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Germany: the Eurozone's fifth column

by Migeru Mon Jun 21st, 2010 at 04:56:02 AM EST

Is Germany bent on destroying the Euro?

Zero Hedge: Ferocity Of Imminent Spain-Germany Cold War Will Only Be Second To Upcoming Fox Biz-CNBC No Holds Barred (by Tyler Durden on 06/18/2010)

One of the more ominous news of the day came from Reuters, which reported that the previously disclosed rumor that Spain was seeking a €250 billion bail out package, had in fact originated from high-placed German officials. The move, which will could easily set off an intraeuropean cold war, was prompted by the increasing schism between Europe's (so far) solvent core and the insolvent Club Med, and was intended "for Spain to take tougher austerity measures to cut its huge budget deficit." Instead, the tsunami of denial that resulted, only exacerbated matters and made it seems like Spain is truly on the brink. Compounding this animosity, was the disclosure that Spain's direct counterattack took the form of the El Pais story that "quoted Spanish government officials as saying Madrid wanted to publish the results of stress tests being conducted on its banks to reassure markets" a move which has been opposed by Germany and especially by Austria, which believes that publishing the true deplorable state of affairs of its Erste and Raiffeisen Bank would cause yet another bank run. At the end of the day, none of this helped either unlock Spain's frozen interbank or money markets, or encourage a sense of credibility in the euro (turns out that was only courtesy of the biggest short squeeze in Euro history). In fact, if such political low blows are to be expected, it is only a matter of time before all investors completely desert Europe and let it deal with its escalating vendettas on its own. Yet all of this pales in comparison with the very sweaty locker room war that was just unleashed by Fox Business' Charlie Gasparino against CNBC, and particularly its early morning anchor, Joe Kernen.

...

This is the kind of "accord" that is permeating Europe right about now: what initially was just a war of words between Germany and France, has escalated into a war of actionable attrition, as the German rumor most certainly had a very adverse impact on Spanish bond spread. The simple conclusion is that Germany is now actively trying to scuttle the European rescue, and will not stop before the euro plunges, or goes extinct. It is certain that this media circus will only get worse, although it will wipe out Spain first, before it comes around and test just how stable those sub 3% Bunds really are.


Is a country that would have government officials spread damaging rumours about a fellow Eurozone country "on condition of anonymity" the weekend before a major public debt issue fit to be a member of the Eurozone, especially when said country is the Eurozone's largest economy and its bonds are the benchmark for ther countries'?

Reuters: German-Spanish whispering wars hit euro zone (June 18, 2010)

German, Spanish officials leaking against each other
German sources said Spain on brink of EU bailout

...

The Germans seem to have fired the first shot, telling journalists in Berlin on condition of anonymity on June 7 -- the day the German coalition agreed on its own austerity package -- that Spain was on the brink of seeking a European Union bailout.

Two German officials told Reuters that the Spanish government would make an announcement concerning the European Financial Stability Facility that day, when European finance ministers were meeting in Luxembourg to finalise details of the 440 billion euro backstop arrangement for euro zone states.

...

After extensive checks, Reuters decided there were no facts to report. But the rumours were already affecting the markets.

It appears journalistic integrity is in short supply at Financial Times Deutschland and Frankfurter Allgemeine Zeitung.
Diplomats said Spanish Prime Minister Jose Luis Rodriguez Zapatero was furious and demanded to know in Berlin and Brussels where the reports were coming from.
Angela Merkel issued a characteristically unhelpful non-denial denial
Asked about the German media reports, Chancellor Angela Merkel told reporters that day: "If there should be problems -- and we shouldn't talk them up -- the mechanism can be activated at any time. Spain and any other country knows that they can make use of this mechanism if necessary."
As kcurie put it, "Spain's powers-that-be got fed up with Germany"
The counter-attack began on Tuesday, when El Pais newspaper quoted Spanish government officials as saying Madrid wanted to publish the results of stress tests being conducted on its banks to reassure markets -- a move hitherto opposed by Germany.

"If the results of the tests were known there would be more than one surprise," one of the sources was quoted as saying, noting that Spanish banks had performed well.

The next day, the Bank of Spain said it would soon issue unilaterally the results of tests of capital adequacy and risk resilience being conducted on Spanish banks.

The conclusion is that Germany is unfit to be a member of the Eurozone:
EU officials, reluctant to speak on the record about the dispute, said the European Commission was flabbergasted by the leaks, which were damaging the euro zone.

"We simply cannot understand how this can be in Germany's interest, or anyone's interest in the euro area," an official involved in crisis management said.

But we knew that already - even German economists agree...

Eurointellingence: GERMANY IS UNFIT FOR THE EURO (By Joerg Bibow, 21.04.2010)

Not for the first time in its history the German people have been irresponsibly misled by a political leadership that seems to have lost any sense of history, any sense of order and stability in Europe, and any sense of Germany's key contributing role to the current crisis. As ever, the mindset of lawyers frames the political debate among a political class that seems inhumanly uneducated in matters of economics. If economic voices are heard at all, it is usually the voice of the Bundesbank. It is a peculiar democracy that expects either its constitutional court or central bank to have the final word of wisdom.

...

Germany likes to see its international competitiveness as the fruit of hard work and productivity. Yet, German productivity growth since 1999 does not stand out. What stands out is wage stagnation. Germany's improved competitiveness was derived from reducing German wages relative to its European partners; the equivalent of a beggar-thy-neighbor devaluation in pre-euro times. The consequences of this strategy have proved disastrous: domestic demand stagnation in Germany, housing bubbles in partner countries with higher inflation, given that the ECB sets one rate that has to fit all. One way or another, the country that runs up trade surpluses must either lend or grant transfers to the deficit countries that make its own surpluses possible. Today, German policymakers refuse to do either. Fooled into believing that beggar-thy-neighbor was the right thing to do, popular demands appear to be just that. One cannot fail to see that insane austerity in the periphery serves to keep the euro low enough so that Germany can now grow on external exports.

