THE EMMA WEST FACTOR

If foreigners don't like living in Britain, they can bugger off back to Psynigragua anytime!

 

KIKISH KRAUTS


Category: Category: None   Tags: ---
Kikish Krauts

The German government pushed most for the Euro. Germany was the first member-state to give up its own currency. So all their oyveying now about how the Greeks and other swarthy Mediterranean types, and the Poles, and Paddy Irishman, are all a burden on the hard-working Germans is indeed mega-chutzpah.

EU “creation”: 2001.12.31. Member-states were allowed to keep "legacy-currency" in circulation as legal tender until 2002.02.28. The official date on which the national currencies ceased to be legal tender varied in member states, but most permitted their legacy-currency to remain in circulation the full two months. The earliest date was in Germany -- The Deutsche Mark officially ceased to be legal tender immediately after 2001.12.31.

The Eurozone would be a complete impossibility without German backing.

The Euro is administered by the European System of Central Banks (ESCB), which is comprised of the European Central Bank (ECB; headquartered in Frankfurt, Germany) and the Eurozone central banks. The German-dominated ECB has the sole authority to set monetary policy; other members of the ESCB participate through printing, minting, and distributing notes and coins.

Germans: “The Greeks cheated us, oy vey!, with false ecomonic data!” – Complete nonsense. The Germans knew exactly the state of every EU member-states’ economy. So their moaning now is indeed chutzpah.

[Besides that, it was Germany that pushed the most for NATO “action” in Bosnia and Kosovo, and then for the adoption of the Euro as the official currency in those client-states -- and the NATO-occupied Serb province of Kosovo does use the Euro. It was Germany that fabricated the worst “evidence” of “anti-Muslim atrocities!” in Kosovo as a pretext for the invasion of Serbia.]

What’s Germany’s Long Game? — To be “forced to have to” dictate to the rest of the Eurozone:

The Kike Soros: Germany Must Dictate Terms To Europe!

SPIEGEL Interview with George Soros


'You Need This Dirty Word, Euro Bonds'


In a SPIEGEL interview, billionaire investor George Soros criticizes Germany's lack of leadership in the euro zone, arguing that Berlin must dictate to Europe the solution to the currency crisis. He also argues in favor of the creation of euro bonds as a way out of the turbulence.


Graphics Gallery: The Most Important Facts about the Global Debt Crisis


[ http://www.spiegel.de/fotostrecke/fotostrecke-71636.html ]


SPIEGEL: Mr. Soros, we currently see a global banking crisis, a currency crisis and a sovereign debt crisis. Has the financial dilemma become too big to handle? How can politicians on both sides of the Atlantic be expected to solve such a multitude of crises?


Soros: The politicians have not really tried to fix any crisis; they have so far tried only to buy time. But sometimes time actually works against you if you refuse to face the relevant issues and explain to the public what is at stake.


SPIEGEL: Are you talking about the Germans? Many experts think Chancellor Angela Merkel has been particularly hesitant to address the euro crisis.


Soros: Yes. The future of the euro depends on Germany. This is the point I really want to drive home. Germany is in the driver's seat because it is the largest country in Europe with the best credit rating and a chronic surplus. In a crisis, the creditor always calls the shots. Sure, this is not a position Germany or Chancellor Merkel ever desired and they are understandably reluctant to embrace it. But the fact is that Germans are now in the position of dictating to Europe what the solution to the euro crisis is.


SPIEGEL: Why should Berlin embrace that idea?


Soros: There is simply no alternative. If the euro were to break up, it would cause a banking crisis that would be totally outside the control of the financial authorities. So it would push not only Germany, not only Europe, but also the whole world into conditions very reminiscent of the Great Depression in the 1930s, which was also caused by a banking crisis that was out of control.


SPIEGEL: What, then, needs to be done to fight this crisis?


