Capital Flight To Germany In Full Swing

Authored by Mike Shedlock via MishTalk,

Capital flight to Germany, the Netherlands, and Finland is in full swing. These sums cannot be paid back.

I have commented on Target2 liabilities before.

Perhaps a Mish-modified translation from the Welt article Imbalance in the Euro System Reaches a New Record will ring a bell.

The central banks of Germany's euro partners Italy, Spain and France owe the Bundesbank almost a trillion euros . This is a new high. - more than ever before. Tendency continues to rise. There is no security for this money.

Read that last line again and again until it sinks in. Italy is €464.7 billion in the hole. Spain is €376.6 billion in the hole.

Creditors owe Germany, the Netherlands, and Finland over €1.157 trillion.

In May, Italian liabilities increased by almost 40 billion euros.

"Capital flight to Germany is in full swing," says Hans-Werner Sinn, longtime head of the Ifo Institute and one of the most prominent economists in the Federal Republic.

Originally, Target2 was designed to facilitate cross-border transactions within the eurozone. The system achieved this goal. From the point of view of critics, this means that the Deutsche Bundesbank provides long-term unsecured and non-interest-bearing loans to the central banks of other eurozone countries , especially the central banks of southern countries Italy, Spain and Portugal.

Fundamental Eurozone Flaw

Target2 is a fundamental problem of the Eurozone.

  • The ECB guarantees these loans.

  • As long as they are guaranteed, then hells bells, why not make more loans?

Germany Will Pay

Germany will pay one way or another. Here are the possibilities.

  1. Germany and the creditor nations forgive enough debt for Europe to grow. This is the transfer union solution.

  2. Permanently high unemployment and slow growth in Spain, Greece, Italy, with stagnation elsewhere in Europe

  3. Breakup of the eurozone

Those are the alternatives.

Germany will not allow number 1. It is unreasonable to expect number 2 to last forever. The only door left open is door number 3.

The best move would be for Germany to leave the eurozone. Germany is in the best shape to suffer the consequences.

Unfortunately, the most likely outcome is a destructive breakup of the eurozone, starting in Italy or Greece.

Related Articles

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  2. Michael Pettis Calls Surplus Trade Statements by German Finance Minister “Utter Lunacy”
  3. Germany’s Finance Minister Blames ECB For German Trade Surplus; Why the Eurozone Will Destruct


Singelguy Adolfsteinbergovitch Wed, 06/13/2018 - 12:39 Permalink

The non-productive members of the EU should never been allowed to join the euro. They always devalued their own currencies when spending got out of control, creating high inflation until the people started screaming over higher prices. That forced the government to be more disciplined. Once a member of the eurozone, the government just kept issuing debt that the ECB eagerly bought up. They are now surprised there is a problem??

In reply to by Adolfsteinbergovitch

AGuy Adolfsteinbergovitch Wed, 06/13/2018 - 13:39 Permalink

"That the others cannot pay back because of their shenanigans is the problem. They can't align with anything productive. That's why they drive German cars. "

Germany set them up to all be debtors. A creditor controls all the cards of the debtors, especially when debts cannot be discharged. Germany already dictates policy in Greece. It will try to do the same in Italy & the eventually most of Europe.

In reply to by Adolfsteinbergovitch

AGuy earleflorida Wed, 06/13/2018 - 13:36 Permalink

"Germany never wanted WWI, nor WWII.."

BS. The kaiser wanted to become a global power. Kaiser was jealous of Britain's global empire and wanted German to have its own empire.

Hitler wanted to War, to pay UK & France back. He kept on invading neighboring nations to get the UK & France to attack Germany. Germany wanted a piece of the global empire building.

Too many ambitious Politicians & rulers during the early 20th Century. Too many Ambitious Politicians today!

In reply to by earleflorida

Faeriedust AGuy Wed, 06/13/2018 - 20:41 Permalink

Let's start with WWI.  The Kaiser wanted to become a global power, TRUE.  He wanted Germany to have ITS OWN empire, TRUE.  He wasn't trying to take British territory.  He didn't even start or make the first declaration of war.  He wasn't even involved in the incident.  The Austrians were gently nibbling up the outer European (Balkan) provinces of Turkey as Turkey collapsed.  The British decided to covertly fund and assist local independence movements so that they could keep the Balkans divided into small warring nations that wouldn't interfere with British control of the Bosphorus straits.  It was one of those covertly supported nationalist groups that assassinated Archduke Ferdinand, starting WWI. Also, during the immediate aftermath when all the Great Powers were scrambling to see if they could avoid a war, the British deliberately reached out to the Serbian government and assured them that they would have British support if they stood up to Austria's demands (they didn't, of course, actually provide the Serbs with any support, and they were slaughtered by the Austrians in the first movement of the War).

