EZONE CRISIS: Bundesbank slaps restraining order on Merkel, fires torpedo at EU peripherals.

Weidmann….has effectively doomed eurozone

Victory for Bankfurt over Berlin as Weidmann retaliates on firewall question

Yesterday afternoon’s decision by the German Bundesbank to refuse acceptance of Greek, Irish or Portuguese sovereign/bank bonds has dealt a blow to the Eurozone which few informed observers think it can survive. With the help of sources, The Slog digs into what’s really going on here.

As The Slog has always maintained – and Parisian sources have consistently affirmed – there are really three Germanies at the moment: Merkel Germany, Schauble Germany, and Banker Germany. Banker Germany has been led for several months now by Jens Weidmann, the Bundesbank President; and as the Slog’s Bankfurt Maulwurf has been alleging for weeks, this last schism’s power is in the ascendancy. Schauble Germany consists of the Finance Minister and some of his aides: these are the leading players who have become increasingly pessimistic about ClubMed’s chances, while coming under more and more pressure from parts of the Bundestag and the Karlsruhe consititutional Court. Merkel Germany consists of Angela Merkel and the woefully uninformed German electorate.

Despite widespread scepticism earlier this month, The Slog also reported a detailed US-inspired plan to ‘amputate’ Greece as a source of debt contagion after close of business on 23rd March. I later added to this further detail explaining that the US felt ‘double-crossed’ by Germany, having given the ECB’s Mario Draghi the dollars to underpin eurobanks, but not seen Brussels ‘deliver’ by pulling the plug on Greece. What’s now becoming clearer is that Washington hugely underestimated both the power of Jens Weidmann, and the rift between him and the ECB. They weren’t double-crossed: the State Department had its lines crossed.*

The EU in general – and very badly shaken markets – now face the reality of a Spanish situation getting worse by the day; an effective civil war inside the EU’s biggest player Germany; and Greek bonds that have been rendered worthless. As Greek newspaper Ekathimerini reports this morning:

‘The development is very serious as it means that even the new bonds issued by Athens to replace the old ones after the private sector involvement in the haircut will have too low a value. Already their difference in yield compared to German bunds, known as spread, has grown by more than 200 basis points in fewer than 20 days, climbing to 1,940 bps….the credibility of the new bonds issued is no different to that of the old ones they have replaced. What is more, Greek banks will need to gradually seek funding from other sources and not the Eurosystem, which is not at all an easy proposition.’

Late yesterday evening I got this comment from the Bankfurt Maulwurf:

“As I said, by the wintertime there will be no eurozone as we know it. Merkel is now increasingly alienated. My guess is that, based on her history and personality, the Chancellor will switch sides.” [ie, and privately accept that FiskalUnion is doomed with any ClubMeds inside it].

The Slog’s regular and reliable source also disputed the main suggestion in last night’s Wall Street Journal piece, in which the Murdoch-owned paper noted that ‘Jens Weidmann reacted strongly after the ECB relaxed collateral rules for its second three-year loan tender in February. The looser rules allowed smaller banks to take part in the loan operation.’

“Of course,” he told me, “Herr Weidmann is opposed to such a crazy idea, but today’s aim was really to fire a shot above the Chancellor’s head. The Bundesbank’s management – and most of my colleagues – believe that the so-called firewall boost is madness. Not only will it not work, it is throwing very good German money after very bad ClubMed debt. We must hope that Frau Merkel’s head will now return to earth from the clouds.”

Earlier this month, The Slog ran a lengthy piece alleging an ultimatum given to Merkel by Frankfurt bigwigs.

My favourite Parisian diplomatic source also adds some colour.

“Yes of course Weidmann is dumping the risk back at the ECB and delivering a serious snub to Signor Draghi. But as you might say in Britain, the German Central Bank has placed an ASBO-tag on Angela Merkel. She is a very stubborn woman, but Jens Weidmann is a very patriotic and resourceful banker. This is a very bad development for the Eurozone.”

Market contacts I’ve managed to find this (Saturday) morning GMT responded similarly. “The eurozone was dead in the water anyway,” said a Madrid-based dealer, “Weidmann just torpedoed a dead duck. This means there’s no longer a debate about whether the duck’s dead or not.”

“I think what we’re seeing here is open warfare on several fronts,” said a leading UK wealth manager, “member State banks batting the ball back to Draghi, Frankfurt starting to reel Berlin in, and everyone scrabbling around for an exit plan. Another way to describe it, of course, is to say it’s every man for himself now. We’re expecting the Spanish bond market to need massive ECB support come Monday. We’ll see, but that has to be the most likely outcome”.

Anyone predicting the order of events from here on would have to be mad or dumb. Later today I hope to talk to some US sources, but in the meantime, the reaction to Weidmann’s move among the American the media set has been muted. More broadly, neither Reuters nor Bloomberg flagged the development,  and the FT – ! – doesn’t mention it at all so far online.

There are times when even an anti-conspiricist like me has to wonder about the Anglo-American business MSM, and whether there are some things they just won’t print. Rupert Murdoch loathes the EU and would do anything to sink Britain – hence the WSJ coverage. But most of them seem at times to look the other way when this kind of stuff happens.

*Since March 23rd, the Athens Government has twice postponed the closing date for English Law bond-swap involvement – a fact barely reported anywhere in the MSM. It was always my suspicion that the English law liability would’ve represented one of the many rationales cited to amputate Greece on that day. During this period, the Greek government has also illegally raided the bank accounts of Greek hospitals and Universities in order to raise the money required to settle some English Law debt. The story (later confirmed in the Greek media) was first posted here. I have yet to see it covered anywhere in the rest of the EU.

