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Ambrose Evans-Pritchard sums up the EU impasse with one word: Merkel. For now, while insisting...

Ambrose Evans-Pritchard sums up the EU impasse with one word: Merkel. For now, while insisting on increased power to police the budgets of sinner states, she offers precious little in return. In the end, he writes, "we may just have to hunker down yet again and wait for Germany to blink at last, or detonate the fuse."
Comments (27)
  • Michael Parmar
    , contributor
    Comments (235) | Send Message
     
    While this is not what the market wants to hear, Merkel IMHO is trying to steer Germany and the EU along the more sustainable long run path of having a "proper" fiscal union in place to underpin the currency union and any measures for common debt financing and transfer payments amongst the states.

     

    The nature of EU politics means she must first put out the simple message of "Nein!!" to quick fixes, but she has not ruled out eurobonds in the long term nor transfer payments.

     

    She is well aware the Germany did VERY well out of the EU of the 2000s and they, like the PIIGS have to pay just as much.
    4 Dec 2011, 04:41 PM Reply Like
  • IncomeYield
    , contributor
    Comments (2064) | Send Message
     
    Merkel knows that fiscal union or not doesn't fix THE problem. No way to pay back the debt with austerity, low growth, low tax collections, etc.

     

    The markets are looking for a US type 2008/2009 bailout scenario. How does the debtor bail themselves out? How do you re-finance yourself?

     

    Defaulting on pensions and health care promises to shore-up your balance sheet is difficult politically and near impossible legally.
    4 Dec 2011, 04:51 PM Reply Like
  • cynic2011
    , contributor
    Comments (652) | Send Message
     
    What is she supposed to offer in return? She's the only one proposing a fundamental solution to a fundamental problem. What she's offering is a solution.

     

    But I think she's wasting her energy and her breath. Germany should just let the EuroZone fall apart. After a few years of pain throughout Europe Germany will still be on top,as always.
    4 Dec 2011, 05:40 PM Reply Like
  • The Last Boomer
    , contributor
    Comments (900) | Send Message
     
    I have been saying this for weeks now. The German understanding of fiscal union is to gain control over the other countries' fiscal authority without ceding any of the German own sovereignty. This is a dangerous path leading to European disintegration. If implemented, it may propel to power the likes of Jean-Marie Le Pen in France and the emergence of similar nationalist leaders in the rest of Southern Europe. Merkel is playing with fire.
    4 Dec 2011, 05:43 PM Reply Like
  • WMARKW
    , contributor
    Comments (10454) | Send Message
     
    Boomer,
    IMO, the EU was created as a stepping stone to what was always a unified Europe concept. The member states would not have accepted the political union in the beginning.....but just create enough of those "crises" that you need to take advantage of and voila, you have the impetus to create the political union and the fiscal union that never would have been possible in the beginning.
    4 Dec 2011, 07:55 PM Reply Like
  • The Last Boomer
    , contributor
    Comments (900) | Send Message
     
    WMARKW,what Germany tries to achieve now is an unequal political union. Imagine if California wanted to have more rights than any other state, for example, to have a veto on their budgets but not let them to have a veto on the California's budget. Well, this is what Germany tries to accomplish now in Europe.
    4 Dec 2011, 08:55 PM Reply Like
  • WMARKW
    , contributor
    Comments (10454) | Send Message
     
    Boomer...are you saying that what they couldn't accomplish with WWII, the may be attempting to accomplish via controlling the EU monetary and potentially political union?
    4 Dec 2011, 11:45 PM Reply Like
  • cynic2011
    , contributor
    Comments (652) | Send Message
     
    "European disintegration" just means going back to the way things were before the Euro. It will certainly cause confusion for a while, with lawyers and accountants reaping the benefits as usual. but "playing with fire"? I don't think so.
    4 Dec 2011, 05:46 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4013) | Send Message
     
    Debt slavery is coming to Europe. The losses will be socialized.
    4 Dec 2011, 05:48 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9966) | Send Message
     
    Still don't see anything realistic coming out of EU at this point. Default & recapitalize, gift & transfers to indebted, print & inflate, or go back to individual currencies. What other alternatives do they have? And what will address the structural imbalances such as differential labor costs, trade imbalances, etc.?
    4 Dec 2011, 06:02 PM Reply Like
  • HiSpeed
    , contributor
    Comments (1112) | Send Message
     
    How much more is the German Middle class willing to spending to keep the EU lie going a little longer? Default by the Peripherals is inevitable whether it be direct or by printing press.

