I am under no delusion nor are they my audience; nothing that I write will change much of anything for the public and so I am not passing out knowledge at the supermarket. There are a few of you however that pay attention not to who I am but to what I think. Europe has become so complicated and so riddled with the obtuse and the fractured that I thought I would take some time today to try to simplify the process. All of my life I have listened to economists, who always seem to want to make things more and not less complicated to make themselves sound more intelligent I have always supposed, and I have read research reports that offered forty pages of excuses mostly in an attempt to sell you something. To be perfectly honest; I have never found either of these tacts useful. I would guess that ninety-five percent of what I write is to warn you away from the pitfalls and very occasionally I think something is of interest and might be useful and I point it out. The point of my commentary is to try to keep you out of trouble which is an increasingly difficult task these days as the European Union is the most confusing government on Earth bar none.

Instruction begins today with an assessment of just what we face each day which is why it is all so bewildering until it is explained and then it is not. Many things in life are like magic tricks. They appear to be magic and everyone applauds until someone explains the trick to you and then it is just ho-hum. Today I am going to try to make all of the European magic ho-hum.

The EU is made up of seventeen nations that use the Euro as their currency and a total of twenty-seven nations in total with ten using their own currency. The ten nations in the outer ring have very little influence including Great Britain. Each day the seventeen nations individually pump out “stuff” from their own propaganda machines so we have seventeen spewers of “stuff.” Then we have the European Parliament which lives under the delusion that eventually they will run Europe and they have their own Ministry of Information, rather like something in Harry Potter, that also pitches out its own “stuff.” Then we have the European Union’s various commissions and departments which hands out their own “stuff.” Finally we have the European Central Bank who we are told is independent, which is about fifty percent accurate, who tosses out their own “stuff.” This is twenty-one then individual manufactures of information with each one representing their own interests. So they blow it out and the markets react and I would venture that about eighty percent of the time they react incorrectly and then the news flat lines and then reality sets in while a lot of money is lost betting on the wrong outcome because all of the information is taken at face value and not graded for importance. If anyone thinks that all of the propaganda has the same worth then they are making a disastrous mistake.

What is Important and What is Not

Germany holds the title for the most important propaganda machine. When they discuss what they will and will not pay for you may grade the accuracy as a ten and believe exactly what they are saying. If Germany says “No” or they say “Yes” then that is exactly what to bet on and period and end of the story. Nothing in Europe will get done, when it comes to the outlay of cash, without Germany agreeing to it and that, my friends, you can take to any bank you like. When Germany talks about future events and “support at the appropriate time” and that they welcome the ideas of so and so and whomever then you should read this as fluff and the polite rolling of German eyes and pay no attention to it whatsoever. When it is about money the German rank of importance is a ten and for the rest; just don’t pay attention.

Next when it comes to the troubled nations; Greece, Portugal, Ireland and Spain you may be very little to no attention to what they say about almost anything. Each of these countries has one aim and one goal and that is to get Germany to pay for their troubles and they will roll out any rumor, any scheme, any plan and any fantasy to try to accomplish this goal. They will say it with style and grace and panache but it is all just drivel and should be discarded in your mind.

The machine located at the European Parliament has all of the use of a paper boy on the street corner in Topeka, Kansas. He sells a few newspapers but the value of it is about the same. Brussels is the Hall of pomp and circumstance and lavish dinners where everyone gets congratulated for nothing by everyone else. It is the creation of Berlin in a rather good attempt to keep the Court away from what really matters and so not to be distracted by the throng and it is also useful for the Germans to have it in another country so they can claim the spreading of power which is very useful politically for them. What Brussels sends out then is about as useful as one of the pieces of fluff found by Winnie the Pooh in the forest