Soros: I think there is only one choice. It is not a question of whether Europe needs a common currency. The euro exists, and if it were to break apart, all hell would break loose. Germany has to make it work. To make it work, you have got to allow the members of the euro zone to be able to refinance the bulk of their debt on reasonable terms. So you need this dirty word: "euro bonds". But when you study what it involves to have euro bonds, you really have a problem because each European country remains in control of its own fiscal policy, and you have to rely on the country to meet its financial obligations.


SPIEGEL: Germans hate the euro bonds idea. They fear that under this scenario they will ultimately need to bail out everyone, even large nations like Italy.


Soros: That is why you need to establish fiscal rules that will ensure the solvency of every member. This should make the euro bond acceptable to German voters. Europe needs a fiscal authority that has not only financial but also political legitimacy. The difficulty is agreeing on the rules. Unfortunately, Germans have some funny ideas. They want the rest of Europe to follow their example. But what works for Germany can't work for the rest of Europe: No country can run a chronic surplus without others running deficits. Germany must propose rules that other countries can also follow. These rules must allow for a gradual reduction in indebtedness. They must also allow countries with high unemployment, like Spain, to continue running cyclical budget deficits until they recover.


SPIEGEL: More and more economists, especially in Germany, would like to see Greece leave the European Union. Do you consider that to be a viable option?


Soros: I think that the Greek problem has been sufficiently mishandled by the European authorities that this may well be the best solution. Europe, the euro and the financial system could survive Greece leaving. It could survive Portugal leaving. And the remainder would be stronger and more easily managed. But the financial authorities have to arrange for an orderly exit in order for the European banking system to survive it. That will cost money because the European banking system including the European Central Bank has to be indemnified for its losses. Depositors in Greek banks also need to be protected. Otherwise, depositors in Irish or Italian banks will not feel safe.


SPIEGEL: Is the current crisis even worse than the one in 2008?


Soros: This crisis is still the continuation of the same crisis. In 2008, the financial system collapsed and it had to be put on artificial life support. The authorities managed to save the system. But the imbalances that caused the crisis have not been removed.


SPIEGEL: What do you mean?


Soros: The method the authorities rightly chose three years ago was to substitute the credit of the state for the credit in the financial system that collapsed. After the failure of Lehman Brothers, the European financial ministers issued a declaration that no other systemically important financial institutions would be allowed to fail. That was the artificial life support; it was exactly the right decision. But then Chancellor Merkel stated that such support would only be granted by each EU member state individually, and not by the European Union.


SPIEGEL: That undermined the concept of a strong European response to the crisis. Has that been the biggest mistake so far?


Soros: That Merkel statement was the origin of the euro crisis. It shattered the vision that the EU will protect the euro in a joint effort.


SPIEGEL: Where will the current crisis stop? Even France now seems to be threatened by a financial meltdown.


Soros: Of course it is spreading. Markets fear uncertainty. Germany has to realize that it has no alternative but to defend the euro. The longer it takes, the higher the price Germany will have to pay.


SPIEGEL: You have been very critical of how the crisis has been handled by governments. Many European citizens, however, blame speculators like you for their attempts to bring down the euro. Huge hedge funds like yours have waged massive bets against the European currency over the past year. And in recent days, several European countries have even imposed temporary bans on short selling, bets on falling share prices.


Soros: You are confusing markets and speculators. At the moment, the biggest speculators are the central banks because they are the most important buyers and sellers of currencies. Hedge funds have definitely been supplanted by central banks. Markets expect the authorities to produce a financial system that actually holds together. If there is any hole in that system, speculators will rush through that hole.


SPIEGEL: That sounds very noble. But in reality, speculation makes any crisis worse. Look at the credit default swaps (CDS) market where speculators can bet on a further decline of currencies and economies. How can that be helpful?


Soros: Of course, speculation will always make a crisis worse. If there is a weak point, it will expose it. And you are right, the CDS market is a very dangerous instrument and I think it should not be allowed. I am one of the very few people who argue that the CDS is a dangerous instrument because it is so lop-sided in favor of a negative outcome.
Any central bank should only be in charge of liquidity. Solvency is a matter for the treasury. But because there is no European treasury, the ECB was pushed into that arena. To keep the financial system alive they overstepped their limits, as the former German Bundesbank president Axel Weber pointed out, by discounting the government bonds of a country that was clearly bankrupt.


