Tuesday, 18 May 2010

Will Germany Leave the Euro?

Angela Merkle, the German chancellor, hasn't had an easy time of it in recent weeks.

It is well know Germany places a particularly high priority on price stability, yet as long as Germany remains in the European Economic and Monetary Union (EMU) with the euro as its currency, Germany may not be in control of German inflation.

Last week Morgan Stanley wrote to their clients late last week warning that Germany may leave the euro and the EMU and that investors should be prepared for the event.

If this happens it may create an enormous financial windfall for millions of individual Germans, as well as German companies, not to mention the German government.

You can read the reasons why here. It is a lengthy document but well worth reading. Also it may clarify why Sarkozy's threat to leave isn't quite so silly.

Thanks to NotASheep


Furor Teutonicus said...

I have said this on other blogs.

ONLY Britain seems to have heard of this possibility.

It has never been even MENTIONED here.

From what I wrote at Mrs Rigby's place;

NOTHING, I can find, has mentioned "leaving the Euro" here.

Maybe F.T Deutschland, but who the HEL reads that any way?

Also, we remember how, as the Brits were with decimalisation, ripped off when we went in.

Things that were 1 mark in the shops, overnight, were €1, a DOUBLING (+-). From a monthly food bill of 50 to 60 marks, we all of a sudden needed 60 to 70 Euro!

It may be a dream to get the Mark back, but we all know we will be robbed once again.
15 May 2010 09:38


I went through the German papers yestaerday after reading your post. NOTHING.

UNLESS, of course, it is hidden on page five of some "local rag" like the Frankfurter Allgemein. Not even anything about Sarkozy, or however he spells his name.

It appears that the British press quite often tell the Brits that the Europeans are going hysterically up in arms about various things, when from here, we have never even HEARD of the issue.

The pub smoking ban a case in point. The BBC kept on about the "Pro/Anti smoking lobbies" as if there were barricades in the streets, and burnings of the Reichstag.

All our pubs did was declare themselves "smoking pubs, no under 18s", and that was the end of the story. (Except in Bayern, where the ban is tOTAL. But even there. No protests.)
16 May 2010 09:50

I also posted this on Fausties blogg.

I checked all I could with Google, and NOTHING, except one obscure "Ecconomist" mentuined "leaving the Euro" in one paragraph of a three page long interview.

THAT was/IS it.

A touch of British anti European wishfull thinking I suspect.

Furor Teutonicus said...

Answers on a post card.

Anonymous said...

There is one other blocker to such a mischief making suggestion by this article based on a Morgan Stanley analytical paper.

The Lisbon Treaty, remember that, forbids any country exiting the Euro to exit the EU. Such a country would need to reapply and meet current convergence criteria. To change the Lisbon Treaty would be impossible in any reasonable time-frame.

The Germans are against a wall here and if any fundamental change could be carried out wrt the Euro I would guess that Germany, The Benelux group, Belgium, Austria and Finland would have to find a way of letting the profligate ones suspend their Euro membership, devalue and then be let in on a case by case basis.

The real Elephant in the room is Italy, whose bank indebtedness to France is about 20% of France's GDP (over $500 billion.) Italy also owes Germany about $200 billion. In all Italy has borrowings of $1.1 Trillion

Put in this context the Portuguese debt at, $286 billion, is chickenfeed, similar but bigger to Greece.

About one third of Portuguese debt is due to Spanish banks and about 15% to French one.

Spain, oh boy has a debt nearly as big as Italy about $220 billions is due to French banks and the same to German ones.

If Italy came under pressure it would bounce to France and by that Germany also as the French and Germans have interwoven economies now.

I have no idea what Austria's banks owe but I am sure that they are carrying a heap load of notes for Poland, the Baltic countries, Hungary, the Czech and Slovak republics etc. Maybe that is borrowed from Germany too.

The key is Portugal and what happens there. The little domino falls on the Spanish big one which falls on onto the French one which tilts towards Italy and Germany.

This all make the banking crisis, which we are still in, miniscule in real terms. Countries could go down and take with then the European banking structure.

Printing and chucking money at the problem is not going to work unless the indebted countries can or are able to get a grip on their economies and financial habits.

A North South split is on the cards so stick with Euros and a Northern European bank account.

Or, time to grow carrots?

subrosa said...

Furor, is there no unrest there about the bail out for Greece?

I think this is where all this came from don't you think. Some American sites are also mentioning it.