Also related: American doubts about Merkel (March 9th)

123 thoughts on “EZONE CRISIS: Bundesbank slaps restraining order on Merkel, fires torpedo at EU peripherals.

  1. In Lanzarote watching CNN business news last night. The Gobs-on-sticks anchors and reporters were enthusing wildly about how well the markets have done Q1. One young trader and ‘financial guru’ insisted, “you have to be in stocks”! It was like watching some deranged form of alien reality.

    John, as ever you are pivotal in the blogosphere, offering the kind of reality we all need.

    Thanks.

  2. Pingback: John Ward – EZONE CRISIS – Bundesbank Slaps Restraining Order On Merkel, Fires Torpedo At EU Peripherals – 31 March 2012 | Lucas 2012 Infos

  3. How many Spanish bonds does the Bundesbank have on its books, and what happened to all the Spanish Bonds hoovered up by the ECB some months ago? That is the question.

    M.

  4. Excellent piece John.
    If it’s true about how Germany is now split with “Merkel Germany consists of Angela Merkel and the woefully uninformed German electorate“, my advice to Jens Weidmann at Buba would be to find discreet ways of getting his view of the mess that Merkel is creating out into the public domain for the German people to understand, whilst being very careful to remain a-political. He needs to undermine her appalling game of dancing on pinheads and deceiving the German electorate. If he can do that, she’s dead in the water and EZ resolution progress can begin.

  5. I am always heartened how the markets remain wedded to reality and immune to political manoeuvring and lies. My only query is why that sense of reality has not discounted a eurozone collapse? It’s been on the cards from day one. I suppose some speculators unwisely believe, like the banks in 2007, Governments are too big to fail. Now my ancient history book shows that would be a first!

    • @Old Rightie

      the markets make a living by making money. If they make more money by not discounting a eurozone collapse, they won’t. When it profits them to do so, they will. Usually these tell-tales are too late to rescue a situation. Markets in this respect are always a lagging indicator. That is very dangerous when that may (or may not) involve profiting on the failure of the economic situation they rely on to profit from. The markets in this respect are blind to everything save profit.

      If you are going to work with the markets, the one thing you must not do is respond to them. They will only want more. More of the same. What you need to do is pre-empt them. Pre-empt their blindness. You must make a situation where they can profit more from a situation that benefits you, not beggars you.

      • From what I have read, from reliable sources, the markets are rigged & the banks are keeping it that way with QE.

        ” Never give a sucker an even break “

      • @Stevie

        you are probably right. Klaus Kastner speaks as an aside of how the Goldman boys get up to their tricks. He also gives an idea of how the banks are themselves used!

        As to QE – that is where the Germans start getting tetchy. The populace don’t like the idea. Nor do I. If a Brit knew what was being done in their name, nor would they.

  6. On “Anglo-American business MSM“…I’ve said several times that our political elites (especially Red Ed’s Labour loons) and our Left of centre, PC-obsessed MSM are all on the same page. What they’re trying to do is promote policies which reinflate the credit bubble to get the economy moving and increase tax revenues. A return to the ‘old days’ is what they want, hence their obsession with consumer spending, the housing market and Osborne’s policies aimed at easing credit and cutting mortgage costs via ZIRP. Of course, the only people with any money left to fund this madness are savers and pensioners. All this because the task of cutting State spending and downsizing excessive government machine is a mountain too high for the Tory coalition to climb and totally unthinkable for Labour, who are reinforcing their stance by covertly supporting rising trade union militancy. We are witnessing another round of Britain’s eternal struggle between sanity and the Hard Left, which has become increasingly fascist since 1997.

    • As we have said before BT, more of the same please, added to this ethos is also I believe, an utter inability to grasp the situation as it really is, let alone the solution, hence a return to a known formula.
      God forbid they get anywhere near power ever again.

      • The puzzle is that before the last election, Cameron & Osborne said many times in speeches about the need to reinvigorate Britain’s economy with more manufacturing and more exports. All good stuff. But although they’ve done some things to kick-start this, the bulk of their policies are more of the same, as you rightly say. And I recall Osborne specifically criticising Brown’s zirp & QE policies but what do we see now? More of the same aimed at reinflating a credit economy funded by savers and pensioners. The whole of government and treasury boffins need a crash course in proper Austrian economics! Or perhaps they need some guidance from Buba who long followed that model which took the DM to a world class currency and strong econmy, before they were forced to hand over to the ECB clowns in the EZ.

    • the hard left???

      ”Our greatest achievement? Tony Blair and New Labour, because we forced our opponents to change their minds” Margaret Thatcher.

      Left of centre MSM???

      Sky, ITN, Telegraph, Times, FT, Daily Mail, Daily Express, Sun

      vs what? The Guardian and the Mirror? And they’re hardly ‘hard left’ – the Guardian supported the Orange book Lib Dems.

      Please, PLEASE don’t tell me the BBC or C4 is ‘left of centre’ – I don’t remember them explaining the 2008 crisis as an insolvency rather than ‘liquidity’ crisis.

      Get some perspective man.

    • Gemz
      I like Klaus Kastner. He’s Austrian, calm, fair, and generally a good egg. Also he speaks English better than I do, which is infuriating.

  7. Phew! What a scorcher of a piece, John!

    As to the woefully uninformed German electorate (uninterested?) is it not worth me and Viking Jack organizing translations of this for Germany and Holland? We could co-operate on the German stuff, I still have a better grasp of the grammar, and he is up to date there or could pass his article to a friend who could iron out the errors.

