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Spain and Italy are toast unless Germany allows the ECB to print trillions of Euros

Spain and Italy are toast unless Germany allows the ECB to print trillions of Euros

The financial chess game in Europe is still being played out, but in the end it is going to boil down to one very fundamental decision. Is Germany going to allow the ECB to print up trillions of euros and use those euros to buy up the sovereign debt of troubled eurozone members such as Spain and Italy or not? Nothing short of this is going to solve the problems in Europe. You can forget the ESM and the EFSF. Anyone that thinks they are going to solve the problems in Europe is someone that would also take a water pistol to fight a raging wildfire. No, the only thing that is going to keep Spain and Italy from collapsing under the weight of a mountain of debt is a financial nuke. The ECB needs to have the power to print up trillions of euros and use that money to buy up massive amounts of sovereign debt in order to guarantee that Spain and Italy will be able to borrow lots more money at very low interest rates. In fact, this is probably what European Central Bank President Mario Draghi has in mind when he says that he is going to "do whatever it takes to preserve the euro". However, there is one giant problem. The ECB is not going to be able to do this unless Germany allows them to. And after enduring the horror of hyperinflation under the Weimar Republic, Germany is not too keen on introducing trillions upon trillions of new euros into the European economy. If Germany allows the ECB to go down this path, Germany will end up experiencing tremendous inflation and the only benefit for Germany will be that the eurozone was kept together. That doesn't sound like a very good deal for Germany.

Read more: http://theeconomiccollapseblog.com/archives/spain-and-italy-...

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fireant's picture

Germany may abandon the euro and re-introduce the Deutschmark.

I think they have made preparations for such an eventuality. They would remain in the Euro-zone, but there is no way the German people will tolerate more bailouts for other countries.
This could all get real serious soon. Banks across Europe are tanking, and without Germany, there is no money.
What I wonder is, if Germany does leave the euro, would that then give license for ECB to print print print?

Undo what Wilson did

Germans....

Are going to want massive concessions if they agree to this. lol

I do not think the German Parliament and/or their jucidicial branch will allow this on Constitutional grounds. Something will have to give.

Looks like Merkel is going to lose the next election either way imo.

ie. The Germans will seek at least a 20 per cent per annum tribute in foodstuffs of the German's choice from Spain and Italy of their total production and harvest ;)

donvino

Merkle

has an election coming up. If merkle signs onto this, she is political taost. Most Germans are fed up with all the bailouts. Yep....gonna be interesting.

You know the Germans are

You know the Germans are still paying reparations to Israel from WWII. I don't think want to have to pay anymore money to other countries.

Germany's fight against Keynes

Here is the fundamental problem from Germany's perspective. They understand what it means to have a collapsing economy and what is means to re-build from absolute devastation.

They have a culture of savings and sound money. Which is why many did not want to give up the D-Mark. The Germanic cultures believe in Austrian economics. The Anglos & WW2 victors believe in Keynes.

Good Article: "Germany's fight against Keynes" - http://www.csmonitor.com/Commentary/Opinion/2012/0120/Europe...

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

The Germans are responsible.

The Germans are responsible. Southern European countries, not so much.

Have you ever noticed?

The countries where it freezes hard in the winter are the most successful? In the southern areas, like the equator countries, they are not so successful. I believe the very cold weather conditions over time cause an areas people to be more industrious.
Take an island country that also freezes hard in the winter and they will be so industrious they will dominate the world if allowed to. Just an observation.

Differences in culture & relgion

But... there is another distinction as well: Religion.

The south is predominantly Catholic. The cultures look to a "Padron" in Spanish - strong man / father figure. The cultures are more fatalist and the individual is not championed. Family first, community second, the individual third. It is more class based. Hard to rise above your "lot in life" so why bother. Institutions can't be trusted. Cronyism is the rule, not the exception. In fact it is celebrated and awarded. Aristocracy flourishes.

The north is predominantly Protestant: Lutheran, Anglican, Calvinist, Reformist.. etc...

The cultures do have strong family and community but the individual is considered. Being industrious is valued. Personal achievement is OK. Frugality is valued. Rule of law is valued. Sound money is valued. Systems are valued. Strong institutions are hallmark. They are more focused on merit than cronyism.

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

Lol I thought it was funny

Lol I thought it was funny when I saw a photo in Time Magazine of Merkle pointing her finger and lecturing with an upset facial expression to the President of Greece, like she was his mother upset with her kid by spending too much and maxing out on his credit. It was funny. The Greek president had this innocent facial expression, like "sorry mommy". lol

Nigel Farage - very candid

You will like this. Nigel Farage, UKIP MEP (Libertarian more or less):

http://www.youtube.com/watch?v=RQ9uHUDkTq4&list=UU-XsHHcuGty...

