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“Now, Europe Will Speak German!” Germany to UK: Adopt the Euro, or Else!

Mar­tin “Merkel” (right) with Himm­ler

COMMENT: As Germany cements its con­trol over the Euro­pean econ­o­my and the Euro­pean Cen­tral Bank, the Ger­man pow­er elite are open­ly and deri­sive­ly call­ing for Britain to join the EMU.

(Note that the ECB could solve much of the euro­zone debt cri­sis by lend­ing mon­ey, but has been blocked by Ger­many from doing so. The only solu­tion, accord­ing to the Ger­mans, is polit­i­cal union–Deutschland Uber Alles.)

Note also, that belt-tight­en­ing is just what should­n’t be done dur­ing times of reces­sion, because it wors­ens the sit­u­a­tion. Ger­many is insist­ing on just such a solu­tion!

Of course, we should nev­er for­get that the Euro­pean Mon­e­tary Union is the blue­print for Ger­man Euro­pean and world dom­i­na­tion, as for­mu­lat­ed by Friedrich List and real­ized by the Third Reich and the Bor­mann cap­i­tal net­work.


EXCERPT: Ger­many last night declared that Britain would be forced to scrap the pound and join the euro – as David Cameron returned home emp­ty-hand­ed from cri­sis talks in Berlin.
In a high­ly-provoca­tive inter­ven­tion, Ger­man finance min­is­ter Wolf­gang Schauble sug­gest­ed the UK’s strug­gling econ­o­my meant the pound was doomed, and urged the Prime Min­is­ter to back Europe’s ail­ing sin­gle cur­ren­cy.
Mr Schauble said the euro would emerge stronger from the cur­rent cri­sis – leav­ing Britain on the side­lines unless it signed up. He said Britain would be forced to join ‘faster than some peo­ple on the British island think’ – despite a pledge by Mr Cameron nev­er to do so.
But Jean-Claude Junck­er, head of the pow­er­ful Euro Group of euro­zone finance min­is­ters, said Britain was in no posi­tion to com­ment on the cri­sis as its deficit was twice the Euro­pean aver­age.
He said he was ‘not in favour of being dic­tat­ed to by coun­tries that are doing worse than us’.
Mr Schauble’s com­ments came as Mr Cameron arrived to a hos­tile recep­tion in Berlin for talks on the euro­zone cri­sis with Ger­man Chan­cel­lor Angela Merkel.
Senior mem­bers of Mrs Merkel’s rul­ing coali­tion voiced their irri­ta­tion at London’s ‘lec­tur­ing’ over the cri­sis.
Lead­ing Ger­man mag­a­zine Der Spiegel ran a promi­nent fea­ture describ­ing Britain as the ‘dis- eased empire’.
And Rain­er Brüder­le, head of Mrs Merkel’s coali­tion part­ners, said: ‘Britain can’t be free­load­ers in the euro­zone.’
The deputy leader of Mrs Merkel’s par­ty, Michael Meis­ter, crit­i­cised Britain for lec­tur­ing the euro­zone on what steps it should take while not active­ly con­tribut­ing towards a solu­tion.
He also warned Mr Cameron against cater­ing to nation­al­ist sen­ti­ment on the euro, say­ing tur­moil in the sin­gle cur­ren­cy area could have a dev­as­tat­ing impact on coun­tries out­side the euro­zone and on London’s finan­cial indus­try.
Mrs Merkel flat­ly reject­ed Mr Cameron’s key demand to allow the Euro­pean Cen­tral Bank to pump in hun­dreds of bil­lions of euros to prop up the euro and pre­vent a new reces­sion. . . .

EXCERPT: Berlin is demand­ing a pre­dom­i­nat­ing vot­ing major­i­ty in the prin­ci­pal EU insti­tu­tions. Accord­ing to reports in the Span­ish busi­ness press, the Ger­man gov­ern­ment will insist at the next EU sum­mit in ear­ly Decem­ber on a redis­tri­b­u­tion of vote weight­ing in the Euro­pean Cen­tral Bank (ECB): In the future, the votes should be weight­ed in accor­dance with the coun­try’s Gross Nation­al Prod­uct (GNB). Thus, Ger­many would attain a pre­dom­i­nat­ing posi­tion in the most impor­tant Euro­pean mon­e­tary insti­tu­tion — not only tem­porar­i­ly, but most like­ly on a long-term basis. The cur­rent prin­ci­ple of equal­i­ty among sov­er­eign coun­tries would be can­celled. The demand, which has not yet been offi­cial­ly for­mu­lat­ed by the Ger­man gov­ern­ment, is a con­tin­u­a­tion of the reor­ga­ni­za­tion of the Euro­zone along the lines of Ger­man inter­ests. Berlin’s lead­ing politi­cians have com­ment­ed on this reor­ga­ni­za­tion, which has been tak­ing place for quite some time say­ing Europe is fac­ing “a new era.” Volk­er Kaud­er, chair of the CDU/CSU par­lia­men­tary group and a con­fi­dant of the Ger­man Chan­cel­lor, suc­cinct­ly sum­ma­rized this devel­op­ment say­ing, “now Europe will speak Ger­man.“ ‘

