Much as I respect David Dayen, I believe his call for Germany to bail out Europe is gravely misguided. However, the discussion is moot as Germany has no intention of doing any such thing. The salient question is what will happen when Europe defaults. Insisting that Germany do something it won’t do gets us nowhere. The situation is deteriorating and will come to head very soon. We should be talking about protecting American taxpayers from the rapacious goons on Wall Street and their craven enablers in Washington.

The euro was headed to failure the day it was signed and it’s not like no one knew it at the time. Imagine setting up an authority that prohibits any fiscal action from a central treasury. It is inevitable that one or more would get into trouble and no one thought how to get them out. Oh wait, they decided that austerity was the winner. Fucking idiots.

Germany could be the first to abandon the Euro. The richest people in Germany don’t want to get a “haircut” for the richest people in France or Italy. Remember actual people make these financial decisions and there is no honor among thieves. David is right on.

You’ve got it right David. The Germans have clearly decided to let the Eurozone collapse, or shrink. An act of world historical stupidity. They are going to rue the day they took this disastrous sadomonetarist course. Of course the brain dead zombie Hooverites never learn either, including those few on FDL. Let’s see how well Deutsche Bank, Commerzbank and Allianz fare when the it all hits the fan in France.

They insist on protecting the banks. Which in the end will be left impotent and empty temples to a failed system.

Ironically, Sarkozy’s Reaganesque supply-side games put France’s finances in dire danger over four years ago:

President Sarkozy accepts the need for a radical reduction in state spending in the long term but wants to push ahead, cautiously, with his promised deep reforms of the French “social model”. He does not want to be forced into emergency spending cuts, which could damage an already faltering economy and generate opposition on the streets.

In effect, the President is paying the price for a first failed experiment in “Sarkonomics”. He gambled soon after his election in May on a ¿12bn package of tax cuts, mostly benefiting the wealthy or reasonably well-off. This was supposed to kick-start the economy but its main effect has been to increase the black hole in public finances.

No adults in the room. Sounds familiar.

As soon as the banksters get regime change in Spain, they will start being the lender of least resort. They got regime change in Greece and Italy so far, so why should they stop now.

Right now the banksters are trying to get “signed pledges” from all the members of the Greece Parliment on their austerity program. Sort of sounds like the European twin of Grover Norquist.

And here in the US, the Big Banks are now foreclosing on tents.

From the WSJ;

According to the new rules–which will now have to be rubber-stamped by representatives of EU governments and are expected to enter into force in a year’s time–the purchasing of default insurance contracts without owning the related bonds will be banned, the Parliament explained. National authorities will be able to lift the ban for as much as 12 months, in case the sovereign debt market starts malfunctioning, it said.

Ok, so after the EU economy collapses, we’ll put a stop to one of the principal tools used by the MOTU to instigate, and profit from that collapse.

I’d call that a brilliant example of forsight.

Get up to speed on this people, setting the rules to outlaw naked CDS trading on European sovereign debt to go into effect 12 months from now is the same as advertising Get ‘em while you can!

It’s closing the barn door after the cows are gone.

The collapse is being engineered as we speak, 12 months from now, may as well mean never.

I believe his call for Germany to bail out Europe is gravely misguided.

No, the ECB needs to print money to give to the banksters to cover their losses. It’s not “bailing out Europe”, it’s making the debts of banks disappear. The banks mismanaged their risks while gambling, and the house should cover their bets.

Making people in the various countries suffer is just sadistic policy, much worse than risking a slight rise in inflation by printing some more money.

We seem to have a good many astute finance people here, can someone tell me what should happen from this point forward if sane compassionate humans were running this show?

sadomonetarist

Excellent addition to the English language. OED, are you listening?

Lets also add worserious which is worse than worser but not as bad as “oops”

There is an aspect of truthiness to that.

No, nothing says “humiliating public meltdown and destruction of one’s Presidential dreams” like “Oops.”

When Europe collapses and the Banksters are holding their worthless CDS’s they can tell the overlords “oops”

You know, bluewombat, I quite agree, “sadomonetarist” is wonderfully self- defining as well as very timely in its application… for which TasteofFreedom deserves both genuine appreciation and serious applause.

In the same vein, I have long sought recognition for “ukaseomatic-tyrannomania” which means, simply; a congenital tendency toward dogmatic authoritarian repression on a grand scale, to distinguish it from the lesser form, petite-ukaseomatic-tyrannomania. The dons at Oxford insist that it is not a “pretty” word and I have assured them, repeatedly, that it is not a pretty condition for those on the receiving “end” and, therefore, presents itself most honestly.