     

    The coordinated Central Banks' move last week gave some insight into just how close to the edge the EU is.
    4 Dec 2011, 06:06 PM Reply Like
  • cynic2011
    , contributor
    Comments (652) | Send Message
     
    this article says the Italian cabinet just approved a total of E30 billion in tax hikes (2/3) and savings through delayed retirement. Wanna bet it fails to pass in Parliament? It's the wrong way to go and a spit in a rainstorm anyway.

     

    http://bloom.bg/rRkm8j
    4 Dec 2011, 06:08 PM Reply Like
  • davidbdc
    , contributor
    Comments (3165) | Send Message
     
    So Merkel is too demanding?

     

    Yeah, its a terrible thing for the German leader to demand the Greeks pay for their own debts. Its terrible that the German people - whom enacted their own painful reforms a decade ago - expect the Italians and Spanish to cut their welfare states.

     

    The difference between the USA and Europe is that in the USA its easier to have the responsible pay for the irresponsible - we're all in the same country. But in Europe you have the opposite - the responsible Dutch and Germans and Danes have no reason to pay for the irresponsible.

     

    If we had the option in the USA I'd gladly choose to let the irresponsible fail and bail out no one.
    4 Dec 2011, 06:11 PM Reply Like
  • cynic2011
    , contributor
    Comments (652) | Send Message
     
    Denmark isn't a EuroZone country,but your point is well taken anyway.
    4 Dec 2011, 06:15 PM Reply Like
  • davidbdc
    , contributor
    Comments (3165) | Send Message
     
    Your correct, although the Krone is pegged to the Euro the people had the common sense to reject the Euro vote.

     

    Score one for the common man!
    4 Dec 2011, 06:24 PM Reply Like
  • cynic2011
    , contributor
    Comments (652) | Send Message
     
    I read recently that the Poles were re-considering whether they really want to adopt the Euro. Smart guys.
    4 Dec 2011, 06:26 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4091) | Send Message
     
    Better for Euro zone if they were not in.
    4 Dec 2011, 07:02 PM Reply Like
  • cynic2011
    , contributor
    Comments (652) | Send Message
     
    Actually,I think you touch on a point: with your comment: France and Germany were so eager to expand their power and influence they agreed to admit several countries such as Greece (to the Euro) even though their national accounts were completely off the EU targets and headed in the wrong direction.
    4 Dec 2011, 07:07 PM Reply Like
  • WMARKW
    , contributor
    Comments (10454) | Send Message
     
    "How many Poles does it take to reject the EU?"
    4 Dec 2011, 07:56 PM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    But the German taxpayers aren't getting the bill for Greece or any other EU country's bailout. So which irresponsible people are they allegedly paying for?

     

    ANYBODY in Germany or any other EU State claiming to have paid for this bailout, is either profoundly retarded or a liar, full stop.

     

    The EFSF and any other current EU Bailout Fund are BOND ONLY.

     

    Nobody is being forced to buy those bonds. When they say a new tranche is being made available, they are talking about sovereign bonds being offered. As we saw last week. Germans won't even buy their own damn bonds, the failed offering is one of the worst on record in recent years.

     

    The biggest drawback to bond funds is that they don't have a fixed maturity, so that neither your principal nor your income is guaranteed. Fund managers buy and sell bonds in their portfolios to maximize THEIR interest income and capital gains. That means YOUR interest payments will vary, as will the fund's share price. Fund Mgr. wins, you don't.
    5 Dec 2011, 03:17 AM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    Germany MUST submit to authority and act decisively. They survived this mess at the expense of others, we know it, so do they.

     

    http://on.cfr.org/tOg7rI
    5 Dec 2011, 05:15 AM Reply Like
  • Angel Martin
    , contributor
    Comments (1311) | Send Message
     
    I think AEP has missed the point slightly, what Merkel is offering is her definition of fiscal union in exchange for ECB support. The ECB is the only thing that can move fast enough to prop up the piigs.

