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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Austerity blow for Merkel in German state election [Reuters]

By Stephen Brown

DUESSELDORF, Germany (Reuters) – Chancellor Angela Merkel’s conservatives suffered a crushing defeat on Sunday in an election in Germany’s most populous state, a result which could embolden the left opposition to step up attacks on her European austerity policies.

The election in North Rhine-Westphalia (NRW), a western German state with a bigger population than the Netherlands and an economy the size of Turkey, was held 18 months before a national vote in which Merkel will be fighting for a third term.

While she remains popular at home because of the strength of the economy and her steady handling of the euro zone debt crisis, the sheer scale of the defeat in NRW leaves her vulnerable at a time when a backlash against her insistence on fiscal discipline is building across Europe.

According to first projections, the centre-left Social Democrats (SPD) won 38.9 percent of the vote and will have enough to form a stable majority with the Greens.

Merkel’s Christian Democrats (CDU) saw their support plunge to just 26.3 percent, down from nearly 35 percent in 2010, and the worst result in the state since World War Two.

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Let’s talk about Germany. What does Germany want? Why is it important? How does what the Germans want affect us?

This week, we have an American flavour to the column because I am writing this from southern California, where I have just had the pleasure of listening to probably the most important player in the global bond market, Mohamed El-Erian, the chief executive of Pimco, the world’s largest bond fund.

When this guy speaks and shares his view of the world, we should listen, not only because he is one of the most influential people in the market but because, unlike many financial market superstars, he is thoughtful, analytical and sensitive.

Equally significant is the fact that he is also addressing a group of investors who will have an impact on how the world reacts to political news from Europe and, to a small extent, from us in the months ahead. (The details are at Before we think they are worried about Ireland, they are not. However, they are concerned about Germany and the euro and what happens next.

If you believe that we even have a small amount of leverage over German decisions, it is important to figure out what the Germans want. When we say the “Germans”, we are not talking about the average man on the street in Munich, but the German establishment and the power behind the political throne, the industrial interests of Germany.

Germany doesn’t want a United States of Europe; it wants a Federal Republic of Europe, based on the model of the Federal Republic of Germany.

Constitutionally, it doesn’t want an American-style republic, but something much more like Germany. It also wants this with the minimum of fuss.

The reasons are simple. It wants to do with banks what it couldn’t – historically – do with tanks. It wants a Europe that looks and feels democratic, but in which Germany really rules the roost and makes the final decision in all the big calls. This it will achieve by financial dominance.

It wants the euro to stay intact for internal European and external global reasons. First, the EU is Germany’s biggest export market. It is therefore in its economic interests to keep the single currency going in order not to disrupt trade. Secondly, Germany has been the main beneficiary of the euro because the euro is a much weaker currency than the Deutschmark would be. This means that the euro gives Germany, as the world’s biggest exporter per head of population, a huge competitive advantage against the US and China. It is not unreasonable to suggest that if the Deutschmark were around today, it would be worth two dollars, as opposed to the $1.31 that the euro is worth today.

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‘Greece needs people’s revolution to oust foreign meddling’ [PressTV]

Greece is at the epicenter of the eurozone debt crisis as austerity cuts grip the country, with one in every five workers unemployed and pensions and salaries slashed by up to 40 percent.

This comes as the outgoing coalition government has adopted painful spending cuts to secure emergency bailout funding from the International Monetary Fund and the European Union.

However, the parliamentary elections are set to be held in Greece on Sunday amid the country’s deepening economic troubles and the ongoing austerity crisis.

Press TV has conducted an interview with Paolo Raffone, secretary general CIPI Foundation, to further discuss the issue. The following is a transcription of the interview.

Press TV: Given what our guest from Athens stated and at the end there she talked about the banks, it seems like this vote is basically based on two options for the voters: simply for the Greeks to give a clear answer as to whether they want to follow this pro-European course which equals to deep cuts and austerity; or not, which is why it’s been called a protest vote.

Raffone: Yes, it is the unfortunate history of Greece, is that of continuing occupation from outside.

On the other hand, the disgraceful leadership of the elites within the country has been conducting the entire population and the Greeks as a nation to the point of no return.

