EXCLUSIVE: ‘Bankfurt and the US out to stop Draghi’

German bankers, IMF ‘blocking ECB plans for Bank Union and Greek rescue’

I’ve been saying for months now that Greece ‘will not be allowed’ to leave the single currency, because Merkel and Draghi accept that the chaos would be fatal for the eurozone. I also recently noted that the ‘done-deal after a suitable period of fisticuffs’ I’d predicted was surfacing. It still is: reduced interest rates on extended periods of Greek debt repayment (plus both ECB and sovereign EU member haircuts) are now being openly discussed by officials in Berlin, Brussels, and Paris.

But the assumption of all the players in this soap opera is that there won’t – indeed can’t – be any changes to the script. However, new storylines are coming into play, and at least three of them could yet demonstrate that this is  an unravelling nightmare than a wooden TV production.

Alpha, Greece’s largest bank, released a report 48 hours ago suggesting that the Troika is being deliberately negative. My own information is that the IMF is the prime mover in this negativity. In turn, the bank quite rightly points out an uncomfortable truth: worse than imagined Greek economic performance should be triggering a mitigation of the Greek debt repayment terms anyway….based on the original Brussels bailout.

But the IMF doesn’t want to talk about that: it seems suddenly very keen for some reason to depict Greece as a hopeless basket case. I have no problem with that (I agree with them) but persistent leaking about the need for a third Athens bailout is odd behaviour for a Fund allegedly trying to help the Greeks.

As I predicted, the soft Left in Greece (mainly Venizelos) is remaining adamant that it won’t budge on the Troika’s assertions that the proposed savings are a scam, and anyway more are needed than even the ones suggested. The main issue as always is the fear among the Athenian political class that civil servants awarded massive pay cuts will start digging smelly bodies up, but suspicions remain that the Pasok leader has his own agenda for trying to scupper the Samaras/EU deal on mitigation.

Now I’m told that Thanos Katsambas (a Greek very close to the IMF) has blurted out to the Wall Street Journal  that in reality the Papademos Government that fell in 2011 had actually met “only 22% of the commitments madee under the troika-supported program”. (Bailout 1).

Further, according to prominent Greek blogger Yaris Varoufakis, ‘Greece has 12 billion euros pending from Brussels (unspent structural funds for the 2007-2012 period), but the European Commission is only channelling 1.44 billion to the EIB for investments in Greece.’

Just to make things even more confused and conspiratorial, the Bankfurt Maulwurf re-established contact with me yesterday morning. His contention seemed at the time farfetched in the extreme: “It is very simple,” he told me, “the sensible elements in the Frankfurt financial community have made it brutally clear to the key people in Brussels, Berlin – and Herr Draghi – that we are not prepared under any circumstances to submit to a banking union run by the ECB, and most definitely not as the price of saving Greece”.

Many Sloggers (especially in Germany) have, from the start of the Maulwurf’s appearance as an irregular Frankfurt mole, opined that the bloke talks a good game, but he is destined to lose. I think they could well be right, but even after last week’s rebuff, BuBa head Lens Weidmann is still blocking any substantively greater German commitment to the ClubMed bailouts; and as we’ve seen, earlier this week the Karlsruhe Court effectively capped any such involvement at €190bn.

So I was intrigued to read this in Varoufakis’s blog earlier today:

‘Regarding the Banking Union, we have a clash of titans brewing. A new Titanomachy is raging, as these lines are written, between German bankers adamant against any serious supervision by the ECB, and the Commission which has issued a splendid paper on what Europe’s banking system should look like within a few years.’

Now as that is almost word for word what the Bankfurt Maulwurf told me, I have to wonder whether there may indeed be substance to what I have long suspected: that the German financial community is out to stop what it sees as the madmen of the ECB – and that it has an enthusiastic helper in the United States.

That would explain the tough IMF line – and is itself explained by the East Mediterranean aims of the Americans reported here many times before. Washington would like very much to drag Greece into its sphere of influence: but for clear historical reasons, most Greeks with any Left leanings at all would find that abhorrent. So if that’s the case, why are the Samaras soft-Left elements trying to scupper a deal that would keep Greece in the euro, and the gravy train still working for pro-Brussels troughers like Venizelos?

