. The Irish, the Dutch and the French said no in referendums, but were ignored. This is not forgotten and people feel as insignificant in the eyes of the politicians. They'll get even every opportunity they get. That is not because there is nothing positive about the EU, it is because people have lost faith. The only way people can be persuaded to act in the common interest of the EU project is with massive fear campaigns of doom and utter despair awaiting them if they make the wrong decision. See the propaganda the Greek voters were exposed to recently to ensure the election outcome desired. It was the best possible outcome under the conditions, but almost has still clearly indicated that they were not afraid enough. The EU is doomed for many reasons, not least a total lack and disregard displayed for the democratic process.

In the Netherlands our "Demissionair" MP Rutte signed the ESM treaty. A week after that signature our politician’s decided to delay a decision about drowning the "Hedwig Polder"till after the election because it was so important. The latest might be true, but surely the same applies to the ESM and probably more so.

Sun, 07/01/2012 - 04:22 | 2578165 Inthemix96
Inthemix96's picture

Relax ZHers,

We are witnessing a once in a generational event, the death of a ponzi, it is a beautiful thing, no?

Watching these half wits and immbeciles reconciling their own futures is brilliant.  The curtain has been pulled back and we can all now see the wall of a sham which is printing money out of thin air.

It had to come to this, there simply was no other way, just remember who done it, who allowed it, and who in the end profitted from it.  There isnt a place on earth these fuckers will be safe.

Bring the collapse, I cannot fucking wait.

Sun, 07/01/2012 - 06:57 | 2578240 fiddy pence haf...
fiddy pence haff pound's picture

Answer to title: yes

Merkel better hurry up , then. She needs those Eurobonds

to keep the world thinking that it's Germany feeding the world,

and not the poor of the periphery feeding German banks.

It's just like war. Propaganda and starving non-combatants.


Why else would the EC monarchs put GS men in almost every

key spot where the 'plan' was about to go off the rails? THen the EC has the gall to blame the US. THey're right, but the EC is playing right along. WHo needs Tom clancy anymore?


all the 'over my dead body bullshit' is just to get the Germans

riled up. They'll want to kill some PIIGS. but the pigs they

should roast over a pit are their leading duo.

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