SPIEGEL: You are referring to the purchase of Greek bonds. Now the European Central Bank even started buying Spanish and Italian bonds. It is not even clear, however, if it is legally allowed to do so.


Soros: Yes, but there is a well-established conviction that the central banks always do what is necessary to keep the system going and then afterwards you then take care of the legal aspects. In a crisis, you simply do not have time to think about such concerns for too long.


SPIEGEL: The United States is drowning in even more debt than Europeans. Its economic recovery has been painful. Are we going to see a double-dip recession in the US?


Soros: The indebtedness of the US is not all that high, but if a double-dip recession was in doubt a few weeks ago, it is less in doubt now, because financial markets have a very safe way of predicting the future. They cause it. And the markets have decided that America is going to see a recession, particularly after the recent downgrade of the US by the rating agency Standard & Poor's.


SPIEGEL: President Barack Obama has been fiercely criticized for his handling of the economy. You were one of his biggest supporters in 2008. Are you happy with his economic policy?


Soros: No, of course not. But the reality is that we have had 25 years of excesses building up in America -- a combustible mix of too much credit and too much leverage. You need a long time to reverse that.


SPIEGEL: Obama tried to stimulate growth with a gigantic stimulus program which increased the national debt further. Was that a mistake?


Soros: Obama embraced the ideas of John Maynard Keynes. Basically, the analysis of Keynes is still very relevant -- with one big difference between now and the 1930s. In the 1930s, governments had practically no debt and could therefore run deficits. Nowadays, all governments are heavily indebted, and that is a big change.


SPIEGEL: If Keynes were still alive, would he adjust his theory?


Soros: Definitely. He would say governments can still benefit from running fiscal deficits, but the new debt has to be invested in a way that will pay for itself. So the money spent would have to increase productivity.


SPIEGEL: The $800 billion stimulus program launched by Obama did not live up to that?


Soros: Obama's stimulus program was not big enough and it was not directed at improving infrastructure nor human capital. So it was not productive enough.


SPIEGEL: And any further stimulus is now basically a non-starter, because the conservative majority in Congress is hell-bent on preventing it.


Soros: That is what is pushing the world towards another recession, into a double dip.


SPIEGEL: The Republicans are doing that?


Soros: Yes, but Obama is also at fault. He yielded the agenda to the Republicans. He is talking their language. The president would have to show leadership to counter the Republican wave, and so far he has not done so.


SPIEGEL: Do you think the US deserved the recent downgrade by Standard & Poor's?


Soros: Probably not. This decision was the attempt by the rating agencies to reinvent themselves as anticipating rather than responding to changes that have occurred. So they are really basing that downgrade on the expectation that the political process will not provide the solution. Judging such political developments is a very new role for the rating agencies, though.


SPIEGEL: As an investor, do you listen to the rating agencies?


Soros: Well, I do not, but many other investors do.


SPIEGEL: The credit rating agencies are accused of exacerbating the crisis. Do you think the role of the rating agencies in the financial system needs to be scaled back?


Soros: I do not have an answer to that.


SPIEGEL: There are no alternatives.


Soros: Frankly. It is an unsolved problem in my mind


SPIEGEL: As an investor, would you still bet on the euro?


Soros: I certainly would not short the euro because China has an interest in having an alternative to the dollar. You can count on China to back the efforts of the European authorities to maintain the euro.


SPIEGEL: Is that the reason why the euro is still so strong compared to the dollar?


Soros: Yes. There is a mysterious buyer that keeps propping up the euro.


SPIEGEL: And it is not you.


Soros: It is not me (laughs).


SPIEGEL: In the end, will China be the only winner in this crisis?