What is happening now under the EU and the supposed way to save Greece from bankruptcy is, as it was said from Athens hidden type of occupation, people have to understand this.

The Greek people are not below the capacity and standards of others in Europe. On the contrary, their history, even their recent history, has proven that they can be avante garde to the others.

There is a protest. The vote of protest will come out. Unfortunately, even in extreme right-wing parties which do not promise any good. But of course it’s a protest vote.

Press TV: What type of government, then, can we look at to ensure Greece’s stability in that area? Hope doesn’t seem to be on the side of these two main parties in the coalition government.

Raffone: I would say that the issue of the coalition government that may come out is almost irrelevant.

The thing that is very important is that Greece has to get out of the situation of subjugation which has been put for a very long time, since the time of the British, over there.

I even see a sort of connection between the history of what is going on in Greece and what has been going on in Iran itself. There is a need of a people’s revolution in Greece to get rid of these foreign people muddling with their internal affairs, and using the country as their own garden.

Those representatives of the coalition government will not change anything. They are still coming from the same elite groups that have brought Greece to the brinks.

Press TV: What is going to be in the works given the fact that this coalition government is going to be elected? What are we going to be looking at as these troika, these three organizations, are going to come in, probably, right after the elections? What kind of cuts are we going to see for Greece so we can get perhaps a pulse on what lies ahead for Greece?

Raffone: In spite of the various specific situations of Greece which I have [implied] before, meaning that the leaderships of Greece have been rapacious, people taking the blood from the Greeks in Greece to put in foreign accounts, this has been done for decades. This is an issue that the Greeks have to resolve with their own leaders, kicking them out of the country if they want to survive.

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Yesterday was International Workers’ Day. It was celebrated all over Europe with public holidays. It is a bit ironic that on the day that Europeans celebrate our workers so many millions of these workers are on the dole. Traditionally, periods of high unemployment are also periods of social and political change. It is easy to see how the present levels of unemployment might lead to political U-turns.

Today, unemployment in Spain is 23.6%, Greece 21%, Portugal 15% and Ireland 14.7%. Greek, Italian, French and Irish voters will all be given a chance to express their preferences over the coming weeks and months. Although some of the political elites are trying to divorce local difficulties from greater European issues, everyone realizes that it is mendacious to try to do so because policy is being set in Europe.

And it is not just policy that is being set in Europe. Governments too are being determined by EU technocrats. This is extremely dangerous. Lest we forget, in the past six months, two legitimate national governments have been deposed by the EU. The democratically elected leaders of Italy and Greece have been thrown out and replaced by technocrats. These are now EU puppet governments. In Ireland, the government’s job, to use the words of one of our senior Labour politicians has been reduced to “policing” EU agreements.

The biggest loser in all this, if other electorates turn, is going to be the German view of the European Union.

Are we seeing the beginning of a process whereby Germany becomes isolated in Europe?

The Germans know that they do not yet have the “permission” to behave like a bully in Europe. If they overstep the mark, most countries have sufficient collective memory of German “form” to react in the expected way.

But Germany itself is changing too.

We now know that the design flaws of the Maastricht Treaty that created the rationale for European monetary union in 1992 have been exposed by the current sovereign crisis. Convergence, the mantra of EU central bankers, politicians and bond dealers in the 1990s, has proved a cruel mirage.

The Mediterranean did not magically transform into Greek, Italian and Spanish templates of sober, inflation obsessed, high savings, high tech Germany. Nor did we become a Celtic version of the Saxons.

The Euro triggered a tsunami of wasteful fiscal spending in Greece and Portugal, the loss of export markets for family owned Italian firms dependent on lira devaluations and an epic construction bubble in Spain whose denouement has devastated its banking system and cajas. Ireland has mirrored Spain.

“Convergence” was an illusion in Europe and the ECB’s “one size fits all monetary policy” was a disaster under Wim Duisenberg, Trichet and possibly even Draghi. Europe simply did not meet the economic model of an optimal currency area even a decade after the creation of the ECB and the Euro.

