Greek scare-tactics continue as Berlin remorselessly plans a future Fiscal Union dominated by Wolfgang Schäuble

Schäuble’s outline plan for FU is a totalitarian accident waiting to happen

One man’s poison….

There was more Domesday scariness from the National Bank of Greece on Tuesday. If Greece exits the euro, its latest report suggested, the events would lead to a devaluation of the new currency by 65%,  a GDP nosediving by 22%, 34% unemployment, and income per capita nearly halving to 55%.

But you ain’t heard the half of it: Sovereign finance will be impossible to find, initial inflation will therefore (?) be at 30% – and keep rising until any and all advantages of the drachma’s reinstatement have been wiped out.

But on the other hand, here’s some news about what’s likely to happen while there is even a risk of Greece leaving the eurozone: this morning, two of the world’s biggest trade credit insurers stopped providing cover for exporters to Greece “on concern that the country might leave the eurozone.” Brokers said the decisions by Euler Hermes and Coface were the only instances they could recall of trade credit insurers pulling out altogether from a European country. As none of them are 168 years old, I’d imagine that’s true.

But one is left wondering how, if that’s the case, things could be any worse without the euro….which isn’t going to exist in a year’s time anyway.

Greece doesn’t want to leave the euro, and Berlin-am-Brussels doesn’t want the country to go. I keep on saying this, and it seems to make remarkably little impression. This does not, of course, mean that a departure won’t take place, as the entire eurozone and its EU parent are based on the madness of bad science anyway.

But think on this as well: ClubMeds staying in the euro and dragging down its value can be good for business…especially German business.

…is another man’s meat.

Currency devaluation can be fun.  After EURUSD and German CDS had been tightly coupled for months, said Zero Hedge yesterday in another eurocalypse episode, the CDS market changed exchange-rates markedly between the euro and the Buck – as in, a 6% devaluation of the former. 

In Berlin – some in Frankfurt think – a cold calculation is going on in Schäuble’s Finance Ministry about the cost of megabailout versus the long-term business gains to be had from a weak exporting currency. The Frankfurters however – and they are dead right – see the calculation as not so much cold, more braindead: it would simply lead to aggressive devaluations elsewhere, and start a full-scale currency war. But a few of the more radical FinMin Berliners say that inflation is what the financial MoUs want anyway – as part and parcel of the monetisation of paper madness – so when rape is inevitable, try to enjoy it.

It strikes me on the whole as unlikely, but now he is slated for the TopFinMin job in the EU, Wolfgang Schäuble’s delusions of grandeur may be overriding his incipient paranoia about inflation. Certainly, he is very much on the case of his new job task – discipline, discipline, and more discipline. The following draft is a leak (and an intentional one) from the Berlin Finance Ministry scoping out how life in the Fiskal Union will work. And as we all know, work makes free:

The portion of a  FU nation’s debt exceeding 60% of GDP will be transferred into a new European Redemption Fund. (Very Merkelian, that one: sinners will be redeemed)

The 17 countries will be liable for their own portion of the debt transferred to the ERF. But they will face a maximum term of 20-25 years to pay it off. But here comes the double-think:

In a legal ‘redeemable pref shares’ sense (as per standard takeover contracts in business) all 17 nations will be jointly liable for the debt placed in the fund. This locks everyone in forever: you can run, but you can’t hide. As the more observant among you will have spotted, the original eurozone lock-in caused most of the problems the ezone faces today. Good to see that Berlin learns from its mistakes, nicht?

But it also means that nobody (for example – pulling a name out at random – Germany) can ever get lumbered with the entire debt mountain: because the word ‘severally’ is missing from the definition used (‘jointly’),  creditors can’t come after one debt guarantor like they could in business.

Deutschland über alles – naturlich. And – to be fair here – Brussels off the hook yet again…it not being a sovereign nation an’ all. “Don’t let’s be beastly to the Germans, or in any way horrid to the Hun” as Noel Coward sang in 1939.