Rights of Inter­ven­tion

Accom­pa­nied by open­ly chau­vin­ist insults, the CDU par­ty lead­er­ship per­suad­ed the par­ty con­gress del­e­gates to adopt the government’s aggres­sive pol­i­cy toward Europe. At the upcom­ing EU sum­mit in ear­ly Decem­ber, Ger­man con­ser­v­a­tives are deter­mined to reor­ga­nize com­pre­hen­sive­ly the Euro­pean Union to sat­is­fy Ger­man inter­ests. In her Euro­pean pol­i­cy speech at her par­ty’s con­gress ear­ly this week, Chan­cel­lor Angela Merkel declared, “So far we have not inter­fered in the sit­u­a­tion of oth­er fam­i­ly mem­bers.” But, it can­not con­tin­ue like this: “We need the means for tak­ing legal action against states,” cur­rent­ly being drawn into the mael­strom of the debt cri­sis. Once again, the Chan­cel­lor demand­ed that the EU bureau­cra­cy be grant­ed “rights of inter­ven­tion” in indebt­ed EU mem­ber coun­tries. For Ger­many, there are no alter­na­tives to a con­sol­i­da­tion of the Euro­pean Union, Merkel said, “We have to cre­ate a polit­i­cal union step by step.”[1]
EU Aus­ter­i­ty Com­mis­sion­er

The CDU con­cretized its objec­tives in a keynote motion cul­mi­nat­ing in the demand to cre­ate the post of an “EU Aus­ter­i­ty Com­mis­sion­er.” Bypass­ing par­lia­ments, this com­mis­sion­er should have the pow­er to inter­vene direct­ly in the bud­getary pol­i­cy of Euro coun­tries, as soon as they exceed a cer­tain debt lim­it. “We must estab­lish a fis­cal union,” said Ger­man Finance Min­is­ter Wolf­gang Schäu­ble. Accord­ing to the CDU’s keynote motion, this fis­cal union should include auto­mat­ic sanc­tions on indebt­ed coun­tries. Under cur­rent reg­u­la­to­ry pro­vi­sions, this can only be imposed after being passed by EU bod­ies. In addi­tion, the CDU would like to con­vert the EU’s so-called res­cue umbrel­la, the Euro­pean Finan­cial Sta­bil­i­ty Facil­i­ty (EFSF), into a sort of “Euro­pean Mon­e­tary Fund,” which would be entrust­ed with the enforce­ment and mon­i­tor­ing of aus­ter­i­ty pro­grams in the periph­ery of the Euro­zone. Final­ly, only those EU coun­tries can join the mon­e­tary union in the future, which have inscribed “debt brakes” in their con­sti­tu­tions, along the lines of the Ger­man mod­el. Rebuff­ing calls for Euro­pean bonds, the chan­cel­lor again reject­ed Germany’s par­tic­i­pa­tion in bear­ing the costs of the cri­sis, which, after all, esca­lat­ed because of the Ger­man exports indus­try’s exces­sive account sur­plus­es vis-à-vis the south­ern Eurozone:[2] “A com­mu­ni­ta­riza­tion of the debts can­not be permitted.”[3] . . . .

Discussion

13 comments for ““Now, Europe Will Speak German!” Germany to UK: Adopt the Euro, or Else!”

  1. It looks like Schauble could take a page from Putin’s book of vas­sal state mar­ket­ing tech­niques. Less stick, more car­rot:

    UPDATE 2‑Russia woos Belarus with gas price cut, $10 bln loan
    Fri Nov 25, 2011 6:13pm GMT

    * Belarus gets 40 pct price cut on Russ­ian gas

    * Rus­sia lends Belarus $10 bil­lion for nuclear pow­er plant

    * Belarus gets ‘inte­gra­tion dis­count’ — Putin

    * Rus­sia eyes clos­er ties in so-called Eurasian Union

    * Gazprom acquires 100 pct in Belarus pipeline oper­a­tor

    By Vladimir Sol­datkin and Denis Pinchuk

    GORKI, Rus­sia, Nov 25 (Reuters) — Rus­sia will slash gas prices for Belarus and lend Min­sk $10 bil­lion to build a nuclear plant, Prime Min­is­ter Vladimir Putin said on Fri­day, as he offered an “inte­gra­tion dis­count” to push his agen­da of build­ing his vision of a Eurasian Union.

    Mar­kets have close­ly fol­lowed talks on gas prices between the two for­mer Sovi­et states as pre­vi­ous stand-offs between Moscow and its west­ern neigh­bours have led to pun­ish­ing dis­rup­tions, in win­ter, of Russ­ian gas exports to Europe.

