[PAA-Discuss] EUROPE WATCH Pay Attention America

[Rick _lux]

Be sure to see Max Keiser's Truth to Power on Greek Analyst (bankster's "useful idiot" Teddy Tsakiris)http://youtu.be/Y2vsYdReMCg    


 
                                
            
              Wikileaks Exposes German Preparations For "A Eurozone Chapter 11"
              
              
  


  
    Submitted by Tyler Durden on  11/06/2011 




  The following cable from US ambassador to Germany Philip Murphy ("Ambassador
 Murphy spent 23 years at Goldman Sachs and held a variety of senior 
positions, including in Frankfurt, New York and Hong Kong, before 
becoming a Senior Director of the firm in 2003, a position he held until
 his retirement in 2006") "CONFIDENTIAL: 10BERLIN181" tells us all
 we need to know about what has been really happening behind the smooth,
 calm and collected German facade vis-a-vis not only Greece, but all of 
Europe, and what the next steps are: "A EUROZONE CHAPTER 11: DB
 Chief Economist Thomas Mayer told Ambassador Murphy he was pessimistic 
Greece would take the difficult steps needed to put its house in order. 
 A worst case scenario, says Mayer, could be that Germany pulls out of 
the Eurozone altogether in 20 years time.  In 1990, Germany's 
Constitutional Court ruled that the country could withdraw from the Euro
 if: 1) the currency union became an "inflationary zone," or 2) the German taxpayer became the Eurozone's "de facto bailout provider."  Mayer
 proposes a "Chapter 11 for Eurozone countries," which would place 
troubled members under economic supervision until they put their house 
in order.  Unfortunately, there is no serious discussion of this underway, he lamented." This was In February 2010. The discussion has since commenced.Full cable, created on February 12, 2010, presented with no comments, and just the occasional highlight, as all of what Germany is really saying has already been said by us as well.C O N F I D E N T I A L SECTION 01 OF 03 BERLIN 000181 
 
SIPDIS 
 
STATE
 FOR EEB (NELSON, HASTINGS), EEB/IFD/OMA (WHITTINGTON), DRL/ILCSR AND 
EUR/CE (SCHROEDER, HODGES) LABOR FOR ILAB (BRUMFIELD) TREASURY FOR 
SMART, ICN (NORTON), IMB AND OASIA SIPDIS 
 
E.O. 12958: DECL: 02/12/2020 
TAGS: EAID EFIN ECON PREL EUN GM GR PGOV
SUBJECT: GERMANY RELIEVED BY EU SUMMIT OUTCOME ON GREECE 
 
Classified By: ECONOMIC COUNSELOR INGRID KOLLIST, REASONS: 1.4 (B) AND 
(D) 
 
¶1.
 (C) SUMMARY:  Chancellor Angela Merkel's government welcomed the 
decision taken at the EU's February 11 informal summit in Brussels not 
to provide financial assistance, for the moment, to 
cash-strapped Greece.  German officials believe a bailout is not needed 
at this time, and that extending a lifeline to Greece would have carried
 too many risks.  One major fear in Germany is that "saving" 
Greece would lead to other needy Eurozone members expecting the same 
treatment.  Another concern is that extending an explicit guarantee for 
Greece could weigh on Germany's own good standing in the markets, 
ultimately raising its borrowing costs.  While German 
government officials do not totally rule out an IMF program for Greece 
if push came to shove, most consider this eventuality highly unlikely, 
especially in light of the European Central Bank's strong opposition.  
In fact, the German government, the ECB and private German economists 
are downplaying the seriousness of Greece's predicament and its 
potential impact on stability of the Euro.  They agree, however, that 
the crisis could have longer-term consequences for EU institutions and 
how they interact with member states that stray off course.  END SUMMARY. 
 
NOT IN THE MOOD 
--------------- 
 
¶2. 
(C) Prior to the February 11 EU Summit in Brussels, there was much hair 
pulling in Berlin over the wisdom of participating in some sort of Greek
 rescue.  No one savored the idea of explaining to German 
taxpayers, already concerned about Germany's record deficit, that they 
would be footing the bill for the irresponsible behavior of another 
country. A Finance Ministry official explained to us that many Germans felt disgusted
 by the situation in Greece: "While Germans have spent the past decade 
tightening their belts and improving their competitiveness, Greek civil 
servants still earn 14 months' salary per year."  A recent editorial in 
the German daily Frankfurter Allgemeine Zeitung (FAZ) asked rhetorically
 whether Germans would need to work until age 69 just to finance early 
retirement for Greek workers.  With important upcoming elections in the 
state of North Rhine-Westphalia, bailing out Greece would not be a vote 
winner. 
 
