troika123Surprise, surprise: Germany, Netherlands and Italy have the biggest liability to gdp ratios in the EU

For some time now, many of us have been puzzled as to why some of the more vociferous members of Troika2 have been behaving as they are. In particular, there is conjecture about:

1. Why Berlin in particular engages in persistent lying about the negative financial taxpayer ramifications of Greek default and

2. Why they and most American media continue to the promote the myth of forced Grexit from the eurozone….which all pollsters agree is what most frightens the middle class Greek voter.

In previous Slogposts, I have tried to rationalise these odd behaviours as the classic means by which controlling bullies whip up Xenophobia among their own electorates, and create terror among the victim electorates. I’m sure this is a very real motivation among the eurogroupe, for it cannot allow any Resistance Contagion: once that begins, it is the end of their largely overrated power. But evidence is gradually emerging that far more selfish drivers are also in play.

At this link is an official EU release whose sole concern is the subject of ‘contingent liabilities’ entered into by EU member states. This is a subject which, in the UK context, I’ve been boffing on about since 2008: the difference between a Sovereign’s national debt, and its contingent liabilities can be massive. To take the case of Britain, such liabilities add one trillion pounds to all things for which no budgetary allowance has been made – either because of the usual lack of foresight, or grubby little deals that went round the democratic process. In the UK, the two biggest by far are illegally self-awarded Sir Humphrey pensions, and Gordon Brown’s off-piste screw-up with the private finance initiative.

To cut quickly to the Sun headline, the EU release in this instance contains some blockbuster facts….and adds another piece to the eurozone jigsaw of hypocritical mendacity.

Contingent liabilities are often referred to as Shadow Debt: if you’re lucky, they won’t become an eventuality. But as the EU table shows, given the parlous nature of the ezone banking sector, every one of the liabilities is a racing certainty.

We’ve all been asking why Germany ignored the EC bailin directive last week and bailed out a small Bavarian Bank. The answer is simple: not to do so would’ve been illegal under BundesRepublik law, because Berlin had promised so to do. On this basis, while at first sight German national debt is a ‘mere’ 70% of gdp, add the promises it has made to its banks, and the number comes in at a horrific 222%.

Not far behind comes the Netherlands with a similar ‘official’ national debt at 73% of gdp. But the contingent liabilities are 115%…making a pretty nasty mountain of 188%.

The Number One and Number Two top contingent liability millstones in the EU are – by miles – Germany and the Netherlands.

Now let me see…who are the two chaps working hardest to stop the Greeks and their contagious banks from going their own way? Why, none other than the German finance minister Wolfgang Schäuble, and the Dutch finance minister Jeroen René Victor Anton Dijsselbloem.

The third prong of Troika2 is of course the ECB’s Italian Mario Draghi. Without any contingencies at all, Italy’s national debt is 132.6% of gdp. Add its 45.5% of contingents, and this too adds up to 178.1% of gdp.

This makes Mario’s homeland Number Three contingent liability millstone in the EU.

So you see, its not exposure to bad debt Troika2 fears (because nobody’s responsible for that): it’s the internal guarantees they’ve given to banks who will fall by association once it becomes increasingly clear that there isn’t a safe bank anywhere in the ezone. Names like Deutsche Bank, Monte Del Peschei, Santander and Landesbank spring easily to mind, although I’m not entirely sure why.

Yet again, Frances Coppola has nailed this one with clinical accuracy in her latest piece on strained Austro-German relations at Forbes:

‘As I’ve noted elsewhere, the entire Austro-German banking system depends on a system of off-balance sheet sub-sovereign guarantees: if Austria overturns the guarantees of one of its provinces, how can any of the rest be trusted? Unsurprisingly, a swathe of court cases challenging both the Austrian authorities’ overturning of the Carinthian guarantees and its debt moratorium are being prepared.

But this goes beyond court cases. It strikes at the heart of the European Union, which above all depends on there being trust between member states. Greece has been roundly criticized for behavior that caused trust to break down, threatening to tear the union apart. And now it seems Austria may join Greece in the naughty corner….Amusingly, the architect of this “default”, Austrian Finance Minister Schelling, is critical of Greece. He says that Eurozone countries can’t trust Greece. No doubt Heta bondholders – and perhaps the German government – would say that they can’t trust Finance Minister Schelling.’

Oh dear. Just when we all thought blood was no longer thicker than water, it seems that “we’re all Europeans now” was just another load of old bollocks.

Earlier at The Slog:


  1. Isn’t it the case that these privately owned institutions we call banks are now big enough to destroy any country’s economy?


  2. It now seems that the EU is just too big to fail.
    The young people are being stiffed, and asking for more. So let them have it..


  3. Actually as far as I can see it always IS a load of bollocks, kfc. I have long come to the conclusion that nothing said in the public domain by government, politicians, Establishments or indeed any large organisation is intended to inform or explain. It is all meant to confuse and obfuscate, the few crumbs of truth are indiscernible among the bollocks, deliberately so IMO.