    Putin said Belarus would pay $164 per 1,000 cubic metres of Russ­ian gas in the first three months of 2012, a dis­count of more than 40 per­cent on the price it paid Russ­ian gas export monop­oly Gazprom in the third quar­ter of 2011.
    ...

    Rus­sia, Belarus and Kaza­khstan last week signed a dec­la­ra­tion envis­ag­ing a Eurasian Union that would deep­en their exist­ing free-trade zone and could be joined by oth­er ex-Sovi­et states.

    Belarus will get a so-called inte­gra­tion dis­count, and with­in the next few years it will move to pric­ing par­i­ty (with Russ­ian domes­tic gas prices),” Putin said.

    ...

    BUFFER ZONE

    Belarus is seen in Moscow as a buffer between Rus­sia and its Cold War-era adver­sary NATO and the Krem­lin is keen to keep strong ties with Min­sk, which suf­fered a finan­cial cri­sis this year after Moscow jacked up its ener­gy bill.

    A bal­ance-of-pay­ments cri­sis led to a 65 per­cent deval­u­a­tion of the Belaruss­ian cur­ren­cy this year and stoked infla­tion, leav­ing the gov­ern­ment strug­gling to meet its exter­nal debt oblig­a­tions.

    The $10 bil­lion nuclear pow­er project loan may help ease the fund­ing strains fac­ing Belarus.

    ...

    Ear­li­er this year, Rus­sia and Belarus agreed to press ahead with a stalled plan to build a nuclear reac­tor near the east­ern fron­tier of the Euro­pean Union, where there are many calls to aban­don nuclear ener­gy after Japan’s Fukushi­ma nuclear dis­as­ter.

    The plant, to be built in Belarus using Russ­ian nuclear tech­nol­o­gy, will be locat­ed 50 km (31 miles) from the cap­i­tal of EU mem­ber Lithua­nia.

    ...

    Ok, maybe some stick too:

    Gas pipeline from Rus­sia to Ger­many reveals weak­ness in Putin’s ‘ener­gy weapon’

    Many peo­ple believe that the open­ing this week of the Nord Stream gas pipeline link­ing Rus­sia and Ger­many will put Europe in an even greater ener­gy bind with Rus­sia. But Gazprom, the giant state-run com­pa­ny behind Putin’s export-ener­gy pol­i­cy, has many weak­ness­es.

    By Lucian Kim / Novem­ber 7, 2011

    Berlin

    On Nov. 8, ener­gy giant Gazprom plans to start deliv­er­ies through Nord Stream, the first nat­ur­al-gas pipeline link­ing Rus­sia direct­ly to Ger­many. The 760-mile pipeline under the Baltic Sea is a per­son­al vic­to­ry for Prime Min­is­ter Vladimir Putin, who pushed through the project despite tech­ni­cal chal­lenges and oppo­si­tion from neigh­bors.

    The $12.1 bil­lion pipeline has stoked fears in Europe over grow­ing depen­dence on state-run Gazprom, which already pro­vides around a quar­ter of the Euro­pean Union’s gas. Crit­ics main­tain that Nord Stream will seal a dan­ger­ous alliance between Berlin and Moscow, rem­i­nis­cent of the 1939 Molo­tov-Ribben­trop Pact between the Sovi­et Union and Nazi Ger­many.

    Gazprom is the per­fect bogey­man: over­sized, greedy, and always lurk­ing around the cor­ner. Rather than fight its image as Putin’s “ener­gy weapon,” the com­pa­ny rel­ish­es it. But the mon­ster is illu­so­ry.

    ...

    To repair this weak­ness, Mr. Putin, dur­ing his first two terms as Russia’s pres­i­dent, pushed Nord Stream as part of a dou­ble-pronged gas deliv­ery sys­tem devised to bypass Ukraine. A sec­ond under­wa­ter pipeline called South Stream is planned to con­nect Rus­sia to south­ern Europe via the Black Sea.

    ...

    Posted by Pterrafractyl | November 27, 2011, 5:08 pm
  2. Is it just me, or is our rad­i­cal hip­pie euro­com­mune start­ing to feel a lit­tle like Jon­estown. Does this Kool-Aid taste fun­ny?

    Ger­many, France exam­ine rad­i­cal push for euro­zone inte­gra­tion

    By Luke Bak­er and Julien Toy­er

    BRUSSELS | Sun Nov 27, 2011 5:58pm EST

    (Reuters) — Ger­many and France are explor­ing rad­i­cal meth­ods of secur­ing deep­er and more rapid fis­cal inte­gra­tion among euro zone coun­tries, aware that get­ting broad back­ing for the nec­es­sary treaty changes may not be pos­si­ble, offi­cials say.

    Ger­many’s orig­i­nal plan was to try to secure agree­ment among all 27 EU coun­tries for a lim­it­ed treaty change by the end of 2012, mak­ing it pos­si­ble to impose much tighter bud­get con­trols over the 17 euro zone coun­tries — a way of shoring up the region’s defens­es against the debt cri­sis.