    I am glad that Jens Weidman is still active. I was disappointed that he left the ECB, to my mind he would have done better inside than out. Principles are principles and a person who has his connections does not waste them. You have restored hope! Thankyou.

      • There is plenty of information on the web – even in German – but many people do not make use of it. They take their daily dose of hopium and lies from MSM!!!! They are not enough educated, they are indoctrinated, they do not understand anything, neither politics nor economics. It’s hopeless!!! The masses only want WELLFARE and Socialism. The German blogosphere is choke-full of socialist sites, damn it! They still think there is “democracy” and liberty for everyone.
        I’ve tried to convince people to read on the web, I gave them links, they simply do not use them because they prefer to live in denial!!!
        It’s schizophrenic, I had to cut my contacts to the outside world or at least reduce it to a minimum in order to remain sain.

      • @alien

        Greetings,there are many who share your frustration. That such apparently vast numbers of our populations seem to be looking the other way is a clear indicator of the magnitude of the disconnect which we are witnessing; I hesitate to write them off though, however tempting it is (I don’t think you are doing this either).

        I think that there are two important factors: i) for so many of us the struggle for survival on a day to day basis no longer applies which allows us to pursue other self-interests, and ii) the supreme irony of the revolution in information technology is that we have information overload which leads to confusion and disengagement. Add to these, greed and stupidity on the part of those who we have always, foolishly perhaps, trusted to know better and you have a near lethal cocktail which acts like a giant anaesthetic. Let’s hope we find the antidote soon!

      • @Kergoff

        well said that man! My thinking was to translate JWs stuff (or at least the stuff that is relevant) and post a link to it from here – or JW could do it himself via the sidebar if he felt it worthwhile.

        Perhaps one of the German readers could do the same?

        I can sort out the promotion etc.

        Neither Dutch nor German is my first language (those are English and a now very rusty Danish; my father would never speak Afrikaans with us).

        @Alien

        there is no reason to be disheartened. If you believe in something, do it. If you can’t believe, then follow someone who does. In this case it is JW.

        My point in all this is that the average German is better educated than the average Brit. By quite a long way. Remember that Bildzeitung – the German equivalent of the Sun – has articles of a complexity and length that matches the Telegraph. Take a look at Die Zeit and you will find articles running to six pages – and those are the articles shortened for the internet.

        Those people who prefer denial are lost, I am afraid. However even those can see a glimmering of the truth given enough time and patience. They may never agree with you, but that is not the point. IF they are aware, they will be democratically active and that is the most important element here.

        As to Britain, where people think their democratic rights extend just as far as the edge of the ballot box, things are a lot less easy to deal with.

      • @alien: Thanks muchly for that info. Many folks here will understand and agree with your comments because we have exactly the same problem in Britain. And I’ve no doubt it exists in other EU memebr states too. It’s only on blogs like The Slog that we get some daily helpings of truth and reality from the author – JW – and informed commenters. I often think that these alternative Internet news channels are maybe five years ahead of society in general, so they will catch up in time.

      • @BT

        how do you think I should set up a blog reflecting JWs work in Germany? Any suggestions?

        Remember that the MSM in Germany is controlled by the US as well as the Bundestag (according to documents found by VJ). The US are no friends to free speech it would seem.

      • @Gemz: Dunno, I’ve never run a blog. It’s only for masochists!!!
        But I believe there are several free blog sites like WordPress, which itself has a free version (which The Slog uses) and a pay version with more features (eg comment editing). Also, there’s at least one downloadable s/w blog s/w suite for running on a local server but that’s a challenge due to hardware + s/w requirements and planned up time. (eg: my own fileserver: http–flyto.zapto…normally only runs during office hours, not 24×7 whereas most bloggers want to be running 24×7).

        If I were serious about starting one myself, I’d probably look at other blog sites (either blogs proper or personal website blogs) to collect some ideas. I’d probably go for a website blog due to the inherent limitations of WordPress. But it costs more. This website blog I like the style of and also the content: http://papermoneycollapse.com/tsf/ I’d also contact some existing good blog authors and seek info from them, with a promise they’d be added to my roll list ;-)

        But there’s no easy way of preventing anybody (govt or corp) from blocking direct access to any blog or website if they want to. They can easily use a DNS provider like OpenDNS (as I do) which provides an easy tool to block any site/IP Address you want. That way, end users can’t get round it unless they use a proxy or TOR etc. But that route is unlikely to get a mass audience.

    • Gemz (and VJ)
      If you would do that, I’d be eternally grateful.
      One or both of you need to explain something to me – preferably by email to jawslog@gmail.com.
      I spent much of today trying to ‘market’ this piece on German sites. Is it me, or has the Fuhrerine put some sort of firewall around Deutsche political websites? All I could get – whatever I Googled – was site stats and then redirection bollocks.
      It’s as likely to be Berlin blocking just the hat4uk callsign of course: this has now happened in a number of US Government departments – and for some unknown reason, Albuquerque!
      Either way yes, I’d love to have a closer relationship with Germany online. I used to thread at Weissnix, but that too now seems to have been taken over by the Thought Police….and Gays ?!?
      If you guys (or other Sloggers) can help in this area, it would be brilliant. I have no desire to be anti-Europe: I am anti Brussels control-freak, but otherwise very pro the idea of Europe sharing the best (rather than the worst) of what we are. I just don’t want to spend the rest of my life persuading Geli that Greeks will never be Germans.

