[Russ Winter]

Poor Frau Angela,  Germany industrial production is tanking,  and for good measure so is trade,  and the losses and liabilities for bailouts keeps piling up. She must feel like the Kaiser in 1918, with so many men already lost (sunken costs), and still needing more troops to fight a losing war. It is obvious that the political will for this lost cause is waning too. As a response Angela is flaying around calling for reinforcements from the bankrupt EU. She has gone begging to China who has actually lowered its European stake. She is  even suggesting the UK join the EU.  This is real coo-coo time. Gee I wondered if the Kaiser ever sent feeler out to the UK in ’18 to switch sides.



The market seems to think Germany is actually willing to assume the liability for its share for up to another trillion dollar LTRO bazooka (consensus if for 350 bn). Really? I wonder, but I guess it is coo-coo time. I mean seriously folks, three out of four German voters opposed this latest $125 bn euro EU deal for Greece way back in October before the wheels came off. Now its $140 bn and counting.  But wait that was before Greece reported a complete collapse in tax receipts in January, even before the next round of EU imposed austerity.  So much for Greece’s higher VAT.

“Revenues posted a 7 percent decline compared with January 2011, while the target that had been set in the budget provided for an 8.9 percent annual increase. Worse still, value-added tax receipts posted an 18.7 percent decrease last month from January 2011 as the economy continues to tread the path of recession: VAT receipts only amounted to 1.85 billion euros in January compared to 2.29 billion in the same month last year.”

As far as the next round of Greek coo-coo “austerity” (another bogus word), Zero Hedge puts it best although I saw 15,000 cuts not 150,000 and 22% reduction in minimum wage not 20%.  Do they actually think this will survive a Parliamentary vote on Feb 12.?  This vote isn’t about the implementation, but the restructuring, but would you care? :

• TROIKA DRAFT GREEK ACCORD SAYS 2012 GDP TO SHRINK AS MUCH AS 5% – so make that 15%-25% realistically
• GREECE TO CUT MEDICINE SPENDING TO 1.5% OF GDP FROM 1.9% OF GDP – why not just “cull” 15-20% of the population?
• GREECE PLEDGES TO MERGE ALL AUXILIARY PENSION FUNDS -  one problem – following the default, there will be no pension funds left.
• GREECE TO PLEDGE 20% CUT IN MINIMUM WAGE IN TROIKA DRAFT – and Greek citizens pledge to never work again.
• TROIKA DRAFT GREEK ACCORD RENEWS PLEDGE TO CUT 150,000 EMPLOYEE – or the US equivalent of nearly 5 million workers…

But the winner is:

• TROIKA DRAFT GREEK ACCORD SEES RETURN TO GROWTH IN 2013 – OMFG…. no, did they just… HILARIOUS

Is there no end for the Kaiser, I mean Angela?  This is going to test all her political skills just to finalize the $140 bn to be thrown down the rat hole.   Of course Portuga and Ireland also wants to be restructured with Troika haircuts if Greece does.  Germany’s Parliament  is to vote on aid next week. As far as the EU,  perhaps Frau Angela hasn’t noticed that her ally Sarkowzy is getting in his ass kicked and is now down 16% in the upcoming election.  His successor Hollande wants to completely revamp the EU and not in the vision of Frau Angela?

My conclusion is that the political capital for bankster bailout economics, and that would include free lending by the ECB and EFSF is exhausted.  In the case of Greece , a  massive amount of Greek debt would now be held by taxpayer-backed institutions – specifically the ECB, the Eurozone bailout fund (EFSF) and the IMF. Given the seniority of the IMF, most of the next round of losses would fall on the Eurozone. Incidentally now there is talk of having the EFSF participate in the Greek haircut instead of the ECB.  A minor technical point, as really makes no never mind as far as who pays up, it is still going to Germany, France, Italy and Spain, only Greece gets excused.





View the full article