Germany sells Israel nuke-ready submarines – report [RT]

Germany is supplying the Israeli Navy with submarines that are fully capable of being fitted to carry cruise missiles with nuclear-warheads, Spiegel reports. Thus, if Israel does indeed have any such missiles, it could deploy them immediately.

The extensive military deal suggests that German shipyards are to supply Israel with six Dolphin-class diesel-electric submarines, four of which have already been delivered.

“The Germans can be proud to have secured the existence of Israel for many years,” Israeli defense minister, Ehud Barak, told Spiegel.

According to Barak, the latest craft, which was delivered on May 3, has become yet another “force multiplier in terms of the capabilities and strength of Israel’s defense forces.” And in the face of the growing strategic regional challenges, Israel’s navy, and particularly its submarine fleet, represents a “defensive and fighting arm of deterrence,” Chief of Staff Lt. Gen. Benny Gantz said upon delivery.

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Israeli seamen sit atop Tekumah, a Dolphin-class submarine in the Mediterranean Sea, near the port of Haifa June 1, 2012 (Reuters/Baz Ratner)

Berlusconi: Italy should print Euro and Germany should leave.


 ROME -(Dow Jones)- Italy should start printing fresh euros and Germany should leave the currency union, former Italian Prime Minister Silvio Berlusconi said Friday, MF-Dow Jones reported.

“Here’s my crazy idea; Let’s start printing euros ourselves,” Mr Berlusconi told an assembly of his center-right People of Liberty party’s parliamentary deputies.

“Germany should leave the euro if it doesn’t agree with the European Central Bank serving as a lender of last resort,” he added, MF-Dow Jones said. 

If the ECB doesn’t take on that role, Germany’s role in Europe should be reviewed, he said. 

Mr Berlusconi resigned last November to make way for a technocrat government led by former European commissioner Mario Monti. Senior officials in government and at Italy’s central bank have since said the country risked being unable to pay state employees due to trouble issuing sovereign debt. 

While no longer in power, Mr Berlusconi remains the founding leader of the party with the most parliamentary seats and hence his support for Mr Monti’s government is considered crucial.

The current legislature is due to end in the spring of 2013.

Mr Berlusconi said he had no intention of being a candidate for prime minister or the head of state but that he was “at the service of his party as a coach.”

Mr Berlusconi, owner of the AC Milan soccer team, has long called for the ECB to serve as a lender of last resort, shorthand for urging it to buy government debt when private investors will not.

Last summer he sought policy help from the ECB but was surprised to receive in exchange a letter from the central bank demanding that Italy speed up its budget consolidation, push through tough pension reforms and make it easier for companies to fire employees.



Germany Has A Generous Proposal To The Broke PIIGS: “Cash For Gold” [Zerohedge]

Submitted by Tyler Durden

Back in February, as part of the latest Greek bailout of European banks, we noted that the most subversive part of the German-led proposal was nothing short of a gold confiscation scheme.

the European bailout of Greece, is now formally a Greek bailout of Europe, funded by the country’s already negative primary surplus, or better said – deficit (don’t try to make mathematical sense of that – a scene out of Scanners is guaranteed). Hence, negative bailout. But the piece de resistance, and the reason why Greece is the in situ version of bankster heaven is the news from the NYT that Greece is also about to have negative gold.

Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.

Well, they may be broke, and they may be bailing out Europe, but at least they’ll have no gold: sounds like a sweet deal – it makes perfect sense that Greeks are taking every incremental humiliation from a syndicate of few fat, bald types who have access to a digital money printer, with the supine determination of an Oliver Twist.