    But in meet­ings with EU lead­ers in recent weeks, it has become clear to both Ger­man Chan­cel­lor Angela Merkel and French Pres­i­dent Nico­las Sarkozy that it may not be pos­si­ble to get all 27 coun­tries on board, EU sources say.

    Even if that were pos­si­ble, it could take a year or more to secure the changes while mar­ket attacks on Italy, Spain and now France sug­gest bold mea­sures are need­ed with­in weeks.

    ...

    With Ger­many rigid­ly opposed to the idea of the ECB pro­vid­ing liq­uid­i­ty to the EFSF or act­ing as a lender of last resort, the euro zone needs a way of quick­ly calm­ing mar­kets, where yields on Span­ish, Ital­ian and French gov­ern­ment bench­mark bonds have all been pushed to euro life­time highs.

    Pol­i­cy­mak­ers hope progress toward tougher fis­cal rules will also assuage investors. Schaeu­ble said a Sta­bil­i­ty Union could be a deci­sive step to win­ning more con­fi­dence from the mar­kets.

    “That means that every euro zone mem­ber has to do its home­work on its bud­get dis­ci­pline. We want to ensure that through treaty changes,” he said.

    RADICAL OVERHAUL

    Reuters exclu­sive­ly report­ed on Novem­ber 9 that French and Ger­man offi­cials were dis­cussing plans for a rad­i­cal over­haul of the Euro­pean Union to estab­lish a more fis­cal­ly inte­grat­ed and pos­si­bly small­er euro zone.

    “The Ger­mans have made up their minds. They want treaty change and they are doing every­thing they can to push for it as rapid­ly as pos­si­ble,” one senior EU offi­cial involved in the nego­ti­a­tions told Reuters. “Senior Ger­man offi­cials are on the phone at all hours of the day to every Euro­pean cap­i­tal.

    While Ger­many and France are con­vinced that mov­ing toward fis­cal union - which could pave the way for joint­ly issued euro zone bonds and may pro­vide more lee­way for the Euro­pean Cen­tral Bank to act force­ful­ly — is the only way to get on top of the debt cri­sis, some oth­er euro zone coun­tries are unable or unwill­ing to move so rapid­ly toward that goal.

    Not only Greece, Ire­land and Por­tu­gal, which are receiv­ing EU/IMF aid, but also Italy and Spain and some east Euro­pean coun­tries such as Slo­va­kia, would either find it dif­fi­cult under cur­rent eco­nom­ic con­di­tions to meet the bud­get con­straints Ger­many wants, or sim­ply do not agree with the aim.

    ...

    The ECB has bought the bonds of euro zone strug­glers in inter­mit­tent fash­ion when they have reached cri­sis point. Econ­o­mists say it has to act much more rad­i­cal­ly to turn the mar­ket tide but the cen­tral bank, and Ger­many, has opposed any such move. Com­mit­ments to bind­ing fis­cal rules by euro zone gov­ern­ments may be the cov­er it needs to change tack.

    ...

    So it looks like “the mar­ket” is going to be the offi­cial dri­ving force behind the cre­ation of the world’s lat­est vas­sal state union. “We did­n’t want to turn Europe into a giant fief­dom. The bond vig­i­lantes made us do it.”

    Posted by Pterrafractyl | November 27, 2011, 7:07 pm
  3. Well, the Brits may or may not end up learn­ing how to speak Ger­man, but with their cur­rent aus­ter­i­ty fetish, they’re going to have to learn some­thing. Man­derin per­haps?

    27 Novem­ber 2011 Last updat­ed at 20:37 ET

    Chi­na eyes UK infra­struc­ture invest­ment to boost growth

    Chi­na Invest­ment Cor­po­ra­tion (CIC), is keen to invest in infra­struc­ture devel­op­ment in the UK and oth­er devel­oped coun­tries.

    Lou Jiwei, the head of CIC, wrote in the Finan­cial Times that the fund is look­ing to par­tic­i­pate in pub­lic-pri­vate-part­ner­ships in the UK.

    His com­ments come as the British gov­ern­ment has been seek­ing to upgrade infra­struc­ture in bid to boost growth.

    CIC is Chi­na’s main sov­er­eign wealth fund.

    “CIC believes that such an invest­ment, guid­ed by com­mer­cial prin­ci­ples, offers the chance of a “win-win” solu­tion for all,” Mr Lou said.

    ...

    He added that author­i­ties need­ed to attract invest­ment in the sec­tor by reduc­ing tax­es and offer­ing bank loans at dis­count­ed rates.

    ...

    Or how about Ara­bic?