      • John, it’s very easy for corps/govts/anybody to block access to specific sites – websites or blogs etc – simply done by blocking DNS resolution, adding them into a browser hosts file or router config etc. If your Google searches aren’t delivering results, that wouldn’t be you methinks but a problem with search queries, Google or the German govt having the German blogs filtered out from search results. The Chinese govt are quite good at doing that!

      • “– and for some unknown reason, Albuquerque!”

        Maybe they don’t want the guys storing and maintaining ~3000 nuclear warheads to get too much of a dose of the truth? Can’t think of anything else of particular importance in Albuquerque.

    • @Chihuahua

      as long as they possibly can avoid it. When this does hit the MSM it will be too late to save the situation. They, like the markets, profit not from doing what is right, but what is profitable. Such short-sightedness can lead to the destruction of the very thing you need to live.

      • Indeed so, Gemz, you can always rely on politicians, MSM, Banks and big business to always do whatever is expedient, never what is right or necessary unless they happen to coincide. It is also the great fault of modern democracy, only benign dictatorship is ever prepared to do what is right foremost. Although such dictatorship does tend to lose the benign over time and they certainly aren’t always right.

      • @Peter

        if a business is doing what you say, they will fail. They are not making the most of their opportunities. As to benign dictatorships, in Britian that is what you have effectively – for periods of five or ten years at a time. Nobody complains, and if they do are seen as troublemakers.

        Just an opinion. Spoken in a free world.

      • I am afraid you are wrong there, Gemz, our British dictatorship, or as I call it, Elective Oligarchy is no more benign than it is democratic, not for the ordinary citizen. Nor is it any different in any European country outside Switzerland. I can’t agree with your comment re businesses failing if they are ruled by expediency, in business expediency is more important than anything else. And while that is good for the business and the shareholders and quite often for its customers it is not necessarily good for a country.

      • @Gemz & Peter C: I agree with both of you :-) @Gemz is right in that Britain has long been a benign dictatorship and @Peter is right in that it has become far less benign in recent years and now closely resembles an elected oligarchy. The precise labels are probably not too important because we all see the same things happening.

      • @Peter C

        so: you live in a benign dictatorship. What are you going to do about it?

        If you do nothing, they get to have all the fun. That is how they think: because nobody speaks out, they think that they are doing the right thing. After all, nobody is telling them otherwise.

        As to this being the state of affairs across Europe, how many languages do you speak? You can only appreciate the depth of a society through a thorough understanding of their language and the thinking patterns that it expresses. Many British make the mistake of thinking that their culture is homogenous with Europe. They are very wrong in this.

        As to businesses: many businesses in the UK have failed because they chased ever-diminishing returns having chased the bottom line. They should focus on more creative measures – only that many business leaders lack the creativity to deal with this. Their creativity is limited to what they can see written on a page.

        Indeed, had many British business leaders heeded my words about culture above, they would have been able to make effective export campaigns in Europe. Britain makes (made) some very fine stuff that Europeans would have bought – had they been told about it. This lack of communication seems more apparent in Britain than other parts of Europe.

      • Agreed, BT, but it is important to remember that democracy died out in Britain over 2 thousand years ago, the petty kingdoms of the pre-Roman era were far more democratic than any British Parliament has been. They were in large part meritocracies and even the humblest of voices got heard. Even the Anglo-Saxon times that followed were more democratic. After William came the parliamentary era, existing first to promote the vested interests of the nobility against the monarch, then extending over time to promote the vested interests of the guilds, the merchant and moneyed classes and finally the professional classes. Whilst the interests of the nobility were largely squeezed out it Parliament has always been the tool of the moneyed and professional classes. The universal franchise is less than a hundred years old, don’t forget, and contrary to the received wisdom it has neither given power to, nor made the interests of the man in the street paramount. It is a sham democracy, always was. British democracy is simply a safety valve allowing governments to be replaced without violence, the British demos has no voice in shaping policy or direction.

      • @Peter C: Agreed. I’ve been saying the same myself for years. This is why I have long advocated that Britain needs a proper strong written constitution clearly positioning the people as supreme power, with a variety of safeguards in place to prevent abuse by the political elites. Importantly, it also explains why not one single member of the political elites (let alone those in Westminster of any Party) ever mentions this growing need. Turkeys don’t vote for Christmas etc.
        That said, I do occasionally have fears of what sort of Britain we might have if the political elites were subservient to popular will under a proper constitution. Nevertheless, I do believe it is the only way forward if we are not to become a fascist dictatorship.

  8. Perhaps, just perhaps, the tectonic plates are shifting at last! Let’s hope so. Club Meds get with it and learn the lessons of Iceland.

    • @Brookie

      yse, it does but the translations are very rough and much of the sense is lost. If the reader doesn’t know the context, they could find the result loses the thrust of the argument.

      The Gemz

      • Google Spanish is hilarious. Sometimes it gets exactly the opposite meaning. Quite often, in fact. Other times it comes across a word that it doesn’t know (usually a colloquialism) and just pops it in without change. Very helpful! But give it another few years and I guess quality will gradually improve. I hope so.

  9. Where else would we get this kind of information? Brilliant! Thanks be to John, the Bankfurt Maulwurf and John’s other sources.

  10. Straight in the back of the net John, a few more gusts (of hot air) and the windbreak will be disappearing over the horizon.

    I’ve just realised that fiat, as in money, is an acronym.. fixing it’s always trouble. Definitely nothing to do with a stylish but fragile motor made in Turin anyway…

  11. None of this really matters when people find out how bad off China REALLY is (they’re economy is more of a fantasy than Greece’s ever was).