These days I seldom listen/watch the BBC. It has perfected mass brainwashing and I'm too old for that.

subrosa said...

Furor, can you comment on this please:


Indyanhat said...

Carrots don't do well round here I'm investing in turnips and swedes (possibly mangle wurzels, if I can get the seed)
Very interesting article!!thanks

subrosa said...

Morning bugger. The European banking system has been questionable for some time although I can't quite assess how much it is in trouble. Opinions vary.

Thanks for your assessment.

Time to grow carrots or even cabbage.

Furor Teutonicus said...

subrosa said...

Furor, is there no unrest there about the bail out for Greece?

In the newpapers, among the Government coilition members, but as usual, on the street, and in the Pub, no one gives enough of a shit about Europe to even comment on it. And if you do, you are looked at as if you had asked their opinion on 15th dynasty ming porcelein, or whatever.

No one in Europe (Geographic) gives a twop├╝enny TOSS about Europe (Political).....Except for the fact that no one wants bloody Turkey to join.

As to the other post, I will first read it, then get back to you.

Furor Teutonicus said...

Thought so. "404" error.

My server does not like the Times for some reason. The links never work.

subrosa said...

There you go Furor, page 1:

A tabloid campaign in Germany is turning the eurozone crisis into a nasty populist duel between Europe’s largest economy and the aggrieved demonstrators of Greece. Some headlines:

"Greeks ready to cut back? They would rather strike!" April 28, Bild.

"Why are we paying the luxury pensions of the Greeks?" April 27, Bild.

"How much more do we have to pump into this country?" April 26, Bild.

Spain downgrade sparks European sell-off
Markets drop as Greece debt is rated junk
Merkel must be tough for the voters
About 86 per cent of Germans are against bailing out Greece, according to a weekend survey.

Talk shows and radio phone-ins have been taken over by outraged politicians echoing the vocabulary of Bild, which now refers to Greeks only as "Pleite-Griechen" (broke Greeks). The news channel NTV found this week that 92 per cent of its viewers were in favour of Greece going bankrupt.

Politicians are limbering up for regional election in North Rhine Westphalia on May 9 and it would be a brave candidate who called publicly for a handout to Greece.

None of this is lost on Angela Merkel who, having promised the IMF and EU that assistance for Greece would be a "last resort", has been thrown off course by the timing and the possible size of the bill to Germany.

The crisis would have been easier to manage if it had heppened after May 9.

There are 18 million voters in the North Rhine Westphalia, already irritated by the sums that have been allocated to saving German banks. It also has large numbers of Turkish-German voters whose hearts do not necessarily pound for the Greeks.

The result: a popular press that wants to reverse Germany's traditional role as paymaster of Europe; an irritable electorate in a region with many depressed pockets; and a government that cannot decide how to save the euro without shooting itself in the foot.

Bild, which claims a readership of 12 million, is leading the charge.

subrosa said...

A couple of interesting comments too Furor:
Hugh Colgan wrote:
@Mac McKenna - Well Said !
Most people (outside BRD - Banana Republic Deutschland) don't know what The Germans are up to. 1-euro jobs, 10-days unpaid leave per annum, unpaid sick-leave. That is the modern BRD. A land where farmers slaughter their own animals, and the quality of supermarket goods is a disgrace - Germany is a true 3rd-rate country. The Marshal-Plan was well conceived !!

Mac McKenna wrote:
Poor Germany........Pushed for the Euro to help stabilise its own debt from the re-unification. Now it has stabilised it is playing "Daddy of Europe" and looking down its nose at other countries. But this is the country where one works for 38 hours per week and still earns less than the minimum living standards so has to claim benefits to help. This is where people are forced work for 1 Euro per hour to help with benefits. 1 Euro for work that used to attract a normal wage. If the person was given a proper wage then maybe they would not be on benefits in the first place. This is where a childs birthday gift of money will be deducted off a family's monthly benefits. The list is endless. That is how the country has stumped up the rest to stabilise, by chastising its own people. It will pay billions for the car industry but leave its children to go without food.

Furor Teutonicus said...

As I thought. Media and Politicians.

For the people "on the street", it is, as with 99% of E.U stuff, a non issue.

The "Bild" is about as reliable as the "Sun" by the way, but with less news.

Furor Teutonicus said...

Mac McKenna wrote:
Poor Germany........Pushed for the Euro to help stabilise its own debt from the re-unification. Now it has stabilised it is playing "Daddy of Europe" and looking down its nose at other countries...... et al


I want to know why we can "afford" to bail out a country, who'se books were fiddled for them, to get into the Euro in the first place, when my Granny, and all the other pensioners must go for ANOTHER year without a single Pfennig "pay" rise, because, according to the Government; "We can not afford it".