That is neither what Europe needs nor what the world may reasonably expect from Europe. Sooner or later Europe may have to conclude that Germany is unfit for the euro. Let the Germans have their mark back if they are so keen. Let the new euro-mark rise to US dollars 2 or 2.50, so that the joys of stability are real. Euroland may then regroup around France. With Germany once again proving immature to provide constructive rather than destructive leadership, Europe's fate is in France's hands.

The problem is not only that rules don't apply to Germany, but that France repeatedly colludes with Germany to move the goalposts because it is also in France's narrow national interest.

EurActiv: EU to introduce concept of 'dynamic debt' (18 June 2010)

EU leaders yesterday (17 June) agreed to curb excessive public debt in the wake of the Greek crisis, with sanctions for rule-breakers set to be based on debt trends rather than absolute figures in order to avoid immediate sanctions for member states like Italy, Belgium, France and Germany.
(h/t Colman)

3 months earlier (to the day, on 18 March), I had written:

Eurostat's Selected Principal European Economic Indicators links to a table with annual time-series data on General government gross debt [as a percentage of GDP]. This is Germany's:
1997 59.7
1998 60.3
1999 60.9
2000 59.7
2001 58.8
2002 60.4
2003 63.9
2004 65.7
2005 68.0
2006 67.6
2007 65.0
2008 65.9

In 2005, EurActiv reported:
Heads of state and government agreed at the March 2005 Summit to revise the EU's Stability and Growth Pact reform. Under the revised rules, member states must still keep their public deficits under a 3% GDP/deficit ratio and their debts under a 60% GDP/debt ratio.

However, the pact's rules have been made more 'flexible' across a range of areas. For example, member states will avoid an excessive deficit procedure (EDP) if they experience any negative growth at all (previously -2%), can draw on more "relevant factors" to avoid an EDP and will have longer deadlines if they do move into an EDP.

...

In essence, big countries such as France and Germany have won concessions making the pact more 'flexible' in various parts, adding up to a considerable relaxation of the rules. In return, countries such as Austria and Netherlands have won references to "enhanced surveillance, peer support and peer pressure".

The two thresholds - 60% for the debt and 3% for the deficit - remain unchanged.

Gee whiz, when the governments of Germany and France were about to have an "Excessive DeficitDebt Procedure" open against them, they lobbied to change the rules. And this was in 2005, not in the middle of the biggest recession since the 1930's.
Back in March, with the Greek bond crisis raging and Germany getting all holy about fiscal probity, it was really, really hard to take Germany seriously at all given their own fiscal record. Now, having successfully torpedoed Greece, they are going against Spain. It is no longer a question of not taking Germany's moral admonitions seriously, but of recognizing Germany as the leading destabilizing political force within the Eurozone.

Display:
EUobserver / Slovakia may hold up eurozone rescue fund
EUOBSERVER / BRUSSELS - The emerging new leadership in Slovakia has said the country will not contribute its share of the €110 billion rescue package for Greece. In addition, Bratislava is likely not to add its signature to the €750 billion eurozone support mechanism - something that could put the entire project on ice.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Jun 20th, 2010 at 07:04:55 AM EST
Cosolidated Version of the Treaty on European Union, Article 3, paragraph 3.
The Union shall ... promote economic, social and territorial cohesion, and solidarity among Member States.
So much for that...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 07:18:17 AM EST
[ Parent ]
A benighted individual who perceives an illusory distinction between serving his nation and abetting the criminals who govern it.
I guess that makes me a traitor to the European Union...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 08:29:48 AM EST
[ Parent ]
Daily Kos: The Black Swans of Europe

A new EU report warns that economic conditions in Portugal and Spain could "result in a high `snowball' effect on the government debt."
  French financial group AXA says "there is a fatal flaw in the system and no clear way out." They are predicting the Eurozone to break in half or completely disintegrate in the next 18 months.
  Over 13% of Europe's investors are betting on a Black Monday-style collapse in stock prices (think 1987).

 The latest source of these fears is a renewed liquidity crunch among Europe's banking sector, which is expected to write off another 195 billion euros in losses in the near future.

  The central bank is preventing a crisis by providing banks with unprecedented funding. In substituting long-term money with shorter-maturity ECB cash, policymakers are making it harder to wean banks off life support as well as the short-term financing that regulators blame for the credit crisis.
  Banks are still struggling to borrow even from one another and loans with a maturity of more than one month are "rare and expensive," making them depend more on ECB funding, Brice Vandamme, a London-based analyst at Deutsche Bank AG, wrote in a note to clients on June 9.

The source of all this distress is the banks of France and Germany, who lent enormous amounts of money to Greece, Portugal, and Spain.

 All told, Spain, Ireland, Portugal and Greece owe nearly $1.6 trillion to banks in the 16-country euro zone, either in the form of government debt or credit to companies and individuals in the four countries, the report said. Credit from French and German banks accounted for 61 percent of that total.

 These huge liabilities on the balance sheets of the strongest banks in Europe are the reason why the EU decided on a trillion dollar bailout of its southern members rather than the more logical restructuring of debt that is badly needed.
  Or to put it another way, the politicians in Brussels decided to kick the problem down the road by a year or two, hoping that the citizens of Greece, Portugal, and Spain would accept abject poverty without complaint, rather than have to face a catastrophic collapse in major European banks who made stupid loans.



'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Sun Jun 20th, 2010 at 08:53:26 AM EST
[ Parent ]
Less charitably, if Deutsche Bank keels over by itself, then it will be politically impossible to bail them out.

But if the blame can be pinned on a "Club Med" default, then it becomes politically palatable to bail out Deutsche Bank.

In fact, the loans made to Greece on condition of abject austerity are a bailout of Greece's foreign creditors, first and foremost, using IMF and EU money.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 09:02:46 AM EST
[ Parent ]
Maybe that's why the Slovaks want no part of it. Doubt any Slovak banks will suffer...German and French ones, though...

