Dysfunctional, Datfunctional, Main Thing Nothing Works

And costs everybody else in the country a whole lot of money. Berlin, my kind of town. My kind of town??

Berlin

Berlin, the capital of Europe’s most successful economy, is surprisingly badly governed. The new airport, the city’s biggest flagship project, missed its seventh opening date earlier this year and may not open until 2021, ten years after it was originally supposed to. The jobless rate is among the highest in the country. Schools are dismal. Courts and police are so overworked that hundreds of millions of euros in fines and taxes have not been collected; and the city failed to keep tabs on Anis Amri, the jihadist who killed 11 people with a lorry last Christmas, despite warnings about him three weeks earlier…

Astonishingly for a capital city, Berlin makes Germany poorer. Without it, Germany’s GDP per person would be 0.2% higher. By comparison, if Britain lost London, its GDP per person would be 11.1% lower; France without Paris would be 14.8% poorer…

“We have a deeply held suspicion of anything that smacks of efficiency and competence.”

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German Of The Day: Albtraum

That means nightmare. You know, like Nightmare on Elm Street? Or Nightmare at Deutsche Bank?

Deutsche Bank

Read my lips, the usual suspects are saying: Everything is fine, the German government is not preparing a bailout, there have been no secret talks with the chancellor and there is nothing here that needs to be rescued in the first place. Now say that ten times really fast.

The German government denied it was working on a rescue of Deutsche Bank as Germany’s biggest lender boosted its balance sheet by selling its British insurance business on Wednesday.

Deutsche is facing a $14 billion fine from the Department of Justice, and concerns over its funding pushed its shares to a record low on Tuesday and heightened concerns about the health of the financial sector in Europe’s largest economy.

“Die Situation des Konzerns ist viel besser, als sie von außen wahrgenommen wird.”

Money For Nothing

But no chicks for free.

Debt

Speaking of debt… Here’s the state of the state today, folks. If you’re not one of us, if you’re the German government, for example, you can actually make money with your debt.

The German state profited from incurring more debt in the first half of this year, a newspaper report showed on Monday.

State bonds issued with negative interest rates flushed around 1.5 billion euros ($1.68 billion) into federal coffers, as total interest spending dropped from 9.7 to seven billion, the “Bild” daily reported.

German government bonds with a maturity of up to 10 years currently carry a negative interest rate, which means investors, who would traditionally expect a return on their investment, actually pay to own them.

Last Man Standing

Only she’s a girl.

Merkel

You have called Angela Merkel the modern-day empress of the eurozone. What do you mean?

The title empress reflects, in my view, two realities of present-day Europe. First, the Germans look so strong because the others look so weak. The British are withdrawing from Europe. The French are down but not out. They’re unable to rev up their economy – same thing for the Italians, same thing for the Spaniards. So, when you add it all up, who is the last man – or in this case, the last woman – standing?

The second reason is more concrete – the Germans have been in the vanguard of driving home fealty to the eurozone’s foundational treaties. These conventions enjoined member states, like Greece, not to overspend and over-borrow and, at the same time, to make their economies more efficient. Merkel and her finance minister are not austerity mongers as everybody is harping on about. They are committed to the original treaties’ stated rules that require eurozone members to reform their economies and become more competitive.

Zum ersten Mal seit 2005 könnte die Union einer Umfrage zufolge die absolute Mehrheit erreichen. Die Partei wäre mit 43 Prozent der Stimmen stärker als all anderen Parteien zusammen.

The Guy YOU Love To Hate

I pour moi think he’s the greatest. Weiter so (keep it up), Wolfgang!

Schäuble

Despite bitter opposition in many quarters to the austerity-first policies Germany has imposed on Europe’s poorer nations, Chancellor Angela Merkel’s government has hung on to its role as champion of integration on the Continent through deft use of diplomacy and the country’s economic clout.

But in negotiating a new deal this week to bail out Greece, Germany displayed what many Europeans saw as a harder, more selfish edge, demanding painful measures from Athens and resisting any firm commitment to granting Greece relief from its crippling debt. And that perception was fueled on Thursday when the German finance minister, Wolfgang Schäuble, suggested that Greece would get its best shot at a substantial cut in its debt only if it was willing to give up membership in the European common currency (they mean Grexit here, of course, they just don’t like to use the word).

“Ich werbe nur dafür, dass Sie heute nicht meinen – jetzt ist das Thema erledigt, jetzt haben wir noch mal einen da zum Bösewicht erklärt. Ich bin so abgehärtet in einem langen politischen Leben, dass mich das nicht aus der Bahn wirft.”

Greece Worried Eurozone Could Collapse

And Greece is willing to help.

Tsipras

Greek prime minister Alexis Tsipras has just pointed out to Merkel, Hollande & Co. that his country, accounting for a whopping 2% of the eurozone’s economy, is now finally ready to lend officials in Brussels all the money they will need in the turbulent times to come. Provided, of course, that they hand it all over to Greece first (along with a couple zillion euros on top for administrative fees).

Let’s get this over with, people.

„Es wäre der Anfang vom Ende der Eurozone.“ Tsipras warnte, dass die Kosten für die europäischen Steuerzahler enorm seien.

 

Dial M For Merkel

And something tells me there was a lot of heavy breathing during this telephone conversation, too.

Tsipras

Greek Prime Minister Alexis Tsipras made an uncexpected telephone call to German Chancellor Angela Merkel that nobody wants to comment about officially.

Bild newspaper reported on Monday that Tsipras had called Merkel as well as Euro group head Jeroen Dijsselbloem to try to convince them of the need for more help for Greece and for the need for an emergency meeting of EU leaders this week.

Bild said the reason for the call is that the Greek government has run out of money

“It’s on fire and there’s no water there to put out the fire. The situation is more than dramatic.”

Plan B For Bankrupt

Tick tock tick tock

Plan B

German Finance Minister Wolfgang Schaeuble hinted on Saturday that Berlin was preparing for a possible Greek default, drawing a parallel with the secrecy of German reunification plans in 1989.

“You shouldn’t ask responsible politicians about alternatives,” Schaeuble answered, adding one only need to use one’s imagination to envisage what could happen.

He indicated that if he were to answer in the affirmative that ministers were working on a Plan B — what to do when Greece runs out of money and cannot pay back its debt — he could trigger panic.

“Da ist überhaupt nichts dran. Der Plan B wurde nicht diskutiert.”

Ultra-Safe German Government Debt?

It’s good to be the king. Isn’t it?

King

More than half of all German government debt with more than one year maturity is now trading negative.

Investors have been warned of dangers of holding German government debt, as unprecedented central bank easing sends the country’s 10-year borrowing costs towards zero.

“If you look at bunds in anything other than the shortest possible timescale, the risk becomes very clear.”