As for WWII, Churchill spent the entire interwar period agitating for a rematch which he wanted every bit as much as Hitler did.  Hitler at least intended to do his own fighting.  Churchill intended from the start to manipulating the Americans into fighting the war for him.  Most Brits during the 20s and 30s considered Churchill a loose cannon just one ball shy of raving lunatic.  He was anointed Prime Minister of a "unity cabinet" after the Hitler/Stalin NonAgression Pact by the British "establishment", who had been trying to avoid WWII but once it was inevitable, wanted to make sure Someone Else took the blame for anything that went wrong.  He was a sacrificial goat, and once the war was over he was removed as speedily as was decent.

It takes two to tango.  Britain's reign as the world's only superpower was in decline, and the Germans tested it.  Britain took the bait and self-destructed.  There was no British Empire after WWII.  It would have fragmented one way or another, but their choices on the way down cost about 70 million human lives.

On the bright side, one of the underlying reasons for the Great Wars was overpopulation, especially in Europe.  

In reply to by AGuy

AGuy rf80412 Wed, 06/13/2018 - 13:24 Permalink

"WWI was pointless ... and without it, WWII would never have been fought"

A World war would have happened. The early 20th century was the rise of socialism in Europe. NAZI's or some other socialist movement would have still happened. The monarchys in Power (Germany\Austria\Russia, etc) would have been overthrown by the communist/socialists. There would be civil wars and morphed into a full European war.

In reply to by rf80412

Faeriedust AGuy Wed, 06/13/2018 - 20:44 Permalink

You seem to be one of those people who believes that socialism is so awful that it must inevitably lead to murder and holocaust.  Hate to burst your bubble, but most of the socialists in the early 20th century were NOT Bolshevik terrorists. They were perfectly capable of working through existing structures for economic reform; in fact they had already achieved a number of very significant reforms in both England and Germany.  It took an act of war from a desperate enemy to bring the Bolsheviks to power.

In reply to by AGuy

Radical Marijuana rf80412 Wed, 06/13/2018 - 14:18 Permalink

Who ended up more wealthy and powerful from wars?

All Wars Are Bankers’ Wars

The primary objective of WWI was to stop Germany from being able to gain more access to the petroleum resources of the Middle East:

Robert Newman - History of Oil


The European Union was a stealthy accomplishment of the international banksters' long-term agenda. Similarly, the immigration policies of European countries were divide and conquer strategies.

While the goals of warfare concern access to the world's natural resources, since the monetary systems symbolically represent that access, the most important goals of warfare were to make and maintain the monetary systems: MONEY IS MEASUREMENT BACKED BY MURDER.

Wars may appear relatively pointless to those in the lower classes. However, the highest classes benefit from the murder systems backing up the money systems: fascist plutocracy, where the primary source of the wealth of the plutocrats is the ability to make money out of nothing as debts, while the governments force almost everyone else to agree.

Wars are usually started by some sort of false flag attacks. Class warfare especially relies upon the lower classes being tricked by the demonization of something or somebody else by the ruling classes, such that the lower classes fight amongst themselves, while the ruling classes benefit in every possible way from that situation.


(For instance, both alcohol and pot prohibition were expressions of class warfare. The former criminalized the fundamental chemical of organic chemistry, while the latter criminalized the single best plant for people. Since successful warfare depends upon deceit and treacheries, Huge Lies, backed by Lots of Violence, work the "best" from the point of view of benefiting the ruling classes, despite the immense suffering caused to the lower classes.)


At the present time, and for the foreseeable future, it is politically impossible for enough people to sufficiently understand that warfare is necessarily the manifestation of organized crime on larger and larger scales, and that there is nothing but the dynamic equilibria between different systems of more or less organized lies operating robberies.

Those countries whose previous cultures most enabled them to organize their own systems of lies and robberies became the relatively dominate empires, in relative competition with each other. Wars are the result of the rivalries of different organized crime gangs, as dominated by their own best organized gangsters, as the ruling classes of those. However, by and large, those groupings have become increasingly misleading, due to the ways that the international banksters have become so overwhelmingly dominate.

What the article above illustrates with its charts are the ways that enforced frauds have become about exponentially more fraudulent, with the overall consequences of driving those systems to become so extremely unbalanced as to beggar the imagination.