    Novem­ber 23, 2011 10:36 pm
    Mis­sion to woo Mideast investors

    By Sime­on Kerr in Dubai and Michael Peel in Riyadh

    Britain has launched an ambi­tious effort to raise cap­i­tal for infra­struc­ture invest­ment from oil-rich Mid­dle East­ern states seek­ing to recy­cle their ever-grow­ing wealth abroad.

    ...

    The Sas­soon delegation’s sweep through the Gulf – tak­ing in Sau­di Ara­bia, Kuwait and the Unit­ed Arab Emi­rates – is part of a wider British push for infra­struc­ture fund­ing from cap­i­tal-rich coun­tries out­side the cri­sis-hit west.

    Lord Sas­soon, who said he had also seen inter­est from Chi­na, told the Finan­cial Times: “As an asset class, UK infra­struc­ture is gen­er­at­ing about as much inter­est as there was with the pri­vati­sa­tion pro­gramme of the 1980s and 1990s.”

    He said talks with long-term investors in the Gulf, such as sov­er­eign wealth funds, had spanned projects in water, ener­gy and trans­port.

    Region­al investors were “look­ing for­ward” to next week’s announce­ment in Lon­don of a time­line for nation­al infra­struc­ture invest­ment, Lord Sas­soon added. The pro­gramme could give investors more gen­er­ous long-term returns than gilts — but less risk than equi­ties, he said.

    ....

    Con­grats Britain, you’re so ded­i­cat­ed to pleas­ing “the mar­ket” that you’ve man­aged to simul­ta­ne­ous­ly out­source both your stim­u­lus and infra­struc­ture. That’s almost impres­sive in a weird way.

    Posted by Pterrafractyl | November 27, 2011, 8:16 pm
  4. http://www.bloomberg.com/news/2011–11-30/germans-righteous-stand-fans-flames-in-euro-crisis-clive-crook.html

    Ger­mans’ Moral Stand Fans Flames in Euro Cri­sis: Clive Crook
    By Clive Crook Nov 29, 2011 4:00 PM PT

    Radoslaw Siko­rs­ki made a strik­ing com­ment in Berlin on Mon­day night. “I will prob­a­bly be the first Pol­ish for­eign min­is­ter in his­to­ry to say so, but here it is: I fear Ger­man pow­er less than I am begin­ning to fear Ger­man inac­tiv­i­ty.”

    I see his point, though “inac­tiv­i­ty” doesn’t quite do jus­tice to Germany’s impres­sive ded­i­ca­tion to deep­en­ing the euro area’s cri­sis. This isn’t mere inac­tiv­i­ty. This is zeal in pur­suit of cat­a­stro­phe...

    Posted by R. Wilson | November 30, 2011, 10:46 pm
  5. http://maxkeiser.com/2011/11/30/the-germans-are-playing-this-crisis-perfectly/

    Keis­er com­ments on the above arti­cle:

    “Ger­mans are play­ing this cri­sis per­fect­ly: Euro­peans are beg­ging Ger­many to be more auto­crat­ic”

    Keis­er has pre­vi­ous­ly been fol­low­ing “Ger­many 4.0” as his self-described “con­spir­a­cy the­o­ry” is that “a Fourth Reich is under­way”:

    http://tinyurl.com/6rfrtsc

    (It’s begin­ning to get notice­able to more com­men­ta­tors).

    Posted by R. Wilson | November 30, 2011, 10:53 pm
  6. 78-to‑1, the gam­bling man’s lever­age ratio:

    Deutsche Bank Could Trans­fer Con­ta­gion: Simon John­son
    By Simon John­son Dec 1, 2011 9:00 PM CT

    You’ve prob­a­bly nev­er heard of Taunus Corp., but accord­ing to the Fed­er­al Reserve, it’s the U.S.’s eighth-largest bank hold­ing com­pa­ny. Taunus, it turns out, is the North Amer­i­can sub­sidiary of Germany’s Deutsche Bank AG, with assets of just over $380 bil­lion.

    Deutsche Bank holds a large amount of Euro­pean gov­ern­ment and bank debt; it also has con­sid­er­able expo­sure to lin­ger­ing real estate prob­lems in the U.S. The bank, there­fore, could become a con­duit for risk between the two economies. But which way is Deutsche Bank more like­ly to trans­mit dan­ger — to or from the U.S.?

    By any mea­sure, Deutsche Bank is a giant. Its assets at the end of Sep­tem­ber totaled 2.28 tril­lion euros (accord­ing to the bank’s own web­site), or $3.08 tril­lion. In the lat­est rank­ing from The Banker, which uses 2010 data, Deutsche was the sec­ond- largest bank in the world by assets, behind only BNP Paribas SA.

    The Ger­man bank, how­ev­er, is thin­ly cap­i­tal­ized. Its total equi­ty at the end of the third quar­ter was only 51.9 bil­lion euros, imply­ing a lever­age ratio (total assets divid­ed by equi­ty) of almost 44. This is up from the sec­ond quar­ter, when lever­age was about 36 (assets were 1.849 tril­lion euros and cap­i­tal was 51.678 euros.)