Alas, such a term apparently lacks some essential element of “bling” and it does not, admittedly, trip off the tongue with spirited elan …

Ah well, back to the vapulations of the drawing and quartering bored, until tortured morale improves or hellishly high water flows over the board.

;~DW

It is the leaders of Germany and the U.S., along with the IMF — representing the Global Financial Elite — who are demanding the austerity that is strangling the struggling European countries, which it is being done to force feed those nations to keep them afloat in order to stave off the “credit event” that triggers all the derivatives. The Global Financial system needs hard cold cash not more funny money and the only place it can come from is the pot of gold Germany is sitting on and that belongs to the German People. Do you really want the German People to bail out the Global Financial Elite like the American People did in 2008. I don’t. But far more importantly, the Germans aren’t going to do it whether I want them to or not. You know, the Germans got burned pretty good by the Wall Street Wizards and they can hardly be expected to jump off a cliff like we did just because Wall Street and its political enablers say so.

You want to prop up the Global Financial Elite with the German People’s money. Why?

I think the austerity issue was “predecided,” sort of, a decade ago when there had to be some cover in order to set up the EU and Eurozone, while gelding the opposition. Nobody expected that to be called in, at least not in their time. Profits would be robust for awhile.

So now Germany and some of its smaller friends in prosperous northern Europe are acting like assholes — just like the pied piper did.

I don’t see what Germany is doing wrong. It’s exactly what I’d hope my government would do in the same circumstances.

BREAKING NEWS- Germans acting like assholes.

Let me clarify. I think Germany is being foolish by imposing austerity on nations that are going to go bankrupt (which is exactly what the U.S. is doing domestically and abroad, by the way). However, I think Germany is exactly correct in refusing to use its taxpayers’ money to bail out the sovereigns and the banks and Wall Street. In fact, as that is the case it won’t be long before the austere nations tell Germany to drop dead. Since Germany won’t bail out Europe what right does it have imposing anything? I expect the Greeks to wake up to this reality momentarily.

This is a great point. Eurozone is made up of sovereign nations and if I am making decisions for the PTB in Germany I don’t have the Euro as a priority. There is no honor among thieves.

Germany still appears to have a functioning democracy and the German People will not allow their money to be used to bail out other nations or other nations’ banks. Whether they will submit to bailing out their own banks remains to be seen but it doesn’t seem likely. Merkel met this weekend with her party and they talked about domestic issues; bailing out Europe or the banks or having the ECB print money (the same thing) wasn’t even discussed bc it isn’t going to happen.

Assuming what you are saying is the reality today what will happen? Your guess seems better than others. I unfortunately spent considerable time with some of the 1%ers and their wannabes and have no faith that they can make decisions with the cool head of a calm detached mind. They really are assholes.

Not sure there is a “good” choice available here. I mean, there. Well here too, if you know what I mean.

This is what worries me. Our future is being discussed by the smartest guys in the room only we don’t know where the room is and the smartest guy in it right now has a room temp I.Q.

Time to scrap the EU and the Euro and everyone go back to their traditional currencies. Let the currencies float and find a natural equilibrium. It just doesn’t seem to be working otherwise.

I don’t know how good my guess is but my guess is that the Eurozone falls apart, the Wall Street banks hemorrhage money, and they come back to the U.S. taxpayers, aided and abetted by the Wall Street White House, for more of our money.

So we are back to DIRE! Will Barney Frank be chicken little again or does it rotate?

Thanks for all the spot on comments. The euro – that produced the German export boom via it being undervalued relative to Germany thanks to those nasty Greeks being in the euro – may be dead, or not.

But I suspect you are correct that the rich Germans will chose to save their money in the bank rather than save future jobs of those that might produce German sales to their current export markets.

Meanwhile the French bless the rich tax package of a 12 billion euro tax decrease gift to the rich did not produce economic growth – tax cuts to the rich “job producers” never does – and has left the French discussing not a return of the old rates but instead discussing cuts to social spending.

Seems like Obama avoiding the return of the Clinton tax rates via the Super Committee, doesn’t it?

The German public quite correctly doesn’t wish to bail anyone out,and hence won’t countenance any new debt ,or devaluation via monetary expansion or direct taxation.Unlike America,Merkel and the gov. actually fear the electorate,and the public is not shallow enough to bite on a recycling scheme where their money is quietly funneled into ECB or EFSF liquidity.Yet this flake,Merkel,still deludes herself into believing she can adhere to the public mandate while also sustaining the Euro to appease her banksters and remain a global export giant.Notwithstanding her inability to lead,she knows the austerity scam is the only way to hustle fast money for banksters through the looting and monopolizing of resources via deregulation and privatization.Those who collude with the Germans and the Euro dictatorship will certainly be killed,as was the plan for the last Greek p.m.,who wisely retired to dodge the crosshairs.The contagion can’t be stopped,and it doesn’t even matter,systemic collapse was inevitable without a unified fiscal and monetary structure.