One final thing of course – because Berlin never misses anything in the detail: if countries fall behind in their repayment of debt in the European Redemption Fund, some of their national tax revenue would be earmarked for repayments. They would also have to commit to fixing national finances to free up money for debt service.

Und all ziss vill be offaseen by little Volfy in dem Veelchair. You haff been varned.

Before any new readers write me off as an anti-German headcase, let me just reiterate what I’ve written a hundred times before: these problems are chiefly CDU-Merkelian, not German. The SPD would be opposed to these tactics, if not the overall goal, of eurostability. And, like UKIP’s Nigel Average, being married into a German family, I’m hardly likely to be a Germaphobic Mossad agent, now am I?

What I am doing here is dramatising and sharpening the focus on some facts to wake people up. Wolfgang Schäuble is a ruthless and slippery man found suspicious by most German politicians. Angela Merkel is a former Osti Stalinist who insists on taking a hard line in support of whatever she is promoting….usually herself. The Brussels eurocrats are all unelected functionaries who have shown themselves to be autocratic and pathetically unimaginative. Schäuble is already approved as the man who will be running the finances of the Fiscal Union. His idea of Germany is clearly going to dominate it. This is only ever going to end in tears.ä


49 thoughts on “Greek scare-tactics continue as Berlin remorselessly plans a future Fiscal Union dominated by Wolfgang Schäuble

  1. Lately I don’t feel the need to comment .
    The bitter truth is that Greece may haven’t yet, but Greeks have already sailed away .Good luck to us & everybody in the EU


  2. They are constantly treating the symptoms and avoiding the root cause of the infection.
    Again, like the last sticking plaster, this one will come unstuck too.


  3. It is all over bar the shouting…and there will be a lot of shouting. I can only applaud our beloved leaders for inflicting a four day holiday on our septic isle before we have to suffer the economic indignity of a hugely loss making school sports day.


  4. Germany leaves first. The euro is just going to be a PIIG currency in the end.

    Oh and get ready for the big print from BananaBux Bernanke very soon. Chicago PMI looks like hot trash and gold is on the way up. This one will make the last two QEs look like a small shower of confetti. And try as he might he just can’t devalue that dollar!


  5. Someone or something needs to kill off all this madness very fast indeed. It matters not to me any longer if it is the Greeks, Spanish, Italians or Irish (all will need massive material help and non financial aid soon enough)…so long as someone puts the EZ out of its misery fast. My biggest fear is that the Euro will not fall apart until next winter, particularly if it is another very a cold one. (It snows in Athens in February too !)

    The idea of countries, energy companies and individuals not being able to buy the power, gas, or fuel to survive, let alone conduct any sort of business, while caught in the middle of a major banking and currency crash during a long Northern European cold snap really too horrible to contemplate.

    After todays U turn on Tax Laws for Charities, mebbe all of us should be sending money to the Red Cross….even if we are stunningly below the thresholds……They are likely to need a hell of a lot of donations by December.


  6. QE3 and its children will do the devaluing for Ben.A lot of Europe’s ills are a godsend for Ben as QE3 will fly the stock market,gold and destroy the Dollar all to save those frightfully nice people from Wall Street and its environs.Quire remarkable that the American people and its forces are tolerating this manipulation.


  7. Yet the bond yields continue to go down. America is still perceived as a safe haven for investors because of the state of the euro. So big Ben can keep printing but it may not have the effect he wants. Dollar/Euro is only going one way.

    Golden rule of QE is go big or don’t go at all. Ben might need a few more zeros yet.


  8. A brilliant idea. But I skeptically wonder if it could be pulled off without the consent of the ruling classes of PTB.

    Wouldn’t nearly be past a coven of sociopathic personalities to use the idea of charitable donations as an excuse to withhold all responsible government and institutional support and say ‘jolly good, that’s it then, tell the masses to send charity, we can now publicly wash our hands of it all and seem peachy, …”


  9. Are the features of Fiskal Union you describe one and the same thing as the recently touted backdoor plan for E-bonds but by another name? The latter mentions EZ members having to pledge their gold…I see no mention of that above…

    OTOH, if the Euro ceases to exist within a year as you think, none of it really matters…except that FU’s short life expectancy should only apply to EZ members, not all EU members!


