VENIZELOS: ‘Schauble conspired to try and scupper Greek bailout, force Grexit’.

Three days ago, Greek friends of every hue bombarded me with news of the attempt by Evangelos Venizelos (left) to present himself as Greece’s Davy Crocket. The Fat One did this by accusing Wolfgang Schäuble of trying to push Greece towards Grexit in August 2011 with some kind of sweetener. Most of one’s instincts would immediately think ‘Liar, liar, pants on fire’….but in just this one case, I’m not so sure. There are some quite solid grounds for thinking that – however base his motives – on this occasion Veryzealous might be at least in part telling the truth.

Longer-standing Sloggers may recall my German source, the Bankfurt Maulwurf. During the Autumn of 2011 (the period EV is referring to) he told me on several occasions that German Finance Minister Schäuble was heavily under the influence of Bankfurters like him, and plotting behind Angela Merkel’s ample back with a view to ensuring that Greek contagion could be contained by evicting it from the eurozone. Similarly geriatric followers of this site will also recall that Tim Geithner – and a White House briefed Wall Street VIP group – were equally keen for Greece to become uneurozone….albeit for more US reelection and geopolitically cynical reasons.

In the event, Grexit didn’t happen. But the evidence suggests that – for several months after that particular incident – Wolfgang Schäuble continued to try and sabotage every attempt to help Greece stay inside the tent. Website Justice for Greece confirms this likelihood by publishing a letter from Geoffrey Atkinson to The Guardian, in which Atkinson alleges that ‘In early 2102 Wolfgang Schäuble repeatedly threw last minute spokes in the wheel just as a solution to the Greek finances drew close’. This is in turn confirmed by a Slog source based in Switzerland (but very close to the Troika negotiations during 2012) who told me twice that – whenever the restructure deal seemed almost done – Berlin would suddenly ride in to unpick it.

Once again in this case, however, I am sadly reminded of just how out of touch the British media and People are with the real story on Greco-German/EU relations. The Evangelos accusations have gone entirely unreported in the UK as far as I can discern. The only mention of Greece anywhere in the British MSM this morning is our joy at the fact that it’ll be warmer than Greece there. The ‘top’ news is that the Queen has left hospital, Azad Singh is, at three feet tall, the smallest teacher in the country, and Kate Middleton is visiting Grimsby.

Somebody needs to write the truth on a larger canvas about this little experiment in social chaos. You never know, it might be me.

THE UK & EUROPE: Does Cameron really understand the politics?

Who is Cristine Lagarde really working for?

Over many months during 2011-12, The Slog painstakingly put together a massive body of evidence pointing clearly to the fact that the US weren’t comfortable with Dominique Strauss-Kahn either as head of the IMF, or potential President of France. Equally, I spent many hours talking to those involved, and tracing career progressions, in a bid to establish that Christine Lagarde was being groomed as the head of the IMF to replace DSK once he’d been framed….and that she herself was probably fully aware of this.

She was the perfect choice for the US Fed and State because she looked and sounded French, but was emotionally wedded to America. She was and is (as Tim Geithner remarked in private) “Our gal”.

Unknown to many of those involved, while former lawyer Cristine Lagarde became the Foreign Trade Minister of the government of Dominique de Villepin, a few years previously she’d been defending the interests of US multinationals to the detriment of French companies. She was, in fact, a member of the CSIS – the think tank of the oil lobby in the United States….the Center for Strategic & International Studies (CSIS). She co-presided over the Action USA/UE/Poland commission of this think tank along with Zbigniew Brzezinski and was in charge of the USA-Poland Defense Industries working group (1995-2002)

In these various high-powered roles, she represented the US interests to the detriment of those of the EU: as a lawyer at Baker & McKenzie  Lagarde worked in favour of the interests of Boeing and Lockheed-Martin – to the detriment of Airbus and Dassault.

In 2003, Christine Lagarde became involved, as part of her CSIS position, of the Commission for the Expansion of the Euro-Atlantic Community along with her friend Brzezinski and others.

Thanks to the contacts established by Christine Lagarde, Bruce P. Jackson, founder of the US Committee to Expand NATO – who represented the interests of the aircraft manufacturing company Lockheed-Martin – signed the contract of the century: the sale, in April 2003, of 48 F-16 Lockheed-Martin jet fighters to Poland for $3.5 billion – completely blocking out EU contractors. (At the time, the European Union was heavily subsidising the Polish government’s agricultural sector).

Cristine Lagarde followed Nicolas Sarkozy into power in 2008 as Finance Minister. As such, she represented the candidate that both he and the White House wanted: Sarkozy is an outsider in French society, an Atlanticist with strong links to Jewish banking, and himself related to Jacqui Onassis-Bouvier. One of his last acts as President before last year’s abortive attempt at re-election was to have a three-hour private meeting with Lloyd Blankfein, the CEO of Goldman Sachs.

Following the demise of Strauss-Kahn in a New York encounter with maid Nafissato Diallo, Lagarde waltzed effortlessly into the IMF post, a feat managed minutely by US influence in South America – see earlier links for evidence relating to this.

Then earlier this week – as The Slog reported – Lagarde stated that, as the head of the IMF, she wouldn’t participate in the Cypriot bailout – insisting that the ESM must bail out the Cypriot Banks directly. Her insistence is, of course, based on the certainty that Berlin will never agree to it. The geopolitics of this are simple: an EU stranglehold on Cyprus is a direct threat to American hegemony in the eastern Mediterranean.

So when she makes supportive statements about the EU (when speaking at the World Economic Forum in Davos) two other guests there – David Cameron and George Osborne – should have the discernment to realise that Cristine Lagarde doesn’t have eurozone interests in her heart. Her ambition and wallet are connected to the US.

Let’s hope Cameldung and the Draper do know this. My previous experience of our chaps at the FCO, however, leaves plenty of room for doubt.

Further reading: The unaswered Strauss-Kahn/Lagarde  questions

Yesterday at The Slog: between the lines of Dave’s EU speech

+ slogposts about US/Greece/EU last one this week.

“Yes, of course, the European economy faces many challenges, many issues that have to be addressed but destiny comes through the smoke and the fog and I. for one, am optimistic about Europe’s future.”

Chrstine Lagarde, the head of the International Monetary Fund, was speaking at the World Economic Forum in Davos. She was optimistic about the future of Europe as a whole.

22.5.2011 -

THE VIX FIX: First there was gold, then there was Libor, now there is Vix. Very soon, only citizen wealth-appropriation will be left….

…but then what happens to consumption?

The Slog offers further reasons why ‘middle-squeezing’ will continue, America is in a corner, gold must rise dramatically before long, and the VIX is being cynically repressed by the US Federal Reserve.

VIX is the accepted acronym among stock market traders and other commentators for the Chicago Board Options Exchange Market Volatility Index, a popular measure of implied volatility. CHEBOOMVIX would’ve been more aptly onomatopoaeic but less memorable, so Vix it is. Basically, the VIX is a warning signal people use to suggest actual or approaching volatility, because it has norms. It is often referred to as the “investor fear gauge”. If there’s one thing sovereign States and bankers can’t abide, it’s fearful investors: cautious investors are bad for business.