So instead, we are paying the pensions of bloody some lazy, fat arsed Greeks.

You also have to remember another thing about Germany.

No one discusses politics here. Blog sites like this are so and few apart, that you may as well dismiss them as "non existant".

Any comment on Political threads in newspapers, makes the Gurdians josef Goebells approach to free speech look like the biggest supporter of Libetarianism the world has ever seen. They are also poluted by commy bastards.

Anything further right wing than Mother Theresa is branded a "Neo nazi".

Polotica amongst the public here, is just a non starter.

Anonymous said...


I sometime read the English language versions of two or 3 Continental newspapers; Speigel, Handelsblat and Politiken


The above is a beauty.

Greece is a gonner and we should be looking well past it to Portugal, Spain and Italy.

Furor Teutonicus said...

Aye. Those three are quite reliable.
But The Media here is no different to that of the U.K.

They are ALL "Partisan" for one Government view or another.

The Axel Springer group are virtualy the Governments mouth piece. Ne'er a bad word will be heard from THEIR presses, regarding Government policy.

Oh aye, they do crtisise them some times, but the kind of critisism that gives meaning to Callaghans (?) comment; "It was like been savaged by a dead sheep".

subrosa said...

Oh dear Furor, I learned quite a bit of German from the Bild so I won't have it ridiculed.:) It was the easiest paper for a foreigner to understand and I suspect, 40 years later, it's still the same.

subrosa said...

People do discuss politics in Germany though Furor but it's usually done within their own homes - something I noticed many years ago.

It's true about blogs. I've tried to find political blogs but most are written by professionals. Such a shame. A couple of months ago I had German friends visit and we had some good-going conversations about the political scene in Germany and they appear to have many of the same problems as here. All EU driven of course and they, like many here, were now anti-EU.

Pensions over there used to be far above those here. I can't find any information regarding the basic state pension - in fact what I did find was that there isn't one. It is a complex system.

subrosa said...

Die Welt and the Frankfurter Allgemeine are my regular reads these days and have a look at the videos on the Focus site.

But, like the UK, each paper supports their own section of the political scene. I suppose we should be grateful for that. So many countries only have a totally government-controlled press.

Furor Teutonicus said...

subrosa said...

Oh dear Furor, I learned quite a bit of German from the Bild so I won't have it ridiculed.:) It was the easiest paper for a foreigner to understand and I suspect, 40 years later, it's still the same.

Aye. But 40 years ago, the Experess was still to be considered a "quality paper", O.K, at the low end of Quality papers, but just the same...

There is a difference between a "Government controled press", and a press that by default, has virtualy entirely taken the same "side".

As you say, Die Welt is O.K. It still has some independant thought in it's editorialy and articles. But similar news papers are few and far between.

A pretty new one is "Jugend Freiheit"...I will check that. That is what it is called. Whether it is the official titel is the question.

Furor Teutonicus said...

Ja. Junge Frieheit;


Anonymous said...

"Dead Shhep"

It was Dennis Healy who said that wrt Sir Geoffry Howe.

Howe got his own back on Thatcher and brought about her downfall, I think. The conjoiner was heard about "some dead sheep" after that.

subrosa said...

I've heard of that one recently Furor but haven't had a look. Will do now you've given me the incentive.

Anonymous said...

Just came across this a few minutes ago.

Bloody Hell!


subrosa said...

That's an excellent link Bugger. I know some of the German press have been very concerned about recent events there, although I didn't see the piece in the FA about an 'alternative' monetary system. Kind of makes sense though.

Mrs Rigby said...

I wrote about this at the weekend, and spent ages digging but found nothing useful. All we can do is wait and see. (Seem to be doing a lot of waiting these days!)

But, have just read something on England Expects that might interest you.


subrosa said...

I read your post Mrs R and agree it was hard to find anything of substance. The link Bugger gives is worth a read though.


I missed that one. Thank you for your link. Little by little the information comes to light.

subrosa said...

Intriguing comment on England Expects Mrs. R. I've yet to verify it though but here it is:

'Ambrose Evans-Pritchard on the Telegraph website 18th May states "US Senate has voted 94:0 to block use of taxpayers’ money for IMF rescues that make no economic sense or bail-outs for countries like Greece ..."'

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