    Even by mod­ern stan­dards, this is very high lever­age. JPMor­gan Chase & Co. has a bal­ance sheet about 20 per­cent small­er than Deutsche Bank’s, but more than twice as much Tier 1 cap­i­tal, an impor­tant indi­ca­tor of a bank’s finan­cial strength. Bank of Amer­i­ca Corp., whose weak­ness is a seri­ous wor­ry in the U.S. today, has twice Deutsche’s cap­i­tal. (These com­par­isons use The Banker’s rank­ing of the top 25 banks and aren’t adjust­ed for dif­fer­ences between U.S. and Euro­pean account­ing rules.)

    ....

    Per­haps Deutsche Bank holds most­ly Ger­man gov­ern­ment debt, which still has safe-haven val­ue. But it’s like­ly that Deutsche also holds a sig­nif­i­cant amount of Ital­ian and French gov­ern­ment bonds.

    Still, the big­ger risks are prob­a­bly in the U.S. Deutsche Bank is a sig­nif­i­cant trustee for mort­gages, hav­ing been heav­i­ly involved in the issuance and dis­tri­b­u­tion of mort­gage-backed secu­ri­ties dur­ing the hous­ing bub­ble. Yves Smith, writ­ing on the nakedcapitalism.com blog, says Deutsche Bank is one of the U.S.’s four biggest secu­ri­ti­za­tion trustees. Many ques­tions on whether paper­work was done prop­er­ly and whether the rights of investors have been pro­tect­ed hang over these trusts.

    Let’s take a look just at Taunus Corp., named after a range of moun­tains out­side the par­ent bank’s Frank­furt head­quar­ters. The lat­est fig­ures (from the Fed data, using the con­sol­i­dat­ed finan­cial state­ment at the end of the third quar­ter) show Taunus with total equi­ty cap­i­tal of just $4.876 bil­lion. This implies an eye-pop­ping lever­age ratio of around 78.
    ...

    Ask­ing for Trou­ble

    Deutsche Bank and, if nec­es­sary, the Ger­man gov­ern­ment should be required to inject sub­stan­tial­ly more cap­i­tal into Taunus. Allow­ing busi­ness as usu­al is ask­ing for trou­ble, par­tic­u­lar­ly as Deutsche wants to remain focused on rel­a­tive­ly risky invest­ment bank­ing. Recent­ly it named as chair­man Paul Achleit­ner, the finance direc­tor at Allianz SE, the Ger­man insur­ance com­pa­ny, and an ex-Gold­man Sachs exec­u­tive, wor­ry­ing even some of its share­hold­ers.

    This would be a good time for Con­gress to dig more deeply into the risks that Deutsche Bank pos­es to finan­cial sta­bil­i­ty in the U.S. and around the world.

    Posted by Pterrafractyl | December 2, 2011, 7:57 am
  7. With the UK look­ing like the only EU nation that isn’t pledg­ing to join the new-fan­gled aus­ter­i­ty-zone, some of the UK left appears to be engaged in a knee-jerk if-Cameron-opposed-it-we-sup­port-it antics. That may not be the best response.

    Posted by Pterrafractyl | December 9, 2011, 7:21 pm
  8. Back­ground: Niall Fer­gu­son is a UK-based right-wing his­to­ri­an who is cur­rent­ly work­ing close­ly with Hen­ry Kissinger on his autho­rized biog­ra­phy. Fer­gu­son has a “whim­si­cal” vision of Europe & the world in 10 years in which the U.S. is incon­se­quen­tial, South­ern Euro­pean nations are bro­ken serfs who are con­tent with their serf­dom, and Ger­many is the crown of a reborn dynasty:

    http://online.wsj.com/article/SB10001424052970203699404577044172754446162.html

    2021: The New Europe
    Niall Fer­gu­son peers into Europe’s future and sees Greek gar­den­ers, Ger­man sunbathers—and a new fis­cal union. Wel­come to the oth­er Unit­ed States.

    Posted by R. Wilson | December 10, 2011, 8:06 pm
  9. http://www.zcommunications.org/tough-on-euros-weak-on-nazis-by-victor-grossman

    Tough on Euros, Weak on Nazis
    By Vic­tor Gross­man

    Source: Berlin Bul­letin No. 35Friday, Decem­ber 16, 2011

    Excerpt: “... Who are the pow­ers-that-be? A major con­tender for one title would be Josef Ack­er­mann, CEO of the Deutsche Bank, with his 9.6 mil­lion euro income (2009). He just hit the head­lines because of a let­ter bomb was addressed to him — alleged­ly from an obscure Ital­ian anar­chist group. This tem­porar­i­ly pushed the Nazi killer sto­ry from the head­lines; yes, we were back to left extrem­ists again. The bomb, dis­cov­ered before it could hurt any­one, came at such an appro­pri­ate moment that it even caused cau­tious skep­ti­cism among some cyn­ics.