The overall failure of the European Union project is an aspect of the overall failure of Globalized Neolithic Civilization, as a runaway slavery system based on being able to back up legalized lies with legalized violence, automatically becoming worse, faster.

The underlying POINT of warfare was the unavoidable "realities" underpinning how and why natural selection systems must exist, with selection pressures which are "really" forces of nature. The deeper reasons for how and why that may well seem to be relatively POINTLESS were the ways that natural selection pressures drove the artificial selection systems to become as dishonest as possible.

Successful warfare between societies, and class warfare within societies, were based on deceits and treacheries, which became the ways that financial success manifesting through enforced frauds. However, being able to enforce frauds never stopped those from still being fundamentally fraudulent. Rather, about exponentially advancing technologies have enabled those to continue to become about exponentially more fraudulent, as illustrated by a trillion units of currency being owed by those who could not pay, while those systems automatically drive that to become even more unbalanced, as outlined in the statistics presented in the article above.

Since the debt controls were backed by the death controls, the runaway debt insanities are being set up to provoke runaway death insanities. The European Union was able to be made and maintained during times when it was still possible to create about exponentially more "money" out of nothing as debts, in order to "pay" for strip-mining the natural resources of a fresh planet.

Globalized Neolithic Civilization has no good ways to cope with running into the issues of diminishing returns due to the limits to the growth of the abilities to continue to exponentially increase the strip-mining of the planet, as enabled by exponentially more "money" made out of nothing as debts. The globalized blowbacks from the European invasion of the rest of the world during the previous five Centuries will manifest as aspects of the failures of the European Union, from both within and without.

At the present time, and for the foreseeable finite future, it is politically impossible for the European Union to become more "realistic" about itself. The deeper issues are that there were death control systems backing up debt control systems, but that those were operated by professional hypocrites becoming as dishonest as humanly possible regarding what they were "really" doing.

The primary POINT of warfare is that endless exponential growth is absolutely impossible, while, by definition, it is the death control systems which limit that impossible growth. The apparent POINTLESSNESS of warfare is due to the paradoxical history of successful warfare becoming as dishonest as possible, which includes the degree to which there are no publicly significant groups which are not forms of controlled "opposition" surrounding the central core of banker dominated governments.

The European Union was the result of banker dominated governments becoming even more banker dominated. The possible break-up of that Union will be due to ways that Civilization based on enforcing frauds will go through series of psychotic breakdowns. Although the laws of nature never stop working, the only connections between the laws of nature and the laws of men were the abilities to back up legalized lies with legalized violence, the most important manifestations of which became that about exponentially "money" was made out of nothing as debts, despite that generating numbers which have become runaway debt insanities (as indicated by the article above.)

Everyone who becomes socially successful does so by operating inside of a society which is based on being able to enforce frauds, while the corollaries to that are the ways that those relatively successful people are the best available professional liars and immaculate hypocrites. The European Union was a project conducted on behalf of the banksters, by their puppet politicians, voted for by enough of the masses of muppets, which were brainwashed to believe in the banksters' bullshit.

The vicious feedback spirals of all aspects of the funding of the political processes resulted in institutions such as central banks being run by bureaucrats who were selected for their abilities to function as professional hypocrites. At the same time, there is no publicly significant coherent opposition, because the only publicly significant opposition has been controlled by that they continue to think in ways which take for granted the banksters' bullshit-based world views.

Although it is theoretically possible to develop accounting systems which were consistent with human beings and Civilization operating as general energy systems, and therefore, to have accounting based on energy standards, the actually existing systems are almost totally based on being able to make the public "money" supplies out of nothing as debts, while almost everyone has adapted to living inside that runaway fraudulence, with the more successful people necessarily becoming the more extremely hypocritical about that.

Hence, the European Union, as an expression of Globalized Neolithic Civilization (that Europeans largely required the rest of the world to become integrated into) is basically the excessively successful manifestation of the applications of the methods of organized crime, resulting in a society which is collectively manifesting runaway criminal insanities.

Among those insanities are the debt insanities outlined in the article above. However, as usually the case on Zero Hedge, the depth of those insanities are grossly understated, which enables the threats of the only "realistically" possible "solutions" to those "real" problems being understated.

AGAIN & AGAIN, almost everything that Civilization does has become based on enforcing frauds, despite that those are becoming about exponentially more fraudulent. However, those enforced frauds achieve symbolic robberies, which are recycled through the vicious spirals of the funding of all aspects of the funding of the political processes, resulting in society continuing to be dominated by the best available professional hypocrites.