You may or may not remember a Slog post from August 30th that suggested (based on Athenian sources) a plot by Venizelos and others to dump Samaras. The key source at that time said:

“A Samaras failure would damage his political position in Greece massively. Those with their noses in the Belgian and German graft trough have everything to gain from retaining a close EU relationship, everything to lose from the development of this [Cyprus/Israel/Greece] thing, and much to gain from Samaras’s failure.”

The source went on to accuse Evangelos Venizelos directly.

So the calculation of the more corrupt Greek pols appears to be that Samaras screws up, and fear of a Greece drifting off towards Israel persuades Berlin-am-Brussels to keep Greece in the eurozone at all costs.

Up until the last few days, that was looking like a smart overall strategy. But the page one assumption of Venizelos and others is that the EU will always prove to be too strong for Bankfurt and the Karlsruhe Court. If the strong men of Frankfurt really are on a mission to rubbish Greece beyond redemption, then the power assumption might prove to be misplaced.

Things will continue to develop. Stay tuned.

58 thoughts on “EXCLUSIVE: ‘Bankfurt and the US out to stop Draghi’

  1. I fear that the Frankfurters will be sausages in a barbecue soon!
    We are seeing the last hurrah from the Central Banks. Once the sugar rush wears off we will either have serious debt restructuring or face a Japan style lost generation.


  2. My guess is the kick the can mentality will prevail and we will see something closer to your lost generation, unless they are absolutely forced to make the hard changes. But there is no political will to do that unless things totally fall apart to the point that there is no other option left. Left with an option, it seems to me the politicians will always choose the easy, leave-it-to-the-next-guy approach.


  3. We need to look at the basics. Any money directed to Greece has not been for the benefit of its citizens. It has gone directly to the bondholders holding the debt, ie. the private banking cartel outside Greece.
    The austerity, which is creating poverty,unemployment and civil unrest in Greece , is imposed to enable more money to be available to pay the Foreign creditors.
    The next step is a financial coup d’etat of Greece. They will be required to sell-off state assets to the Carpetbagging Financiers for cents on the Euro.
    I can not understand why Greece clings to the Euro, it is impoverishing them.
    They need to default , revert to the Drachma and get back to reality. They can still be part of the EEC, if they need this political union.


  4. Forget about Greece, the country is tiny and unimportant commercially. The worst it can do is upset some banks and juicy military contracts. Spain, on the other hand, has 47m inhabitants and its finances are in meltdown, its politicians in denial.


  5. As JW and others point out, those that are clinging onto the Euro are the elite that are benefitting from the current situation and will continue to benefit as long as they can stay. The continuing acceptance of the status quo is not for the benefit of the people.
    Hearing the attitude of the EC and it’s president, to their concept of democracy (supported by the appointed Italian premier), that democracy is too important to be left to the people, Greece will remain in the Euro until its usefulness is exhausted. It’s peoples fate is of limited importance to those making the decisions.
    The Greek people may refuse to go along with this but the level of organisation required to supplant those currently controlling the decision making, is I fear, still well beyond their control.


  6. *** Spot on.*** I could not agree with you more. I’d be utterly mystified by the likes of “Roasario” and “SamurarTrader” above, were it not for the fact that we can recognise them for the eu-philes that they are …


  7. The article brings in my mind a question i had posted to JW some time ago.
    In fact i sent the question to Dr Conan back then, thinking it’s probably silly (
    Dr Conan probably found it silly too).
    But what the heck – i will place it to your attention. My question is:
    How “Deutsche” is Deutsche Bank?


  8. “… Objective of tyranny is to bankrupt the citizens, on the one hand, in order the guard of the regime to be maintained with their money, and on the other hand , the citizens to be occupied so no time to remain to them for scheming.

    To this result aims so much the imposition of high taxes, the absorption citizens fortunes , as well as the construction of big works that exhausting the state finances….”


    They provoking us.

    Still all these bums , thieves and traitors are in power supported by the European Political elite however at the end , there it will be an end, I hope that all the deplorable Hellenic political elite and their collaborators will be excoriated and hanged at Syntagma Sqr.