OFF THE HOOK 
------------ 
 
¶3. (C) The 
German government was, in fact, "relieved" that the European Council 
meeting on February 11 decided not to put concrete assistance on the 
table at this time.  Wolfgang Merz, Director for European Financial 
Affairs, German Ministry of Finance, told us that while Germany stands ready to throw a lifeline if the Greek government truly runs aground, Greece
 currently has access to capital markets and needs no outside 
assistance.  The key to overcoming the crisis will be the Greek 
government's implementation of the planned austerity measures, said 
Merz.  Bernhard Speyer, Head of Banking, Financial Markets and 
Regulation at Deutsche Bank (DB) Research, agreed that the EU struck the
 right balance: "The decision gave reassurances that Greece would not be
 abandoned, but kept the pressure on the Greeks by not yet putting cash on the table." 
 
¶4. (C) Stepping in with assistance at this point carried too many downside risks, according to Merz.  Legal questions aside, a German or EU bailout of Greece might have harmed Germany's credit worthiness, thereby raising its own borrowing costs.  Merz
 added that a bailout would certainly have set a bad precedent for other
 Eurozone countries, such as Spain and Portugal, experiencing similar 
stresses.  (Merz acknowledged, however, that these two countries' 
problems were less acute -- a sentiment echoed by Speyer.) 
 
¶5.
 (C)Still, there is some skepticism that Greece's austerity program will
 get the country's finances on the right track, even if fully 
implemented.  Merz said an IMF bail out remained on the table, despite the official line that the situation in Greece could be addressed within the EU. 
 
IMF RESCUE? RESOUNDING NO FROM ECB 
---------------------------------- 
 
¶6. (C) According to Karlheinz Bischofberger, Deputy
 Head of the Financial Stability Department at the European Central Bank
 (ECB), the likelihood that the IMF will be asked to bail out Greece is 
"zero."  Greece does not have a balance of payments crisis, so 
there is first and foremost no basis for the IMF to step in. 
Bischofberger added that apart from the damage to the ECB's reputation an IMF intervention would inflict, it
 was uncertain that the IMF could even succeed in doing the "political 
dirty work" of forcing Greece to implement a structural adjustment 
program.  DB Research's Speyer concurred, adding that [and IMF 
intervention] would undermine the credibility of EU institutions to manage a crisis. 
 
REPORTS OF MY DEATH ARE GREATLY EXAGGERATED 
------------------------------------------- 
 
¶7.
 (C) Talk of a possible break-up of the Eurozone is "absurd," according 
to Moritz Kraemer, Managing Director, Standard and Poor's.  He noted 
that Eurozone membership is still seen as highly desirable, and there 
was absolutely no incentive to exit, despite the allure of devaluation. 
 Any country that tried to leave the Eurozone would get hammered in the 
credit markets, exacerbating any underlying structural problems.  S
 and P estimates that Greece's rating in the case of an exit would drop 
to "BB " or lower, i.e. below investment-grade.  Even today, Greece's 
rating of "BBB " is higher than it was in 1997 ("BBB-") before joining 
the common currency. [ZH: HAHA]
 
¶8. (C) While 
the current crisis may have revealed an "Achilles heel" of the Eurozone,
 it may present opportunities, according to Klaus Masuch, Head of the EU
 Country Division, Directorat General of Economics, ECB.  The crisis is a
 "healthy warning signal" that Eurozone members must conduct "sound 
national policies in line with the agreed rules."  It also underlines 
the necessity of better integration and coordination of member state 
fiscal policies.  The Euro will come out of this crisis strengthened, he said. Better and stricter early warning and surveillance systems will be in
 place, and the Stability and Growth Pact will ultimately be reinforced.
 DB Research's Speyer agreed, adding that the crisis could make EU 
member states proceed more cautiously with enlargement. 
 