Soros: China, of course, has been the great winner of globalization, and if globalization collapses, the Chinese will also be among the losers. So they have a strong interest in preserving the current global system. However, in some ways, they have been just as reluctant to accept it as the Germans. Germans have been hesitant to accept responsibility for Europe, and the Chinese have been hesitant to accept responsibility for the world. But they are both being pushed into it.


SPIEGEL: Mr. Soros, we thank you for this interview.


Interview conducted by Gregor Peter Schmitz and Thomas Schulz


http://www.spiegel.de/international/europe/0,1518,780189,00.html



Germany & France: Oy Vey, We Were Cheated, So We MUST Take More Control!

France, Germany push creation of eurozone gov’t


AP, 2011.08.18


PARIS (AP) – The leaders of France and Germany called Tuesday for greater economic discipline and unity among European nations but declined to take immediate financial measures seen by many investors as the only way to halt the continent’s spiraling debt crisis.


[…]


Chancellor Angela Merkel of Germany and French President Nicolas Sarkozy announced the results of their emergency talks in Paris.


Sarkozy called for a “new economic government” for Europe that would meet at least twice a year with European Union President Herman Van Rompuy as its head, but he offered few other details or indications that the body would have real power.


Merkel and Sarkozy also called for all eurozone nations to enact constitutional amendments requiring balanced budgets. They said they want the process completed by the summer of 2012, but it would almost certainly run into protracted political difficulties in many countries.


Both leaders said the moment was not right to replace 17 government bonds with a single one allowing weaker economies to borrow in cooperation with the powerhouse economies of France and Germany.


[…]


“We have exactly the same position on euro bonds,” Sarkozy said. “One day we could imagine them, but at the end of a process of European integration, not at the beginning.”


[…]


The two leaders also proposed a Europe-wide tax on financial transactions and pledged to harmonize their countries’ corporate taxes in a move aimed at showing the eurozone’s largest members are “marching in lockstep” to protect the euro


http://www.philstar.com/Article.aspx?articleId=717837



Merkel & Sarkojuif “Forced” to Push for more Euro-Integration, Oy Vey!

Germany, France examine radical push for eurozone integration


By Luke Baker and Julien Toyer, Reuters, 2011.11.27


BRUSSELS (Reuters) – Germany and France are exploring radical methods of securing deeper and more rapid fiscal integration among euro zone countries, aware that getting broad backing for the necessary treaty changes may not be possible, officials say.


Germany’s original plan was to try to secure agreement among all 27 EU countries for a limited treaty change by the end of 2012, making it possible to impose much tighter budget controls over the 17 euro zone countries — a way of shoring up the region’s defenses against the debt crisis.


But in meetings with EU leaders in recent weeks, it has become clear to both German Chancellor Angela Merkel and French President Nicolas Sarkozy that it may not be possible to get all 27 countries on board, EU sources say.


Even if that were possible, it could take a year or more to secure the changes while market attacks on Italy, Spain and now France suggest bold measures are needed within weeks.


As a result, senior French and German civil servants have been exploring other ways of achieving the goal, one being an agreement among just the euro zone countries.


“The goal is for the member states of the common currency to create their own Stability Union and to concentrate on that,” German Finance Minister Wolfgang Schaeuble told ARD television on Sunday.


Another option being explored is a separate agreement outside the EU treaty that could involve a core of around 8-10 euro zone countries, officials say.


An even more pressing decision faces euro zone finance ministers when they meet on Tuesday.


Detailed operational rules for the euro zone’s bailout fund, the European Financial Stability Facility (EFSF), are ready for approval, documents obtained by Reuters showed.


The approval of the rules will clear the way for the 440 billion euro facility to attract cash from private and public investors to its co-investment funds in coming weeks, which, depending on interest, could multiply the EFSF’s resources.


With Germany rigidly opposed to the idea of the ECB providing liquidity to the EFSF or acting as a lender of last resort, the euro zone needs a way of quickly calming markets, where yields on Spanish, Italian and French government benchmark bonds have all been pushed to euro lifetime highs.


Policymakers hope progress toward tougher fiscal rules will also assuage investors. Schaeuble said a Stability Union could be a decisive step to winning more confidence from the markets.