Hey wbgonne,really have enjoyed your analytical insights.

You want to grind the working people of Europe into the dirt to save German finance capital? Why?

I have no idea how you arrived at that conclusion. In fact, it seems to me that, of all the western nations, Germany may have the healthiest relationship with its banking sector. Germany has a real economy that the finance system serves, which is how a capitalist country is supposed to work. We in the U.S have inverted the roles and made the financial economy superior to the real economy. That is one reason why Merkel and Germans are demanding a financial transaction tax. Guess who opposes it? The U.S. and Great Britain, both of whom have artificial finance-based economies. The German banking sector was relatively quiescent until the Shock Troops from Wall Street spewed out their filthy products and seduced everyone in the world into buying the shit. Of all the nations in the line of fire right now, Germany is by far the closest to a properly run polity. Which is probably why their economy is relatively solid.

Now Germany’s choice to let the peripheral Euronations become insolvent may turn out to be disastrous in that it may wreck Germany’s export economy. OTOH, it’s probably a better bet than throwing a ton of hard cash down the Wall Street rathole, which is what the U.S. is demanding Germany do.

The German banking sector was “relatively quiescent” until Wall Street spewed out its products? Really? Well you clearly haven’t had a look at what Deutsche Bank was doing in the mortgage-backed securities market, when it was spewing out volumes of “shit” at the same or greater rate than any of its American cousins. In fact, the German banks, and not just the landsbanken, but the big banks, are teetering on the brink. Yesterday DB put out a desperate call for ECB intervention. So please, enough of the naivete about what finance capital, which is completely globalized, does. As for Germany being a “properly run polity,” well you might also want to have a look at the complicity of its intelligence services with neo-Nazis, which is all over the German media today. But the basic point is that if the Schaubeles and Starks let the Eurozone go down, this will not only drive millions of people into poverty, but reopen the pandora’s box of European right wing nationalism. It’s not the “Wall Street rathole” that’s at stake, but the future of democracy in Europe. And it’s not just the U.S. that is demanding it, but the German SPD and Greens too. The biggest disaster is that the right wing is in power in Germany at the time of its greatest challenge, created by the financial collapse and recession, not simply ill governed southerners, who Germany was happy to foist credit on just a few years ago.

Hey Taste,Your knowledge is very impressive,but isn’t DB calling for ECB intervention roughly tantamount to calling for Germany to fund the ECB ? I realize extraneous funding is plausible,but China,and nearly everyone else,even the IMF loan sharks,have told Merkel and Sarkozy they need to put some skin in the game before others will help them. I know the ECB has huge gold reserves,but I doubt that that could be leveraged,and if it were,it would have to aid all the Euro banking oligarchs who are also on the brink.Did I take a wrong turn in my reasoning ?

Yes, DB got in on the sub primes. But then everyone did bc so much money was being made by GS et al. Of course, DB wants to be bailed out; that’s how banks are. It all started on Wall Street and Wall Street, using the U.S. and the IMF, exported “vicious capitalism” around the world. Quite successfully, which is why the Global Financial Elite can so easily conduct coup d’etats in European democracies. None of that addresses the question of what to do now.

You say German money must be used to bail out European sovereigns and banks to keep the Eurozone together because, otherwise, poverty and nationalism will be unleashed. In fact, just the opposite is true. It is the desperate push to keep the Euro intact that is imposing poverty on the peripheral nations. It is Germany, along with the U.S. and the IMF who are imposing strangling austerity. If Greece, for example, simply defaulted it could return to the drachma and begin recovering. The power of the Global Financial Elite to impose its will on the weak Eurostates evaporates when the subject state chooses to leave the Euro. As for the risk of dangerous nationalism, it was exactly this type of foreign humiliation that caused the rise of Nazism after WWI and, I’d say, it is just a matter of time before some splinter party in Greece or Spain or even Italy emerges to tell the foreigners to drop dead.

As for German internal politics, yes, the European Left has been decidedly pro-Euro since the beginning. I have nothing against the Euro in principle but in practice it has failed. That’s the reality. And if the GFE insists on imposing grotesque austerity in exchange for propping up these dead economies just to stave off a technical default to protect the Euro banks that loaned the money and the Wall Street banks that insured against default, then the resentment in the people will only increase until it reaches the political break point.

IOW: I agree with you that the European People are the ones to be protected. I disagree with you that taking the German People’s money to prop up bankrupt states merely to protect the Eurobanks (and Wall Street) somehow protects the European People. Just the opposite is true, IMO.

Thanks for the fine discussion.

Yes thanks for the good discussion. This is why I like FDL.