Bending the truth here and there

While Angela Merkel did a bit of overseas wandering about last week, the spin from Berlin was ‘Chancellor building her Statesman credentials for the next election’. There was a trip to Afghanistan as part of this, something that took everyone by suprise – and looked nonsensical given Germany’s light military presence there. But it was a feint – a distraction. She flew straight from Afghanistan to Rome, and all points thereafter on a whistle-stop return to Berlin. The mission, I am very reliably informed, was to sound out opinion on the choice of her finance minister Woflgang Schauble as the next head of the 17-Nation Eurogroup… replace Jean-Claude Junckermann, who is finding the job too onerous on top of his responsibilities as the top DJ on Radio Luxembourg.

A Parisian diplomatic source confirms (in the light of yesterday’s Spiegel story about Schauble’s future) that Merkel discussed this possibility with Nicolas Sarkozy before taking the trip, and that his response was “polite but equivocal”. I wonder why. The French President has since told Elysee staff that he is “very concerned that once again Berlin seems to be consolidating its power in the EU”. I understand he has asked Frau Merkel to delay the decision until after the French Presidential Election.

Full engagement in plotting this move may explain the lack of noise from Berlin all week. Wolfgang Schauble contented himself with just the one swipe at hasty Greek elections and their potential for promise-breaking.

Overall, in fact, it was a week significant for what never took place.

EUROCRISIS: A week in which what didn’t happen was far more important than what did.

Most of the business media lost interest in the eurozone for much of this last week. Those who still refer to ‘the bailout’ gaily continue to refer to the ’39bn euros used from the EFSF fund’ although in reality none of it came from there: truth be told, the eurocrats are only just over halfway through the notional ‘non-cash’ paper manufactured by Mario Draghi’s ECB the week before.

The real Greek bailout was one of many things reputed (and reported) to have happened that didn’t. And one must ask, therefore, why not. I would submit that Mario Monti got his way about the 130bn EFSF money earmarked for Greece going to Italy instead. And because the likes of J P Morgan are very good at selling funny-money but diffident about receiving it, I’d also wager that Signor Monti will use a great deal of the 130bn not to stabilise and then stimulate the Italian economy, but rather to pay off over-collateralised debt that could blow the entire global financial system apart.

Sniffing around the markets over the last few days, it was obvious that anyone even half-connected to sovereign credit knew exactly what had been done with Greece. For most of those I spoke to or emailed, the dual take-out was (a) I wouldn’t now touch Greek bonds with a bargepole and (b) the Troika has no faith whatsoever in a Greek return to the markets any time soon…or even a survival within the eurozone. A majority had also turned to speculating about when the next ClubMed crisis would start the whole manic Carousel off all over again…and who would be the target.

For myself, I am still devoting some time to analysing the nature of, and reasons for, Greek collapse: not because they are particularly important to the eurozone economy, but because of the ither forces likely to be released when it happens. By that I mean both the behaviour of other ClubMeds, the response of the markets to being led up the garden path yet again, and the contagion of the real money system by the Pixie-dust obligations and bets created and made by investment banking firms over the last fifteen years.

We need to look at what’s bubbling under. Yet another IMF report was leaked last night showing that Greece is screwed. This is no accident: it’s part of the ‘Undermine Athens’ lead-up to pulling the plug at the earliest opportunity The Slog predicted last weekend. Lagarde wouldn’t be leaking like this without the Sprouts and the Berliners having given her the nod. So I’d imagine that options are being weighed in the now certain arrival of Greek insolvency.

Equally, with indecent haste Evangelo Venizelos jumped ship earlier in the week to devote himself more fully to himself….that is, taking over the PASOK leadership and campaigning to make up lost ground in the opinion polls. As far as I know, the election date is still set for April 29th; but whatever the date, this has to be one of the greatest derelictions of duty ever seen – even from a Greek politician. The extrapolation from this has to be that Evangelo thinks the ‘bailout’ is a joke anyway; and he’d really rather be somewhere else when the solids start flying about. (“Everything at the office was just fine when I left….”).

Adding weight to that view is another thing that didn’t happen yet: the full Athens delivery on some of the more bonkers demands made by the Troika. This may have something to do with the fact that, as yet, the Troika itself hasn’t done any moaning about it. And that in turn probably reflects the fact that, with only invented funny-money at stake, maybe they think there’s no point in bothering: “Greece is in a bucket bound for Hell, so let’s look the other way as it passes our window”. Venizelos, you may recall, was supposed to be in charge of fiddling the Constitution in order to meet the needs of Troika control freaks. I see no sign of that being even started as yet.