The ECB has two printing presses, one for money and the other for information and you should pay attention to both. This is certainly true as it relates to what it will do or won’t do as a matter of fiscal policy and for anything else; ignore it. Further, for anything of importance, whatever they do must be approved by Berlin and if it is not, as was demonstrated Friday, the eventual outcome may be overruled by Berlin. The ECB made a move to ease collateral requirements without permission of Germany and the reaction was swift. The ECB may allow looser collateral rules but the Bundesbank will not and given that they control the Traget2 financing the charade was ended. Now the markets did not understand this and rallied upon the news of easier financing but the markets, once again, did not get it right. The ECB made an unauthorized attempt to ease collateral and then the Bundesbank said “No” and that will be the end of that. There will be no announcement made and Germany will not embarrass the ECB but the decision was made and the easing for collateral will not be taking place and so the independent action of the ECB was dead at arrival. So much for the independence of the European Central Bank, a lofty notion, an inaccurate piece of data.

Finally there is the Bureau of Magic which resides at the European Union. You may live under the delusion that the EU and the European Parliament are the two oversight groups for Europe but this would be a colossal mistake. They are both firmly under the thumb of Berlin. They each present a useful distraction so that Europe does not think that Germany is running the show but then sleights of hand and distractions from the obvious is what politics is all about. You must anchor this firmly in your mind; there is Germany and then there is everyone else and all important matters of policy and all matters of funding are decided in Berlin and that is the exact way of it.

Growth

France is demanding growth, Italy is demanding growth, Spain is demanding growth; all very nice. All of Europe is in a recession except for Germany so certain calculations were made in Berlin. If the average profit margin for German industry is 10% and all of your main trading partners are in a recession then a 1% hand-out for growth is a useful enterprise and so was agreed to by Germany. The 1% cash outlay means an increase in purchasing power for the buyers of Germany’s good and services and so the net profit margin may only be 9% which is much better than a 3-5% decline in orders and so, voila, Germany agrees to the growth measures. Not any more complicated than that I contend and a good strategy for Germany but do not be misled in terms of their agenda; all for Germany, Hail the Reichstag.

In the Coming Days

There are two significant events that will be decided in the forthcoming days. Each will change the face of the European Union. The first is Greece; a little country with a total debt of $1.3 trillion and likely to default. The calculations in Athens are how to get more money out of Germany and the calculations in Berlin is whether a default is less costly, both politically and economically, than giving Greece more money. Debt forgiveness has never even been mentioned so I think we can rule out this possibility as it would have been floated by the German public for review and reaction. The Troika shows up Monday in Athens, they will find all targets missed, all promises unkempt and all hopes for salvation dashed upon the Greek floor along with the plates. The Greeks will beg and plead and threaten and the Germans will decide. In the end I think Greece will be allowed to stay in the EU to preserve the dream, that they will default, that they will return to the Drachma and that they will receive some kind of debtor in possession financing so that the country does not collapse. That is my best guess. Cheaper tourism and cheaper ships will help with their competiveness but it will be years before Greece is allowed back into the Eurozone as a voting member.

The second item on the docket is Spain. They need a total of around $350-400 billion dollars to straighten out their banking system and their regional debt. Money lent to the banks in some fashion, not currently allowable under the various policies but you never know, or money lent to the sovereign to be lent to the banks will be just the first tranche of funding. It will be followed by more money lent to the regions of Spain which may take another novel approach but no matter. Spain is about to be run out of Germany no matter how all of the trivialities play out and so the impositions of the Men in Black are about to be put in place. So long to the importance of Madrid and thanks for all of the entertainment. You have been caught and are about to be hung out to dry and enjoy the ice wine that Germany will provide for your congratulatory dinner. Rajoy was right, a “Great Victory for Europe;” serving ice wine in Madrid.

Frau Merkel: Prime Minister, how do you like ice wine?

Mr. Rajoy: I have never tasted it.

Frau Merkel: Oh but you will!

and.....

http://hat4uk.wordpress.com/2012/06/23/merkels-hurry-hurry-esm-tactics-full-spectrum-of-german-press-gives-her-a-drubbing/

MERKEL’S HURRY-HURRY ESM TACTICS: Full spectrum of German press gives her a drubbing

Germany is gradually waking up to the danger

Although still furious at the cooked-up Gauck/Karlsruhe plot to stop Fiscal Union in its tracks, Angela Merkel has only herself to blame. Despite having ridden roughshod over the Bundestag, the Constitution, and EU Treaty Law on numerous occasions, she and her sewn-together creature Wolfgang Schäuble remain not just unrepentant, but more childishly aggressive than ever.