    • John have you ever been in China ? i lived in China and Greece as well and i know this basic difference between the two : the chinese work like dogs .China may have it’s problems , but it is the largest creditor and have saved enough for a rainy day with huge foreign currency reserves .
      Investors are queuing to get in China and many people have yet to realize that China will be the financial center for the world in the 21st century .
      p.s. Let me mention one more difference between the two countries : in China corrupt politicians are send to the gallows , in Greece they reign
      and rule .

      • In China the loser corrupt politicians are sent to the gallows. The winner corrupts continue to reign.

  12. By golly I hope that you are right about the Weidaman group having the ascendancy JW because Merkel has descended to rank populism and dithering wheras Schauble just appears shell-shocked.
    The spin on the new EFSF ‘Bazooka’ by the EU would have it in front of any ‘False Advertising Tribunal’ in the Western world and the interview I heard today on the radio by a representative from BBVA about how everything was okay and the problems had been fixed in Spain,had me reaching for my sanity tester.
    It does look like the wheels are coming off in the EU, but the fear I have is that the wheels are going to come-off in Japan, China, the UK and the US simultaneously after one last hurrah by the Central Banks. This looks like a December date as all the major elections will be over bar the shouting.
    The Maulwurf looks like he will be right about the timing of the Euro break-up, but I fear that the explosion will be a lot bigger than just the Eurozone.

    • This is why I moved back to my farm house… lots of regular rainfall, my farming land, and a bio-diesel mini tractor run by olive oil. Voila. It is inevitable that this house of cards that the worlds economy has become will tumble… badly.

      • Sounds divine until the euro tax collectors have calculated monies owing for the failed experiment and post their demands on the population punishable by confiscation.

      • I am in Greece so the Euro won’t be a problem for us (having ducked out early to avoid the implosion). If the Bond folks want to come and try to take lands that the government has used for collateral then they are welcome but… it will only be worth something to them if Greece as a country has land with decent value so the markets will have no choice but to invest in Greece so they’re collateral will be worth something besides a devalued Drachma (ahahahahaha). Of course, my PERSONAL property will be fine… in Euro’s or otherwise.

    • After running on run-flat tyres for the last few years, it’s inevitable that the wheels must come off eventually!

  13. Germany through the Bundesbank had the tightest bank regulation before the 2008 crash, but unfortunately their banks decided in order to join the party they would have to take their cheap dodgy sliced up sub-prime loans elsewhere, like Greece & the financial whorehouse that was Dublin. Thank Goodness for some realism from the Bundesbank & of course John.

    As David McWilliams said:
    ” How do you solve a debt crisis, with more debt ? “

    • As David McWilliams said:
      ” How do you solve a debt crisis, with more debt ? “
      Isn’t that just what they have been doing to solve the crisis?
      “Today I have borrowed enough money to pay off all my debts ”
      A. N. Other. (put who’s ever name you like)

      • @kfc: ” “Today I have borrowed enough money to pay off all my debts ” ”

        Lol. That’s a keeper :-)

    • @Stevie

      do remember that the German banks were told that these investments were AAA. In book-keeping terms they were a buy. After all, the regulations concern the bank’s books.

      The problem is that off the books, many banks – especially in the UK – are up to goodness knows what! To be frank with you, the Germans are too straight to get up to much in the way of off-book action. The Dutch simply couldn’t conceive of it. The Brits know no such bounds. Whilst socially insular, their imagination is anything but.

      • Ah come on Gemz, it’s not rocket science, although they would want you to believe that. Fred the shred knew damned well what his securites were made up of & I’m sure Ackerman & others did so too. Deutsche bank has been bailed out by the US Fed due to their take up of sub-prime in the US. The banks pay the rating agencies, to say they didn’t know what they were selling is daft. Their is plenty of evidence out their to prove that they were selling junk to customers & then betting against it failing.

        I don’t think bankers wherever they hail from are really any different from any others. They all jumped on the bandwagon trying to keep one step ahead of the opposition. Lot’s of people are now spouting off about Greece should not have been allowed to join the EZ, if bankers had any credibility they would not have lent them any money, particularly when they knew damned well that these loans were sliced up in sections with the dodgy bits infecting the good bits, but of course there answer to that was CDO’s, another great idea. All of the banks were involved in these trades, they put them together & then paid the ratings agencies to AAA them.

        Hubris & greed are not any one nations monopoly.

      • @Stevie

        my point was more that to a banker whose imagination stretches as far as the numbers presented to him on a piece of paper, seeing beyond that is something that he is not inclined to do.

        Do not forget that you are an artist, you can see many things that others cannot. You would find it hard to imagine how someone who cannot see what you do, actually *does* see. The ratings agencies had the wool pulled over their eyes by governments and banks whose vision was more like yours. That they believed them was because they believed the pieces of paper they were given.

        If you want to construe that they were happy to do so because they were paid to is neither here nor there: believe them they did.

        You say: “I don’t think bankers wherever they hail from are really any different from any others. ” – – – bankers are still the product of their culture. A German banker will deal with his bank in a different way than a British one. Yes, the bottom line is still important, but the manner in which it is arrived at will differ in each culture. If you do not speak German, you cannot know how a German will approach their banks. You cannot assume that they will do so in the same way as a British person or an Irish one: that is too simplistic. Sorry.

        Hubris and greed, yes you are right – but they have a significant divergence in cultural terms. The Germans do it one way, the Irish another.