    Currently there is no hope and there is nothing to be lost for us and this the worst situation for “them” to face.





  9. I have been astounded by the amount of failed conclusions about the German constitutional court’s ruling in the mass media (and even the German government, although Merkel and Roesler could well be aware of theirs being a Pyrrhus victory only and really be bluffing their ’happy’ faces. I mean, they should have some sort of counsel able to explain the preliminary decision’s real meaning, shouldn’t they).

    This blog is among the notable exceptions and among the VERY few who actually got the real extent of Wednesday’s Karlsruhe ruling right: the ”ESM” may well be a goner, http://www.financialnewsroom.com/ — and with it most of those idiotic hopes centred around ”Super-Mario” (which, very appropriately for this blog, are among the craziest Bollocks on the planet) and appeared to be ”calming” the markets so far. Each and every tick based on confidence in ”Super-Mario” is unfounded and will eventually be reversed — and then some –, providing a rough awakening for the stupid crowds in the markets still believing the mainstream media and their notion of Karlsruhe to have ”cleared the way” for the ESM. Just wait for the next rounds of negotiation with those newly-limited-to-€192bn German reps in them and see that new-found ”Euphoria” coming to a screaming halt…


  10. Experience shows that politicians will not do anything that makes them unpopular, however necessary that might be. They are all ensconced in nice comfy situations and don’t want to lose their power, influence and incomes.


  11. Oh come off it! RheinMetall can easily get a bit of help to the next contract from the German authorities. Greece is not the only place to buy arms. I find this alarmist talk unconvincing.


  12. @Nick This is an important question as what it is asking, essentially, is: To what extent have ‘national’ interests been replaced by ‘supra-national’ interests? And, of course, the question is by no means restricted to Germany. The answer, in the end, will be found if you just follow the money as usual but it is getting harder not to think that ideas of national sovereignty are now being severely eroded.


  13. Pingback: ‘Bankfurt and the US out to stop Draghi’ | Machholz's Blog

  14. The ESM-ECB debate is on ice. The battleground has switched – as some of the above indicates – to the issue of bank supervision (national or EU wide). There is a tendency, JW, to use terms like “German financial community” as if there few differences in interests and style of various German financial institutions. Deutsche Bank’s interests and those of the regional savings banks may well diverge. (I wonder if Bankfurt is allied with the latter). Earlier this week, The German Savings Banks Associations spent a substantial sum on full page adverts in the German media (everything from FAZ to Bild Zeitung) highlighting how “special” their members are and how they want to continue to be supervised by a German supervisory body. I don’t pretend to understand what exactly this means, nor how it fits in to the above (both JW and some sloggers), but offer it just for info. Tschüß.


  15. Maybe Cameron took a leaf out of Vince Cable´s book and left important documents in the back seat of his car and sent an SMS to his buddy at the newspaper?
    No such thing as a leak, a secret conversation or indeed the chance to run down the beach topless with you royal loved one.
    Honesty, Integrity? I guess these two words might not appear in the next edition of the Oxford


  16. $150 (minimum) WTI will make a mockery of any plans that anyone has.

    And it’s Friday so that means a quick shout out to the CIA/FBI/MI6 spook(s) tasked with watching these threads for unpatriotic opinions.

    OBAMA, TESTICLES, TNT underpants

    Now that I have your attention: take a look a what Bernanke did yesterday. That’s the first step towards a full printathon that will potentially destroy the accumulated wealth of millions (including you and your loved ones) and lead to thousands of deaths from the inevitable food inflation.

    He represents the face of the establishment you are sworn to protect. It’s not about serving your country, it’s about serving your masters. Do you honestly believed that they’ll do you a solid and protect you when their policies lead to mass indignancy and violence? Of course not, your efforts are meaningless and only exist to buy them time. You’ll be cast aside as soon as those efforts are deemed surplus to requirements.

    Just a little food for thought whilst you pretend that your job matters on a Friday afternoon. Remember there’s an alternative, it’s called “having a moral compass and quitting”.

    If not: I hope, as always, that you catch a particularly bad STD this weekend and spend the next 3 weeks feverishly scratching your groin. Without any relief. ;)


  17. ” I have long suspected: that the German financial community is out to stop what it sees as the madmen of the ECB – and that it has an enthusiastic helper in the United States.”