A EUROZONE CHAPTER 11 
--------------------- 
 
¶9.
 (C) DB Chief Economist Thomas Mayer told Ambassador Murphy he was 
pessimistic Greece would take the difficult steps needed to put its 
house in order.  A worst case scenario, says Mayer, could be that 
Germany pulls out of the Eurozone altogether in 20 years time.  In 1990,
 Germany's Constitutional Court ruled that the country could withdraw 
from the Euro if: 1) the currency union became an "inflationary zone," 
or 2) the German taxpayer became the Eurozone's "de facto bailout 
provider."  Mayer proposes a "Chapter 11 for Eurozone countries," which 
would place troubled members under economic supervision until they put 
their house in order.  Unfortunately, there is no serious discussion of 
this underway, he lamented. 
 
COMMENT 
------- 
 
¶10. (C) Chancellor Merkel is clearly
 relieved she does not, for now, have to explain to the public why the 
German government is running up its own deficit to bail out debt-laden 
Greece.  Still, the German government appears prepared to step in as a last resort if needed and is cognizant that German banks (such as Hypo Real Estate and Deutsche Bank) and insurance companies (Allianz) have significant exposure to Greek sovereign debt.  The
 crisis is also viewed -- within the German government as well as within
 the ECB -- as a way to exert greater influence over the public finances
 of profligate Eurozone members.  Some Christian Social Union (CSU) 
politicians are even using the crisis to promote the candidacy of 
Bundesbank President Axel Weber as next ECB President, arguing that 
Weber's selection would send a signal that Eurozone stability is 
paramount. [ZH: Axel Weber was passed over for the post of ECB head and instead former Goldman staffer Mario Draghi was appointed] One way or another, the consequences of the Greece crisis seem likely to outlive the immediate situation.  One strong possibility is that German influence over policy in the common currency area will grow. 


++++++++++++++++++++++++



 



In Act of Desperation, G20 Asks Germany to Pledge its Gold for EFSF Rescue Fund, Bundesbank Refuses; Grateful for the Arrogance





The gall and arrogance of the G20 and Euro-nanny finance minister clowns is staggering.

German
 newspapers report that the G20 discussed asking Germany to pledge its 
gold to bail out Greece and the Piigs, and to fund the EFSF.

The Bundesbank, Germany's central bank said "We know this plan and we reject it."

One
 might think that would be enough to stop such idiotic talk, but one 
would be wrong. In spite of Bundesbank opposition, euro zone finance 
ministers will discuss the idea next week.

Please consider Bundesbank: central bank reserves will not help fund EFSFThe
 Frankfurter Allgemeine Sonntagszeitung (FAS) reported that Bundesbank 
reserves -- including foreign currency and gold -- would be used to...http://globaleconomicanalysis.blogspot.com/

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ECB Threatens to Halt Italian Bond Purchases; Italy Prime Minister Pressured to Resign; Bond Buyer's Strike Coming Up?





In yet another attempt to pressure prime minister Silvio Berlusconi into promised reforms ECB debates ending Italy bond buys.
The
 European Central Bank often discusses the possibility ending the 
purchase of Italian government bonds if it concludes Italy is not 
adopting promised reforms, ECB Governing Council Member Yves Mersch 
said.

"If we observe that our interventions are undermined by a 
lack of efforts by national governments then we have to pose ourselves 
the problem of the incentive effect," Mersch said according to extracts 
of an interview with Italian daily La Stampa to be published on Sunday.

Asked
 if this meant the ECB would stop buying Italy's bonds if it did not 
adopt reforms it has promised to the European Union, Mersch, who heads 
Luxembourg's central bank, replied:

"If the ECB board reaches the
 conclusion that the conditions that led it to take a decision no longer
 exist, it is free to change that decision at any moment. We discuss 
this all the time."

Mersch said the ECB did not want to become a 
lender of last resort to help the euro zone solve its debt crisis and 
said it was concerned that its job could be made more difficult by 
governments that "don't meet their responsibilities."

"Our job is not to remedy the errors of politicians," he said.For
 starters, the ECB is already the lender of last resort. Moreover, one 
look at Portugal and Italy suggests the ECB is not having the intended 
effect.