      • Gemz

        I can see no difference in how these people from many nations have operated their ponzi scheme. The Germans set up a bank in Dublin, run by Germans called Depfa. They did this to take advantage of Ireland’s very lax regulation. They were taken over by the German mortgage giant Hypo Real Estate witch is a subsidiary of an even bigger German giant.

        They dealt in dodgy sub-prime securities, when one scam fell apart it led to the onset of the problems in Wisconsin USA. The German government were eventually forced to give them a 100% bailout, in effect nationalising them to the tune of 52 billion.

        I accept there are cultural differences, but I think greed & hubris overide them.

        http://en.wikipedia.org/wiki/Depfa_Bank

  14. Who could have thought that it takes so long to crash the system?
    I’m not afraid of the Biggest Crash, I’m only afraid they can kick the can down the road for longer. The USG semms to be prepared, Gendfor is established, it will be ppl vs. pols/bank/oligarchs!
    All sensible ppl can do is just prepare for it and by god, we had had time and still have some left!
    Au&Ag phys, some food stocks, water and some fuel – just get you some in case you haven’t.
    The day the EU is wiped out will be a great day for all Europeans irrespective of their nationality. That will be the greatest unity we will ever share, united in our diversity and reciprocal acceptance.

    • @Alien, it’s really about rather more than a simple, bog standard crash, nasty thought that will be. It’s about France and Germany realising that the role they have arrogantly chosen for themselves (undisputed and unquestionable leaders of the EU and EZ) was not exactly what the other members had in mind. And there are other members, thought from their participation, you would not think so. Pity that the others have said little or nothing, but as nearly all are direct recipients of substantial EU financial largesse, I guess that’s what you would expect. Now that the inelegant rump of the Merkozy hegemony is plain for all to see (even to supine German taxpayers if they can be bothered), something will change. I note that Mariano Rajoy faced them down the other day on his deficit target and that is a first (though the revised target is still too low to be achievable). Expect far more of that in the future, perhaps even from the UK, and a considerable dilution of Germany’s leadership role. As for France, sadly I can’t see where they are going, even if Sarkozy wins on 22/4. Massive exposure to Southern EU debts will come back to bite them in the not too distant future and their economy though better than the UK’s is not exactly healthy. We will receive some unpleasant bites, too.

    • @alien:
      The day the EU is wiped out will be a great day for all Europeans

      Amen to that :-)
      I hope the political elites and unelected Brussels crats sink with it…

  15. And I would just have the following question to Mr. Jens Weidmann:

    Mr. Weidmann where were you when the bank regulators authorized German banks to lend to Ireland, Portugal and Greece holding only 1.6 percent in capital/equity while requiring German banks to hold 8 percent when lending to German small businesses and entrepreneurs?

    As you surely must understand, that doomed the banks to the definitely obese exposures to infallible sovereigns, and to the relative anorexic exposures to German small businesses and entrepreneurs.

    In a speech on March 20 in the Frankfurt Finance Summit Mr. Weidmann held “Market participants must be held responsible for their actions”

    Mr. Weidman though in my mind with your silence on these stupid regulations you might be as any Greek finance minister could be of the current disaster, as an absolute minimum it you are hiding those guilty colleagues of yours.

    And now with Basel III you seem only to be digging us deeper in the hole we are because not only will the capital requirements for banks remain to be based on perceived risks but also now your liquidity requirements.

    Who did the Eurozone in? http://bit.ly/t3mQe0

    • PK
      I agree on the fact that regulation has a big part to play in this & German & others took full advantage of this. Ahern & MacCreevy in Ireland were mainly responsible for lax regulation in Ireland. A German bank, Depfa set up in Ireland with help of changed legislation from the above. They were one of the first banks to be bailed out after Lehmann’s collapse.

      Incidently Charlie MacCreevy was instrumental in the railroading through of the RBS takeover of ABN Amro in his later role as European commissioner on financial regulation, he was later forced to resign his position on NBNK investments because of conflict of interest.

      Personally I think the bankers are all of the same ilk, it’s just the regulatory systems vary within different jurisdictions, these animals flock to the most accessible waterholes.

      http://en.wikipedia.org/wiki/Depfa_Bank

      • PK
        This fella by the name of Jonathon Sugarman worked as a Risk manager of Unicredit dublin. Horrified by what he saw & the fact he was told to ignore it, he eventually resigned, Irish regulators & government have since totally ignored his whistleblowing & at one point he was threatened with prosecution himself. The only publicity he has gained was from an Australian TV network.

        http://whistleblowerirl.blogspot.co.uk/

    • @PK: I’ve whizzed around your various blogs, read your articles about the cause of the financial crises and watched your video. All good stuff.
      I cannot say for sure why your explanation of the cause is not listened to by the current powers that be, but here’s one or two pointers:
      – Your analysis firmly places the blame primarily on the Basel club for cocking up the regulations regarding risky and non-risky bank lending. Nobody but nobody gets rewarded for blaming any crises on those who were responsible and paid to prevent it. Meaning the EU political elites, the Brussel crats and those shady appointees in Basel. That rule usually applies however sound the analysis is.
      – Your current input on this subject is aimed at those who already have a solid understanding of how the banking & risk system works. Many do not.
      You may benefit from producing simplistic explanations which show where Basel fits into the bigger picture of bank regulation (where in the pecking order) and how much notice national politicians & banks are required to take of their edicts and regulations etc. That might help ordinary people to understand it better and apportion blame more accurately and get your views more widely adopted.