Top-heavy US brain and enduring Slogger Butch Cassidy (it’s a pseudonym, like Tyler Durden or Dora the Elf) writes to point out something to me.  The New York Stock Exchange records that in recent months, margin debt has sky-rocketed to $327 billion, passing the levels seen just prior to the collapse of Lehman Brothers. It’s not so much that the frontal-driven lunatics have wrested back control of the asylum, but rather that the Black Dude in the white coat never took it off them in the first place. It was a textbook case of “No I can’t”.

The US market players are now unsustainably over-leveraged (just like Wall Street firms in general) and there’s enough speculative money in there to ensure that only a rampant bull-market forever can stave off what I’ve taken to calling Panicollapse. I believe the term translates into Greek as Panikolopoulus, which is also the brand name of a small taxi firm in Thessalonika.

But here’s a funny thing missus: the Vix futures warning line was going up at a sharp rate during April/May 2012, and then inexplicably went south when it should’ve been heading north to Emergency Klaxon Sound III. There’s a brilliant piece on this at Zero Hedge for those of you who enjoy terrifying yourselves with 1 in 1 wiggly black schüss slopes on charts. But what it all adds up to is directionalising, aka Keeping the Mugs Calm.

This is what happened. At the end of May, the US Fed Reserve’s trading desk acquired a new Supreme Leader called Simon Potter. His style seems to involve 24/7 selling of VIX to keep the market high, happy and hyped. Mr Potter (who bears the same surname as the megalomaniac Scrooge in Frank Capra’s A Wonderful Life) is a former Brit and former Economics Prof. He is also an old crony of the Fed Reserve’s boss, Timothy ‘Bazooka’ Geithner. During 2007, Tim’s diary has an inexplicably indiscreet item headed ‘Fixing Libor’, and a key attendee at that meeting was none other than…..Simon Potter.

Potter is a 14-years Fed Reserve veteran who designed the 2009 US bank stress tests – which were almost (but not quite) as pointless, selective and optimistic as the ezone’s 2011 stress tests. He also produced a solid and honest report on the Fed’s failure to see the US housing bubble wobbling about like a giant soapy dirigible above America: but as he was on the team at the time, we have to consider him at least implicated. The VIX measure of volatility is being suppressed (ie, manipulated) to disguise the natural level of instability in an over-leveraged and over-risk-exposed Bourse. It really is that simple.

There’s no place these bastards won’t go to stitch up the American Dreamer, or even British pisceans like me. But if you think all of them are making it up as they go along, you need to do more historical research. In 1975, Fed Chairman Arthur Burns, sent a “Memorandum For The President” to Gerald Ford, in which several VIPs like Kissinger and the later Fed Chairman Alan Greenspan were included. Declassified in 2004, the memo discussed gold in great detail, especially in relation to what Burns called its ‘fair value’. The trick here is to ask the question, “Fair to whom exactly, Keemosabe?”

Burns must have been a smart bloke, because he worked out that what I posted last week in relation to gold would happen one day unless “the money-gold equivalency is controlled”. Except that he knew that 37 years ago. Nixon having taken the US quietly off the Gold Standard in 1971, Burns made the following points among others:

1. Failure to disguise the equivalency of gold and money, “could easily frustrate our efforts to control world liquidity”. Valuing gold at its real market value, he opined, carried “the risk of massive liquidity creation…..of such extraordinary magnitude, it would seriously endanger” the control of inflation.

Thus, controlling global liquidity and inflation was good for US business, and this alone was a strong enough argument to artificially depress the value of gold.  Those Sloggers who don’t believe in gold market manipulation should look away now….

2. The memo openly accepted the near-universal gold price manipulation by central banks even after the gold standard had been formally abolished. It was neither deplored nor supported, but merely accepted as a necessary way to stop freely available gold becoming an investment alternative – dare I say superior alternative – to the US Dollar and the NYSE.

But here’s a specific from the Burns paper that I find rivetting:

“I have a secret understanding in writing with the Bundesbank – concurred in by Mr Schmidt [the BundesKänzler] – that Germany will not buy gold, either from the market or from another government, at a price above the official price.”

The official price being, of course, a repressive fix. It was then $42.22 an oz, but the real value was estimated to be at least $120.

So here we have the US enjoying a cosily dominant relationship with Germany (then West Germany). This was very different to its diplomatic status with the French, however, described by Burns as something of a pain in the arse: ‘…a large measure of freedom for governments to trade in gold at a market related price’ would screw things up because ‘such freedom would provide an incentive for governments to revalue their official gold holding….In fact, there are reasons for believing that the French are seeking such an outcome’.

The important point here is not really that the US had the two founding architects of the EU following entirely opposed gold diplomacy with itself: given later events, it’s hysterically funny, but not exactly unusual. The key point for me is that it shows the much higher degree of global power and control enjoyed by the American State back then compared to now. Several things have happened during those four decades since:

1. The eurozone has emerged with a more powerful and united anti-US policy.

2. China awoke with an insatiable demand for gold, and no willingness to accede to blatant American price controls….except when it favoured Beijing’s collectible hobby.

3. As globalist mercantilism and mad investment paper rocketed ahead, America’s deficit grew…and the amount of US debt owned by China went stratospheric after Wall Street lost the will to invest in anything not made of paper.

Where all of this leads is to a more profound understanding of what the American financial élite is up to in 2012. The chief factor to note, I suspect, is option close-down: the US is running out of fingers to put into pies.

It can no longer depress the price of gold at will, or informally devalue the Dollar beyond a certain point. It can no longer fob off those emerging Powers who want their gold back. More frightening still for them, both gold as a crypto-currency and the Yuan as the forerunner of a global means of exchange threaten to doom the Dollar’s status as the pre-eminent purchasing currency. It will one day run out of QE funds with which to manipulate the NYSE – and is anyway scaring folks with that degree of currency compromising.

But what it has left, for the time being, is the VIX. Smarter minds than mine cottoned on to this some time ago. But you don’t have to be smart to see that this is last-ditch stuff for the United States of America.

Be warned: stay out of the Stock market, and keep a close eye on gold….but don’t jump in too early.

Related: Is Draghi the new Goldfinger?

 

 

US ELECTION: Romney goes global in pursuit of votes.

Romney…just a few mortar bombs away from the White House

Newly nice-guyed Mitt Romney says that, if elected, he will call for an escalation of the conflict in Syria by arming rebels with the heavy weapons needed to confront president Bashar al-Assad’s tanks, helicopters and fighter jets. That will probably gain him another poll point, leaving him one behind the Black Dude. To draw level, not doubt he’ll back Japan as a faithful ally, and vow to nuke China. Then we really are going to see an exciting finish to the Election.

Meanwhile, perhaps the most blatantly staged ‘border skirmish’ since 1939 in Poland was escalated yesterday when another mortar bomb signed by Bashar Assad landed near an empty Turkish factory, devastating an entire tree in its garden. Erdogan the Mad having vowed last Friday to retaliate, we can now expect more shelling of some poor bugger’s bullet-pockmarked hovel inside Syria. But this too is all good for career politics, Hillary Clinton having her eyes firmly set on a 2016 ticket under the slogan ‘Peace in our Time’.

However, this is what a Turkish source emailed to The Slog overnight:

‘The government here has done a thorough forensic check on the mortar fragments involved in last week’s attack. The scientists have concluded that they are typical of the weapon type favoured by the Syrian rebels, not the Syrian government’.