The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Sun Jun 20th, 2010 at 09:23:40 AM EST
[ Parent ]
Don't know enough about the Slovak case, but, yeah, I agree with Mig.  The bailout had nothing to do with propping up Greece and everything to do with Merkel bailing out Frankfurt and blaming it entirely on the stupid Greeks.

Spain doesn't seem interested in lying down and taking it like Greece though.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Jun 20th, 2010 at 09:37:10 AM EST
[ Parent ]
They probably know Sarko won't let that happen. French banks even more exposed than German ones down there. They just love real estate.

Oops!

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Sun Jun 20th, 2010 at 09:49:07 AM EST
[ Parent ]
The whole thing is a bit surprising to me.  I'd heard for a few years that European banks were in a bad way, but I didn't know the extent of it.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sun Jun 20th, 2010 at 10:08:47 AM EST
[ Parent ]
The bailout was Sarko's idea, and Merkel was brought along after all the others, so the politicians are more clueless than that.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Jun 20th, 2010 at 12:17:32 PM EST
[ Parent ]
A lot of the French and German banks' exposure to these countries is through direct ownership of banks there. I fail to see why these local banks would be in any worse position than the other local banks, which are not necessarily in a bad way because of public sector deficits (other than the fact they probably own quite a bit of government bonds, but that's still a fraction of their balance sheets, and in their case it makes sense to have your own government's bonds...

Wind power
by Jerome a Paris (etg@eurotrib.com) on Sun Jun 20th, 2010 at 11:39:09 AM EST
[ Parent ]
It's written in the media that just over half of Spanish debt owned by German banks is money lent to Spanish banks.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Jun 20th, 2010 at 12:22:13 PM EST
[ Parent ]
In the Germany-as-Machiavelli version, that doesn't really matter: What matters is that it can be spun as "shiftless PIGS creating a crisis - we have to save our stalwart German bankers from those irresponsible brown people."

In the Germany-as-Clueless version, it doesn't necessarily matter either, because the markets have the predictive power of a bipolar crack monkey and the attention span of a ferret on speed, and our politicians are so thoroughly indoctrinated that they could have most of their higher brain functions replaced by Bloomberg feeds and nobody would notice the difference.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jun 20th, 2010 at 04:21:59 PM EST
[ Parent ]
JakeS:
so thoroughly indoctrinated that they could have most of their higher brain functions replaced by Bloomberg feeds and nobody would notice the difference.

ROFLMAO

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun Jun 20th, 2010 at 04:44:36 PM EST
[ Parent ]
As Mig suggested:

Migeru:

I am on the record suggesting to replace governments with roomfulls of monkeys at Bloomberg terminals.
by Bernard on Mon Jun 21st, 2010 at 07:09:16 AM EST
[ Parent ]
No, in Slovakia, this was an election campaign theme, and it was a populist "why should poor Slovakians pay for the irresponsibility of rich Greeks" argument (Slovakia having a much lower per capita GDP; and the Slovakian elite and media having swallowed the irresponsible-Greek-public-spending narrative like all others).

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Jun 20th, 2010 at 12:20:36 PM EST
[ Parent ]
European Bank Exposures--From PIGS to FUG Banks Business Insider

Portuguese Exposure

Orange: Public Sector.  Green: Banking Sector.  Yellow: Non-bank private sector.  White: Other Exposures.

Irish exposure


Orange: Public Sector.  Green: Banking Sector.  Yellow: Non-bank private sector.  White: Other Exposures

Greek exposure.

Orange: Public Sector.  Green: Banking Sector.  Yellow: Non-bank private sector.  White: Other Exposures

Spanish Exposure


Orange: Public Sector.  Green: Banking Sector.  Yellow: Non-bank private sector.  White: Other Exposures.

French Banking Exposure

French banks have $106 billion in exposure to the public sectors of Greece, Ireland, Portugal, and Spain.

French banks have sovereign debt exposure of $48 billion to Spain, $31 billion to Greece, and $21 billion to Portugal.

French banks have $493 billion in exposure to the private sectors of Greece, Ireland, Portugal, and Spain.

French banks have $248 billion in exposure to the private sector of Spain alone.

UK Banking Exposure

The UK's banks have $23 billion in exposure to the public debt of Greece, Ireland, Portugal, and Spain.

UK banks have $230 billion in exposure to Ireland's private sector.

Banks in the UK also have $140 billion in exposure to Spain's private sector.

German Banking Exposure

German banks have $68 billion in exposure to the public sectors of Greece, Ireland, Portugal, and Spain.

German banks have sovereign debt exposure of $33 billion to Spain, $23 billion to Greece, and $10 billion to Portugal.

German banks have $465 billion in exposure to the private sectors of Greece, Ireland, Portugal, and Spain.

German banks have exposure of $202 billion to the private sector of Spain alone.

German banks have $177 billion in exposure to Ireland's overall private sector, and $126 billion to the non-bank private sector.

Source of all data: Bank for International Settlement.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jun 20th, 2010 at 01:37:19 PM EST
[ Parent ]
As I have commented elsewhere
The Bank of International Settlements published a 68-page report in which half a page is occupied by these statistics. The exposure to other OECD countries is nowhere to be found. Germany has larger aggregate debt than Spain and higher public debt-to-gdp ratio - who's exposed to that? BIS isn't telling.


By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 06:44:28 PM EST
[ Parent ]
Graphu, Sensi! Graphu!

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jun 20th, 2010 at 08:11:10 PM EST
[ Parent ]
Barroso, Zapatero and others need to bring pressure to bear on BIS to release comparable information treating France, the UK and Germany as possible defaulters and showing who is exposed to their debt.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jun 20th, 2010 at 11:24:12 PM EST
[ Parent ]
Barroso!?