  10. Is it just me or does Schnauble remind you of Dr. Strangelove, perhaps it’s just the wheelchair? I hear that Herr Schauble is starring in a new movie ” How I Learned to Stop Worrying and Love the Devalued Euro.”


  11. Geo, heard Krugman at lunchtime today; he makes a lot of sense to me, not that I am anything of an economist!
    For any currency to devalue, in order to improve its export market, it has to devalue AGAINST another currency. If everyone is heading into a downward spiral, it’s definitely a race to the bottom, just to keep exports vaguely favourable.
    I guess this is why everytime the Euro drops, sterling doesn’t become hugely better, as TPTB (bankers et al) are undermining markets to keep us competitive.
    I honestly can’t see a way out, which is depressing!!
    We (family of 4) are desperately trying to book a last minute holiday to Greece, as it is the only way we can see to support them, scary as the idea is. Trouble is, we do self-catering for many reasons (helps the local economy), and the idea of self catering accomm. is a kettle and 1.5 hob rings……….if the Greeks want to encourage more of us to spend our £ with them, and share the so called wealth, they need to address the fact that everyone is struggling, and self-catering needs to mean a fairly adequate kitchen and facilities. Just my idea!


  12. Bah, it’s just a new version of the Beach Towel Wars. Call their Teutonic bluff, I say.

    Sure, Greece leaves the Euro, followed by the rest of the Garlic Belt. Where does that leave the Germans? The Euro/Deutschmark goes shooting up and they can’t sell a bratwurst. Hell, without Mediterranean corruption (though Germans are no virgins on that count) their luxury car industry goes down the spout.

    Worse. After twenty years of Spanish investment in education our youth is over-qualified and can’t find a job here. So Spanish doctors, nurses and other professionals are off to find their fortunes in Germany. And when the whole edifice comes tumbling down they’ll find a fifth column of Spaniards dancing over their deceased banks.

    Here’s more flo6x8, from 18 months ago. As you can see we’ve been practising:


  13. Hi Joanna…

    This gives me a business idea…

    To rent cheaply houses from people who cannot afford to live in Greece anymore and have abadonded their houses/cars etc….


  14. Jacob. You don’t need to rent them that cheaply – just stay within the still-over-generous limits of Housing Benefit, which they’ll all be claiming as soon as they crawl off the ferry.
    No doubt the ever-helpful Benefits Agency will be hastily reprinting all its application forms in Greek as I write…..


  15. Letter to President Obama

    Dear President Obama;
    I learn today from a normally reliable source (well it was Peter Oborne in Die Telegraf) that you are NOMFIC (that’s US Air Force slang, sir, for the Number One (person) In Charge) of a so-called nominating committee that meets every week to determine which enemies of the state you will terminate with extreme prejudice this week. (Not sure if this Vietnam lingo still works.)
    I have a modest proposal for you this week and that is to target and decapitate the heads of the German republik including a well known Stalinist in overall charge and a cripple running the finances that threaten the economic stability of the world and, indeed, your re-election. You would be finally doing god’s work if the incompetents working for you were able to accomplish this deed. You could, of course, explain that it was neccesary to destroy the village to save it from Al quaeda and their accomplices and you would have completed the mission that your predecessor Franklin D. Roosevelt funked in 1945.

    Yours in hope


  16. This euro redemption fund sounds bllx to me. Take 2T of debt and push it to one side and then repay at 100B a year for 20 years? Who is going to agree to this – maybe captive banks – which are already bust – so will need more money – but from where? Possibly will be printed.

    But the whole set up is poor maths. Anything over 60% gdp gets parked. But what happens next year when the EZ has zero or near zero growth or even a recession – and is already borrowing. The 60% will jump to maybe 63 or 64%. Then what? And the following year to maybe 65%. The only way to keep the figure at 60% will be to allow inflation to equal the deficit – which may be 4% – twice current levels. Not a disaster but I’m sure some Germans will fret. And what happens if real interest rates turn positive?