    Would these be the same German and American financial elites that caused the crisis in 2007 with their fraud?… and have and are still profiting from it?


  18. Pingback: John Ward – Eclusive : ‘Bankfurt And The Us Out To Stop Draghi’ – German Bankers, IMF ‘Blocking ECB Plans For Bank Union And Greek Rescue’ – 14 September 2012 | Lucas 2012 Infos

  19. Chris :”If not: I hope, as always, that you catch a particularly bad STD this weekend and spend the next 3 weeks feverishly scratching your groin. Without any relief. ;)”

    An ancient Arab curse be on them: May their groins be infested with the fleas of a thousand camels, and may their arms be two short to scratch.


  20. to me it is the Chicken version of the Great Game. Since the bubble burst in 2007-08, the events that I remember are (a) TARP, (b) Tim Geithner’s visit to Europe in the summer of 2011 (and the cold shoulder treatment) and (c) the accidental non-downgrade of France by S&P that was followed by the massive intervention of the Fed righr after Bunds ticked up (or was it unnnamed French bank that almost went bust?) Clearly the Americans and the “Europeans” have had different approaches, further complicated by the fact that in spite of the Democratic administration, it is “E Pluribus Unum” over there, whereas in Europe, well… you tell me! The Germans have collected the cash since 1990 (so the numbers say), and they aren’t the generous types. They will not return it, (nor will they write down their losses) nor will they depreciate it. “Europe”, to them, is a zero-sum game, and “growth” is forced sales of junk, with borrowed funds, to the rest of us. I am happy with that, because the sooner the charade ends, the better.


  21. A large part of these unfolding events is they have no real idea of what to do.
    Hence the confusion and veiled statements flying around.
    I am now convinced they do not know how to deal with the crisis they have created, after all it is unprecedented.
    This is why the collapse will occur too many chefs who haven’t got a clue spoiling the broth.
    The bold statements are just “bluster”.
    This is the time for radical action and thinking.
    But that’s risky and these politicos don’t do risks any more do they.
    Still after the collapse someone will emerge who will.
    Probably have some kind of a moustache ,despots always do !
    Not interesting times, dangerous times.


  22. They will never let it collapse. Imagine all those gold plated pensions in Brussels, well all over really. We have not yet begun to witness the depths to which they will sink to save their pensions. Sequestrations, gold confiscations, outrageous money transactions which include just taking the money straight from our bank accounts. Nothing but nothing will be sacred or off limits if the threat of collapse becomes to great, after all, they will have nothing left to lose, will they? And they care not a jot for us, even less when it them that are in the firing line.
    We have even begun the real suffering yet.


  23. Chris. i do think you are being a little unfair to these poor chaps. There is a recession after all and jobs aren`t easy to find, it`s not as if they could quit and just walk into another job.
    That would be hard enough for any normal adjusted member of society, but these poor chaps have no social graces, they can`t interact with other members of society as the rest of us do, they don`t know how to make any sort of meaningful contribution to the community.

    Now be honest Chris, would you employ one of them?
    There you see, you were honest with yourself and you had to say no.

    I think we should just leave them in their darkened room, glued to their screens, with their delusions of of being a useful member of society. They`re happy there doing their bit to save the world from subversives like us, and let`s face it, you really wouldn`t want the alternative of them wondering around the streets unsupervised would you……..


  24. @MM: you make a valid and thought provoking argument. But the question remains, what can be done with them, post collapse?

    I’m thinking Soylent Green might be the way to go?! Their sedentary jobs mean that their body fat percentage would be substantially higher than a functioning member of humanity.

    Therefore they could be a very nutritious snack?


  25. @kfc: all true, but how do collapses happen? First slowly, then all at once.

    They’ve struggled to contain the slow-motion part of the event, I have my doubts they’ll be able to act fast enough once it really gets going.


  26. @ c 777…..Agree totally……..anyone who thinks for a moment that any EU politicians are doing anything other than reactive fire fighting must be nuts…There is no master plan….there are schemes, some silly, some disfunctional, some downright illegal…..But sooner or later, every Scheme that they field gets shot down or makes no sense once the detail is known.