I don’t have substantiation of that. I can only repeat what I blogged last week: the last thing Assad needs right now is to open up another war front. This entire ‘incident’ smacks of being a put-up job, made all the more amusing by William Hague doing his Eddie Waring impressions in the background. He really must be the worst foreign secretary since Anna van Rentle worked in the Foreign Office typing pool during 1943.

Either way, if Romney is still behind come later this month, I’ve taken to wondering what his campaign managers have up their sleeves. And the answer of course has to be arms. Not the ones with elbows and wrists: the other sort that include bazookas and so forth. Tim Geithner has a stock of unused bazookas; he could be helpful here.

What Mitt needs to do now is decide the exact promise he’ll make about who to arm. My money’s on the National Guard once his tax affairs are leaked. I can hardly wait.

 

GREEK CRISIS: Geithner intervention threatens to split Athens coalition

Venizelos….inspecting the American gravy train?

Commentators on the Coalition/Troika negotiations are underestimating the geopolitical dimension

Emboldened by an American promise of support – and terrified of being wiped out politically if further Troika burdens are placed upon the Greek people – the faux and moderate Left part of the Greek Coalition is in disagreement with right-wing Prime Minister Antonis Samaras this evening about how to proceed in its negotiations with the EU/ECB/IMF triad. The Troika itself (aware of an increasing US influence in Greece) is treading more softly than it was last week. Against a background of growing anger in Germany, this is now an extremely unstable situation for the debt markets to analyse…and one from which America can benefit enormously.

The decision to hand tonight (Tuesday) in Athens is which way to jump – into Merkel’s FiskalUnion, or under Geithner’s cloak of protection. And it looks like that choice is causing a split between Right and Left. The coalition leaders met on Monday evening to finalise the austerity proposals, but there was no agreement: Venizelos and Kouvelis suggested that there should be no more taxes, and a renegotiation of the repayment timelines. Samaras disagreed.

But note this from the Collyns-reassured Finance Minister Stournaras: “The point is that our choices should not annul our ability to negotiate and remain in the eurozone….either we take the necessary measures or we return to the drachma within two months”. This isn’t an ultimatum from the American-connected Finance Minister: he is saying, “Make your bloody minds up”. However, just in case anyone was in doubt about the poo-or-get-off-the-pot nature of the situation, his Deputy Christos Staikouras told NET National TV, “Cash reserves are almost zero. It is risky to say until when [they will last] as it always depends on the budget execution, revenues and expenditure. But we are certainly on the brink, we did not receive the aid tranche we were supposed to and we have the pending issue of an ECB bond maturing on August 20th.”

This afternoon BST, PASOK leader Evangelo Venizelos presented to his parliamentary group of MPs  a 10-point strategic framework, reiterating calls for the extension of Greece’s fiscal adjustment period by two years. So in many ways at the minute, the Geithner envoy intervention is having a telling effect. As we’ve seen for some time now, this issue is about more than Greek eurozone membership: it is about even more than Greek contagion. It is about securing America’s future.

A  number of American Sloggers emailed and threaded after the latest update on the long-running plan by Washington and the Pentagon to hive Greece off from Europe….and Germany’s resistance to it. A common reaction was that the US has many bases already, and the entire gamble wasn’t worth it. I comment threaded myself at one stage, to make this point:

‘It’s not just oil/minerals or just a base or just Islamism: it’s the confluence of all that plus Russian, Chinese, German and Turkish influence in the area. The US is a fading Empire desperate to carry on being the Top Cop on the planet. Geopolitics is as much about egomania as it is left-brain stuff.’

An influential Greek wrote to me today as follows:

‘I read your article today. More and more frequent visits of U.S. agents in Greece have the purpose to convince Greece to go to a new nest. If this can be achieved there will be two two benefits for the US: the weakening of Europe, and the strengthening of Israel and US influences in the Middle East. I believe we will see more of this in the future – the “Greek corridor” (Israel-Cyprus-Greece) [that] can ensure the necessary survival of Israel while in case of hot crisis , it can be used to transport aid to the Theatre of Operations in the Middle East. This vital corridor cannot and should not be allowed to be checked by Turkey as it will then be vulnerable to any intervention.’

I posted on Aril 29th last about the electronic comms cable being jointly laid by Israel, Cyprus and Greece. These three nations see themselves as inextricably linked and capable of leveraging their strategic importance to the big boys. Last June 21st, I wrote a piece about Putin’s ambition to turn Cyprus into a Mediterranean Cuba. It took the MSM a week to catch on to that one. Last year, the Russians gave Cyprus a $2.5 bn loan at a massively discounted rate…on vastly better terms than those offered by the catatonics in Brussels. The Kremlin has many servicemen on the island, and many investments in the Greek half, while the President is a pro-Moscow Communist. Turkish Cyprus is a hotbed of Islamism, and was a refuelling point for the soi-disant ‘peace flotillas’ of which we heard so much in 2010.

Since last February, I have been a lone voice using sound sources, local knowledge and strategic nous to show a consistent American attempt to hive off Greece and thus provide both reassurance and supplies to what security services throughout the West now refer as The Greek Corridor. My piece on Wall-Street cooperation with Washington  to get Greece ‘amputated’ and thus ripe for American adoption went viral very quickly on February 16th this year. The guys over at Zero Hedge still think I’m a hoaxer: but that plan keeps resurfacing, and as time goes on it gets harder and harder to deny it. I said Geithner’s envoy had given his Greek friends a ticket to ride, and now Geithner is here himself.

To get your head round this, the first thing one must do is to stop thinking about Greece as a small country with a big debt, full stop. This is geopolitics, not conspiracy theory – and geopolitics is often about opportunity. Greece is being bullied by Berlin-am-Brussels because, without making an example of them and playing for time, Franco-German banks would’ve fallen over and caused a major disaster. But it didn’t take long for American thinkers to see this desperate ploy as their big chance to cement a presence where it really counts at the moment: at the south-eastern end of the Mediterranean.

Others dismiss Greek Aegean resources as chickenfeed, and point up the strong Turkish-held belief that some of them belong to Ankara anyway. But this is precisely what it’s all about. Let me offer you something that every knowledgeable writer in this theatre accepts, be they Greek, American or German: All three intelligence services have massively underplayed the undersea wealth under the Aegean. So too has Mossad, without a shadow of a doubt. Putin (ex KGB) knows this, Schäuble (ex German Interior Minister)  knows this, the Fed Treasury knows it, and so too does the Athens Coalition. Both the Americans and the Russians are determined that Turkey won’t get its hands on one ounce of rare earth or a single drop of oil. These are the stakes, and they’re why this is massively important.

If one draws a slightly wobbly ellipse within the Mediterranean/Arab world as follows -

-  what results is the sphere of influence every major national player would like to be in….because it has rapid flashpoint response, the overwhelmingly biggest energy form on the planet, the epicentre of unstable religious fanaticism, and above all massive supplies of post-modern minerals required for the next stage of economic growth. The Slog essay on Syrian complexities last Saturday used precisely the same perspective.

Talk to those on the ground and at sea in the Med area, and you will learn that Cyprus is swarming with Russian engineers and Greece with American engineers – in the same way that Black Africa is covered in Chinese engineers.  The American elite doesn’t give a crap about Europe beyond two considerations: the euro is a potential competitor to the dollar, and the eurozone screw-up is a massive threat to Wall Street and US debt management costs. It just happens that on the arse end of Europe is Greece, and neutralising its debt-threat is the treble-chance jackpot for Washington: less fiscal contagion, more access to industrial wealth, and the long arm of the law made shorter when things get out of hand.