    But if you add this to the fiscal pact it looks to me like embedding recession in the “periphery” and an endless series of crises. One contry after another. Not in anyway a solution.

    I see from ZH that the EU has come out in favour of Eurobonds and the ERM stumping up the cash. Germany et al has allegedly said “nein”.

    Interesting times as the can is redesigned but appears now quite bent out of shape and not very aerodynamic.


  17. Joanna, thanks for choosing Greece. It was already in the local news 2 days ago. UK reservations increasing. Unfortunately German reservations are dropping….
    About self catering. Greek tourist industry will adjust eventually. We are flexible people. All is needed is information and planning from both sides (that’s a coordination the EU was supposed to assist…:-(
    For now, the stereotype of British tourists is mass charter packages, many of them full of youngsters – nightlife, dance music and drinks…
    But i am optimist on this one. Internet is changing everything very fast.


  18. O/T From The BBC site
    “David Cameron has decided not order an inquiry into whether Jeremy Hunt broke the ministerial code after he was grilled at the Leveson Inquiry.

    Mr Cameron believes the culture secretary acted properly when he was responsible for Rupert Murdoch’s BSkyB takeover bid, Downing Street said.

    Downing Street said the PM would not refer the case to Sir Alex Allen, his adviser on the ministerial code.

    Mr Hunt admitted he considered resigning over the BSkyB controversy.

    Deputy Labour leader Harriet Harman called the decision not to refer Mr Hunt’s case “disgraceful”.”

    Well that’s all right then.


  19. A smart operator and with political nouce. that the EZ has made it so far is down to him I think – though one man could not be wholly responsible for LTRO1 and 2. But these are very public messages that something has to give, and soon…


  20. “Dublin turnout averaging 10% by midday”
    It looks like a win for the yes vote, romping home with 6% to the no‘s meagre 4%.
    The ‘people’ of Ireland that have braved the rain that is, are voting for more austerity.
    To be fair, the final turnout is expected to rise to the astonishing 16%.
    So the ‘don’t cares’ on 84%, have won the day!


  21. “Before any new readers write me off as an anti-German headcase, ..”

    This is nothing, one needs to read what the few politically-aware Germans are writing about their own government:

    “The Federal Government: ESM and therefore Euro have nothing to do with the EU!?!?

    The ESM is a criminal agreement. You need say nothing more about it. But the information that we received today (thanks to the Bündnis Bürgerwille) is remarkable, because it reveals the utter mendacity of the political and legal leadership of the Federal Republic. From an official statement of the Federal Government to the ESM (text):

    ‘The federal government does not share this view (that the Bundesrat must be involved in the legislative process for the ESM – ADD). With the ESM, it is not an EU project in accord with Article 23 of the Basic Law, instead, it is an international treaty that was deliberately concieved outside of the EU. There is thus no basis for an application of Article 23 of the Basic Law for that reason alone. Apart from that, with the ESM contract there will be neither a transfer sovereign powers to the EU nor any other “modification of the textual foundations of European primary law”. (text of Article 23, Basic Law, at the bottom end of the text – in the German orig. Website!)

    It is important that the meaning of this paragraph is made really clear.

    The Federal Government declares officially to the Federal Council that the ESM has nothing to do with the EU: ‘… the ESM ….is an international treaty that was deliberately conceived outside of the EU.

    Note well, the euro and the euro zone were created under the EU treaties and exist within the framework of the EU.

    The ESM has the purpose of saving the euro and thus the euro zone. This is the unanimous consensus of everyone, whether a part of the government, the Bundestag or the Federal Constitutional Court, that has up to now addressed the public: “If the euro fails, Europe fails” – by whom was that again? Perhaps the head of the federal government?

    Now, the Federal Government declares, the ESM has nothing to do with the EU. Accordingly, it must also have nothing to do with the euro.

    The attitude of the Federal Government so obviously has no relation to reality, that one can only ask, what is really behind this argument. We believe: DESPERATION. The Federal Government, and with it the entire large homogene party fromCDUtoGreens, has hopelessly got onto the wrong track in the euro bailout madness. They have broken the law, relegated the Constitutional Court to a jumping jack, speculated away the assets of the citizens and sold off the rights of the citizens.

