Supporters of Germany’s moral high ground say “why should the hard working, industrious, Germans pay for the sloth of its neighbors?”
Is it really that simple?
When the euro was created, the architects encouraged European institutions to buy the sovereign debt of all members countries, including Greece, Italy, Spain Ireland etc. The Germans knew they’d benefit because the euro would ensure that no one could undercut them via currency devaluation. They had successfully stripped Europe of its independence and locked members–and the institutions who bought sovereign debt– into a currency prison.
Aside from Greece, there aren’t any cash calls in Spain and Italy. The panic is spreading, forcing yields up, and giving the perception that everything is about to unravel. Confidence is everything. As money flees troubled states, it swarms into German banks, pushing their borrowing rates to record lows.
It’s quite nice to be a German today, no?
On top of that, the Germans refuse to monetize troubled states debt, instead forcing them into austerity. The result is a downward spiraling economy for the austerity stricken, crippled by an overvalued currency and inability to provide stimulus for their beleaguered economies. Is this simply a case of Germany taking the moral high ground, drawing a line in the sand in an effort to protect their tax payers?
Fuck no.
The Germans know what they are doing and it has nothing to do with taking the moral high ground. They are creating this crisis in order to maintain German manufacturing superiority and to finance their own mountains of debt at extraordinarily low interest rates.
How can you have a common currency with 16 other nations and fail to guarantee their debts? Is it preferable to see the entire Eurozone collapse, eliminating the idea of credit and prosperity, just so Merkel and co. and say “we took the moral high ground?”
THEY SHOULD HAVE THOUGHT ABOUT THIS SHIT BEFORE THEY ENTERED THE EURO!!!
If the euro collapses, forget about stocks even trading. How could they, if they won’t have a currency to denominate into? Markets will crash, then close. Eurozone GDP will fall by at least 25%, taking Asia and America with it. Unemployment will soar and Germany will be able to borrow money for free.
Those fuckers may finally get to win a world war.
Congrats.
If you enjoy the content at iBankCoin, please follow us on Twitter
Well Fuck, I’d personally much rather go to war in Europe, war in Islamic countries sucks.
Thank you for fighting for our country!
Really? How many people died because of European wars and how many people died because of what you falsely call Islamic wars? (It never had anything to do with the religion of the country, you dumb fuck).
Putting that issue aside, you do the math before speak such nonsense.
Yea but steal columns against steal columns and shit is fun to watch compared to the average taliban skirmish.
u mad bro? re-read… he said “war is Islamic countries”, not “Islamic wars” as you so eloquently misquoted. Putting that issue aside, you do the reading comprehension before speak such nonsense.
“before speak such nonsense” lol
war in** Islamic countries
A-game
beginning of sorrows
Nice summary of a fucked up situation.
It is hard to see how they can kick the can down the road much further. I would like to see some analysis of how the Euro can be fixed in the short term, and at what point progress would help the EU economies.
ECB simply provides funding at X interest rates, or provides X funds to countries or guarantees countries bonds.
The entire problem over there is nobody can create new currency, which results in possibly the worst monetary system ever. The gold standard has a constant stream of new currency, in the US gov’t deficits essentially create new currency…
Its pretty simple to fix the EU. The Politics are the challenge, and possibly impossible.
Good point. Printing billions of Euro dollars would be a solution. But that seems highly improbable. I like the comparison to the constitutional congress after the founding of the US to form a more solid fiscal union. Yet neither solution gets Europe out of this mess soon.
Eff Germany
“THEY SHOULD HAVE THOUGHT ABOUT THIS SHIT BEFORE THEY ENTERED THE EURO!!!”
The Germans didn’t have a choice about joining the Euro.
The Euro was demanded by the French as a precondition for German reunification.
Interesting. I googled this idea and found this article.
http://www.spiegel.de/international/germany/the-price-of-unity-was-the-deutsche-mark-sacrificed-for-reunification-a-719940.html
If indeed Germany had their arms twisted into joining the Euro zone, then that might explain some things about their current position.
Nope, doesn’t matter. If the Germans don’t act equity markets might go down therefore current German policy makers MUST sell Germans who had nothing to do with the Euro down the river.
I mean is so OBVIOUS that it doesn’t matter what the circumstances of joining the Euro were because the expedient solution here is to fuck German savers so the political elite can paper over the problems that have happened under their oversight.
3/3 in the last 100 years. What a great record for starting world wars.
They should have listened to Milton Friedman in 1999. He said this euro thingy wouldn’t survive the first recession.