Germany has unquestionably benefited from the Euro project, the strategic goal of every postwar German chancellor since Konrad Adenaur. The people of Germany loved their Deutsche Mark but German industrialists dreamed of having a cheaper currency. Within the Euro, German business created a trillion euro export colossus and accumulated the world’s largest trade surplus. In fact, the crisis in peripheral Europe benefited Deutscheland AG since it triggered a devaluation of the Euro against the dollar and the Chinese Yuan, increasing Germany’s most important trading partner.

Just examine the graph, which shows the different unemployment experience of Germany versus Spain, Ireland and Italy. German unemployment is now the lowest in twenty years, while the rest are experiencing something quite different.

By using the French-German axis, symbolized by the term “Merkozy”, Berlin has emerged as the geopolitical and financial hub of 21st century Europe. Germany is no longer an American appendage, occupied and self-conscious, but the strategic partner of Russia and China in the brave new world of international power politics.

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Is There No Escape from the Euro?


As I discussed recently, the costs and risks of maintaining the eurozone system are already immense and rising. So is an exit possible? Intuitively, the exit from the euro should be as easy as the entrance. Joining and leaving the club should be equally simple. Leaving is just undoing what was done before. Indeed, many popular articles discuss the prospects of an exit of countries such as Greece or Germany.

[1] However, other voices have rightly argued that there are important exit problems. Some authors even argue that these problems would make an exit from the euro virtually impossible. Thus, Eichengreen (2010) states, “The decision to join the euro area is effectively irreversible.” Similarly, Porter (2010) argues that the large costs of an exit would make it highly unlikely. In the following we address the alleged exit problems.

Legal Problems

The Maastricht Treaty does not provide for a mechanism to exit the European Monetary Union (EMU). Thus, several authors maintain that an exit from the euro would constitute a breach of the treaties (Cotterill 2011, Procter and Thieffry 1998, Thieffry 2011, Anthanassiou 2009).[2] In an ECBworking paper from 2009 Anthanassiou claims that a country that exits the EMU would have to leave the EU as well. As the Lisbon Treaty allows for secession from the EU, withdrawal from the EU would be the only way to get rid of the euro.

The solution to this legal problem could be an exit from both the EMU and EU with an immediate reentering of the EU. This procedure could be negotiated beforehand. In the case of a net contributor to the EU budget such as Germany, the country would probably not face any problem getting immediately readmitted to the EU.

In any case, the referral to the Maastricht Treaty when discussing the legal possibility of exit is intriguing, because the Maastricht Treaty, especially the “no-bailout clause,” has been violated through the bailouts of Greece, Ireland, and Portugal. The European Financial Stability Facilityeffectively serves to guarantee debts of other nations, not to mention the plans to introduce eurobonds.

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German insurers warn of higher inflation []

19 Apr 2012
Later today, representatives from eight of Germany’s leading economic institutes will present their joint spring economic forecast to the government. The experts will warn that the actions taken by the ECB throughout the crisis, most notably large-scale purchases of government bonds and the ‘unlimited’ liquidity provided to eurozone banks, have put its “independence and credibility at risk”.

Separately, Die Welt reports that the ECB has also come under fire from German insurance companies, which have warned that the bank’s crisis management strategy is threatening the profitability of private pensions as higher inflation results in lower yields, hitting savers.

The FT reports that John Paulson, who heads Paulson & Co which manages $24bn in assets, has said that he is shorting German bunds in the expectation that the eurozone crisis will worsen significantly this year, mostly down to the growing problems in Spain.

Meanwhile, Handelsblatt reports that Christoph Degenhart, a judge at the German Constitutional Court, has criticised German President Joachim Gauck for his assertion yesterday that any legal challenges against the ESM treaty and/or the ‘fiscal treaty’ would not be successful, arguing that the Presidency “should be aware of the independence of the judiciary and be cautious with such predictions”.

Angela Merkel Still Doesn’t Understand Capitalism [azizonomics]

Published on



Last December I took the time to explain capitalism for Angela Merkel:

Capitalism means both successes and failures. It is a fundamentally experimental system, with a continuous feedback mechanism — the market, and ultimately profit and loss. Ideas that work are rewarded with financial success, and ideas that don’t are punished with failure. With capitalism, systems, ideas and firms that fail to produce what the market wants fail. They go bankrupt. Their assets, and their debt is liquidated.