Although the laws of nature are never going to stop working, and so, nothing that depends upon the laws of nature is going to stop, those laws of nature have driven the laws of men to become as insane as humanly possible, as well as that those are also set up to automatically become even more psychotic. That the European Union is manifesting runaway debt insanities, which are obviously getting worse, faster, has no good resolutions within its established systems, while it continues to be politically impossible to accomplish anything sufficiently outside of what the banksters have made and maintained.

"Capital Flight To Germany In Full Swing"  shows one of the ways in which debt insanity situations must become ever more insane. Inside that context, in my opinion, it blames some symptoms, rather than discusses the root causes, to focus on nationalities either inside Europe or among those now invading Europe. However, it is one of the characteristics of those kinds of craziness that the divide and conquer strategies have been pushed towards oblivion.

Although it may be relatively facile to recommend some idealized "solutions," the breakup of the European Union will more be some aspects of the overall psychotic breakdowns of Globalized Neolithic Civilization than any good resolutions of the underlying issues.

Since the majority of people do not understand, and do not want to understand, but rather, want to continue to deliberately ignore and misunderstand, the only "realistic" ways that the "real" problems can be resolved is for the manifestations of runaway criminal insanities to go through series of crazy collapses into chaos. Furthermore, there are no good grounds to expect that even then enough people will finally understand that enough to belatedly respond any better.

of course, those events will be postponed for as long as it continues to be possible to strip-mine the natural resources of a fresh planet at about exponentially increasing rates. However, those postponements, kicking the cans of debt insanities further on down the road of ever increasing debt insanities, become less and less possible and probable. Hence, articles like the one above can review the statistical predicaments, and then, reasonably predict that the European Union could not survive by indefinite extensions of more and more unbalanced debt insanity numbers.

However, articles like the one above still mostly continue to take for granted regarding "economics" from the perspective of the banksters' bullshit, which presents everything in the most absurdly backward ways humanly possible, since everyone has become personally successful within society by adapting to operate inside of systems based on being able to enforce frauds, while doing so was matched by them not publicly being able and willing to understand themselves actually doing so.

Almost everyone, particularly to the degree that they became socially successful, has perfected their abilities to operate as professional hypocrites, by adapting to live inside and take advantage of systems based on being able to enforce frauds, despite that those systems are thereby becoming about exponentially more fraudulent. It is not only the European Union that very probably can not withstand doing so, but rather, the entirety of Globalized Neolithic Civilization is manifesting the same overall runway criminal insanities, within which context the history of warfare developed, and within which one may well project the pointlessness of World War III, etc. ...

In reply to by rf80412

Faeriedust Radical Marijuana Wed, 06/13/2018 - 20:59 Permalink

Very good, but you need a qualifier: all modern wars are bankers' wars.  Before 1694, bankers did not wield the power to create currency and dictate national policy.  Anywhere.  They influenced policy by demanding interest and repayment, and some rulers took actions in the hopes of winning enough booty to pay them . . . but others just decided to hang them for treason.  Or in your terms, before 1694 the organize violence syndicates were strong enough to control the organized fraud syndicates.  Now, we have vice-versa, and because of that fraud, hypocrisy and deceit have become the prime requisites for social advancement whereas previously the most useful survival trait was the ability to kill.  Neither one is ideal, but the dominance of some variety of organized coercion will be inevitable unless or until the human population is reduced to significantly below the earth's carrying capacity (which is theoretically pegged at 1-2 billion, with the continuation of modern agricultural methods.  A  more realistic number would be 500 million as modern agriculture is unsustainable.) 

In reply to by Radical Marijuana

Radical Marijuana Faeriedust Wed, 06/13/2018 - 22:15 Permalink

I agree that there were times before the international bankers had captured so much control over the political processes that the results became that all wars were directed by those bankers, as has increasingly become the case:

"... modern wars are bankers' wars.  Before 1694, bankers did not wield the power to create currency and dictate national policy."


In reply to by Faeriedust

zvzzt hidflect Wed, 06/13/2018 - 11:29 Permalink

Or IT/ES won? DE/NL/FI won't go over to collect. Feels more like IT/ES have got the upper hand: Got a massive infuse of money over the years. Now walk away from the loans and devalue/leave EU etc. What is more disrupting? Losing savings and investments in a foreign land or defaulting and walking around in 'shame' for a few months? 

Anyway, small poll of who-has-who by the balls:

<--- DE/NL are the ultimate winner 

<--- IT/ES are the ultimate winner 

I'm down voting myself on this one

In reply to by hidflect