    The ESM might have been approved but if Germany is effectively capped at EUR 190B…..and since France, Spain and Italy are supposed to contibute large sums to the scheme…it is daft…it is’nt going to happen…..Bond buying by the ECB is far from a done deal…..Eurobonds are off the radar, Bank Regulation has many different versions from different countries………and ultimatley….Here be the problem….Go back five years and there was a community spirit of communication, co-operation and consensus…..not to go along was simply bad manners.

    There is no possible way now, with almost every country set at the throats of every other country, with real media fired hatred and loathing, that the European Community can ever be retrieved…Put the money aside for a moment and just look at different EZ nations view of each other. That is ultimatly why the Euro Dream can never possibly work…..The fact that the Sprouts are having to move so fast is to beat the Ballot Boxes of much of Europe and their next elections. They may have got away with it in Holland for now…..but only by a whisker.


  27. Well yes, that is of course a large part of the problem. ‘They’ know where they have come from and where they want to get to, but the tricky bit in the rather extensive middle is missing. ‘Their’ solution? Do nothing for a very long time. Dissemble, play around with massive currency debasement, threaten dire consequences if conditions for funds infusions are not met (which infusions merely help the infusor), have endless ‘secret’ meetings between what are jokingly called ‘leaders’, cut social welfare payments, raise taxes and generally muddle along, surfing the crest of their own self-inflicted crisis. This is the best ‘they’ can do, trailership at its finest. The crux, of course, is that they can never get from the past to their desired version of the future without selling the concept and its detailed implementation to the diverse sets of people involved. Secrecy is the certain way to have your ideas blocked at every stage. Transparency may not work either, but at least it stands a chance.


  28. @CL.’First slowly,then all at once’.Watch the oil price(inflation),basic food prices in the Arab world(inflation, more riots),house price crashes in Spain and France(well underway),a run on those countries’ banks,paralysis on 8 October EZ finance ministers meeting on Greece,more paralysis on 18-19 October at EU Brussels summit,troubled bond auctions of Spain and Italy on 29 -31 October, ‘hung ‘outcome of US elections November 6,the Bundestag refusing to go beyond E190 bn,November.Personally,I would have Bernanke,Monti and our MarK put into an asylum before they destroy the world.


  29. You sound like you might be quite indifferent to th suffering, kfc.
    Mr Ward is not a fan of violence but this is one area I must disagree.
    Lie back and enjoy the apathy or take your biggest stick and fight the bastards
    instructions to follow


  30. From next edition of Trivial Pursuit:
    – Which is the greatest country in the world?
    – Why, Greece of course.
    – Greece ?!?
    – Well…it’s population is in Athens, their money in Switzerland and their government in Brussels.


  31. Have you guys seen this article?


    Essentially, Der Spiegel suggests that the Germans may have pulled of a genious trick, considering the fact that the Bernank hit the print button within 24 hours of the supposed German “green light”:

    Triumph in Defeat – Euro Ruling Not as Simple as It Seems


    Before the European Stability Mechanism can be ratified, the German government must answer complicated legal questions.


    The question of how exactly these legal declarations are supposed to be implemented is likely to cause headaches among legal experts in the German government and the president’s office.


    In the ruling, the court says that Germany “must express clearly that it does not wish to be bound by the ESM Treaty in its entirety if the reservations made by it should prove to be ineffective.”

    According to the German parliament’s attorney of record, Martin Nettesheim, this means that the German government must affix a formal reservation under international law and, at the very minimum, must inform and solicit a response from the other euro-zone member states and provide them with a reasonable deadline within which to enter any objections.

    The bottomline is that you don’t just unilaterally declare an exit clause into an international treaty without consent from the other member states….



  32. The above curse should of course say: May their groins be infested with the fleas of a thousand camels, and may their arms be TOO short to scratch.


  33. Giwrgo, I agree. I have doubts on the “WE WILL NOT FIGHT EACH OTHER” thing. Look around, it’s happening. Look at the % of Golden Dawn as one of the symptoms…


  34. “almost word for word what the Bankfurt Maulwurf told me”

    The logical conclusion from that is that the Bankfurt Maulwurf is telling more bloggers than just you.


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