  16. Pingback: EZONE CRISIS: Bundesbank slaps restraining order on Merkel, fires torpedo at EU peripherals. [The Slog] « Mktgeist blog

  17. Well, well, rats in a sack, ruffled feathers, stealing thunder and all of that sort of thing:

    “Juncker angered by Austrian Finance Minister

    Out of anger over the Austrian finance minister, Jean-Claude Juncker cancelled a press conference at the Euro Group meeting. She had previously divulged the amount by which the ESM was to be increased. Apparently, he even yelled at her.

    On Friday, the decision was to be announced about a possible increase in the ESM. But shortly before the start of the press conference, which was to have been given by the euro group chief Jean-Claude Juncker, it was cancelled without explanation. The reason for this was the Austrian Finance Minister, Maria Fekter, who on the sidelines of the meeting had already mentioned that the ESM was be increased to 800 billion euros (here) and had announced to journalists that Jean-Claude Juncker will give an official statement on this.

    Jean-Claude Juncker had, after he learned of Fekter’s statement, prematurely terminated the meeting between the Euro group, the ECB and the EU-Commission. “There was no reason to hold a press conference, because the Austrian finance minister had already announced the deal whilst the meeting was still running,” said Jean-Claude Juncker to journalists, as he waited for the elevator to go to his hotel room.

    A source of the Guardian, which was in Copenhagen, said Juncker had shouted at Maria Fekter. Subsequently, she was forced to apologise to Jean-Claude Juncker. Merely a statement of the euro finance ministers about the increased firewall has been made public.”

    Actually, why was the meeting in Copenhagen? The Danes are still using Danish Kroner, aren’t they? Or did they want to toast the mermaid with a glass of Carlsberg or Tuborg?

    Anyway, the DMN’ers had some fun with it:

    “This Juncker, the arrogant, aloof, presumptious snotty-nose steals all of our money and then wants to make out it is his.
    It’s our money that we should not be giving up for rotten countries, it could kill us, remember this, Juncker, and not yours.
    Step down if you can’t do anything more than want to talk.”

    “As if she had betrayed a state secret … The nerves are on edge!”

    “How, and above all who, can force the Mitzi to apologize to this vain popinjay Juncker? I’ve enjoyed it, that and how easily the loud-mouthed representative of this dwarf state, which lives only from financial robber barony, had the show stolen from him. I hope that others follow the example of Fetker. It’s sad enough that it needed a woman.”

    “As a punishment, Austria should be thrown out of the euro zone! A country that behaves so disrespectfully to the Lord Chief should simply be deprived of the right to pay into the rescue fund.”

    “Delusions of grandeur!
    Junker already considers himself to be the God King.”

    “Someone will have said to Frau Fekter: Either apologise or for the next five meetings there will be no pudding for dessert.
    Best to apologise then.”

    • VJ
      What a total *anker Junckermann is: Europe is about to lose its currency, and all he’s worried about is losing face.
      It sums up the nature of these bloated toads.

      • “It sums up the nature of these bloated toads.”
        It absolutely does, doesn’t it? Their arrogance is astounding. Death would be too good for them, they need to be made to live as poor folk.

      • Juncker should never have been allowed to work within the EZ management. His expertise from Luxembourg is at the level of a medium-sized UK city (of which there are many). It shows in his every move. Would you let a councillor from one of those run anything more important?

  18. I left a comment on The Times online painting a not quite rosy picture of the current situation and was told to ‘get a grip’ and ‘lay off the news’. I linked to this piece to encourage the dreamers to wake up.

  19. It’s a shame, John, that with all the effort and passion you put into this, and with all the good sources you have acquired, you still fail to drive home your point. I read the headline, got the impression something major had happened, read the piece, and emerged on the other side still not knowing just what has happened, or even less what the significance of it is. All I really came away with were punchy quotes about a civil war in Germany and the eurozone being a dead duck. We knew before that the Bundesbank and the German government weren’t exactly seeing eye to eye on these things, and there have certainly not been any shortage of market dealers claiming the eurozone has shuffled off its mortal coil. What has changed? What does it mean that the Bundesbank won’t accept PIG bonds?

    As regards the failed Washington plan for a March 23d amputation, when you say that Washington underestimated the power of Jens Weidmann, are you then saying that it was Weidmann and the Bundesbank that stopped the amputation? Why would they want to keep Greece in the EZ?

    • Bjorn Again
      All depends on whether you’re looking for your point in my point. All of us suffer from this disease.
      No, of course I’m not saying Weidmann and Buba STOPPED the amputation: I’m saying that incompetently deranged MoU’s in the White House, US Fed and Wall Street thought they had Germany ‘on board’ – because being American corporates, they are too insular and hubris-fuelled to drill down into detailed German politics.
      I met hundreds of these pillocks in global advertising. Very fond of either YSL or Brooks Brothers tailoring, gold Company cards, and business class. Absolutely clueless about what real people think.

      • Thanks for the good-natured reply! It’s always darned difficult to give constructive criticism and not have it sound like derision, which it certainly wasn’t meant as. Maybe I was looking for my point, but I rather think I was looking for a point, and not finding one. Lots of interesting snippets, but no consistent narrative – no “red thread”, as we say in Sweden.

      • @Bö

        to be honest with you, this is more a stream of thought than an individual post.

        @JW

        “Absolutely clueless about what real people think.” – – – that is to my advantage.

      • “Absolutely clueless about what real people think.”
        I think the very nub of most of our issues today, it applies to all with an influence in shaping the way things are today.