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Mon Jun 21st, 2010 at 02:24:25 AM EST
[ Parent ]
Barroso is a high ranking EU politician from Portugal. Portugal is Spain's chief foreign debtor. Both Spain and Portugal are amongst the much maligned PIGS and both have nominally socialist governments....Didn't seem outrageous.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jun 21st, 2010 at 10:47:39 AM EST
[ Parent ]
Barroso is a member of the EPP (also known as the Enemy). He's also widely considered to be an incompetent idiot, which is why he was rewarded with a second term at the Commission. See here.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Mon Jun 21st, 2010 at 10:56:25 AM EST
[ Parent ]
"Less charitably, if Deutsche Bank keels over by itself, then it will be politically impossible to bail them out."

Rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, rights issue, RIGHTS ISSUE!!!!!!!111 GAAAAAAAAAAAH!!!!!!!!!1111111

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun Jun 20th, 2010 at 04:03:55 PM EST
[ Parent ]
Rights issues presume that the offering company is actually solvent.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jun 20th, 2010 at 04:24:11 PM EST
[ Parent ]
No they don't. The new capital might very well be used to plug the holes in the balance sheet of an insolvent company.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Jun 20th, 2010 at 04:29:30 PM EST
[ Parent ]
And the new capital would love to do that for what precise reason, again?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jun 20th, 2010 at 05:09:59 PM EST
[ Parent ]
Because the new capital, which might or might not be supplied by the old shareholders, will get shares at very preferntial terms, ie any old shareholder who doesn't take part in the rights issue will more or less be wiped out.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Jun 20th, 2010 at 05:30:15 PM EST
[ Parent ]
You forget the point is to protect management. You know, like this...

EurActiv: Merkel embroiled in row over banker's birthday party (27 August 2009)

A month ahead of national elections, German Chancellor Angela Merkel stands accused by the opposition and the media of having spent public money celebrating the birthday of a banker friend.

Deutsche Bank Chief Executive Josef Ackermann revealed in a TV talk show that Merkel had asked him to invite 30 friends to celebrate his 60th birthday at the chancellery a month ago.

...

Merkel was prompt to react, and in another television appearance explained that part of her job as chancellor was to bring together public personalities. She insisted that the event "was not a birthday party," but a dinner of schnitzel and cold asparagus for people prominent in business, culture, science and education, including Mr. Ackermann.

A month before August 2009? Then there must have been more than one birthday bash for Ackermann at Merkel's expense...

Deutsche Welle: Deutsche Bank boss throws party, Merkel foots the bill (27.08.2009)

Reports say German taxpayers covered expenses of lavish birthday dinner for Deutsche Bank chief Josef Ackermann. The meal was held in Chancellor Angela Merkel's office.

...

In April 2008, Deutsche Bank chief Josef Ackermann invited about 30 guests from home and abroad to the German chancellor's office where he hosted a belated dinner to celebrate his 60th birthday in February.

Mysteriously, back in 2008 Spiegel was reporting less than positive relation between Merkel and her favourite banker: Deutsche Bank CEO Under Fire (10/29/2008)
German Chancellor Angela Merkel had invited an illustrious group of guests to the Chancellery to honor a man from the business world whom she especially admires: Josef Ackermann, the CEO of Deutsche Bank.

...

At the time, in February of this year, the chancellor's relationship with her favorite banker was still in good shape. The dinner in Berlin was Merkel's way of thanking Ackermann for having invited her to his 60th birthday celebration, which she was unable to attend due to scheduling conflicts.

Wait, there was another birthday dinner in February 2008?
Today Ackermann is the bogeyman in Berlin, across all political party lines. The reason for his fall from grace can be summed up in a single sentence: "I would be ashamed if we were to accept government money in this crisis."
Unless your bank was brought down by the PIGS through no fault of your own, right, Josef?

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 07:29:19 PM EST
[ Parent ]
Or the vuvuzelas:

BZZZZZZZZzzzzzzzzzzz!

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 07:10:16 AM EST
O-LE, OLE-OLE-O-BZZZZZZZZZZZZZZZZZZZZZZZ!!

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sun Jun 20th, 2010 at 08:01:26 AM EST
[ Parent ]
Hitler on that vuvuzilla stuff:

The meeting on economy tomorrow?

by das monde on Mon Jun 21st, 2010 at 01:34:59 AM EST
[ Parent ]
I'm not sure, in terms of the current economic meltdown, that there is such a thing as Germany, or Spain.  Yes, there are political entities, but they certainly are not unified. Point being, we are very likely not in a position to know what's actually happening here...

... though we may well be in position to judge the coming, lasting effects.

I don't get a sense that there's anything political about this, even though I don't understand enough to even have a sense.  Seems far more likely that we're seeing the leaking version of what's happening behind the scenes, as we enter Phase Whatever of the Great Meltdown.

I suspect this is more about the strategies of Deutsche Bank, Siemens, Daimler, FauVay and the rest of the German financial/industrial powerhouse trying to make sense of what they already see coming, not that they would let us in on it.  I would expect the Bundesbank to be a tool of those in power, and suspect that this has little to do with government.

Or, certainly not a government that has any inclination to be about the lives of normal people.

I would sense this is more about Santander et. al. putting Ackermann et. al. up against a wall, and the old guard reacting (knowing full well their own weakness with respect to solvency.)  i sense masters of the universe are using old-world tactics, all they know, to fight for position. They certainly know the reality, or else banks would still be lending to each other.

But then, me know nothing, actually, especially with regard to the flaying of the dying dinosaurs as the world melts.  What i do know, not really, is that it's likely to get worser before it gets besserer.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Sun Jun 20th, 2010 at 07:44:40 AM EST
i sense masters of the universe are using old-world tactics, all they know, to fight for position.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Sun Jun 20th, 2010 at 07:47:24 AM EST
[ Parent ]
I'm not sure, in terms of the current economic meltdown, that there is such a thing as Germany, or Spain

Well, of course, Germany or Spain stand for the powers that be. We people are just innocent bystanders.

Sort of like the ants in The Third Man



By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 07:51:09 AM EST
[ Parent ]
thanks for that, Migs. always a pleasure to have great artists put the "scenes" in perspective.