Apparently he was wrong. See 2001.
you are an ignorant man
Pretty good analysis UNTIL you get to the part about Germany. “When” these PIIGS nations finally leave the Euro, it will be Germany left holding the bag (of shit). German banks will get smoked on the assets they hold of all those shitty nations as we will once again see how leverage, though necessary in the banking system, kills you when it works against you. Combine that with the fact that a possible return to a single currency will price them out of their export markets and ask yourself, “Is it still nice to be Germany?” Is it really a case of Germany taking the moral high ground, or is it more a case of Germany refusing to throw more bad money after bad? How much is a trillion Euros in a situation like this going to buy you – a month?
Germany doesn’t have to throw shit if they agree to a fiscal union. Leave that to the ECB. Essentially they need a United states of Europe. In the USA the Federal Government makes up for state shortfalls. I.E. it doesn’t fall on Texas to fund Alabama’s deficits, just like it won’t fall on Germany to fund Greece’s deficits.
Wait until the realities of the US debt crisis hits home. When interests rates finally rise (and they will), funding our $16 trillion debt won’t feel nearly as “pain free”. It’s coming, inevitable, and you will start hearing similar (German type) arguments from fiscally responsible states sick and tired of bailing out places like California.
Still waiting for the bond vigilantes to show up, huh?
Right on Yogi !
I suggest you check what you consider reality. If you’re going by something you’ve seen in the media about the U.S. debt crisis, you are totally uniformed.
Germany would have to change its constitution to form a fiscal union. The German constitution prohibits the country from guaranteeing the debts of other nations.
Fiscal union will not happen.
It will happen when it is the darkest and all will gladly sign on based on Germany’s view on what it should look like. It certainly isn’t imminent, it will take time.
I predicted this shit years ago:
http://www.youtube.com/watch?v=E4MAifsp-8E
China steps in and bottom feeds this year. The croissant will no loner exist, europe will be eating with chopsticks in 2015.
Is Fly a German name?
i think its american slang for ..little whore ascending to a higher level
Germany?….O-V-E-R—R-AT-E-D!!
http://www.raptureready.com/featured/hahn/h73.html
History just repeating itself ala LMU. Greece needs to be kicked out once again. Germany is doing right and we are the morons (americans) who tell the Germans to ease up. What exactly is wrong with telling them to “basically live within their means”. Pay taxes etc…
Pretty fucked up but you are right… may be the shit show just beginning not ending….
…and how is this different from the FED devaluing the dollar? People bought houses they couldn’t afford. Said houses declined in value. The banks that loaned the money cry uncle and get money from the FED. It is no different from countries like Greece that bought products from Germany while borrowing money from Germany to buy German products. Fuck Germany for being so stupid as to loan money to a country that they should have known had no capacity to repay.
3 interesting, and different, takes on the situation:
http://www.newyorker.com/talk/financial/2012/06/04/120604ta_talk_surowiecki
http://brucekrasting.blogspot.com/2012/06/on-shills-technocrats-politicians-and.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BruceKrasting+%28Bruce+Krasting%29
http://www.georgesoros.com/interviews-speeches/entry/remarks_at_the_festival_of_economics_trento_italy/
Germany will relent when they get the terms they want.
Austerity doesn’t work
Neither does spending like a drunken sailor and never paying any taxes– like they do in Greece. The countries need to find some middle ground here.
Exactly. There needs to be middle ground. There has to be trade deficit countries and trade surplus countries. But there needs to be some balance. Both sides took advantage of the Euro to an extreme. Germany with its trade surplus and the PIIGS with it’s trade deficit.
He’s right. Austerity doesn’t work. It actually drives the deficits everyone so worries about even higher.
So what’s the option then? Just keep spending…just keep spending…just keep spending….That is ridiculous, and it won’t work. Austerity will work, given time. Who said austerity wouldn’t be painful?
+1 Everyone knows money grows on trees. To bad things with real value don’t, unless you have an orchard.
Austerity won’t work if it’s too extreme and strangles growth. Profligate overspending won’t work either. A moderate course may work.
Maybe they’ll take promises of future Austerity?
gas chambers do not do so well as a sales pitch these days. but agreed.
Didn’t GE install the gas chambers?
I think the terms are just that they are in the wheel house with regard to fiscal policy for all members.
They don’t give a sh*t about anyone else because they’re lazy! Austerity will usher in the police state desired.
The problem with Europe as I see it (beside Germany) is that Europe has no leaders who can take them out of this mess…
and we have 3 important events coming june 17-19 which could only add to markets uncertainty…
If Germany keeps on saying “no” we might have so much political turbulence, civil unrest and collapse of social systems in all Euro union that it will bring us back in history … 1931 Europe to be exact… you know what happened than.