Important geopolitical factors vary and transmute over time. In the nineteenth century it was naval routes, trade access and Imperial cachet. In the twentieth century, energy, political philosophy, and nuclear stability. In the 21st so far, it is morphing into energy, efficient exploitation, control of fanaticism, and – connected to this – power over nuclear proliferation. But always, unfailingly, it is about business.

Also today at The Slog: How Delaware shenanigans may yet break the world’s greatest soccer brand

 

 

 

 

 

 

Greece: the Washington v Berlin poker game returns…to Athens’ advantage.

US Treasury Secretary Geithner may yet wind up being Greece’s saviour.

A few airy vapours emerged in the way of rationales for US Federal Treasury Secretary Tim Geithner’s session with German finance minister Wolfgang Schäuble today. The two men ‘expressed confidence in euro-area member states’ efforts to reform and move towards greater integration’, ‘welcomed the Irish example of placing successfully longer-term bonds last week and Portugal’s continued success in meeting program commitments andzzzzzzzzzzzzzzz…..’

Bazooka Geithner was scheduled to travel on to Frankfurt Monday afternoon for a session with European Central Bank President Mario Draghi, and no doubt at that time they will talk about Borussia Dortmund’s women’s soccer friendly against Inter-Milan’s mixed-sex 2nd XI next Thursday. It promises to be a storming game, but most people watching ClubMed developments (especially those in Athens) could be forgiven for suggesting that Greece’s future location as a sphere of vital influence was the main reason Mr Geithner was talking to two of the most powerful financial players in Europe.

The eurozone has been a pimple on the backside of global money for two years now, but while the buttock-blemish just keeps on getting bigger, nothing seems to bring it to a head. My theory is that the problem is now so big, it has expanded far beyond the fiscal arse, and is about to launch an assault on the head: but whether I’m right or wrong, there’ve been so many jigsaw bits, clues and signs falling into place of late, you’d have to be Mr Magoo in a tank not to notice them.

What’s going on here is a high-stakes poker game between Washington and Berlin. And once again, we are talking Greek default into the welcoming arms (in every sense) of America v Merkel’s FiskalUnion vision wherein Greece stays in the eurotent…along with its strategic, mineral, and energy importance to Brussels.

Here are some examples of what I mean.

“One thing that’s started happening among eurobankers is debt syndication,” a Madrid based debt expert told me late last week. “The situation here has gone beyond critical…Spain is a cert for full-on bailout. And Greece is running to fall backwards. So senior bank executives are looking to spread risk: they’re happy to lend the same target sum, but to five clients not one. And preferably across three EU States. I asked two guys last weekend [21st/27th July] what they most feared right now, and it was Germany throwing the towel in. So in that outlook which, you know, I think is not unreasonable, you can see why the target setters have said ‘same goals but more borrowers’.”

The anti-Greek feeling among Bankfurters has been growing of late, I am certain. This tendency is also, we now see, shown to be far closer to the German public pulse than that of the Merkel inner circle. Early today Bild splashed the results of a poll by the Emnid research institute. They showed that over 70% of respondents wanted Greece to leave the eurozone if it couldn’t stick to its repayments schedule; while a technical majority of 51% (the first time I’ve seen one) felt Germany would be better off without the euro. The poll is significant, in that it shows any gentle shoving of Athens towards the Exit Lounge would give the MerkeSchäuble Coalition Government a clear electoral advantage next year. Equally important, it showed that Fritz in the street thinks doing nothing Brussels-style is not an option.

The one pair of cold eyes into which Tim Geithner hasn’t stared yet belong to Angela Merkel. Being a born geopolitician, she will still be mulling over what the greatest risk might be: Germany taking on board a Hindenburg of debt, or Berlin-am-Brussels losing the resources and power to have the deciding say in the Middle East….via Greece.

Yesterday I posted about Geithner sending special envoy Collyns to lick the Greeks all over, and reassure them of just how valued they will be as and when a return to the Drachma takes place. I’m confident that German intelligence is aware of the content of their discussion; and I’m told that this is reflected in reports coming back from Athens today about the Greek government finally resolving to draw a line in the sand about Troika demands.

What I suspect might be happening now is that the usual suspects among Greece’s elite of troughers are balancing the horrors of losing the Brussels gravy train against the potential of joining an American version with more First Class carriages.

What’s more, I’m reasonably sure that the Troika is in possession of Berlin’s knowledge about the American offer. This from Athens News yesterday (my italics):

‘…the atmosphere at the [Friday Coalition/Troika] dinner was “exceptionally good” and marked a change in the attitude so far of the representatives of Greece’s creditors….‘

A couple of hours ago (4pm BST Monday) Greek PM Antonis Samaras was due to hold talks with PASOK leader Evangelos Venizelos, and the minor Party Democratic Left’s leader Fotis Kouvelis. I’ve had wildly conflicting reports today as to who if anyone will object to what in the way of Troika demands. Kouvelis, however, is felt by many to oppose any more pension or salary cuts. And some sources think all three men will not budge on auctioning State assets. As this has been a consistent (and from their viewpoint, totally understandable) foot-dragging subject since the first Greek bailout, The Slog’s informants may well be right. However, Finance Minister Yannis Stournaras and Labor Minister Yiannis Vroutsismet met earlier today: Stournaras was the recipient of envoy Collyn’s alleged ‘total support’ message last week. So it’s very possible that the Greek side now feel they have more cards for when the next Troika session occurs.

Even the scheduling for that keeps changing. I was told last Saturday that it would be this evening, but now I understand it has been postponed. According to Athens News the story is that the Troika is digging in ‘until a package of measures is agreed’.

This is a very finely balanced diplomatic situation, but you have to take your hat off to Geithner this time: he seems to have learned the lesson of the EU Poland summit – viz, Yankee bombast doesn’t play well in Europe. Indeed, he is displaying considerably more craft and subtlety at the moment than Hillary Clinton over at State when it comes to Obamite Arab foreign policy. As everyone in the US tells me, love or hate the guy (to quote one trusted contact) “Tim Geithner is not just another money-f**king banker…he’s a cultured man who does see the higher game.”

Make of that what you will. The point is, it’s hard to see how the Federal Treasury Secretary can lose in this situation. If Germany embraces Greece as a preferable alternative to having the Pentagon crawling all over it, then Germany picks up the tab for whatever the eurozone downside turns out to be…and reassures the markets that Berlin is, after all, the final guarantor. This can only go down well on Wall Street. On the other hand, if Merkel goes with German public feeling (or is arm-locked into doing so) then Timmy can write in his memoirs how, in one all-or-nothing hand, he secured Greece as a US base for all time from which to exploit rare-earth minerals and exert fast-response influence on the Iran-Israel-Sunni Middle East farrago.

In conclusion, let me just add one thought that continues to intrigue me. The total Greek debt as of now is roughly $390bn. The US total debt is $16 trillion. For US bank collapses to start happening on the basis of a sum owed in the region of 0.7% of America’s national debt (collapses that could balloon US debt management costs enough to sink the entire country) strikes me a risk not worth considering for longer than 0.07 of a second.