(paraphrasing: with all the intrigue and murder under the Borgias, they still had Michelangelo et. al. and what did we get from 500 years of peace and democracy in Switzerland? the cuckoo clock.  How convenient they left out the Swiss banks.)

Ants or not, when the big boys have a shoot-out at the OK Corral, we can't ever be sure of what's happening.

Though we agree, it ain't gonna be pretty.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Sun Jun 20th, 2010 at 08:06:25 AM EST
[ Parent ]
Whatever happened in the backrooms, events got a strange own dynamic. If the Spanish drive to publish the stress tests was a retaliation, it went further than intended with Barroso talking about the expansion of stress tests to smaller banks after the European Council meeting. He follows demands first voiced by the Bundesbank's boss, yet this expansion would cover the really problematic banks of both countries, that is the savings banks in Spain and the state banks in Germany (and the associations of the latter are still against the publication).

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Jun 20th, 2010 at 12:38:42 PM EST
[ Parent ]
Once the war of attrition is begun, escalation just hurts both contestants.

It's not even a zero-sum game any longer, it's a lose-lose situation.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 06:46:07 PM EST
[ Parent ]
Weber specifically said Landesbanken, so I don't buy the war of attrition narrative.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Jun 21st, 2010 at 01:29:22 AM EST
[ Parent ]
So, what has Germany been doing since February? Do you prefer the "Germany is insane" or the "Germany is stupid" narratives, or maybe the "it's all Anglo disinformation" narrative?

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Mon Jun 21st, 2010 at 02:27:05 AM EST
[ Parent ]
I prefer the interpretation that the German government was insane, stupid, irresponsible, narrow-mindedly selfish, and incoherent (and in that no special in the EU), and I think I supplied lots of evidence especially for the last. (Add to that some out-of-context quotes reported in international media, see downthread.)

On the issue at hand, I do think that über-hawk Weber would very much like to go after the unloved Landesbanken, whatever the potential damage for the entire German economy, and thus seized the moment.

On the "cold war", what happened at the EU summit regarding austerity and stress tests seemed like the end of it.

On your broader theory, which if I got it right is that since February, Germany's elites collectively want to crash the Euro to have an excuse to bail out Deutsche Bank, it just doesn't make sense to me. First, it starts with speculation that DB is in trouble. Second, Germany is not the UK, there are industries other than the financial industry, and the loss of the Euro would hurt them a lot. Third, given that the austerity drive itself hurts German exports in both the medium and long term (medium: recession reduces EU consumption, long: Germany's depression of labour costs would be reproduced elsewhere), the whole push has all the hallmarks of short-term thinking.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Jun 21st, 2010 at 01:58:44 PM EST
[ Parent ]
Angela Merkel issued a characteristically unhelpful non-denial denial

Checking, I find it was a reply to a question explicitly asking whether the EU is prepared for the case of emergency.

REGIERUNGonline - Pressestatements von Bundeskanzlerin Angela Merkel und dem französischen Präsidenten Nicolas SarkozyREGIERUNGonline - Press statements of German Federal Chancellor Angela Merkel and French President Nicolas Sarkozy
Frage: Guten Tag, Frau Bundeskanzlerin, zunächst einmal möchte ich von Ihnen einen Kommentar zu Spanien haben, das gesagt hat, dass es Probleme hat, sich im Ausland zu refinanzieren. Besteht hier ein europäischer Eingriffsplan, wenn das, was die Spanier machen, nicht ausreicht? Ich möchte wissen, ob Sie in den Gesprächen und den Vorschlägen, die Sie machen werden, die Restrukturierung eines Landes der Eurozone, das in Schwierigkeiten gerät, beabsichtigen...Question: Have a good day, Mrs. Federal Chancellor, first I want a commentary from you about Spain, which said that it has problems to refinance itself abroad. Does a European intervention plan exist on this, if what the Spanish are doing is not sufficient? I want to know whether you intend [to bring up] the restructuring of an Eurozone country which got into trouble in the talks and the proposals you will present...
BK´in Merkel: Bezüglich Spanien ist die wichtige Nachricht, dass wir einen Rettungsschirm für den gesamten Euroraum gespannt haben. Er ist jetzt in den wichtigen Ländern verabschiedet worden. Insofern ist das eine wichtige Botschaft an die Märkte.Federal Chancellor Merkel: Regardin Spain, the important message is that we have drawn a rescue umbrella over the whole Eurozone. It was now adopted in the important countries. In that it is an important message to the markets.
Wenn es Probleme geben sollte ‑ ich finde, wir sollten sie nicht herbeireden ‑, dann kann dieser Schirm jederzeit aktiviert werden. Die Konditionen sind klar. Insoweit brauchen wir wohl keine Sorge zu haben. Der Gegenstand unserer Treffen war, dass wir gesagt haben, wir brauchen einen solchen Schirm. Spanien ‑ oder welches Land auch immer ‑ weiß, dass es diesen Schirm in Anspruch nehmen kann, wenn es notwendig ist.Should there be problems - and I think we should not call it forth by talking about it -, this umbrella can be activated at any time. The conditions are clear. In that we do not have to be concerned. The subject of our meeting was that we said that we need such an umbrella. Spain - or whichever country - knows that it can access this umbrella, if it is necessary.
Wir alle haben ein Interesse daran, die Dinge nicht herbeizureden, die jetzt gerüchtemäßig da sind. Ich habe kein Interesse daran, dass es zum Schluss sich selbst erfüllende Prophezeiungen gibt. Deshalb beteilige ich mich jetzt nicht an Spekulationen.We all have an interest to not call things forth which are presently around as rumours by talking about them. I have no interest in there being self-fulfilling prophecies in the end. For that reason I won't participate in speculations now.

The finance ministry issued its own denial, which was more double-talk-ish: they denied that there is a crisis by saying that the rescue package criteria of insolvency and a danger to the stability of the Euro do not exist, Spain could sell on capital markets successfully, and Spain has its own national bank bailout fund as first line of defense; but that's no denial of the claim that Spain asked for help. Whatever is going on here the movers are highly irresponsible.