Now that Angela’s spent the weekend giving us history lessons about the Weimar Republic and the risks of inflation, would it be too much trouble to ask her to flip back a few chapters to the Treaty of Versailles and review what happens when a country, saddled by its creditors with unpayable debts, cannot negotiate alternative terms of settlement or restructuring?
tl;dr: those who selectively remember the past are condemned to repeat it.
The problem with her – she is more concerned about German votes than about anything also and she will get support of hardliners…
Is there a politician somewhere in the world who is concerned about something other than getting votes?
yep…. Fidel… he is got the votes already 🙂
Except that she’s got her history wrong, and it was the deflation in 29-32, as someone pointed out here last week, that brought down the Weimar Republic.
Europeans are just like all humans–We want to have our cake and eat it too, and more tomorrow. Every country wants the benefits of being in the EU for their particular country, but not the drawbacks.
Call this the Mr. Panos thesis:
http://www.youtube.com/watch?v=Zvl9N9GdraQ
Watch Munk debates.. very good
http://www.bnn.ca/Special-Coverage/The-Munk-Debates.aspx
fuck it. at least a eurotrash whore will finally cost the goin rate. vacation time is coming.
But you get to write the food, lodge and whore off, too, if you travel and do real estate investing.
Vacation with a purpose as a man of industry. Life’s short, get rich while at it.
to be a 23rd century global nomad would lend to ones pleasurable memories
The Germans have not forgotten their hyper inflation event and the crippling demands made by Europe after the first war. One cannot help by smile at the irony as this event, the mirror image of the past, plays out.
Bear took the knife for failing to participate in ltcm, and paid in full later. In Europe, the same process is playing out based on the punishing reparations placed on Germany after ww1…..which they actually paid off only several months ago.
Payback, is a bitch.
Only a few months ago? Incredible. Well, that sure explains why they don’t want to bail anyone else out.
Half of Germany’s WWII debts were wiped clean. Ironic, no?
If you agree with the B.R.A (Euro will survive but continue steep devaluation), then you will bet against LeFly here on this point of issue and get long $STD (no homo).
It will be $SAN in a few more months.
Finally, the only people of Europe I don’t trust are Fins and Swiss. Though I also kindof admire the Swiss, so I’m bipolar in this manner too.
Tick…tick..tick… tock.
Trade this and z Euro probably will dissipate.
Germany could indeed “win.”
If I remember correctly borrowing for a nation like Greece pre-Euro was in the neighborhood of 17%.
When the Euro was created borrowing rates became the same as Germany’s rate at that time. (5%.)
I am not sure what the other nations rates were. However, Germany has tried with other nations. Every so often when treasury and finance minister representatives from other nations meet with the ECB, they report on everything from deficits to surpluses, tax revenues, and everything else that makes up a countries finances. The Greeks have lied. Other nations have lied. Over and over. And now it’s coming to a head. It’s difficult to blame Germany. Heck, Germany was burned very hard with US MBS and other debt. (Commerzebank was bailed out. Landesbanks etc..)
And Germany did not have a housing or sub-prime “boom”.
They bought US debt. Because they believed in Triple A ratings.
Morgan Stanley, Goldman, Merril, every major bank on the street went “full retard” selling them on MBS and CDO’s. Even when the MBS and CDO markets were toast. The Germans still wanted to buy. Because they believed in triple A rated securities.
And Germany did not lever itself up with free and easy money. They had no housing boom. They had no free easy money for ipads and new Cadillacs. They could have. But they chose not to get “ape nuts levered in hock.” So they had no good times. Yet paid for the bad.
Greece went nuts with cheap credit. Spain, Italy as well.
It is not surprising that the Germans are pissed. And when finance ministers show up at ECB meetings to report. Many member nations have basically lied for a long time. The Greeks hate paying taxes. And there is no centralized EU authority to collect. It’s a mess and there is no quick fix. (Unfortunetly)
We had a civil war that finally united our union. And after that war it still took years before things settled.
I think they gave it a shot. But all of the nations in the EU have known the euro experiment has been a joke for a long time. It’s no wonder the Germans are pissed and it’s finally coming to a head.
Couple this with the “culture” of germany. After having experienced huge inflation and depressions from two world wars. I think it’s engrained in their politics not to get levered up. Ever. Hell, if you go to Germany you can’t even see a German flag fly in most places. I guess it’s some sort of “taboo” to be patriotic.
Back when the Euro was first created with the Maastricht treaty. Germany essentially signed up because it was promised that it absolutely would not have to bail out other nations.
Ever. That was the key in getting the Germans to agree to the Euro.