This in turn leads me to ask three further questions. One, is Israel no longer deemed to be of value to the Obama Administration as an ally? Second – even more mind-concentrating – are the derivative multiple indices potentially accruing from eurozone meltdown so terrifying, the US would be happier ‘adopting’ a Greece outside the eurozone, rather than take the risk of a Greece inside triggering the nuclear reaction? And third, if that’s the case, what on Earth is Washington going to do about Spain and Italy?

Stay tuned.

 

GREECE EXCLUSIVE: Geithner envoy ‘assured Athens of US support on return to drachma’ – sources

Meanwhile, the EFSF robs Petros to pay Pavlos

The US Treasury’s Assistant Secretary for International Finance Charles Collyns had a meeting with Greek Finance Minister Yiannis Stournaras in Athens on Wednesday morning. The official Greek media version was that Collyns ‘expressed the support of US-Finance Secretary Tomothy Geithner to Greece and his confidence in Greek efforts. Yinannis Stournas briefed Collyns on the situation of the Greek fiscal condition, and the key challenges of the Greek economy’.

In fact, Washington sources told The Slog last night BST that Collyns – a confidante of both Geithner and Stournas – was on a specific mission to impress on Greek Finance bosses the US Treasury’s sincerity in offering Greece “almost unqualified support in the event of a return to the drachma”. The White House is betting on the strong likelihood of Greece becoming formally insolvent before any more bailout monies are available from Berlin-am-Brussels.

Charles Collyns is uniquely placed to deliver the message credibly to the Athens government: he was at the IMF for many years, and is a personal friend of Geithner going back a long way;  but significantly, he is also an old classmate and close friend of Yiannis Stournaras himself.

As The Slog reported earlier his year  US Government covertly attempted to isolate Greece from the eurozone last March, in a bid to both make the country an important and loyal base for military intervention against enemies in the region, and itself play a beneficial role in the exploitation of Greece’s energy and mineral assets under the Aegean ocean. This move shows that the Obama White House remains determined to follow this course of action. A number of informed sources in Europe believe that the Greeks have had all the EFSF monies they’re going to get. On that basis, they would probably default on or around August 20th.

One day soon – allegedly – that EFSF will become the ESM. But it’s becoming increasingly hard to see how future bailouts are going to work given the likely contributors to the fund. As Yanis Varoufakis noted on his blog yesterday, on August 20th Greece is due to borrow €3.2 bn from the EFSF, in order to pay back the ECB. This idea is potty enough, but are we now to believe that Spain can cough up €600m for Greece, while borrowing another €3bn for itself?

That the whole ball of wool is unravelling could not be clearer given examples like these. Yanis Varoufikas urges Greece not to borrow the next tranche. I think he’s farting against thunder on that one. But as the American moves suggest, the money may well not be forthcoming anyway.

 

Greek update: Troika and Greek Coalition slug it out on more axe & more tax

OFFICIAL: For every € the EU crisis costs Berlin, it earns 12 times more in exports…

….and America isn’t doing badly out of it either

In the midst of European debt turmoil and a ClubMed economy-destroying austerity programme driven from Berlin, German exporters are pulling in €100 billion+ of extra business every year. That’s according to Nathan Sheets, Citigroup’s chief economist based in New York. And this export bonus represents almost twelve times the €8.7bn the country is contributing each year to the ESM rescue fund.

Heavily criticised by many (including me) for being inflexibly mad, the real plus for her national economy is now audited for all to see: Greece, Spain, Italy and Portugal may be crippled by enormous bond yields and socio-economic scorched earth, but when it comes to German exporters, their private view will be, “the longer it goes on, the better for us”.

Germany enjoys a euro that’s 20% weaker than the Deutschmark would probably have been; and if one adds the inflow of low-cost safe-haven bond money, the benefit for Berlin is around 30%.

Of course, the high cost of borrowing in Europe based on debt doubts is also a boon for the country with the biggest debts of all, the United States of America. Its bonds too are trading at almost unprecedentedly low yields, and nobody pushes the need for continuing euro-austerity more than Christine Lagarde, head of the US-controlled IMF – and the woman Tim Geithner refers to in private as “our gal”.

I’ll say she is: almost completely Americanised, Lagarde worked for over 30 years in the States as a heavy-hitting corporate lawyer, and never forgets for a second where her loyalties lie. For the US too, a lingering austerity programme that never comes to a head (and never causes a bank failure) is the win-win solution: no Wall Street collapses, cheap US sovereign borrowing….and Europe neutered as a competitor in a shrinking world market.

This is not to suggest a conspiracy or anything approaching it. Germany is over-exposed to potential EU write-offs, and the US Fed knows perfectly well that eurobank failures are still near-inevitable.

I record these Citigroup and other facts purely for the usual purpose of evidenced bollocks deconstruction: next time you hear Merkel complaining about the stress being put on Germany by lazy Clubmedders – or Geithner saying that the US economy and deficit were in great shape until Yerp screwed it up – remember those recorded factual realities.

While there is a lack of real brainstorming to help solve the EU’s appalling problems, blamestorming is no substitute for that.

The German, Brussels, Frankurt ECB, and American elites bent the law to either get ClubMed into the eurozone, or flog them cheap sovereign loans they could never afford to repay. The blame should be evenly spread for this mess between all participants in banking, politics and government. The last place it should reside is with the ordinary citizens of any of those countries…almost all of whom are paying through the nose (via their taxes) for the megalomania and corrupt greed of their leaders.

GREEK DEFICIT: How Berlin encouraged Papandreou to big-up the 2009 Greek deficit

Defence of German banks a key factor

Schäuble and Merkel….implicated in an incredible scam

How Venizelos fired ELSTAT moles to cover up the truth

Spanish European Commissioner backs story of international fraud

The Western MSM have never questioned the ‘received truth’ that Athens understated its liability and obligations for several years following the launch of the euro. But few if any outside observers know the truth behind what happened when Papandreou took over the Premiership in Greece….and for Machiavellian reasons, the debt was suddenly overstated.

In October 2009, George Papandreou stepped into what one Athens source has called ‘the shitfilled shoes of Kostas Karamanlis’, and discovered that the two previous administrations had lied about both the size of the National Debt, and the ongoing level of government spending. In Greece, the folks you go to see to find out this kind of stuff hang out in an organisation called ELSTAT – the Hellenic Statistical Authority.

What happened in the weeks following was quite bizarre – and pretty fully documented. Somewhat panicked by the degree of mendacity he’d discovered, Papandreou confided to key Cabinet cronies that the real fiscal situation involved not balanced books, but a 7.8% deficit…well beyond the limits allowed by Brussels  – although Brussels had, from Day One, been something of a paper tiger when it came to enforcing the currency rules. An insider from that time comments:

“Papandreou thought there was a serious chance he’d be thrown out of the eurozone. Unbelievable I know, but he did. But then things went rapidly from bad to awful. He really did have no idea what was coming.”

Rather like an Olympics Budget, the deficit figure kept rising  with each week, as the new government opened more and more worm-cans. First ELSTAT said 7.8%, then 9.8%, then it went to 11%, before finally settling at 13.6%. Only then – some time shortly before Christmas 2009 – did Papandreou talk to Brussels, Paris and Berlin about the possible need for a bailout.