Today, courtesy of The Telegraph, we learn that Germany is quietly reminding the world that the stealthy, but voluntary, accumulation of gold is what it is all about. As part of a renewed push for quasi-Federalism, whereby Germany would fund a “European Redemption Pact”, in which Berlin would, in the form of Germany-backed joint bonds, be responsible for any sovereign debt over the 60% Maastrtich limit, but with a big catch. The catch is that “a key motive is to relieve the European Central Bank of its duties as chief fire-fighter. “We have got to get the ECB out of the game of distributing money, and separate fiscal and monetary policy. Germany has only two votes on the ECB Council and has no way to control consolidation,” he said. Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20pc of their debt as collateral. “The assets could be taken from the country’s currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations,” said the proposal.

In other words: a perfectly legitimate, and fully voluntary scheme in which sovereign gold is pledged to a German “pawn broker” until such time as the joint bonds are extinguished, and if for some “unpredictable” reason, a country fails to meet its obligations, read defaults, all the pledged gold goes to Germany!

But why Gold? Why not spam. After all gold is selling off, spam is stable, and the dollar is soaring. Couldn’t Germany merely demand that broke countries simply pledge all their USD reserves, and keep their worthless, stinking yellow metal?

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Europe’s debtors must pawn their gold for Eurobond Redemption [Telegraph]

Southern Europe’s debtor states must pledge their gold reserves and national treasure as collateral under a €2.3 trillion stabilisation plan gaining momentum in Germany.

By , International business editor

The German scheme — known as the European Redemption Pact — offers a form of “Eurobonds Lite” that can be squared with the German constitution and breaks the political logjam. It is a highly creative way out of the debt crisis, but is not a soft option for Italy, Spain, Portugal, and other states in trouble.

The plan is drafted by the German Council of Economic Experts and inspired by Alexander Hamilton’s Sinking Fund in the United States — created in 1790 to clean up the morass of debts left by the Revolutionary War. Flourishing Virginia was comparable to Germany today.

Chancellor Angela Merkel shot down the proposals last November as “completely impossible”, but Europe’s crisis has since festered, and her Christian Democrat party has since suffered crushing defeats in regional elections.

The Social Democrat opposition supports the idea. The Greens say they will block ratification of the EU Fiscal Compact in the German Bundesrat — or upper house — unless Mrs Merkel relents.

“The Redemption Pact cleverly combines the advantages of lower interest rates through joint European borrowing with a reduction of debt,” says Green leader Jürgen Trittin. “Joint liability would be limited in both time and scale.”

Southern Europe’s debtor states must pledge their gold reserves and national treasure as collateral under a €2.3 trillion stabilisation plan gaining momentum in Germany.

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German Central Bank Issues Zero-Rate Bonds [Der Spiegel]

For the first time in history, Germany issued long term bonds with a zero percent coupon rate on Wednesday. The demand reveals the deep concerns investors have about the euro zone and their desire for a safe place to park their capital — even if it costs them money to do so. 

For now at least Germany and Greece share the same currency. But don’t tell that to investors. On Wednesday the German Finance Ministry pulled off a remarkable feat for a country in a threatened currency union: It issued €4.6 billion of two year bonds with a rate of zero percent. In other words, once inflation is factored in, investors are essentially paying to park their money with the German government.

Germany's Bundesbank successfully issued two-year bonds offering a zero pecent interest rate.

Because of the strength of its economy, Germany has emerged as a significant benefactor from the problems being experienced by Greece as well as Spain, Italy and Portugal. In Greece worries that a government uncooperative with the European Central Bank could come to power after next month’s election forcing an exit from the euro zone has investors as well as ordinary citizens pulling their money out in droves. In Spain concerns over the health of the banking sector have driven up borrowing costs.

According to German officials on Wednesday, demand for the zero percent bonds was robust and added that Germany does not intend to offer up bonds with a negative interest rate. “As such, a coupon of zero percent is the lower limit,” Reuters quoted a finance official as saying.

Still, it seems likely that, with investors looking for safe havens for their money, even negative interest rate bonds might sell. “Many investors are putting their money only in places where they are guaranteed to get it back,” Commerzbank analyst Alexander Aldinger told the Berliner Morgenpost. “For a large degree of security, investors are willing to give up returns.”