So, no real money was handed over, no cries of pain from Berlin, no let-up in the ‘Greece is dead’ leaks by the IMF, no political kudos seen by Venizelos in staying to take the credit for Greek salvation, no action by Athens on the i’s and t’s of the Brussels Accord, and no accusations from the Troika about that. But a concerted push for Berlin to get a firm grip on the eurogroup.

That all adds up, I think, to something both nasty and imminent. Here’s what a good French source tells me:

“I think all of them [the Troika and Berlin] are working entirely on the ‘we give you enough rope to hang yourselves’ principle. We help you tie the noose, then we point out your crimes of perfidy….and then with genuine regret, we pull the trapdoor, and you’re dead”.

I still think there will be more significant things to look out for next week. And I would list these as:

1. Troika leaks about Athens backsliding on the Brussels Accord reform implementation

2. Generalised EU/Troika leaks about bad economic signals in Greece

3. Complaints from Berlin and Brussels about the first Greek Party manifestos to appear

4. Concern being shown by the Troika in relation to ‘hidden’ Greek obligations

5. Last minute constitutional hitches in Athens

6. The Troika bleating about English Law participation in the swap being “surprisingly low” and thus knocking the 2020 target off course again.

7. Non-acceptance by March 20th maturity-creditors of the Draghi funny-money which, one assumes, Athens will have to use.

For me, however, the most significant move of the week was the decision to use that flaky ECB bond issuance in the first place. And as only about 60% of that has been used thus far, it is tempting to speculate that – with no real money having been lost – the EU may decide to keep up the appearance of Greek survival beyond March 23rd.

The only thing I can tell you on this quiet Saturday is that Washington will probably acquiesce in that view if it is the prevailing one. But that the Fed remains anxious about when the deed will be done should not be ignored.

Stay tuned.



  1. JW writes:

    the EU may decide to keep up the appearance of Greek survival beyond March 23rd

    So the world won’t end next Friday after all….. that’s a shame – I’ve just been down to the supermarket to lay in supplies.


  2. “I understand he has asked Frau Merkel to delay the decision until after the French Presidential Election.”

    Translated: he’s up shit-creek already and this will only serve to make him look even more like Merkels poodle.

    Don’t worry Nicolas, that won’t lose you the election. It’s far more likely your vacuous personality, corruption, stupidity, drug use and generally being a bit of a runny turd will do that far more effectively.


  3. John, to me the most significant event last week was George Osborne going to Washington, prior to the budget & Hague being there as well.

    1) Osborne & Geithner (secret meetings, something is cooking) explains the leaked 100 year/ perpetual bond story as deflection.

    2) Iran Swift closed the doors to Iranian banks while these two were in Washington and the economic pressure is building so fast that Iran will be a failed state within weeks in economic terms as they are now resorting to barter state with no Oil counterparts except India & China.

    3) Hauge’s mission in Washington with his buddy Clinton was to work on a plan, where India could be pressured by failed state Pakistan for buying Iranian Oil for Gold


  4. Also of significance next week:
    Monday 19th; ISDA bond auction. Will all the rehypothecated CDSs come rattling out of the cupboard?
    Friday 23rd; Final date for acceptance by foreign law bondholders. How many of the 7 categories will be blocked by the hedge funds and trigger payment in full, and who will pay?

    And if Greece survives the week, then what?


  5. Doesn’t the Enterprise arrive in the Gulf in a couple of days?
    Another distraction on the cards?
    Good game, good game, as Brucie used to say…


  6. Pingback: John Ward – Merkel’s Euro-Tour Was To Sound Out Top Pols On Schauble As New Ezone Group Head – 17 March 2012 | Lucas 2012 Infos

  7. You mean that aging ‘sacrificial lamb’ carrier that is due for decommissioning at the bottom of the Arabian Sea courtesy of a C-802 Chinese built missile, now there’s a conspiracy theory for you!


  8. N.E. of Scotland and my daffodils are out. Resplendent in the sunshine – and worth more to me than all those sorry excuses for politicians and bureaucrats put together.


  9. @Purpleline: Interesting, I have a coupla questions:
    1) What might the purpose be for leaking the story about the 100 year bonds, in your opinion?

    2) Aren’t China & India well able to take all of Iran’s oil output, if they wanted to? Perhaps the US is trying to get them to stop imports of Iranian oil?

    3) Not sure how Pakistan could apply pressure to India…


  10. It looks like preparation of a ‘war footing’ or at least an expectation of possible attacks on US soil. Perhaps it was re-issued because of some mods to the content?