Is a country that would have government officials spread damaging rumours about a fellow Eurozone country "on condition of anonymity" the weekend before a major public debt issue fit to be a member of the Eurozone, especially when said country is the Eurozone's largest economy and its bonds are the benchmark for ther countries'?

Dumping Germany from the Eurozone might be a fitting punishment for the German government and banking sector (though a default would be a much better punishment), but that won't achieve anything for the rest. If the benchmark of German bonds is gone, interest rates would climb further; other Eurozone members weren't too high on solidarity either; and specifically Spain's indebtednesss to germany is rivalled by that to France.

At any rate, I will wait until there are explicit and public signs from the two governments before I believe that this ferocious "Spain-Germany Cold War" visioned in Anglo media is really on the horizon.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sun Jun 20th, 2010 at 12:14:10 PM EST
El Pais: Why does Berlin attack Spain? (20/06/2010)

See Google Translate version.

Can we stop it with this assumption that Europe's problems are a figment of the imagination of the English-language press? It's a poor excuse.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 07:06:00 PM EST
[ Parent ]
Ah but the English-language press adds just the right amount of crunchy insanity.

But to the matter at hand: Why are we blaming Germany specifically? Is there anyone anywhere in power who has not yet declared austerity to be the height of both virtue and wisdom?

by generic on Mon Jun 21st, 2010 at 05:29:20 AM EST
[ Parent ]
Germany is the largest Euro economy, the one with the largest trade surplus, and the one the market takes as benchmark. This makes it the single most powerful country and the one with the largest responsibility for success/failure of European economic policies.

In this context:

  1. the constant flip-flopping on the Greek situation arguably made matters worse
  2. we now have credible claims of spreading market-sensitive misinformation


By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Mon Jun 21st, 2010 at 05:45:37 AM EST
[ Parent ]
All of that is true. Nonetheless if the consensus is to burn down the house why bother complaining about somebody playing with fire?

I take the leaking as a sign of internal divisions more than anything else. It seems that Merkel managed to both rid herself of all possible rivals and demoralise her supporters. Some sniping is to be expected.

by generic on Mon Jun 21st, 2010 at 07:06:03 PM EST
[ Parent ]
That El País article only references the Reuters article. And there is a rather far and wide spectrum between 'ferocious Spain-Germany Cold War' (imagined by Anglo media) and all problems being imagined (which would be a superficial reading of what I wrote).

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Jun 21st, 2010 at 02:05:21 PM EST
[ Parent ]
That El País article only references the Reuters article.

Not quite. The most obvious difference is an quotation by Nicolas Veron from Bruegel but there's also a summary of El Pais' own reporting from the previous week as well as other information not contained in the Reuters article.

As for the general editorialising tone of El Pais' coverage, there are things like Terrible management at German banks (google translate)

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Mon Jun 21st, 2010 at 02:23:27 PM EST
[ Parent ]
What I mean is that in that article, only the Reuters article reference seemed to be evidence of actual Spain-Germany conflict cited. The rest seems to be a general analysis of the financial situation, with particular focus on risks in Germany (also discussing the German state banks, without mentioning that the current stress tests won't cover those), and without conclusions drawn (maybe except for the end, see below). On the other hand, if this and other articles in El País shall be considered the reaction of the Spanish government/elite/powers that be and in that a mirror of FAZ, then OK the low-level conflict may continue. Still, this appears even below the level of regular sniping between Merkel and Sarkozy and connected press leaks/spin.

:: :: :: :: ::

As for the end of that article, in Google translate:

...And yet, once again, Germany will have the last word. Merkel gave her support "transparency" involving the testing, but also warned that "details" (which eventually will be released), "the finance ministers decided in Ecofin." In other words, it depends on what his minister Wolfgang Schauble decree on 13 July.

If I read this right, El País is insinuating that Merkel is foreshadowing that Schäuble will water down the transparency in a month. If that's the right reading, then I suspected a misinterpretation already from having read articles on the stress tests two days ago that criticised the EC for not fixing details, so I tried to track this down.

REGIERUNGonline - Pressekonferenz von Bundeskanzlerin Angela Merkel zur Sitzung des Europäischen RatsGOVERNMENTonline - Press conference of Federal Chancellor Angela Merkel on the summit of the European Council
Frage: Frau Bundeskanzlerin, noch einmal zu den Stresstests: Können Sie uns sagen, wie groß der Kreis der Banken sein soll, die untersucht werden? Werden es mehr als die bisherigen sein? Sollen die Ergebnisse Bank für Bank veröffentlicht werden, wie das unter anderem Herr Barroso gefordert hat?Question: Mrs. Federal Chancellor, again about the stress tests: could you tell us, how wide shall be the circle of banks that shall be tested? Will it be more than previously? Should the results be published individually for each bank, as demanded by Mr. Barroso among others?
BK'in Merkel: Es gab heute die Übereinstimmung zu größtmöglicher Transparenz. Ich glaube, die Details werden dann die Finanzminister festlegen. Es war uns allen jedenfalls klar, dass das im Sinne der gleichen Wettbewerbsverhältnisse und des gleichen Felds, in dem man spielt, sozusagen kompatibel und möglichst transparent sein sollte. Die Einzelheiten werden, wie gesagt, später durch die Finanzminister festgelegt.Federal Chancellor Merkel: Today there was agreement about the greatest possible transparency. I believe the details will be fixed by the finance ministers [Ecofin]. At any rate, it was clear to all of us that, in the spirit of a level playing field for competition and the same field to play in, it should be, let's say compatible and as transparent as possible. The details will be, as I said, fixed later by the finance ministers ([Ecofin].

This is obviously an evasion of a question on specific details.