When that mechanism is suspended by a government or central bank that thinks it knows best — and that a system that is too interconnected to fail is worth saving at any cost — the result is almost always stagnation. This is for a number of reasons — most obviously that bailouts sustain crippling debt levels, and are paid for through contractionary austerity. But it is larger than just that.

In nature, ideas and schemes that work are rewarded — and ideas and schemes that don’t work are punished. Our ancestors who correctly judged the climate, soil and rainfall and planted crops that flourished were rewarded with a bumper harvest. Those who planted the wrong crops did not get a bailout — they got a lean harvest, and were forced to either learn from their mistakes, or perish.

These bailouts and interventions have tried to turn nature on its head — bailed out bankers and institutions have not been forced by failure to learn from their mistakes, because governments and regulators protected them from failure.

Obviously she did not read my advice.

Reuters reports:

Angela Merkel is not happy that financial markets have not made any contribution to resolving the financial crisis.

Right; financial markets need to contribute to resolving the financial crisis?

What financial markets? The markets have just become another manipulated manifestation of central planning. The more dollars, euros and yen that central banks pump into markets the less traders will be trading fundamentals  — i.e. basing their trading on the inherent value of securities, and allowing the needs and wants of society to determine economic output — and the more they will be trading the prospects for more central bank and government intervention, more QE, more hopium.

Central planning always and inevitably has unsolicited side-effects (in this case, that markets would be corrupted and junkiefied), and usually side-effects which are not necessarily visible or detectable to the person doing the planning no matter how sophisticated their pseudo-scientific simulations appear to be. Central planners are always making decisions with incomplete information, and the missing information very often has a large and appreciable effect on outcomes. In a small and decentralised system, this is not a problem; decision-makers can usually locally adjust their behaviour to a new trajectory as they get new information. But for central planners, operating from the centre of a system, policy is always centralised and generalised, slow to adapt to local information, slow to adjust to local trends and patterns, broad and sweeping rather than subtle and local.

Very simply: the only way that financial markets could ever have solved the financial crisis is if government had left them alone enough for them to adapt to the new post-bubble reality.

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Germany is Now Openly Engaging In Monetary Policies Against the ECB… What’s Next? [gainspainscapital]

March 30, 2012 By 

While the mainstream financial media and 99% of investors continue to believe that Germany will align itself with the EU, we’ve been pounding the table Germany will in fact look after its own interests rather than the EU’s and that it might in fact leave the Euro temporarily.

We’ll start with German Finance Minister Wolfgang Schauble, who was hinting that the EU was off-track in its policies and that Germany was focusing on a “political union” NOT a “monetary union” as far back as November 2011.

Wolfgang Schauble admits euro bail-out fund won’t halt crisis

Europe’s “big bazooka” bail-out fund is not ready and won’t stem the debt crisis that on Tuesday pounded Italy and the European Central Bank (ECB), admitted Wolfgang Schauble, Germany’s finance minister.

This is a pretty strong admission from the finance minister of the country that Europe looks to as a financial backstop. And the following is even more disconcerting for the future of the Euro:

          Seeing in Crisis the Last Best Chance to Unite Europe

MR. SCHÄUBLE said the German government would propose treaty changes at the summit of European leaders in Brussels on Dec. 9 that would move Europe closer to the centralized fiscal government that the currency zone has lacked. The ultimate goal, Mr. Schäuble says, is a political union with a European president directly elected by the people.

“What we’re now doing with the fiscal union, what I’m describing here, is a short-term step for the currency,” Mr. Schäuble said. “In a larger context, naturally we need a political union.”

Critics say the spending cuts German leaders have demanded from other countries are hurting growth across the Continent, in the process making debts only harder to repay. And his proposals to give the European Commission far-reaching powers to enforce budgetary discipline have been likened by skeptics in Britain to an invasive new “super state.” Even some euro supporters fear that Mrs. Merkel and Mr. Schäuble are talking about long-term changes while panicked investors and practiced speculators are tearing the euro to pieces right now.

“There is a limited transition period where we have to manage the nervousness on the markets,” Mr. Schäuble said. “If it is clear that by the end of 2012 or the middle of 2013 that we have all the ingredients for new, strengthened and deepened political structures together, I think that will work.”