    As I have said before, it is pointless to listen to what they say, they only tell us what they believe we want to hear, or what the opposition doesn’t want us to hear. Sadly while most people will claim they want to hear the unvarnished truth, in reality they want to hear that everything is under control and getting better.

    Liked by 1 person

  4. Hi john, I am just an ordinary chap living in Greece for the last 10 years and am surviving the Greek ‘crisis’. Many expats panicked at the start of the problems here in the country and fled back home. Today with the new government, at least they are trying to look after the people but the boys at the top of the EU do not want them to succeed as their policies have not worked. Here on the ground, they understand what has been going on and realise things have to change but will take sometime to come to terms with it. Today through a storm (weather) I picked up a stranger giving him a lift home to his village, informing me he had been out working from 5.30am until 3pm for 40 euros just to survive. They are the ones who do not really understand what is going but have to grab a Euro were they can. Let the big boys grab what they can but the people will eventually not stand being at mercy of the EU and the Bankers.

    Liked by 1 person

  5. As long as the investment arms are still tied to the retail then absolutely, The US had it sorted with the Volcker rule, then essentially repealed it thanks to some arm twisting (campaign funding) from Citibank leaving the taxpayers on the hook for some quite frightening sums of money, and Obama signed it off WTF!


  6. Well as an expat in Germany I was always trying to find ways to get BBC to get Top Gear since we lost satellite. Now Jeremy has been sacked there is no need to receive BBC in any form anymore. Sad days. My link to the UK gets ever looser.


  7. Gemma
    Given the derivatives exposure is bigger than the economy, yes. Mind you, George Soros falls into the same category….


  8. That’s Bank of America you’re talking about – who in 2011 had $76 trillion in derivatives?

    One small bank has hocked the equivalent of the world’s economy just to bolster the illusion of America’s economic figures?

    Rumours have it (sorry, that should be rumors, this is America!) that another well known Wall St bank has $1200trillion.

    [Off topic by a shade] Oh, and by the way, I have it on good authority – that is to say I speak with these people – there are a good few small businesses in the US who haven’t submitted a tax return since 2010. Nor has the IRS pressed them to do so. Printing money to pay government debts sure allows people to swim upstream! I wonder what is going to happen when the IRS start to get heavy?

    Which reminds me, I need to file my return for 2014… but not in America ;-)


  9. Isn’t this more an example of the level of Telegraph journalism? After all, anything Wolfie says is taken down and used in evidence against him by the mainstream media…


  10. It surprises me that you believe the UK Off Balance Sheet Contingent Liabilities would increase national debt by a mere 1 Trillion given all the pension cos liabilities, the 85 K per bank account (fair enough max), privatised semi monopolies etc etc that lurk in dusty rooms somewhere.

    I am surprised that some young energetic investigative journalist with the patience of Job and the knack of correctly requesting FOI from the Treasury etc minght do us all a big favour and remind the politicians how unstable this debt mountain is by pursuing this number and bringing it to the publics attention a Trillion does not cut it nowadays.


  11. yessiree. The EU gravy train rolls on.

    Lets not forget how the EU has never and can never be audited by accountants because, as the head of the EU Fraud Investigation squad says, 50% of the EU budget is defrauded by the organised criminals running the circus.

    Thats right. Half the budget is stolen by the MEPS themselves.

    But its ok. there will be no investigation. No audit. No awkward questions. The gravy-train rolls on.

    Lets not forget how the government (pedophile ring)b in brussels was braught down because they tried to sweep the biggest pedophile ring/child sacrifice ring in history under the carpet. And failed.

    Lets not forget how many of the EU’s higher echelons were all implicated in those pedo rings. Of course, no criminal proceedings will result. Ever. As long as the pedo’s do as they are told.

    Yep. It is nooooo surprise that the United Saudi Americans, the corporat6ions, monsatano, big oil, big banks big money and ‘special interest groups’ can ride these whores around like ponies.

    They are as big a threat, to the people of euroland as the nazis (third reich.) were and as the united saudi americans (4th reich) are now.

    And the EU gravy train rolls on.


  12. ‘special interest groups’ can ride these whores around like ponies.

    Which is why the British MPs were allowed to get away with their fraudulent expenses claims…


  13. Pingback: John Ward – Revealed : How And Why The Three Prongs Of Troika Two Are Looking After Number 1 – 27 March 2015 | Lucas 2012 Infos

  14. Pingback: Is May 9 The Grexit Date? | David Stockman's Contra Corner

  15. Pingback: Is May 9 The Grexit Date? | ZombieMarkets

  16. Pingback: Is May 9 The Grexit Date? | StealthFlation

  17. Pingback: April 17/According to Dave Kranzler, it looks like a massive derivative bust/Meijer: A GREXIT by May 9/the ECB thinking about a parallel currency for Greece i.e. issuing IOU’s/Oil rigs continue to fall in number/Dow falls/GLD has a huge addition of

  18. Pingback: Three day weekend Grexit? Mark your calendar for May 2nd, 9th or 16th - Hellenic Insider

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