As for what Schäuble's ministry did on the stress test front after the EU summit: going beyond the "if you have nothing to hide..." argument (see this comment of mine), they look for ways to change German law that mandates the tested bank's approval for publication, and Schäuble gave an interview (to another business magazine, the interviewer of which is another automatically blaming Greeks and Spaniards for the situation) in which he insists that the risk of eventual bailouts in the wake of the publication is one to take, one for which the EU has funds ready, and claims that "we won't have to pay in the end"  [speak: any run on a bank would be stopped with temporary liquidity injections that are repaid after the bankruptcy is averted].

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Jun 22nd, 2010 at 02:25:02 PM EST
[ Parent ]
BTW, unless you want to cure low blood pressure, avoid FAZ's upping the ante: yesterday's inerview with economist and Barcelona resident Edward Hugh (whom we know from the blog A Few Euros More, I believe).

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Jun 22nd, 2010 at 02:28:31 PM EST
[ Parent ]
"Not for the first time in its history the German people have been irresponsibly misled by a political leadership that seems to have lost any sense of history, any sense of order and stability in Europe, and any sense of Germany's key contributing role to the current crisis."

WW2-associations are usually taboo in the European debate, especially when Germany is involved, which means some people are really fucking angry with Berlin. And that's not strange. What the fuck are they up to? It seems they are acting completely irrationaly excactly due to WW2-mind-trauma (inflation-> invade Poland).

In the words of Krugman:

German hawk: "We must cut deficits immediately, because we have to deal with the fiscal burden of an aging population."

Ugly American: "But that doesn't make sense. Even if you manage to save 80 billion euros -- which you won't, because the budget cuts will hurt your economy and reduce revenues -- the interest payments on that much debt would be less than a tenth of a percent of your G.D.P. So the austerity you're pursuing will threaten economic recovery while doing next to nothing to improve your long-run budget position."

German hawk: "I won't try to argue the arithmetic. You have to take into account the market reaction."

Ugly American: "But how do you know how the market will react? And anyway, why should the market be moved by policies that have almost no impact on the long-run fiscal position?"

German hawk: "You just don't understand our situation."



Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Jun 20th, 2010 at 04:01:17 PM EST
That's just Krugman being a pawn for the anti-Europeans.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sun Jun 20th, 2010 at 04:09:40 PM EST
[ Parent ]
Some guy at Zero Hedge has an idea about how to resolve the issue, and by god, it's far less retarded than most of the ideas thrown around by Serious People.

What we really need is an ultra high stakes World Cup football match between Spain and Germany.

The bet would go something like this-- if the Spaniards win, Germany funds the full 800 billion euro bailout package.

If Germany wins?  They own Spain.  And will get the option of shipping the 20% or so unemployed to Montana.  Don't worry, Barry O will put them on a new brand of hopey/changey socialism.

And if there's a tie?  They'll be no tie!  Why do they even let these teams do that, anyway?

And in other news, I'm considering changing my signature line below which I've had since 2006 to "Rights issue!!!!!!!!!111111"

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun Jun 20th, 2010 at 04:20:25 PM EST
[ Parent ]
How much of the crisis is the result of people that partied and spent money they didn't have lecturing those that did not party and the latter resenting such lecturing and telling them - you had your fun, now pay?

Even if it is not if Germany's self interest to push for austerity, it's seen as less unfair than the alternative.

Or do we suddenly all believe that people act only in their best interests, as determined rationally?

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri Jun 25th, 2010 at 05:32:21 AM EST
[ Parent ]
Jerome a Paris:
How much of the crisis is the result of people that partied and spent money they didn't have lecturing those that did not party and the latter resenting such lecturing and telling them - you had your fun, now pay?
Who's

  • the people that partied
  • the people that did not party

?

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Fri Jun 25th, 2010 at 05:34:47 AM EST
[ Parent ]
it should be:
  • "people thought to have partied"
  • "people who think they didn't party"
(in each case the "thinking" being done by the supposedly virtuous party.

But basically, it would be people who took on debt and people who didn't take on debt.

There's been an interesting trend to present the economy as a morality play, as per this diary: Tired of Slutty Unemployed Women and Their Divorces


The current economic crisis for American households has taken on a new aspect.  It's being spun by the GOP and their media parasites not as an economic problem, but as a social problem.  A problem of morals.  A problem of values.

It's not the consequence of thirty years of sh!tty conservative economic policy.

Of course not!

It's about a failure of Americans to live within the standards set for them by the preachers, pontiffs and pundits in the right-wing.

American families -- previously considered victims of the economic crisis -- are now the cause of it.

Don't blame Wall St.!

Blame the unemployed.

They are unemployed because they are drug addicts.

People losing their homes are to blame because they were greedy.

People have lost their jobs because they are lazy.

Or because they failed to train for the jobs of the future.  (Tee-hee!)

Shouldn't they suffer the consequences of their misdeeds?

The GOP hopes to get a three-fer win out of the current economic crisis.

First, they want to stall government aid, crash the system again and reap electoral benefits in November.

Second, they want to use it to solidify gains made by their cronies in New York and Washington over the last thirty years of wealth confiscation.

And, third, they want to use it to prove once and for all that there is an economic cost to the working household when the public is allowed to commit values crimes -- you know, the usual divorce, abortion and same-sex marijuana.

And the media is all too happy to comply.



Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri Jun 25th, 2010 at 08:09:29 AM EST
[ Parent ]
Jerome a Paris:
There's been an interesting trend to present the economy as a morality play

That's hardly a trend - it's the foundation of all neoclassical posturing.

Rich people are inherently good. They can do no wrong and must be rewarded for 'their' success, without limit.

Poor people are inherently bad, and must be punished for 'their' failure.

There's some stuff about prices and trading and such, but that's just wrapping paper.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Jun 25th, 2010 at 08:49:02 AM EST
[ Parent ]
Economics is the religious jargon of the day. 500 years ago people used phony biblical exegesis to justify rewarding the wealthy and punishing the poor.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Fri Jun 25th, 2010 at 08:52:31 AM EST
[ Parent ]
Yes, quite. We have Saint Smith of the Invisible Hand, and Saint Friedman who rescued us from the temptations of the Satanic Demon Keynes.

