Tag Archives: Germany

Opening Quotes: Throwing Dummies

You had a sense their was a rabbit lurking in the hat, but the timing and extent on Friday’s ‘relief rally’ surprised me. And, superficially, it seemed justified.

Then there’s the  reality.

FT’s Wolfgang Munchau  – consistently ahead of the curve – claims: ‘The Real Victor in Brussels was Merkel.’

Unfortunately I believe he makes he makes a compelling argument. Strip away the political victory laps and what really happen?

Germany’s liabilities are unchanged.

The ESM has no banking license.

Italy hasn’t really gained anything.

The move towards euro-wide banking supervision (& Spainish recaps) will be torturous.

Conclusion: Merkel stands over her ‘not in my lifetime’ Eurobonds pledge, the ESM is seriously overloaded and by the way – where on earth does the growth come from?

Germany – and remember Merkel is <rightly> contemptuous – has bought the market some time but this could be THE rally to sell.

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Opening Quotes: Resisting Europeanisation

The pressure is on.

Geithner expects lots more.

But lest we doubt it – huge – justifiable? – German resistance remains.

Joseph Joffe (Editor of Die Weit) – FT Editorial:

“When Helmut Kohl went to Maastricht in 1992, he thought he could “Germanise” Europe by imposing fiscal and monetary restraint on the rest. Now, the crisis countries want to “Europeanise” Germany: spend, inflate and pay. Germany must cheapen credit for all and shoulder the risk alone. It all adds up to a moral hazard that will perpetuate the maladies of the eurozone.”

“Berlin has already failed once in “Germanising” the eurozone via fiscal probity and reform. Why would Club Med mend its ways as long as Germany is such a good “europayer”? If it doesn’t, the eurozone can look forward to bankruptcy and decay.”

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Opening Quotes: European Price Tags

We continue to close in on something approaching an endgame.

The ‘solutions’ are now known.

But who pays? Who is the back-stop?

Germany – and lets be fair – has done the math & it made its position clear – it can’t do it alone.

But asking the non-Europena world to make the difference?

Might be right. But seriously tough call.


Budget austerity and measures to promote growth in Europe remain the twin pillars of stemming the crisis right now, Merkel said.

Her message that Germany can’t shoulder the burden alone is aimed at “all those in Los Cabos will be looking to Germany, who are expecting the ‘big bang’ and the solution from Germany – – such as euro bonds, stability funds, European deposit- insurance funds, additional billions and much more,” she said.

“All resources, all measures, all packages will end up being smoke and mirrors if it becomes clear in the end that they extend beyond Germany’s capacity,” she said.

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Opening Quotes: Two Tail Days

From the FT:

“The crisis is deteriorating at an ever-increasing pace,” said Mark Schofield, a senior strategist at Citigroup. “Investors are increasingly pricing in either of the two tail risks – full eurozone break-up or fiscal union.”


Its as simple and horrendously complicated  as that.

I find myself torn between wanting to believe Barroso’s ‘very big step <forward>’ is close …….

Whilst sensing we need another – genuinely traumatic – event to breakdown the final barricades of resistance.

Crisis fatigue is creeping across the screens.

Can the eternal ‘fudging’ last much longer?

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Opening Quotes: ‘Here Come The Historians’

Thoughtful article comparing the events that precipitated the collapse of the ‘Rouble-zone’ with the EU.

Ending the week disappointed with rhetoric surrounding the Spainish banking recapitalizations & prospective deposit guarantee scheme – I think the core is the problem.

It was never going to be easy, but I sense – once more!? – the markets <relief> rally has inadvertently endorsed ‘the fudgers’ self-confidence.

Back on the defensive until the crisis takes another – deeper – twist.


The lesson for the EU is that it should be watching closely what Germany is doing, and be wary of calls for a smaller euro zone, or a “two-speed Europe,” Krastev said. Unions don’t break up because of troubles in peripheral countries, they break up from the core, he said.

“Disintegration doesn’t occur because everyone wants to go their own way,” said Krastev at the think-tank in Bulgaria. “It happens because politicians envisage a closer, optimal union. This crisis is already reducing the borders of solidarity. The EU space is going to be renegotiated.”

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Opening Quotes – They would wouldn’t they?


“Italy’s Prime Minister, Mario Monti, told Italian television station La7 yesterday that the majority of European Union leaders at a Brussels meeting this week backed joint euro- area bonds. He added that Italy can help persuade Germany to support Europe’s “common good” as well.”


Well ….. they would wouldn’t they?

Whatever else happens – and the market unshakable (somewhat justified?) belief in the ‘Central Bank Put’ keeps the equity market bears at bay – EuroBonds?

See yesterday’s post – they can’t even ‘discuss’ pan-European deposit guarantees &/or bank recapitalizations.




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Opening Quotes: G8’s Don’t Do Solutions


President Barack Obama joined G-8 leaders including Hollande and Britain’s Prime Minister David Cameron in embracing a renewed focus on growth, underlining the isolation of Germany’s Merkel, who maintained resistance to new spending. At the president’s Camp David retreat in Maryland, G-8 leaders said in their final statement that “the right measures are not the same for each of us.”


Whilst Schaueble simply doesn’t change:


“We’re all very pleased that France wants to offer new initiatives with its newly elected president,” Schaeuble told theBild am Sonntag newspaper in an interview yesterday. “The German government is ready to talk about anything,” Schaeuble said, though he ruled out measures that would raise debt.

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Opening Quotes – Its All About Germany

Easter’s been and gone.

Merkel is Merkel.

Politics is domestic first.

“It’s partly about still being able to shape our own future,” Merkel said late yesterday at a rally in the city of Muenster in North Rhine-Westphalia. Countries in Europe that have run up debt “are so tightly in the hands of the financial markets that they can’t make independent decisions anymore. We have to watch out that high interest rates on our debt don’t lead to the point where we can’t decide and shape anything anymore” in Germany.


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Opening Quotes – Asking Mr Monti

FT: Spain ‘causing concern’ – Monto warns

Spain’s new government rejected criticism of its handling of a “difficult” inheritance. Asked what Mr Monti meant by his comments, Iñigo Méndez de Vigo, Spain’s EU minister, said, “You better ask Monti, not me.”

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Economical Expediency

It’ll be a drawn out, sloppy affair – and the ‘No vote’ will be solely tempting to very many – but the Irish will vote yes.

Because the ‘fiscal compact’ its a good treaty and will addresses the root causes of the Euro-zone’s imbalances? Of course not. Does anyone really believe that?

Because Ireland is already in an emergency lending program and it doesn’t really matter? Absolutely. Why not.

As Irish economist Colm McCarthy (yesterday’s Irish independent) detailled – the three materially new features are either irrelevant, non-sensical or a no-brianer.

First, the condition that countries with debt/GDP levels above 60% will be required to gradually reduce their burden to that level is already a feature of the Maastricht Treaty – its just been ignored. Two things: (1) Bond markets will (now) impose their own discipline; (2) ow the EU intends to sanction future ‘offenders’ is very debatable.

Second, the whole concept of limiting ‘structural deficits’ is faintly ridiculous. Who gets to decide? And try getting a group of economist to agree on a number. Why 0.5%? Why the same for Ireland & Germany?

Third, the threat of cutting of access to the ESM to non-signatries is somewhat empty. All the rhetoric is that Ireland will not need a second bailout & will graduate successfully. But just in case …..

This referenedum will be about economic and political expediency – as ever.

Ireland will let the IMF will fight out battles (with the ECB) for us, and as Mr. McCarthy concludes: ‘There will be later and better opportunities to reconsider the terms of our (Ireland’s) engagement with the new Europe.’




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