"Our job is not to… http://globaleconomicanalysis.blogspot.com/2011/11/ecb-threatens-to-halt-italian-bond.html?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29


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Greek PM narrowly wins crucial confidence vote following a week of turmoilGeorge Papandreou survives vote by 153 for to 145 against
Talks expected to open with all Greek parties in a bid to form a government of national unity
G20 agree to bolster IMF funds to help stem the European debt crisisFTSE down 35 points, German Dax down 2.74% and French Cac 40 falls by 1.84% this afternoon
Italy agrees to allow IMF to review its progress as it implements reformG20 agrees to fight cross-border tax evasion at summit in CannesGeorge Osborne says Britain 'will not contribute disproportionately' to bolstered IMF fighting fund
Read more: http://www.dailymail.co.uk/news/article-2057558/Greek-PM-narrowly-wins-crucial-confidence-vote-following-week-turmoil.html#ixzz1cpjQ6T00



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Begin forwarded message:From: "Glutimas MaximusSubject: Fw: Max Keiser Humiliates Greek Analyst

Max Keiser Humiliates Greek Analyst (bankster's "useful idiot" Teddy Tsakiris)http://youtu.be/Y2vsYdReMCg    



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Begin forwarded message:From: Ruth MSubject: Latest Sarkozy photo op ---(Ouch!)

Saturday, Nov 05 2011Sarkozy insult to 'island' Britain: Snarling French president dismisses the English saying 'you don't understand Europe'
By James Chapman and Hugo DuncanOutburst: Nicolas Sarkozy's insult to the 'island' of Britain won't go down very well on these shoresFrench president Nicolas Sarkozy launched an astonishing attack on Britain’s attitude to Europe last night.
The furious French leader was branded the ‘new de Gaulle’ after claiming the British can’t comprehend Europe because we are ‘an island’.
‘You come from an island, so maybe you don’t understand the subtleties of European construction,’ he snapped at BBC Newsnight’s economics editor Paul Mason. 
Mr Sarkozy had been asked whether it was right for the European Union to be attempting to block an EU referendum and install a coalition government in Greece.
His outburst was quickly seen as evidence that the diminutive French premier has contempt for both Greece and Britain.
His comments come less than two weeks after he snapped at David Cameron at a Brussels summit, telling the Prime Minister to stop telling the eurozone ‘what to do’ about the economic crisis. ‘You have lost a good opportunity to shut up,’ he said.
Also at the Brussels summit Mr Sarkozy publicly snubbed Mr Cameron by turning away as the Prime Minister offered his hand in friendship.
Eurosceptics fear the big eurozone countries are using the economic calamity to rush headlong into the fiscal union they have always wanted – and see an effective end to independent nation states.They accused Mr Sarkozy of having ‘contempt’ for Britain and democracy.Tory MP Philip Davies said: ‘This just shows what the project is all about. President Sarkozy is not interested in what we have to say. He is only interested in getting his hands on our money. He’s behaving like the new Charles de Gaulle, another French leader who didn’t want us in Europe. But I’m right behind him. I don’t want us in the EU either.’ 
Snub: Sarkozy's relationship is not thought to be too great at the moment after he snapped at the British PM in Brussels last weekFellow Tory Douglas Carswell added: ‘The French president is behaving with complete contempt just as the Euro elite always does to countries with long, proud traditions of national self-determination.’ 
Conservative MP Mark Reckless accused Mr Sarkozy and other EU leaders of a dangerous power-grab.
He said: ‘I think if the Greeks want to have a referendum, they should be allowed to. And what seems to be happening here is the EU leaders, who hate referendums – whenever people get a chance to vote, they vote against the EU – they’ve said, “If you allow a referendum, then we’ll cut off the money”. So they’re almost forcing the Greek leaders not to allow their people to have a say.’
Outspoken: French TV aired an interview with Sarkozy and U.S. President Barack Obama last night (Friday) - it is unknown whether the French premier has any criticisms of the U.SFrance and Germany are threatening to agree their own intergovernmental treaty allowing their economies to converge, excluding Britain, if Mr Cameron tries to use negotiations to meet a Tory pledge to claw back powers from Brussels.
Meanwhile, Italy was last night forced to call in international inspectors to oversee its finances as fears mounted it will be the next victim of the eurozone crisis. It has debts of £1.6trillion – a whopping 120 per cent of GDP.
Prime minister Silvio Berlusconi agreed to the humiliating step during crunch talks with other EU leaders after weeks of fierce pressure from the financial markets and global leaders.
In an extraordinary outburst, Mr Berlusconi said that life in Italy has got worse since the introduction of the single currency more than a decade ago. 
‘Italians have been impoverished since the introduction of the euro,’ he said.

Read more: http://www.dailymail.co.uk/news/article-2057834/Sarkozy-insult-island-Britain-Snarling-French-president-dismisses-English-saying-dont-understand-Europe.html#ixzz1cpA2Oaxr

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