    But Ack­er­man­n’s Deutsche Bank does deserve atten­tion. It was one of the prime lenders to Greece, not far behind Gold­man Sachs. It was also a major play­er in the mort­gage-fore­clo­sure rack­et in the USA, a cause and a win­ner in the whole reces­sion mis­ery. Few in the media liked to recall that the Deutsche Bank was a main play­er in World War One finances, then a key sup­port­er of Hitler’s rise to pow­er, a prof­i­teer from the occu­pa­tion of most of Europe, and a direct investor in the Auschwitz death camp. It now employs 100,000 peo­ple in all the world and is not only pow­er­ful in Ger­many. Its close ties to Angela Merkel became embar­rass­ing­ly vis­i­ble three years ago when it was learned that she had treat­ed Ack­er­mann to a lux­u­ri­ous pri­vate birth­day par­ty in her head­quar­ters in Berlin, com­pa­ra­ble to the White House, and with about twen­ty-five select friends cho­sen by him.

    Though Swiss, he is sure­ly the most pow­er­ful man in Ger­many and beyond; she is still the most pow­er­ful woman, now in most of Europe. The close coop­er­a­tion and col­lu­sion between these two, with a Euro­pean cri­sis still threat­en­ing and a right wing reserve in the back­ground, make one wish devout­ly that all on the left ... can move for­ward...”

    Posted by R. Wilson | December 20, 2011, 6:28 pm
  10. Here’s a col­umn that does a great of sum­ma­riz­ing many of the argu­ments against the ‘expan­sion­ary aus­ter­i­ty’ and anti-Key­ne­sian eco­nom­ic poli­cies that Ger­many is push­ing all of the EU to adopt en mass (don’t for­get, 25 out of 27 EU mem­bers recent­ly signed a pledge to imple­ment de fac­to bal­anced bud­get amend­ments in the mid­dle of the Greater Depres­sion!). Be sure to check out the “punch­line” from the eco­nom­ic study on the sup­posed effec­tive­ness of Ire­land’s aus­ter­i­ty pro­grams:

    What if the Ger­mans are wrong?
    06 Feb­ru­ary 2012 8:30 AM
    MARY ELLEN SYNON

    This is my col­umn from today’s Irish Dai­ly Mail –

    Here’s a ques­tion for you: what if the Ger­mans are wrong? What if our Gov­ern­ment has agreed to sign over con­trol of our bud­getary lives to Berlin and its relent­less aus­ter­i­ty, and the Ger­mans turn out to be enforc­ing the wrong poli­cies?

    Of course it is not just the gov­ern­ment of this coun­try that has thrown the bud­getary car keys to Berlin and said, ‘Okay, you dri­ve. We’ll just strap our­selves into the kid­die car-seat in the back.’

    Greece has done it, Por­tu­gal has done it, Italy has done it; the Baltic States of Latvia, Esto­nia and Lithua­nia have done it. Alto­geth­er the gov­ern­ments of 25 coun­tries of the EU have done it; they have signed an inter­gov­ern­men­tal treaty in which they promise to bind them­selves per­ma­nent­ly to Ger­man-designed pro­grammes of aus­ter­i­ty.

    But what if the Ger­mans are wrong? What if they are dri­ving us over the cliff edge?

    All the evi­dence points to just that. Most spec­tac­u­lar­ly, the evi­dence shows that Berlin-designed aus­ter­i­ty is caus­ing a debt spi­ral – say that fast enough and it comes out ‘death spi­ral,’ and that’s about right – in Greece and Por­tu­gal.

    Yet when any­one points to that evi­dence, the Ger­mans and their deutsch-cult true-believ­ers – the self-fla­gel­lat­ing albi­no monks of the Euro­pean economies — say, ‘The suf­fer­ing of Greeks and the Por­tuguese, and of Spain and Italy, is get­ting worse because they haven’t embraced enough aus­ter­i­ty. If only they would show the dis­ci­pline’ – yes, if they would tight­en that cil­ice on their thighs — ‘of Ire­land and the Baltic States, they would see that fis­cal aus­ter­i­ty and wage cuts would do the trick.’

    Some trick. Our domes­tic econ­o­my, like the domes­tic economies of the Baltic States, is bleed­ing to death.

    This fact was exam­ined last week in a paper by Simon Til­ford, chief econ­o­mist at the pro-EU think-tank Cen­tre for Euro­pean Reform (full dis­clo­sure, the CER receives an annu­al grant from the par­ent com­pa­ny of the Irish Dai­ly Mail, as well as from a shed-load of oth­er big cor­po­rates such as Shell, Boe­ing and Dia­geo).

    Mr Til­ford notes that euro­zone pol­i­cy-mak­ers advo­cate in par­tic­u­lar that Italy and Spain should emu­late the Baltic States and Ire­land. They argue that ‘these four coun­tries demon­strate that fis­cal aus­ter­i­ty, struc­tur­al reforms and wage cuts can restore economies to growth and debt sus­tain­abil­i­ty.