In fact, through her Interior Minister Wolfgang Schäuble, Angela Merkel already know about the Greek deficit lies.  Schäuble became Finance Minister shortly after Papandreou came to power. Although Angela Merkel had shafted the wheelchair-bound assassin’s victim on at least two previous occasions, she wanted him now for three reasons: first, as Minister of the Interior, he had an excellent head for secrecy and covert operations. Second, he was hugely in favour of EU political union. And third, he didn’t have the scruples of his SPD predecessor, Peer Steinbrück. A lack of scruple was going to be crucial: for Merkel also knew that German banks were heavily exposed to the Athens deception.

Thus, if the eurozone members didn’t put their hands in thir pockets bigtime, Germany could be facing a severe financial crisis. (Sarkozy, says a Parisian diplomatic source, was even more terrified, in that all his exposed banks were completely guaranteed by the State).

Somewhere in the midst of these talks, Berlin requested a smaller meeting with the Greeks. At this meeting, three sources (two Greek and one German) allege, the small German delegation made an astonishing observation: the situation would “have to look more desperate” in order to justify a bailout to the other eurozone members. That is to say, only widespread fear of the entire eurozone being damaged would get the member States to pile in with bailout monies.

What Berlin was really worried about, of course, was that the Franco-German banking system might collapse if Greece wasn’t saved. And at that stage, little or nothing had been done to make the sector better able to withstand a derivatives wave.

The European Commission had in fact already issued a warning in July 2009 that Greece’s deficit was likely to reach 10% of GDP – if no counter-measures were taken to curb public spending – and that Commissioners regarded the official 6% GDP forecast as “over-optimistic”. But, Berlin argued, only something, say, 50% or more above that potential second figure would frighten eurozoners enough to get them to part with their cash.

Without assuming much, one has to observe that this plan does have Schäuble written all over it. And sure enough, in due course (November 2010) the eurozone learned that the Greek deficit was ‘currently running at 15.8%’. George Papandreou had meanwhile announced his first austerity package in January 2010, and in May of that year EU leaders unveiled a €110bn bailout with money from the European Union (EU), the European Central Bank (ECB) and the International Monetary Fund (IMF)….the so-called Troika. So clearly, the crisis was real enough….and the bailout fully justified. It seemed.

Fast forward now to 2011. Enter from left field former Hellenic Statistical Authority (ELSTAT) board member Zoi Georganta (pictured) who caused a sensation by alleging that the declared deficit for 2009 had been been massaged upwards in November 2010 by her boss Andreas Georgiou.

And lest any nasty male chauvinists out there want to dismiss Zoi Georganta as a lone madwoman, I should point out that six Elstat board members had been dismissed in June 2011 after clashing with Elstat chairman Georgiou. They too had spotted the Tippex liberally applied to the ‘revised’ data.

Says one Athenian source, “She was trying to tell everyone forever that she knew Pasok purposely sabotaged Greece at Germany’s request, to ensure our cooperation”. Zoi was off the money with her motive guesswork, but she was in no doubt that the figures had been got at and inflated. Investigators visited her, after which everything died down. It was said that she had changed her statement.

But now comes our old friend Evangelo Venizelos – author of the legislation to grant legal indemnity to all Greek Ministers: and in September, he orders the entire ELSTAT board (including Georganta) to resign….except the key villain, Andreas Georgiou. Just fancy that. And when Evangelo gets involved in the mire, you know a sh*tload of mire is being covered over with carefully planted (and watered) roses.

But given that Ms Georganta was not the only whistleblower at ELSTAT, the rumour persisted…albeit (as usual) without any awareness of this spreading scandal in the Western MSM.  It persisted, in fact, throughout the eurozone. And in March this year, Zoi found an unlikely ally.

Joachin Almunia Amann is a former left-wing Spanish politician, and now a prominent European Commissioner. Currently responsible for Competition, in February 2010 – a crucial moment in the debt-inflation plot – he was the European Comissioner for Economic & Monetary affairs…the role now owned by Olli Rehn. Amann was thus in an unparalleled position to watch Greco-EU-German affairs unfold between the austerity announcement and then bailout agreement of 2010.

In a letter to the parliamentary committee of inquiry concerning allegations of deliberate deficit inflation of March 2012, Amman crucially stated that, ‘there was no obligation on each national statistical authority in the EU to follow Eurostat’s ESA 95 code on the inclusion of public utility accounts in the deficit’. But for some reason – suddenly – ELSTAT had decided to add it into the pot. In remarking upon this, Joachin defended the six resignees from 2011. (And thus, by implication, Zoi Georganta as well).

Highly significantly, Amann also observed that had the 2009 warnings from his Commission been been enacted even as late as Papandreou’s arrival, ‘the measures would have succeeded if they had been properly and promptly implemented without any need for a bailout’.

So it was that last Monday (June 25th 2012) Zoi appeared before the deficit Enquiry in Parliament. Having been the unhappy subject of quite a bit of interior ministry ‘attention’ over the last year, Ms Georganta decided to be more circumspect. She dumped on 2009 finance minister Giorgos Papaconstantinou, observing, “I have investigated the matter and found that he does not have any great experience with statistics, with economic issues. In my view, you cannot appoint such an inexperienced minister at such a crucial time.” Unless you don’t want any trouble, in which case you do. But she stuck to her guns about the debt being inflated, telling the Enquiry that the deficit for 2009 should have been 12.5% of GDP – and could have easily been brought to below 10 percent with immediate measures.

Crucially, Georganta, a professor of econometrics, confirmed to Greek media representatives that ELSTAT intentionally, and after being pressured by Eurostat (the EU’s tame body), inflated the 2009 revised deficit from roughly 12-13% to 15.8% using “non-scientific methods in order to justify the adoption of more and tougher fiscal measures in Greece.”

What conclusions should we draw?

Three years ago, I wouldn’t have touched a story like this with a bargepole. But since studying both the EU and the Greek tragedy in more detail in recent times, I’ve realised that a well-documented and sourced account, without collusion and based on trusted informants and mainstream Greek media reports, is more likely to be true than invention. Of course, a great many players on the geopolitical and european stages have agendas, axes to grind, and scores to settle. But when something fits, makes sense, and is in line with other discoveries made along the way….well, all I can say is that absolutely nothing surprises me any more.

So the conclusion I draw is that we have here opportunity, motive, testimony, media reports, personal ‘form’ and a jigsaw piece that fits very well with others upon which The Slog has reported over the last two years. In order to illustrate that assertion, let me introduce as a quartet four people I believe to have been pivotal in recent-history world affairs: Tim Geithner, Dominique Strauss-Kahn, Angela Merkel, and George Papandreou.

I will start by relaying this email content received from a heavyweight player in Greek affairs and a student of geopolitics. I’m sure he wouldn’t mind the tiny changes I’ve made here and there to improve his English grammar. He observes:

‘One very important person, I believe, is Strauss-Kahn. His connection with Papandreou is well known, and verified by his interview where he admitted that he had discussions with Papandreou a lot before the Greek door opening to the IMF [in 2010]. The point here is not the connection of S-K with Papandreou, but the timing of the dalliance which he was accused. I believe that S-K was at that point an ally of Merkel.

‘By the end of 2009, the international economic balance seemed to have permanently changed, and a new scene brought to being in which Europe was in a better position than the U.S. At the hub of the wheel there is Germany, asserting the role of economic power model, which could assure international monetary and financial stability.