France lied to them and the Greeks lied about their financial state. It seems that Spain did as well. Time will tell if Italy did. And we know how well MBS and CDO’s worked out for the Germans. Even after they had not lost a penny for 40 years regarding anything AAA rated.
(according to former Commerzebank chairman Klaus Muller)
The Germans are pissed. And have lost all trust. It’s hard to blame them – but this is just what I see from my humble perch.
Please disregard any spelling or grammatical errors. Just got back from a friends cancer benefit and am a bit drunk. Good Luck all. Like Tupac would say…”Keep your head up.”
I have no idea where all of this German sympathy is coming from. You are all closet racist nazis.
Hear this and loud: FUCK GERMANY!!!!
They are insidious
LOL. Did not mean to be sympathetic to anyone. Just trying to be fair and reasonable.
I too am angry. Angry at the EU for not having it’s shit together. And angry at the US as well. Just plain angry really.
It truly is a fucked up scenario.
If we created a north american dollar with Mex and Cad, at the time of The North American Trade agreement was debated It was floated…. Mexico runs up its debt, economy is crap..ect. NOW USA you gota cover.. Not gonna happen. Germany will let the banks crash but insure all the citizens money if the banks go bust. They are the ones making stupid loans.. the deserve to go out of business. Germany will still hold the note so no getting out of it. Just a bunch of bankers looking for work. The know what they are doing… Unlike us.
You are a nazi
“And Germany did not lever itself up with free and easy money. They had no housing boom. They had no free easy money for ipads and new Cadillacs.”
This isn’t true. They absolutely did lever themselves up, by offering vendor financing to their clients via 5% rates. This allowed for a boom and for Germany to effectively peg their currency, just as China has done. What is more, their banks went nuts lending money, and now they need a bailout. They effectively turned the periphery countries into their own colonies, buying olives and selling BMWs to an inflated market. In Spain, it was housing that led the boom, as it did here.
yeah, keep blaming everybody who’s against money printing and bailouts of having some vile reasons about it.
.
Cold hearted orb that rules the night,
Removes the colours from our sight.
Red is grey and yellow white.
But we decide which is right.
And which is an illusion?
.
In The Land Of The Blind … The One Eyed Man Is King !!!
.
I’m BACK … Baby !!!
.
Alf, do tell, what does one have to do to get oneself out of IBC prison?
I assumed it was like one of those crazy south east Asian prisons where a life sentence is 8 years because no one stays alive that long.
gonna ride a see saw too Alf?!?
futures tanking.. long and wrong ain’t no way to go
Tomorrow I buy with my remaining 2% in cash!
Don’t care about the futures, I’m off coursing. Before ze germans get here. http://youtu.be/mqvqW2tjG4I
One thing… The German banks implode if the Eurozone crumbles. This gives Germany a motive to eventually be cooperative.
A bailout of the PIIGS IS a bailout of German banks. (and other banks)
The Euro might disappear but I am keeping my free Euro coin starter pack I received over 10 years ago, when the Euro was introduced. It’s in mint condiiton and maybe my most profitable investment this year, LOL……
http://www.eurocoins.co.uk/starterpacks.html
So I’ll have to buy a hammer made in Indiana instead of India. A shirt made in North Carolina instead of North Vietnam. Big deal.
Germans are to the Euro what Republicans in the House are to America. For the last four years they’ve forced local, state, and federal gov’t agencies to slash budgets, while at the same time demanding tax cuts.
Well done Tea Party and your no-backbone Republican whipping boys, and thanks for sending us into a deflationary vortex, along with the four horsemen of the apocalypse. I hope you dress for warm weather, because it’s going to get mighty hot in here if you don’t let Obama spend some money like a good Democrat.
The rabbiit screeches the loudest when it is trapped and is about to get eaten…
Printing money until it’s worthless doesn’t work either. Austerity works it’s just painful and we have all been wussified over the last 30 years.
We’ve never seen tough times. We will soon
Austerity works?
When?
Euro now positive vs. dollar and gold
just sitting quietly ………..what the fuck ?
Let me be reincarnated as a currency trader ; anyone realize how much money these guys are making ?
no no FLY, German had no army or weapon how can they win WW3?
If the euro collapses, forget about stocks even trading.
How long did the markets shut down when they originally rolled out the euro?
I think it’s fair to say that was an entirely different scenario, which was planned.
stock market in asia just fell hard but nobody is really worried. it seams everyone is expecting the market to be rescued. what a conundrum. everybody is in buy the dips mode.
I will say, on the other side of the equation, that Greek and French retirement ages are absurdly low.