    And yet they are still faced with failure. From Greece, Spain, Italy, all of which will, sooner or later, give up the euro.

    Because in mendacity every lie only leads to even bigger lies. Because every violation of the law will only lead to an even greater violation of the law.

    By the way, juridically we can understand the attitude of the federal government. It was from the outset clear to everyone who knew anything about it that such a dictatorial authority as the ESM was not able to be brought under EU law. That is why the ESM was not made a part of the EU – which is only further proof of the utter hypocrisy and immorality of the homogene party fromCDUtoGreens and their leaders.

    Our proposal is: Let us simply take the Federal Government at its word: The ESM may not have anything to do with the Euro and with the euro zone! Excellent, because then it does not even need it! And we say to Frau Merkel: If the euro rescue madness fails, then Europe can free itself!

    Valid otherwise: On to the demos! On 2.6. in Munich! On 8.6. in Berlin! On 16.6. in Karlsruhe!


  22. @Bernard. 84% ‘don’t care’ is a powerful illustration of how the elite can get away with it. Sleepwalking into slavery.


  23. Pingback: EUROBLOWN: My my, what odd children Mr Friedman had. | A diary of deception and distortion

  24. Right then, is it on purpose to make a crisis in EU (and US), so a new currency can be introduced [SDR] for us all ? (Which happens to be of a value comparable to the british pound). Is the target to compose a United Nations of The West with the financial Centre in GB, to oppose Russia, China ?


  25. Or “Better the Devil you know, than the Devil you don’t.” is more like it.
    Fear. Fear of the ‘unknown, perhaps?
    Or maybe – “Let’s ignore it, and hope it all goes away.”


  26. if Wolfgang Schäuble was a Minister during the 80’s Europe wil have already been communist. Former soviet union would love him. Today Germany is the best ally of the communist and naziest parties in europe. They really rise them from their grave.


  27. “What I am doing here is dramatising and sharpening the focus on some facts to wake people up.”

    I read your blog every day without fail and imho you are doing an excellent job so please keep it up.


  28. OAH You forgot the more common line heard in Viet Nam ” Kill them all and let God sort them out”


  29. The tabloid war between the useless BILD and your equivalent publications in Greece spooked all the usual suspects for flatrate-tourism.
    Now they all go to Turkey this summer. Sorry about that. :-(


  30. I don´t think its so much a “don´t care” but the fact that the Irish know from experience that they will have to vote again until the vote is yes, so why bother?


  31. “…a devaluation of the new currency by 65%, a GDP nosediving by 22%, 34% unemployment, and income per capita nearly halving to 55%…”

    Indeed, that’s what it would look like a week after the event.

    But a more important question is, what would it look like a YEAR after the event?

    A somewhat more rosy picture I suspect. And in that event, would Spain/Italy/Ireland etc keep on taking the medicine?


  32. “And in that event, would Spain/Italy/Ireland etc keep on taking the medicine?”

    No way! We’d send our dancers to rub their grubby little faces in it. Nah, one would do the job:

    It’s a frail bleeding edifice. Don’t beleive the hype!

    (but they do)


  33. Pingback: John Ward – Euroblown : As The Lights Go Out All Over Greece, Now At Last Berlin Moves Towards Eurobonds – 4 June 2012 | Lucas 2012 Infos

  34. Pingback: EUROBLOWN: Germany will wind up owning Europe, while paying just a third of the asking price. | A diary of deception and distortion

  35. Pingback: Germany will wind up owning Europe, while paying just a third of the asking price / Η Γερμανία θα καταλήξει να κατέχει στην Ευρώπη, στο ένα τρίτο του της τιμής. « eleutheriellada

  36. Pingback: Germany will wind up owning Europe, while paying just a third of the asking price / Η Γερμανία θα καταλήξει να κατέχει στην Ευρώπη, στο ένα τρίτο της τιμής της. « eleutheriellada

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