Look at the face of the Greek MEP. Poor bastard, the wheels are coming off and he doesn't know what to do.

Merkel - tough lady, underestimated by many.

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

The Angloes are FDR commies...So no wonder....

Now I finally understand why they adore Obama.

I didn't at first and now I do. Obama's keeping their but out of jail.

U.S., U.K and Irish bankers arrested and charged for conspiracy.

Dozens of bankers have been arrested and charged for Conspiracy, who have been protecting George Soros and George Bush
http://www.youtube.com/watch?v=dmOZ3jtGtCc

There is some hard evidence that Drake isn't kidding. Massive amounts of arrests are going on. Will it be in time? The big bankers are still free murdering people and changing the law.

"Two bankers were running around ripping the skirt off a woman, forcing her to perform a sex act."
Both bankers were arrested.

These losers are gunning for a big fall. Its either them or us.

So...

Germany is the one country that has managed to keep a decent economy in times of horror and they are asked to risk their success to bail out others who undoubtedly have massive spending deficits? Only until Italy and Spain pledge to cut spending should Germany even think to help them out. Thats like giving money to a family member with a crack addiction, you're never going to see that money back unless they clean up their act.

It's not just Germany that

It's not just Germany that has a relatively sound economy. It's the Netherlands and Scandinavian countries too. And it's not like we don't have problems (and debt) of our own.

And Italy and Spain have already enacted massive cuts. Problem is, it's not enough. It's that bad. This measure is enough to get interest down to a level where they can run up more debt just to pay for their expenses and the interest on their outstanding debts.

Basically, the whole family is on crack and is starting to lose it's mind. The only way to solve this crisis is to pull the plug on the union and let each country take their losses. Cold Turkey for everyone.

Sorry

Probably shouldnt have worded that it was the ONLY country who was doing well economically. Still, I had no idea the European Union was doing THAT badly. Guess we've (I've) been focusing state side for too long.

you don't have to apologize.

you don't have to apologize. Germany is by far the biggest and most powerful economy of the bunch and size matters. Paradoxically they're also pretty firm EU supporters. Only now that it's eating into their pension funds that's starting to change a little bit. They make a lot of money from the EU and it's crisis.

Right, seeing the Germans as

Right, seeing the Germans as frugal as they are, I can't see them bailing out these countries. Memories of the Weimar Republic is well ingrained into their society. They don't forget history like Americans do.

Well I can, actually..

Well I can, actually.. sadly.
I think you have a idealized picture of Germany in your mind. Memories of Weimar are not as ingrained and Germans love to shop on credit as much as anyone else. They have a peculiar fascination with shopping malls. They're facing the same crises as the rest of the western economies, but they're slightly better positioned.

They're not going to be the ones to blow the Union. I'd look to France for that: economy is doing much worse than people think, population is very anti-EU and very pro-welfare. If Hollande doesn't deliver what they want (and he won't because he can't) watch what happens. France is the powder keg.

I think that's part of the reason why the EU is so desperate to 'save' Greece, Spain, Italy and the others.. it's the French who'll be hit the hardest if they drop out. It's their banks with the most exposure there and their economy that's the least viable. So the big risk is not Greece dropping out of the EU, but France crashing and burning because of it. And without either France or Germany there is no Union.

Yes the French electing a

Yes the French electing a socialist president is the last thing they need. I can see them collapsing soon.

Last thing they need, first

Last thing they need, first thing they want. I don't get it either. But I don't get that whole country even though I must've been there over 50 times.

I still feel like the whole situation with Greece, Spain and Italy is, in part, a cover for France's problems. It's all because France has the most invested there, and can't afford to take it's losses.

Yes I don't get it either.

Yes I don't get it either. This is like when I was first being taught economics in college by a Keynsian Professor, of why spending more money and racking up debt is a good thing for the economy. I just could not understand it. This was before I heard about Ron Paul.

Ah, but that's because you've

Ah, but that's because you've probably never dealt crack in your life, correct? If you create money and then redistribute it everybody gets to feel a little rich for little while. It's like cutting dope: more fiends can get high for a shorter time, and the dealer gets more profit.

Keynesian economics is really simple, actually: just think like a crack dealer and wear a bad suit with elbow-patches.

You're right. The only drug I

You're right. The only drug I have taken has been adderal. Lol Though being frugal and responsible was from upbringing. I think my parents and grandparents were natural Austrian economists and didn't know it.