  20. I think that nearly all commentators (and me too) assumed that the ECB would not print. In fact it has though in very complicated ways. Zerohedge today had a piece about the EFSF being bust. But it can borrow printed money from the ECB for say Italian and Spanish Soveriegn collateral – also Greek I believe after recent upgrades. So it won’t run out of money. Neither will the ESM. And Italian and Spanish banks are using LTRO money to buy government debt – which is good collateral for maybe more borrowing / printing.
    This is clearly not lost on Buba and the “maulwurf” or indeed some sections of the German press. However as of yet the sky has not yet fallen in and Merkel et al are talking tough but acting differently.
    I think I have changed my view. As long as the ECB prints and keeps doing so the EZ will rumble on. The key question raised here and elsewhere is whether Germany has the DNA to co-exist in a fiskal union with these monetary degenerates. It clearly has the wherewithall to leave the EZ. So perhaps with the ECB on-going wet (ink) dream the analysis has moved from ecoomics to politics. And I would not underestimate Merkal on this one.

    • marc
      Everyone (including me) has problems with WordPress.
      You can’t ‘rumble on’ by just printing. In the end, the numbers don’t tumble, and the vortex of global slump beckons.
      I have a Slogpost lined up for tomorrow about this. Assuming these tiresome things called ‘events’ don’t intervene…

  21. Pingback: Eurozone Crisis: Bundesbank Slaps Restraining Order on Merkel, Fires Torpedo at EU Peripherals

  22. Pingback: Does a restraining get utilize accross state lines?

      • @andy. I agree, it’s because it’s not an economic currency but a political one. It’s destiny has become intertwined with the desired legacies of various EU/Brussels gas-bags and that just leaves a bad taste in my mouth.

        If something like this that is so important doesn’t work, it’s death must be encouraged so that a more logical and sustainable path can be followed. Individual currencies beckon once again, I’ll be glad to see it in spite of the fact that it will make life in the short term more difficult for me.

      • See below. Basically because it is a stupid idea. On a simplistic level it appeals the idea of not having to change money when you travel from Malaga to Munich. But of course that ignores the reality of what a currency is and what a currency is for. And that is at the heart of it. Our political leaders (not in the UK thanks to Sir John Major and the Eurosceptics) ignored reality for this grand dream which is an illusion. The reality is happening in Greece. Go and look. It is rather ugly.

    • We agree entirely.
      The euro is a fantasy project in a land where different languages are spoken under different governments all with their national interests put before the great design of utopialand.
      The reality is that the unelected administrators have deceived and stolen from the populations, and when invited to discuss reason , invent more and more spiralling lies ending in poverty for the european members who have already drowned in debt and have no prospects for growth. Yet, they are told that tomorrow will be better, when in fact they will see tax increases to further increase their misery to pay off this gigantic fools paradise.

  23. This is such an informative site, the information, arguments presented by John and all other contributors (whether in agreement or not) are fresh and worthy of spending time each day to read. It is so pleasant to look in on a comment section that doesn’t get hijacked by mindless , ignorant and rude posters whose sole intent is to ridicule those they disagree with rather than take the time to frame an appropriate response.

    Although a Brit, my home is in Germany and it pains me to see such a beautiful country, regardless of the percieved “Head of the Leaderboard” place in the Eurozone, sliding into a void of social and economic despair.

    A big thank you to those who have taken the time to clarify how various financial and political institutions interact and influence each other, and breaking down the often complicated terminology in to simpler layman’s terms. In the short time I have been following The Slog, I have learnt many things which I merely read in various MSM articles but was unable to comprehend in any meaningful manner.

    I do not know any of you as individuals, but I do know that I would find many of you to be people with whom I could easily be very good friends with, should we ever have the opportunity to meet.

    Best wishes to you all,

    madflags

  24. [slightly OT, to do with the super-douper Firewall!]

    From Zerohedge: http://www.zerohedge.com/news/europe-%E2%82%AC1-trillion-may-not-be-enough (ZH emphasis)

    The Firewall Lie
    Whether some proposed firewall is $760 billion or $1.3 Trillion or $13 Trillion makes no difference as in zero, nada, nothing and null. It is an IOU, a promise to pay and it is not counted in any European sovereign debt numbers nor is it counted in the figures for the European Union’s debt. It will not stop Spain or Portugal or Italy from asking for or needing money. It will not stop contagion nor will it protect any nation from the calamities of another nation. If approved by the Finance Ministers it is not approved by the European Parliaments and even if approved; it accomplishes nothing besides one more unaccounted for contingent liability that is nowhere to be found on anyone’s books. This whole discussion is a head fake, a deception and a ruse carefully plotted out for investors in one more attempt to mislead the entire world…

  25. John your story on stealing greek hospitals & universities bank accounts was confirmed by the greek minister of education himself the day before yesterday. You see, he’s not a political person (Mr Babiniotis) and he spoke the truth concerning universities funds which were evaporated by psi.

    • We’re working on a project in the lab during coffee breaks.
      It’s a board game based on the eurozone, something between John Waddington’s MONOPOLY and CLUEDO. We needed a name….
      FOOLS PARADISE takes it. Well done my friend.
      Regards to all and have a special day.

  26. Pingback: EUROZONE DEBT: Brace yourselves for Monday trading in peripheral bonds | The Slog

  27. Pingback: John Ward – Eurozone Debt : Brace Yourselves For Monday Trading In Peripheral Bonds – 2 April 2012 | Lucas 2012 Infos

  28. Pingback: BREAKING….Two main Greek Parties already breaking bailout agreement to gain votes | The Slog

  29. Pingback: John Ward – Breaking News – Two Main Greek Parties Already Breaking Bailout Agreement To Gain Votes – 2 April 2012 | Lucas 2012 Infos

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