“That means that every euro zone member has to do its homework on its budget discipline. We want to ensure that through treaty changes,” he said.


RADICAL OVERHAUL


Reuters exclusively reported on November 9 that French and German officials were discussing plans for a radical overhaul of the European Union to establish a more fiscally integrated and possibly smaller euro zone.


“The Germans have made up their minds. They want treaty change and they are doing everything they can to push for it as rapidly as possible,” one senior EU official involved in the negotiations told Reuters. “Senior German officials are on the phone at all hours of the day to every European capital.”


While Germany and France are convinced that moving toward fiscal union – which could pave the way for jointly issued euro zone bonds and may provide more leeway for the European Central Bank to act forcefully – is the only way to get on top of the debt crisis, some other euro zone countries are unable or unwilling to move so rapidly toward that goal.


Not only Greece, Ireland and Portugal, which are receiving EU/IMF aid, but also Italy and Spain and some east European countries such as Slovakia, would either find it difficult under current economic conditions to meet the budget constraints Germany wants, or simply do not agree with the aim.


Consequently, the French and German negotiators are exploring at least two models for more rapid integration among a limited number of euro zone countries, with the possibility of folding that agreement into the EU treaty at a later stage.


TWO MODELS


One is based on the Pruem Convention of 2005, also known as Schengen III, a treaty signed among 7 countries outside the EU treaty but which was open to any member state to join and was later acceded to by 5 more EU states plus Norway.


Another option would be to have a purely Franco-German mini-agreement along the lines of the Elysee treaty of 1963 that other euro zone countries could also sign up to, officials say.


“The options are being actively discussed as we speak and things are moving very, very quickly,” a European Commission official briefed on the discussions told Reuters.


One source said the aim was to have the outline of an agreement set out before December 9, when EU leaders will meet for their final summit of the year in Brussels.


Sarkozy, who has made two speeches in the past two weeks highlighting the need for more rapid fiscal integration in the euro zone, and has acknowledged that it may be inevitable that a ‘two-speed Europe’ emerges, is due to make another keynote address on December 1 which could provide a platform for laying out in more detail the ideas that he and Merkel are developing.


A senior German government official denied there were any secret Franco-German negotiations, but emphasized that both countries saw the need for treaty change as pressing and were exploring how to achieve that in the best way possible.


“Germany and France are continuing to focus on proposals for a limited treaty change that can be presented at the EU summit in December,” the official said, emphasizing that there was a need to act quickly to get changes in place.


The ECB has bought the bonds of euro zone strugglers in intermittent fashion when they have reached crisis point. Economists say it has to act much more radically to turn the market tide but the central bank, and Germany, has opposed any such move. Commitments to binding fiscal rules by euro zone governments may be the cover it needs to change tack.


“If this bond run is not stopped it will really endanger the stability of the European and even the global financial system. Bold action by the ECB is definitely needed,” Peter Bofinger, one of the five “wise men” who formally advise the German government on the economy, told Irish state broadcaster RTE.


Reuters reported a similar possibility on Friday, with euro zone officials saying that if much tighter fiscal integration could be achieved among euro zone states, it would give the ECB more room to maneuver and buy sovereign bonds.


While EU officials are clear about the determination of France and Germany to push for more rapid euro zone integration, some caution that the idea of doing so with fewer than 17 countries via a sideline agreement may be more about applying pressure on the remainder to act.


By threatening that some countries could be left behind if they don’t sign up to deeper integration, it may be impossible for a country to say no, fearing that doing so could leave it even more exposed to market pressures.


“Some of this is just part of the posturing you hear — it’s pressure from Germany to go for treaty change as quickly as possible,” the official involved in the negotiations said.


“To some extent you have to see these ideas as part of the bargaining chips that are being put on the table.”



Comments

Leave a Comment



Profile

The Emma West Factor

Author:The Emma West Factor

 
 
 
Latest trackbacks
 
 
 
Search form
 
 
 
 

Archive   RSS   Login