Even while borrowing costs have spiked in other euro-zone countries, rates on shorter term German bonds have already hit zero and even ventured into negative territory, meaning investors have been paying the German government to hang on to their cash. Rates on longer-term bonds have been trading consistently below the rate of inflation.

The zero percent bond issue is just the latest sign that concern about the crisis facing Europe’s common currency is rampant. As are worries that the situation could become much worse before it gets any better.

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Merkel is being insincere! []

By Christian Gross 2012/05/19 12:52
Most of you readers will know me as the Swiss guy. That is because of the website, the fact that I live in Switzerland and am a Swiss citizen. But I have not always been a Swiss. I was born in Germany, near Frankfurt. When I was young my parents immigrated to Canada and the US. Around 1994 I returned to Europe, with my wife, and lived in many places in Europe (eg UK, France, Germany, Austria, and of course Switzerland). In each place I have paid my taxes and been part of the system. I am telling you this because Chancellor Merkel is forgetting a very key aspect in this Euro crisis discussion. She is East German, and I am West German! Around the time of the walls falling my parents moved back to Germany from the US, where I was still living in Canada. I remember watching the walls fall on a TV in a dorm room and having a friend ask me, “does this make you feel good?” I answered yes!

About six months after the walls fell I traveled from Amberg Germany to Berlin. What I saw shocked me. East Germany was in a complete state of disrepair. The roads were horrible, houses did not have proper toilets, and everything looked so dreary. The East German economy was finished and nonexistent. East Germans were driving on the original roads built by Hitler. I am not kidding, as it was very interesting to see how long these roads lasted. The Chancellor of the time was Kohl. I have always liked Kohl as I thought he was one of Germany’s greatest statesmen. It helps that he was born in the same region was I was born ;). Kohl understood that for West Germany to move forward, it had to reunify with East Germany.

Enter my father, who was an East German. My grandfather was a capitalist who owned two companies that were taken away from him when the communists came to power. To make sure that my grandfather would not raise a fuss he was sent 5 years to a Siberian “work camp.” After his release my father and grandfather defected from the East to the West. My father after the wall fell wanted his old properties back, and he made a case of it. At this point enter West Germany, who having decided to reunify would also bail out East Germany. By bail out I mean BAIL OUT… Studies have shown that West Germany transfered 1.3 trillion dollars! Cost of reunification

Here is where you need to stop and think. West Germany rebuilt an entire country from scratch and I would argue in much worse economic shape than Greece. West Germany exchanged East German marks for Deutsch Marks on a 1 to 1 basis. West Germany agreed to honour the pensions of people who did not pay into the West German system. Imagine if West Germany had a Chancellor Merkel at the helm? Her solution would be austerity, austerity and more austerity! How would East Germany have fared? I will tell you how it would have fared, we would not have a reunified Germany and there would be no Chancellor Merkel at the helm!

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Germany restates opposition to eurobonds [BBC]

Germany has again stated its opposition to so-called eurobonds as the new French finance minister met his German counterpart for the first time.

Eurobonds are a proposal to issue debt on behalf of all 17 euro countries.

But a German minister said they would be the “wrong prescription at the wrong time”.

Pierre Moscovici met German Finance Minister Wolfgang Schaeuble in Berlin with both agreeing Greece should stay in the euro.

Mr Moscovici said he had a “constructive” dialogue with Mr Schaeuble and added that Paris will respect its commitments to cut deficit.

In elections earlier this month, the majority of Greeks voted against those parties backing the drastic austerity measures that had been agreed with the EU.

“We have always said that as a first step we need solidity in European finances, and that is the fiscal compact,” said Steffen Kampeter, a deputy finance minister, referring to the budget pact that 25 out of 27 European Union countries agreed to abide.

But that has been put in doubt by the election of French Socialist Francois Hollande, who wants to introduce eurobonds and amend the pact, and stands opposed to the austerity policies pushed by Germany.

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