     

    the piigs have a choice, they can take merkel's offer and try to get out of their austerity commitments later, or they can have a debt default/euro exit right now.

     

    I think we are going to have a deal that props things up for the short term.
    4 Dec 2011, 06:24 PM Reply Like
  • SwingTraders
    , contributor
    Comments (80) | Send Message
     
    This article published December 3rd in "The Economist" is much more informative regarding how severe the banking crisis is in Europe than is reported in the American press : http://econ.st/s9xlus

     

    The relief rally last week was surprising in light of the magnitude of the overall crisis. There are so many technical issues not to mention political concerns within the Euro-zone that betting on the market in either direction seems dangerous these days.
    4 Dec 2011, 07:27 PM Reply Like
  • cynic2011
    , contributor
    Comments (652) | Send Message
     
    Very good article.

     

    Earlier I posted an article elsewhere that says the Italian cabinet has approved budget "reform" of 30 billion Euros annually. I see on the Economist's chart that the bank redemptions in the month of January alone exceed that amount.
    4 Dec 2011, 07:39 PM Reply Like
  • Jackson999
    , contributor
    Comments (468) | Send Message
     
    Businessweek
    Opening Remarks
    November 30, 2011

     

    Will Angela Merkel Act, or Won't She?
    Germany's Chancellor has her reasons for insisting on severe measures to resolve Europe's economic crisis, but while she stalls, further damage is being done

     

    http://buswk.co/u2vF96
    4 Dec 2011, 11:07 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9966) | Send Message
     
    good link. One of the article comments was as follows:

     

    Still, Germany resists. “Markets are going up a blind alley thinking there’s going to be a common euro bond or thinking that the ECB is going to act as a lender of last resort,” said Norman Lamont, the former British Chancellor of the Exchequer, on Bloomberg Television. “I think Germany would rather leave the euro than see the ECB’s integrity affected.”
    5 Dec 2011, 12:17 AM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    But why should Germany care if the ECB's integrity is affected?

     

    It is not their bank, full stop.

     

    That's the problem here. They (Germany) think everything belongs to them, and they are the one's calling the shots.

     

    Part of their (Germany's) emancipation, was keeping on eye on them so they wouldn't start this "European Domination" plan again, which is already in full swing.

     

    Yesterday, on Live National Television in Germany, Former Chancellor, Helmut Schmidt said, " Die führenden Staatsmänner in Europa und Amerika handelten aus realistischer Einsicht in die Notwendigkeit, eine Fortstzung des Kampfs zwischen Peripherie und Deutschem Zentrum zu vermeiden. Wer nicht verstanden habe, dass dies immer noch ein tragendes Element sei, dem fehle eine unverzichtbare Voraussetzung für die Lösung der höchst prekären Kriese Europas."

     

    Translated:
    "The leading statesmen in Europe and America have applied more realistic insight into the need to avoid continuation of the struggle between the periphery and the German center. Those who did not understand that, this is still a fundamental element, which lacks an essential prerequisite for the solution of the most precarious of European Crises."

     

    Evidently, Hr. Schmidt, a National Hero, agrees with those of us that it's about Germany trying to control the weaker periphery, and Fr. Merkel is just avoiding the issue when questioned. Germany is in no position to be taking charge when they are the EU's largest debtor state, and the weakest link. When cornered, they keep threatening to leave.

     

    Go, who cares, get on with it.

     

    They know they can't survive on their own, we know it too.

     

    If one of her cabinet was academically qualified in practical finance or economics, they might have an argument. Again, Germany is the ONLY industrialized country in the world, where you do not have to have a degree in finance or economics, to be the finance or economic minister.

     

    Hr. Schauble, Finance Minister is a Lawyer, full stop. Only experience in finance has been as Admin. in a State Tax Office, where you also obviously need no financial qualifications. Hardly qualified to be a Minister of anything, let alone Finance.

     

    Dr. Rösler, Economic Minister, is a Physician. He has no business of financial experience.

     

    Maybe this could be part of the problem? They (Germany) have a LONG history of economic and financial problems, defaulting 4 times in the last 100 yrs alone.

     

    Wrong guy on the job = failure every time.
    5 Dec 2011, 03:00 AM Reply Like
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