‘The dramatic announcement by the Greek government of the imminent danger of bankruptcy [January 2010] opened the bag of Aeolus, revealing the weak and until then, unseen side of the euro. The Director of the International Monetary Fund, Dominique Strauss-Kahn, Minister of Commerce of France in the critical years of the early 90s when they entered the foundation for the creation of the euro, and Finance Minister of Germany, Schäuble, interior minister of Germany during secret agreements of the same period,  realized that the U.S.would not let the window of opportunity that had opened be wasted – and that Greece would become the bridge for an attack on the Eurozone.’

The source is not a million miles away from where I am on this one. That is, DSK was taken out of the game for geopolitical reasons, and replaced with “our gal” (as Geithner calls her) Christine Lagarde. You can read several pieces related to this shift in my dedicated page here, The Strauss-Kahn Waltz. Left without an ally in establishing the hegemony of Europe at America’s expense, both Merkel and Schäuble now became deeply (and rightly) suspicious of the Geithner ‘amputation plot’ hatched in New York between late 2011 and early 2012 by a combo of Wall Street, Pentagon and Fed Treasury appointees. You can read more on this at US Bankers given a timetable for Greek Default  and also at  Greek default planners falling out over firewall.

The Americans hoped to gain a firewall, military bases and access to precious raw materials by befriending a post-euro Greece. That ambition still remains, but what the story unveiled above shows is that Angela Merkel and Wolfgang Schäuble are more than worthy opponents in the murky world of geopolitical jockeying.

I would like to thank all the American, French, German, British, Canadian and Greek sources who contributed so generously to helping my feeble brain understand at least some of the above events and allegations. I would also like to offer special thanks to one credit dealer and two journalists, without whose refereeing skills it would’ve remained a mystifying case of underwater rugby without the ball.

EUROBLOWN: As the lights go out all over Greece, now at last Berlin moves towards Eurobonds

“Oh very well then….if I must“

Frankfurt, Obama pressure tells at last

As the union representing drivers of touring buses starts a four-day strike at the height of the season,  public hospitals begin running out of medicine  after pharmcos demanded cash to deal with the Greek State, and power for lighting and cooking stands under threat because Athens hasn’t paid the bills, Angela Merkel has (at three minutes past metaphorical midnight) began to budge on the issue of common responsibility eurobonds.

It bears repeating before we go any further on this piece that these shortages are the direct responsibility of the Troika, not Greek civil servants or politicians. The Troika now takes the overwhelming majority of all decisions on who gets paid with bailout money; and in every case, bankers come before cancer patients and old people in need of food and warmth.

The Slog’s favourite source in the Frankfurt banking sector suggested to me late last night that much of the pressure came from Mario Draghi (whose European Central Bank is based there) and some pretty serious jumping up and down by private Bankfurters. But the Bundesbank is – not surprisingly – solidly against the idea until all 16 eurozoners have signed in blood to a deal that severely limits Germany’s responsibility – see the German Finance Ministry leak published in a Slogpost of last week.

But contacts in both Paris and Washington disagree on whose was the most telling influence, saying that – at Geithner’s near-desperate behest – Barack Obama threatened Berlin with dropping Germany’s share of US trade far down the list of Favoured Nation States. That’s a fascinating development, because Forbes only last week wrote this in relation to what Obama should do about Spain:

“An American President would know how to say to Angela Merkel – if you do not compromise, if you do not  resolve this, then we will begin sidelining your companies from our high speed rail projects; we will make it tough for you to sell luxury cars; we will review procurement procedures to eliminate your companies from our public tenders. We will not relent until you do.”

There is no way the electioneering Obama could be seen to be weak on euro-contagion, and so he has acted. Good for his campaign, bad for the Pentagon and the oil business who had other plans for Greece…and if the truth be known, still do.

As always with Berlin, however, there’s a catch: the Chancellery signalled that it may be open to euro-zone bonds or further support for the region’s banking sector, but that would depend on other countries agreeing to transfer more power to Brussels.

A late adman friend of mine, when asked what the ultimate advertising claim was, told the questioner, “Buy this thing or you’ll die”. This is indeed the deal that’s on the table here. But my God, how much time and taxpayer money all this hubris-fuelled denailism has cost. It would be nice to think that some day those responsible will be brought to book for it. But inhaling without further action is not recommended.

So: Obama blackmails Berlin, and Berlin blackmails its eurozone partners. They used to call this diplomacy.

The Slog wishes to recognise the enormous value added to this piece by Sloggers in four different countries.

Related: How a currency zone we’re not in wiped out 80% of Osborne’s austerity drive

CRASH 2: Alchemy ain’t gonna cut it: matter cannot be created or destroyed

The something from nothing myth exploded forever

I have an insight here, so stand by. Focus, ignore that nagging post-roast indigestion, and clear the detritus from your mind in expectation of wisdom.

Throughout the world of fiscal economics and global finance at the minute, the same flaw is apparent everywhere. The flaw is that almost everyone among the 3% thinks you can get something from nothing. They got to this conclusion through a lifetime of getting something for nothing, but they fell down on Acute Prepositional Misidentification Disorder. Skilled proofreaders they are not. And proof is indeed what they lack.

Tim Geithner thinks you can take €850m and leverage it into €30 trillion without the value remaining exactly the same. He acquired this delusional belief from the derivatives sector (to which he remains fiercely loyal) becoming mildly infected with their belief that 1/500th of a forthcoming wheat crop facing monsoon weather might be worth, not zero at all, but something close to 30,000 times its original value when it was sunny the previous May. However, you can’t make bread from Nowheat: millions of demented farmers have tried this gig throughout the centuries, but the only bloke who ever succeeded was a carpenter – and he had the kind of help from above that not even loyal  God-servant Lloyd Blankfein can deliver.

Pristine Lagarde imagines you can get tax from penniless folks. The reason you can’t is the ‘no pennies’ snag. They could of course borrow (or leverage) the pennies from other people, but that’s how they got into the penniless state in the first place, and anyway every banker knows that you don’t lend money to people who are penniless: it’s a not a gap in the market. Also I never heard of any person devoid of pennies whose first priority when given some was to pay some tax, probably because I don’t get to visit many asylums for the fiscally insane.

UK Estate Agents have spent the last two years trying to convince the media that you can get a housing boom out of no credit. Alarmingly, many of the MSM’s finest haven’t contradicted them, but the reality is that in parts of Oldham, if you buy a packet of cornflakes there’s a free terraced house inside.

Mario Draghi thinks he can create Greek bailouts from hot Frankfurt air. This is way ahead of the alchemists’ dream of substantiating gold from lead, but not quite on a par with Evangelo Venizelos’s conviction that Governments can be created from zero electoral support in a democracy. Other convictions relating to Mr Venizelos are long overdue, but then amnesty (like alchemy) can reduce something criminal to nothing of any significance.

David Cameron and George Osborne think you can get manufacturing growth out of a body of manufacturing killed off long ago by one of their predecessors. Well anyway, Cameron used to think that; but I sense that, you know – out of the limelight, when they kick off their shoes of an evening in front of some Downing Street grate – Dave shoots some breeze with George suggesting that only Irish elections can really get actions out of dead people. I surmise that he’s wised up on this all growth/no manufacturing scam. “Yer know what Gidders?” the Prime Minister asks, perhaps rhetorically, “I’ve come to the conclusion that we don’t export coal any more because we don’t have any miners any more”.

