Money is like water (or maybe like beer). It has to go somewhere. And 40 billion euros just made its way to Germany.
While fear has driven money away from Greece and Spain and co, making the government cost of repaying debt in these countries seem prohibitive, in Germany it has been quite different. Fear has boosted Germany coffers…
One thing is for sure, putting it in Greek bonds is risky. Spanish, Italian and Portuguese bonds don’t seem much safer either. But German bonds, in contrast, feel as safe as a safe house in a land with no crime. In fact so safe are German government bonds or bunds, perceived to be, that there have been times when the yields on some of them have been negative.
So actually, Germany has done rather well out of fear created by the euro crisis – or should that be the other way around – a euro crisis created by fear?
For much of the financial crisis that started in 2007, Germany remained strong and held the envy of modern economies around the world.
In 2010, the industrious country known for its fiscal discipline had GDP growth of 4.2%, followed by respectable 3% GDP growth in 2011.
Unfortunately, for Germans and the world, there are increasing signs the German economy is being marred by the global crisis. In 2012, GDP growth was a meager 0.7%. More significantly, GDP actually contracted by 0.5% in the fourth quarter.
Währung – Deutschland: Devisen: Euro gibt nach – IWF prognostiziert auch für 2013 Rezession im Euroraum
With three tired old SPD guys trying to decide which one of them will have to be the one tired old SPD guy who will have to be the contender in next year’s election against the ridiculously popular Angela Merkel.
So like one of them, former Finance Minister Peer Steinbrück, threw his hat into the ring yesterday, sort of.
His angle? Eat the banks. Split their investment and retail units and have them create their own rescue fund and make them be good and nice again like they used to be in the past (I guess) als die Welt noch in Ordnung war (when the world was still in order).
Been there, done that. Yawn already. Bring out the next stooge and let’s get him over with, too.
“Banks are service providers and not betting shops.”
I still don’t know who Gary Cooper was here, but Mario Draghi just went from “I will do whatever it takes to preserve the euro” (and buy up Spanish and Italian bonds) to “the ECB may consider” doing so at a later date.
Needless to say, the markets were not amused. Cherchez la femme, I’d say (and it ain’t Grace Kelly).
What’s the hold up? Germany, perhaps. During a press conference afterwards, ECB vice-president Vítor Constâncio noted that only one member of the ECB was adamantly opposed to bond purchases. This seems to be a reference to Germany’s Bundesbank, which had vigorously opposed a central-bank bailout of Spain and Italy. And even though the Bundesbank doesn’t have a direct veto over ECB actions, it seems Germany, as the richest country in the euro zone, still has plenty of sway.
“For all the criticism of Merkel, she distinguishes herself from politicians on both sides of the Atlantic in that she has a plan.”
Big spending Mario Draghi, the European Central Bank boss who is shooting for the outright central-bank purchase of European sovereign debt, or lonely Bundesbank chief Jens Weidmann (and pretty much the rest of conservative Germany) who is gunning to resist such a move as it would “dilute debt-laden governments’ incentive to reform, and lumber the central bank with too many risks and responsibilities, endangering its independence and credibility.”
And more importantly, who is Grace Kelly here and where is she when we need her?
“I will do whatever it takes to preserve the euro.”
No horror here. Or terror, if you prefer. How does that German proverb go? Lieber ein Ende mit Schrecken als ein Schrecken ohne Ende?
That is, better an end with horror than a horror without end. And that’s where we’re at with Greece now, finally.
German Vice Chancellor Philipp Roesler said he’s “very skeptical” that European leaders will be able to rescue Greece and the prospect of the country’s exit from the euro had “lost its terror.”
The project to set up a European rating agency to challenge the dominance of American firms is at risk of collapsing, the German business daily Financial Times Deutschland reported on Monday. International consulting firm Roland Berger can’t find enough investors for its plan.
Hey, you-know-what happens. But don’t worry about it, Europe. It’s not like anybody is going to be rating you on this or anything. When in doubt (and you always are), just keep on bitching and moaning instead.
Ihnen wird nicht nur wegen Fehlbewertungen eine Mitschuld an der Finanzkrise gegeben. Auch ihre Rolle bei der Beurteilung der dramatischen Rettungsbemühungen und -konzepte für hochverschuldete Euro-Länder wie Griechenland, Portugal und Irland ist umstritten. Das Urteil der Ratingagenturen prägt letztlich vielfach die Marktreaktionen auf solche Bemühungen.
It’s undeniable that Germany has great interest in helping Greece. Why just look at the great interest they’re getting back by doing so.
Despite all the perpetual bitching and moaning about having to foot the bailout bill for their bankrupt buddies in the bottomless pit, German tax payers raked in some 380 million euros on Greek aid interest payments in 2011 and are likely to pull in a whole lot more this year. It’s good to be the king, I mean lender.
Geez. With generosity like this, who needs extortion?
Im Rahmen des ersten Griechenland-Hilfspakets hat die Bundesrepublik dem Euro-Partner Darlehen von insgesamt 15,17 Milliarden Euro gewährt, um das Land vor der Pleite zu retten. Der Zinssatz habe zwischen 3,423 und 4,528 Prozent gelegen.
Germans are always lecturing the Greeks. “Except when it comes to buying our ridiculously expensive weapons systems,” they maybe ought to add.
Over much of the past decade, Greece – which has a population of 11 million – has been one of the top five arms importers in the world.
Most of the vastly expensive weapons, including submarines, tanks and combat aircraft, were made in Germany, France and the United States.
The arms purchases were beyond Greece’s capacity to absorb, even before the financial crisis struck in 2009. Several hundred Leopard battle tanks were bought from Germany, but there was no money to pay for ammunition for their guns. Even in 2010, when the extent of the financial disaster was apparent, Greece bought 223 howitzers and a submarine from Germany at a cost of €403 million.
This must be the scoop of the century. Are Woodward and Bernstein back? Did the CIA finally do something right? Where on earth do Spiegel journalists uncover such unexpected and volatile information?
Always remember, folks: If it’s not in the Spiegel, it didn’t happen.
Observing Hermann 