  11. Modern day Iran covers much of ancient Parthia, renowned for kicking the crap out of, on every occasion, the Romans. They might still be capable of a Parthian shot. I don’t think it would be anything like as easy to invade as Iraq, the country is very mountainous like Afghanistan. A land force would probably have to come in from Afghanistan. Another Pandora’s box, I would imagine. There are rumours they have Sunburn or Sunburst missiles from the Russians, which it is said, make exocets look like fireworks.


  12. One thing stands out if the Baubles rumour is true: Germany will not be leaving the EZ as other rumours suggest. Instead, it wants more control.


  13. @steviefinn: Indeed. Everything that I’ve read about Iran suggests that it’ll be limited to a massive blitz from air and sea to knock out its nuke facilities. No land invasion except possibly along the western littoral if the opportunity arises where much of its oil facilites are located. But any land invasion is risky IMV. I’m sure one of the great risks is that Iran might lash out at its neighbours who have supported the US. It doesn’t have many friends in that region.


  14. I withdrew a lot of Euros (live across la manche) and spent all the Italian and Spanish notes on wine. Alas it seems to have evaporated – particularly during the Six Nations Matches – well done the Welsh! Must re-visit the cash point.


  15. Attacking Iran would make Afganistan look like boy scouts’ weekend camp.

    All that can happen is to degrade its offensive power projection – assuming that there are a shortage of nutters prepared to blow themselves up for the cause….

    But it can’t be left either – IMHO – so damned if you do and damned if you don’t – perhaps Israel will have the final say?


  16. The only certainty is that ever more weapons grade bollocks will be deployed in a futile attempt to portray the virtual image as a virtuous one. The socialist emperor, due to an incurable eating disorder, and aided and abetted by the sultans of leverage in a frightful symbiosis of pan-galactic proportions, has got too big for the clothes that were bought with our money (and our children’s money, and their children’s money) to the extent that he is now insufficiently dressed and must eventually succumb to hypothermia. The rotting corpse will present a major health hazard, the stench of which is already in the air and making breathing difficult for some.

    It’s not that I’m a pessimist – my glass was half full when it was knocked over – but, at some point we must either confront reality or see our freedom, which we have for too long taken for granted despite the obvious erosions, perish altogether.

    If I can haul my weary bones onto my old trusty Trumpet, I intend to take ship tonight for Normandy in search of fresh air and empty roads; it’s the best restorative I know of.


  17. Indeed Steviefinn – shades of 1938 and Munich

    We learn but we don’t

    But – and only speaking personally – if I was jewish – and I’m not – I’d never allow genocide again – whatever the consequences


  18. johnny, I’m afraid it’s a filthy modern first series Sprint ST – the only modern bike I own. The Commando needs a battery, the pre-war cammy Velo needs its fuel tank sorting because of the bloody ethanol content in petrol the last couple years and I don’t fancy riding a ’29 Panther down to Portsmouth tonight.. God willing, I’ll be on the 23.00 to Le Havre. A bientot.


  19. If the photo works it will be here:

    This is the new socialist leader in the Netherlands, a Diederik Samsom. My first reaction was “where is the image styling and all the bodyguards”. I guess that they do without the limousines too? They can get them down those narrow streets in the middle of Amsterdam because my neighbour Jan drives his lorry down them most week days.

    These are sensible people doing a job. This is politics, Dutch style. No added extras and I guess it isn’t the best that money can buy … ‘cos you can’t buy them.


  20. @maxter: If 200 bunker busting bombs, 600 cruise missiles and 10,000 other assorted munitions land all over Iran in a shock & awe strike, how could the US could deny responsibility for it?


  21. @BT yes I agree, but I was referencing his statement with the false flag event mentioned by SA. Who would trust anything that the mentor of Bombs Away Obummer has to say?


  22. @maxter: Right, I’m with you. The Enterprise going to The Gulf is a bit odd. I suspect that the GHW Bush Carrier CVN77 is also planning to go there quite soon… At this rate they’ll have to install some traffic lights!


  23. Excellent post JW. I just cannot wait for events to unfold. You forgot to add the illegal printing of Euros by the Greek Central Bank, unless they actually got permission to do it, that is!


  24. Any false flag attack will have to be delayed because the Sunday Telegraph carries a report that Joanna Lumley is going to Iran to find Noah’s Ark in defiance of Foreign Office advice. Can’t have one of our national treasures being blown up now, can we? ;-)



  26. Pingback: John Ward – Exclusive – German Bankers Give Merkel Ultimatum – Either Greece Leaves The Eurozone, Or Germany Must – 19 March 2012 | Lucas 2012 Infos



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s