Etc.

No wonder it makes no sense at all.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Jun 25th, 2010 at 09:21:02 AM EST
[ Parent ]
You know, we really need to (virtually) sit down and unpick this one rationally, as best we can. There's a pretty complex interplay of cultural clash, stored resentment, nationalism, free-market bullshit and propaganda all mixed up with self-interest and moral justifications in play in the public sphere here, to the extent that normally pretty rational posters on this site (you and Mig for example) are taking it personally, which is fascinating. It's pretty hard to work out what's really going on and why.
by Colman (colman at eurotrib.com) on Fri Jun 25th, 2010 at 05:39:17 AM EST
[ Parent ]
Colman:
rational posters on this site (you and Mig for example) are taking it personally, which is fascinating
Maybe I should start charging you for the entertainment...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Fri Jun 25th, 2010 at 05:57:46 AM EST
[ Parent ]
I agree.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri Jun 25th, 2010 at 08:02:06 AM EST
[ Parent ]
European Tribune - Comments - Barroso to plebes: nice indebted democracy you have there...
Invertia.com - Deutsche Bank se descubre: apuesta 600 millones contra BBVA y Banco PopularInvertia.com - Deutsche Bank drops its cover: it bets €600m against BBVA and Banco Popular
Hugo Banziger, jefe de riesgos de Deutsche Bank, estuvo el día 10 de junio en Madrid en una conferencia organizada por Goldman Sachs, uno de los bancos de inversión más influyentes del mundo. En ese marco, la entidad germana confesó que ha apostado más de 1.000 millones de euros contra deuda corporativa española (credit corporate). A esa cifra se le unen otros 800 millones contra Portugal.Hugo Banziger, head of risk at Deutsche Bank, was in Madrid on june 10 at a conference organised by Goldman Sachs, one of the world's most influential investment banks. In that venue, the German bank confessed it has bet over €1bn against Spanish corporate debt. To this figure one must add €800m against Portugal.
Fuentes consultadas por este portal explican que una de las formas en las que Deutsche puede ponerse corto en credit corporate español es a través de CDS (credit default swap), derivado que actúa como seguro contra el impago de una deuda. Desde un banco comentan que puede tratarse también de GGB (Government Guarantied Bonds), o sea, "deuda con aval español". En cualquier caso, sea de la forma que sea, lo que subyace es la visión negativa del banco alemán sobre la economía española.Sources consulted by this portal explain that one of the ways that Deutsche can be short Spain's corporate credit is through CDS, a derivative acting as insurance against default on debt. From a bank they comment that [the debt in question] could be Government Guaranteed Bonds. In any case, in whatever way, underlying this is a negative vision of the Spanish economy by the German bank.
La mayor entidad financiera del país teutón justifica esta expresiva declaración de intenciones como una estrategia para defenderse de los movimientos en la valoración de los créditos (value of the credits), recoge el diario The Telegraph. En esta reunión, Deutsche aseguró que no tiene ni un solo bono español o portugués, mientras que en Italia mantiene una cartera de 3.100 millones de euros a cierre de marzo.The largest financial entity in German justifies this expressive declaration of intentions as a strategy to hedge against movements in the value of credit, according to The Telegraph. At this meeting, Deutsche claimed that it doesn't hold a single Spanish or Portuguese bond, while in Italy they kept a portfolio of €3.1bn at the end of March.
......
Esta agresiva estrategia de Deutsche Bank contra la Península Ibérica se completa con millonarias posiciones bajistas en BBVA y Popular, segundo y tercer banco español por activos, respectivamente. En marzo de este año, Ackermann advirtió de que la quiebra de Grecia tendría efectos dramáticos en la industria financiera. Toda una declaración de intenciones de la que ahora intenta sacar partido.This aggresive strategy by Deutsche Bank against the Iberian Peninsula is completed with bearish positions worth millions in BBVA and Popular, second and third Spanish banks by assets, respectively. In march of this year, Ackermann warned that the bankruptcy of Greece would have dramatic effects on the financial industry. A declaration of intentions that he intends to profit from now.

So Germany introduces a unilateral short ban which now protects Deutsche Bank while DB takes a 600 million Euro short position in Spanish banks as well as CDS positions against Spanish debt to which they have no actual exposure. Ho hum.

About Germany's short ban: too bad Deutsche Bank is cross-listed at US stock exchanges...

Also, isn't it interesting that DB claims to have unwound any exposure they had to all the PIIGS except to Italy, which explains why 1) it's not PIIGS any longer, just PIGS; 2) Italy received a helpful hand from Germany, France and Belgium to avoid sanctions over excessive debt at the last EU council summit.

Is it a coincidence that Spain, Portugal and Greece have PES governments while Belgium, France, Italy and  Germany have EPP governments?

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 06:58:12 PM EST
Das PANCAKES.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon Jun 21st, 2010 at 04:39:24 AM EST
[ Parent ]
You let the 2 Germanies reunite and what do you get.

So WWII is a no-no subject??  How odd.  Hope they invade England and do it right this time.  You have my permission to get rid of BP.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Mon Jun 21st, 2010 at 11:33:41 AM EST
Germany "is the main protagonist" in the euro's crisis and risks inflicting deflation on the European Union because of its insistence on budget austerity, billionaire investor George Soros said.

"As the strongest and most creditworthy country it is in the driver's seat," Soros said in a speech at Humboldt University in Berlin yesterday. "As a result Germany objectively determines the financial and macroeconomic policies of the euro zone without being subjectively aware of it. When all the member countries try to be like Germany they are bound to send the euro zone into a deflationary spiral."


by das monde on Wed Jun 23rd, 2010 at 11:24:15 PM EST
Talking to a Dining Room Table - Paul Krugman Blog - NYTimes.com

Somehow I lost the labels, destroying the whole point of the post. The blue line is Germany; the red line is Spain.



By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Fri Jun 25th, 2010 at 04:46:10 AM EST


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