He sees the turmoil as not an obstacle but a necessity. “We can only achieve a political union if we have a crisis,” Mr. Schäuble said.


Note that Schauble repeatedly emphasizes the goal of a “political union,” NOT a “fiscal union” or “monetary union.” Indeed, his one reference to a “fiscal union” is in the “short-term,” while stressing that in a “larger context” the EU needs a “politicalunion.”

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Tungsten-Filled 1 Kilo Gold Bar Found In The UK [Zerohedge]

Tyler Durden's picture

Submitted by Tyler Durden on 03/24/2012 16:50 -0400

The last time a story of Tungsten-filled gold appeared on the scene was just two years ago, and involved a 500  gram bar of gold full of tungsten, at the W.C. Heraeus foundry, the world’s largest metal refiner and fabricator. It also became known that said “gold” bar originated from an unnamed bank. It is now time to rekindle the Tungsten Spirits with a report from ABC Bullion of Australia, which provides photographic evidence of a new gold bar that has been drilled out and filled with tungsten rods, this time not in Germany but in an unnamed city in the UK, where it was intercepted by a scrap metals dealer, and was supplied with its original certificate. The reason the bar attracted attention is that it was 2 grams underweight. Upon cropping it was uncovered that about 30-40% of the bar weight was tungsten. So two documented incidents in two years: isolated? Or indication of the same phenomonenon of precious metal debasement that marked the declining phase of the Roman empire. Only then it was relatively public for anyone who cared to find out on their own. Now, with the bulk of popular physical gold held in top secret, private warehouses around the world, where it allegedly backs the balance sheets of the world’s central banks, yet nobody can confirm its existence, nor audit the actual gold content, it is understandable why increasingly more are wondering: just how much gold is there? And alongside that – while gold, (or is it GLD?), can be rehypothecated, can one do the same with tungsten?

From ABC Bullion:

ABC Bullion received the following email from one of our trusted suppliers this week.


  • It was not ABC Bullion that purchased this bar, the email and photos were sent to us as a general warning.
  • I xxxx’ed out the city’s name to avoid any second guessing as to the name of the dealer.


Attached are photographs of a legitimate Metalor 1000gm Au bar that has been drilled out and filled with Tungsten (W).

This bar was purchased by staff of a scrap dealer in xxxxx, UK yesterday. The bar appeared to be perfect other than the fact that it was 2gms underweight. It was checked by hand-held xrf and showed 99.98% Au. Being Tungsten, it would not be ferro-magnetic. The bar was supplied with the original certificate.

The owner of the business that purchased the bar only became suspicious when he realized the weight discrepancy and had the bar cropped. He estimates between 30-40% of the weight of the bar to be Tungsten.

This is very worrying and reinforces the lengths that people are willing to go to profit from the current high metal prices. Please be careful.

Photos of the cropped bars: 1000g Gold bar cut showing inserted tungsten rods

Two halves of the cropped bar:

Finally, some observations from Paul Mylchreest on debasement:

Let’s consider the run-up to Rome’s hyperinflation. I think this comment from “Good Money, Bad Money, and Runaway Inflation” resonates with what’s happening in the US today:


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Keiser Report: Selective Amnesia for Brokers & Murderers (E266)

In this episode, Max Keiser and co-host, Stacy Herbert, discuss Irish stoicism and social ostracism, boycotts and ponzis and the banking practices of Chuckie. In the second half of the show Max talks to independent journalist, Lars Schall, about his recently published investigation into insider trading around the 9-11 terrorist attack as well as his pursuit of Germany’s elusive gold reserves.

Eurozone Unemployment Rates

  • Eurozone Average 10.7%
  • Spain 23.2%
  • Greece 20.9%
  • Ireland 14.8%
  • Portugal 14.8%
  • Latvia 14.7%
  • Lithuania 14.3%
  • Estonia 11.7%
  • Cyprus 9.6%
  • Italy 9.2%
  • France 9.4%
  • Germany 5.8%
  • Luxembourg  5.1%
  • Netherlands 5.0%
  • Austria 4.0%

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