The Chancellor nods doubtfully, pauses for thought, and then replies “I knew a chap at Westminster called Smythe-Sledgehog minor. But I think his family was in canned meat. Or canned music, one of the two.”

Barack Obama thinks you can plug the US deficit gap with bigger and bigger US trade gaps. That’s why he wants massive State spending: so more and more Americans can be employed, earn money, and buy more and more goods that weren’t made by their fellow Americans. This logic is a product of the Black Dude’s education, in that – like Lagarde – the President majored in Law, and thus thinks anything that stimulates spending – from bondholder litigation to insolvency reconciliation – must be A Good Thing. His other trick is setting up universal Medicare with money he doesn’t have, but both these are really only refinements of the mental disease I’m describing for the keen lay-reader. The 3% as a whole think one can create something from nothing, and so – operating with a smaller brain on a larger canvas – President Obama believes he can make something from companies selling nothing while workers buy everything. But insane is insane, whichever way you cut it.

Angela Merkel proposes that ClubMed consumers with no money should stop spending money they don’t have, and use this imaginary money instead to pay the taxes she insists they must pay before any stimulus will be supplied in order to help the sort of growth with which they can then pay more taxes, which they must do before there is any spendthrift making or consuming of goods that would help their economies to grow…which of course they will, but only if they keep doing the tax lederhosen-slapping dance before any of that decadent retail rock’n'roll buying bop gets people up and grooving.

The first ten years of any human being’s life are crucial to intellectual development, and Frau Doktor Merkel spent them as an enthusiastic Stalinist. She later compounded the problem by becoming a physicist. Hence her continued attachment to Room 101, where all things are possible. I bet she did a thesis on trying to repeat Room 101 experiments outside Room 101. Wolfgang Schäuble has none of these feeble excuses for mental derangement. In fact his delusions contradict each other: he thinks America can’t leverage something out of nothing, but Germany can. Well, if you’re the Master Race, I suppose the potential is limitless.

Finally (although I’m sure most readers have more examples of their own) Rupert Murdoch thinks he can buy everyone in British politics by giving nothing to the Exchequer. This too is a subtle variation on the original create nothing/have something bollocks, except that the make/sell execution of economic alchemy is further perverted by substituting it with the take/give theorem. Newscorp’s success is based on give and take: the politicians take, the Newscorpers give, the politicians then in turn give good Hunt, and the Newscorpers take the piss. We are not included in this commercial arrangement, aside from paying for all of it in the end.

So there it is then. Forget Left v Right, Keynes v Friedman, Local v Global and Stimulus v Austerity. Ultimately, it’s all a question of something and nothing. Freedom, as Kris Kristofferson memorably sang, is just another word for nothing left to lose. But long before Krissang Bobbie’s Blues, Al Einstein had this sign hanging on his wall at Princeton: ‘Not everything that counts can be counted, and not everything that can be counted counts.’

The belief that you can produce something worthwhile from nothing worth having is at the core of Crash 2′s inevitability. And you read it here first.

GREECE: Pressure from all sides on Merkel as ‘contained default amputation’ movement gathers steam

The US Fed Treasury & the Obama White House are starting to have doubts about a German Chancellor out in the cold

America and Frankfurt on the one hand – and Berlin on the other – have reached something of a Greek amputation impasse. It’s not hard to see why, but it is quite tricky working out why it’s taken them this long to face problems that existed from Day One of the ruse.

I blogged earlier in the week about how the ECB >>><<<National Central Banks interpayments system in the eurozone  has quietly been turned into a line of credit for the Sovereign governments of those individual banks. The ECB is now owed 500bn euros by other ezone central banks and – surprise surprise – most of it is ClubMed money. If Greece were to leave the eurozone, they’d be leaving behind a bad debt which, I understand, is around 95 billion euros. The Chancellery thinks that risk is a politically impossible one to take. Wolfgang Schauble isn’t sure, but thinks this a smaller pill to swallow than winding up with Greece inside the Fiskal Union. Bankfurt and the Fed/White House/Wall St nexus say “amputate now”.

They have a point. The reason why the US agreed to the latest round of dollar/euro swaps for Draghi’s ECB in the first place is so he could get some ‘free’ seed money with which to keep the cash  going between sovereign bond purchases, eurobank sandbagging slush, and overnight rates earned as the money returned at close of play. The Americans agreed to this for hard-headed reasons, not out of philanthropy: Geithner knows full well what collapsing eurobanks would mean. But he also demanded a quid pro quo: amputate Greece now, and cauterise the wound with boosted ESM funds once the Fiskal Union is formed.

From the White House as of yesterday, the view was that Berlin is in a 100% welch situation re this one. The Obamites can see with 20:20 clarity what’s going to happen if Greece limps on: ClubMed bond yields will continue to rise – or not fall much – and thus the dominoes will start to fall late Summer….just in time for the President’s massaged ‘recovery’ to be revealed as barely relevant in the context of major US banks falling over. Barack Obama doesn’t want the tits to turn skywards until 2o13 at the earliest. His advisors are now beginnng to get frantic about it happening in September 2012.

An EU Fiskal Union containing Spain, Portugal, and Greece is a zonal insolvency waiting to happen. If (as seems likely) the eurozone lurches into a slump some time soon, you can add Italy to that list. Angela Merkel’s Promised Land is going to be a German tug pulling four sinking Titanics. This is one big, big reason why The Slog’s Bankfurt Maulwurf and his growing army of rebellious bankers are pounding at The Chancellor’s door day and night.

The cost to Merkel of both ignoring the Karlsruhe Court’s illegality ruling against the ESM and landing Germany with a salvage operation running into the trillions suddenly makes a Greek bad debt of a trifling 95 billion euros seem almost attractive. Especially as, the ‘debt’ being yet more of the notional funny-money, she can kick the monetisation can down the road on that one for years.

For the Americans and the Bankfurters, this choice seems to be something of a no-brainer. The Pentagon too, by the way, is also  – for obvious strategic reasons discussed passim – very keen to befriend Greece after its collapse into loneliness. The discovery in late 2010 of the huge natural gas bonanza off Israel’s Mediterranean shores triggered other neighbouring countries to look more closely at their own waters. The results revealed that the entire eastern Mediterranean is swimming in huge untapped oil and gas reserves.

The German Finance Minister Wolfgang Schauble has, in the last fortnight, pretty much accepted the logic of the ‘contained default’ argument. But Frau Merkel wants to suck it and see. She must surely see that, 95% of the way through the lollipop, it still tastes like frozen urine. But she’s a physicist, so anything might happen: perhaps she’s willing a choice of quantum futures.

For realists everywhere, the inevitable is still the inevitable: all this debate concerns is timing. With or without Greece, the Fiscal Union is a stillborn duck. With or without amputation, the eurozone and the EU as we know it are doomed. With or without more Fed Reserve dollars being Benankered all over the US banking system, the contagions will spread, and the phony derivative non-money will demand to be monetised. Eventually there will be forgiveness (and quite possibly a war in between) after which Asia will hold most of the volume cards….and then – if it has any sense – the West will retool to do margin business with the seemingly endless supply of new Chinese wealth.

But very few politicians look this far ahead. If she does, perhaps the ultra-disciplined Angela Merkel, the underestimated little Osti, sees something the rest of us don’t. Either way, the next two weeks will make it clear just how powerful she really is.