    The euro­zone pol­i­cy-mak­ers insist that Ire­land and the Baltic States prove that, with enough aus­ter­i­ty, economies can regain exter­nal trade com­pet­i­tive­ness and close their trade deficits with­out the help of cur­ren­cy deval­u­a­tion. (It is impor­tant to the pro­pa­gan­da of the euro­zone pol­i­cy-mak­ers not to allow any­one to admit that if Ire­land or any oth­er strug­gling euro­zone coun­try had its own cur­ren­cy again, it would have the pow­er­ful tool of cur­ren­cy deval­u­a­tion to help pull it out of its reces­sion.)

    Any­way, you know all that. That is the offi­cial euro­zone line that our Gov­ern­ment has been repeat­ing: that we are the good boys of aus­ter­i­ty, and those undis­ci­plined Ital­ians, Spaniards, Greeks and Por­tuguese could learn from us.

    Real­ly?

    As Mr Til­ford points out, Ire­land and the Baltic States have all expe­ri­enced eco­nom­ic depres­sions: ‘From peak to trough, the loss of out­put ranged from 13 per­cent in Ire­land to 20 per­cent in Esto­nia, 24 per­cent in Latvia and 17 per­cent in Lithua­nia.’

    ‘Since the trough of the reces­sion, the Eston­ian and Lat­vian economies have recov­ered about half of the lost out­put and the Lithuan­ian about one-third. For its part, the Irish econ­o­my has bare­ly recov­ered at all and now faces the prospect of renewed reces­sion.’

    ‘Domes­tic demand in each of these four economies has fall­en even fur­ther than GDP. In 2011 domes­tic demand in Lithua­nia was 20 per­cent low­er that in 2007. In Esto­nia the short­fall was 23 per­cent, and in Latvia a scarce­ly believ­able 28 per­cent. Over the same peri­od, Irish domes­tic demand slumped by a quar­ter (and is still falling). In each case, the decline in GDP has been much shal­low­er than the fall in domes­tic demand because of a large shift in the bal­ance of trade.’

    And here comes the punch in the jaw to our Government’s fan­ta­sy of an export-led recov­ery: accord­ing to Mr Til­ford, ‘The improve­ment in exter­nal bal­ances does not reflect export mir­a­cles, but a steep fall in imports in the face of the col­lapse in domes­tic demand.’

    ‘Coun­tries that have expe­ri­enced such enor­mous declines in domes­tic demand, and whose eco­nom­ic growth fig­ures have been flat­tered by a col­lapse of imports (and hence improve­ment in trade bal­ances) hard­ly pro­vide a blue­print for oth­ers, let alone big coun­tries.’

    ‘Spain and Italy could close their trade deficits if they engi­neered eco­nom­ic slumps of the order expe­ri­enced by the Baltic coun­tries and Ire­land. But a col­lapse in demand in the EU’s two big South­ern Euro­pean economies com­pa­ra­ble to that expe­ri­enced in the Baltic coun­tries and Ire­land would impose a huge demand shock on the Euro­pean econ­o­my. Tak­en togeth­er, Italy and Spain account for around 30 per­cent of the euro­zone econ­o­my, so a 25 per­cent fall in domes­tic demand in these two economies would trans­late into an eight per­cent fall in demand across the euro­zone.’

    ‘The result­ing slump across Europe would have a far-reach­ing impact on pub­lic finances, the region’s bank­ing sec­tor and hence on investor con­fi­dence in both gov­ern­ment finances and the banks. The impact on sov­er­eign sol­ven­cy in Spain and Italy and on the two coun­tries’ bank­ing sec­tors would be dev­as­tat­ing.’

    ...

    Posted by Pterrafractyl | February 11, 2012, 8:28 pm
  11. Whoops! For­got the link for the above arti­cle!

    Posted by Pterrafractyl | February 11, 2012, 8:29 pm
  12. There was a very reveal­ing op-ed piece in Thurs­day’s “New York Times” by Nor­bert Wal­ter, the chief econ­o­mist of Deutsche Bank.

    I think it answers the ques­tion of “What if . . .

    ” . . . This view also ignores the fact that a strong Ger­man export sec­tor acts as a sponge for sur­plus labor in oth­er countries–unemployed work­ers in Madrid or Athens can eas­i­ly move to Munich or Cologne for work. . . .”

    “Sur­plus Work­ers?!” He means “unem­ployed.”

    So, if you’re out of work, just move to Ger­many!

    That’ll solve the world’s prob­lems.

    BTW–the piece is titled “Ger­many’s Hid­den Weak­ness” and is on page A19 of the NYT of 2/9/2012.

    Posted by Dave Emory | February 12, 2012, 2:27 am
  13. Posted by R. Wilson | May 2, 2012, 9:15 pm

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