Either Greece is Forced Out or Germany Walks… Either Way a Collapse is Coming


The situation in Europe has now reached the point that the major players have shown their hands. And they are:


  1. Germany will not put up more money unless Greece essentially passes up its fiscal sovereignty.
  2. The G20 will not give more money to Europe via the IMF unless Germany and other EU nations create a “firewall” by putting more capital into the ESM mega-fund. 
  3. The ECB has announced Greek bonds are not eligible collateral for its LTRO operations, so if banks need immediate liquidity, they need to go to national central banks (read Germany).


This is quite a turn of events. Prior to this, the ECB and Germany were seen to be working hand in hand (aside from the usual political spats) to save Europe. But between the ECB’s decision to swap out its Greek debt for new debt that won’t take a hit in the event of Greek default as well as its recent rejection of Greek debt as collateral for LTRO loans, it appears that the ECB is increasingly going to make Europe’s problems Germany’s problems.


Both parties have a lot to lose in this battle. Over a quarter of the ECB’s balance sheet is made up of PIIGS debt. And German banks have plenty of exposure to the PIIGS as well.


This is why both entities (the ECB and Germany) have made moves to firewall themselves from a European fall-out. However, it is Germany that appears to have realized the reality of the situation more clearly: that there is no “good” way out of this mess, that austerity measures only cripple economic growth and make defaults even more likely, and that the Great Euro experiment is coming to an end.


This is most clear in the fact that Germany doesn’t want to commit more funds to the ESM mega-fund. It’s also illustrated by Germany’s intense demands of Greece, demands it knows Greece won’t possibly go for (which begs the question, “is Germany trying to simply force Greece out of the Euro without having to explicitly call for its exit?).


After all, Germany has its own problems to deal with. German banks are some of the most highly leveraged in Europe. And when you include unfunded liabilities, German Debt to GDP is north of 200%.


Plus you have an increasingly outraged German populace (the majority of them don’t want a second Greek bailout) putting pressure on German politicians. Indeed, the only political points German leaders have scored in the last few months have come from playing hardball with Greece.




Germany is in a great squeeze. On one side the ECB and G20 want Germany to step up with more money to save Europe. On the other hand, German CEOs, voters, and even the courts, are increasingly wanting out of the Euro.


This is not a situation that gives one much confidence that Germany will stick around for too much longer. It is my view Germany is going to do all it can to force Greece out of the Euro before March 20th (the date that the next round of Greek debt is due) or will simply pull out of the Euro (but not the EU) itself.


If you’ve yet to take steps to prepare for this, I can show you how: my Surviving a Crisis Four Times Worse Than 2008 report is chock full of information on how to not only survive but thrive during the months to come.


Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).


Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.


Good Investing!


Graham Summers


PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years, or how to stockpile food (where to get it, what to buy, and how to store it) our reports cover this information in great detail.


And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com




No comments yet! Be the first to add yours.