The court’s ‘request’ to President Gauck for a consideration-delay had Schäuble illogically whingeing as only he can do with this corker of a soundbite: “I don’t think it is smart for constitutional organs to communicate with each other publicly. And it is even less prudent for the federal government to comment on it,” he said. So that’s why he commented, then. Poor ickle Wolfie’s private little plans for a big eurojob gone wong? Aooooaaa, s’not fair.

But Sahra Wagenknecht, a senior MP in the Left Party, injected a sense of reality, arguing that the deal reached between Merkel’s conservative government, the Green Party and the SPD on Thursday to ratify the ESM and fiscal pact treaties was now “worthless.” She and other critics argue that Merkel has tried to push the legislation through parliament too quickly without giving the legislature adequate time to debate the measures. In fact, die kleine Geli has been pulling this rusty stunt for years: do nothing for too long, then delay the news of your decision, then suddenly shout “Emergency!” and panic everyone into a yes vote. (Creative people in advertising have been playing this trick on account executives since God was a girl).

Wagenknecht also claims that Fiskalpakt will limit the Bundestag’s sovereignty in determining budget policy. I wonder if somebody could explain to her that’s one of hundreds of reasons we refused to join the euro in the first place.

Despite their agreement to a support deal on ESM legislation, prominent Greens weighed into the Fuhrerin, Volker Beck accusing her of waiting too long before opening negotiations in parliament. In the SPD camp, Hubertus Heil agreed that the government itself was to blame for the delays. “It let far too much time pass before it began negotiating with the opposition,” he said. The SPD’s leader on the Bundestag floor Frank-Walter Steinmeier said he anticipated a two-to-three week delay in order to provide the court with enough time to review the constitutionality of the legislation. The odd thing remains that nobody – not even S&P – seems to be in the slightest doubt that the Karlsruhe Court will eventually allow the legislation. I’m really not sure about this, but it all depends on how ClubMed insolvency progress outside Germany changes attitudes….and the degree to which the concerned burghers of Bankfurt grab the leash and start spending some money to persuade a broader coalition of Germans that they’re making a catastrophic mistake.

Should they do so, judging by yesterday’s press coverage, they will not be lacking in media support

The business daily Handelsblatt opines:

“What actually needs to happen in order to wake up both the German government and the pro-Europe parties in parliament? For the second time in one week, the Constitutional Court has applied the brakes on the government for the overly hasty implementation of euro bailout measures. This time it is ‘requesting’ that the president wait before signing the treaty on the ESM. It’s a preemptive request, because it is assumed that the Left Party and some members of parliament will challenge the decision in parliament and that the court will need two to three weeks to review the suit. With the request, the court is able to avoid having to issue a temporary injunction against the treaty, which could lead to a complete escalation of the situation.”

“The situation that has now been created must also compel supporters of Germany’s European Union strategy — and since the deal reached on Thursday over the fiscal pact and ESM, these also include the CDU/CSU, SPD, FDP and Greens — to think things over. There are good reasons for ratifying the ESM treaty. But this set of agreements, as well as the vote on the fiscal pact, is not some mere amendment to, say, environmental law. It is about deep encroachments into the national constitution, the transfer of sovereignty to the EU and preparations for new institutions like the ESM that, so far, have only been granted limited democratic legitimacy. It’s also about possibly paving the way for actions that would affect Germans’ property.”

The center-left Süddeutsche Zeitung suggests:

“The timeframe for deciding on this law is an undermining of the court’s ruling on Tuesday and it mocks the notion of parliamentary democracy. But out of her desire to position herself as the queen of the euro rescue, the chancellor has degraded the parliamentary vote to the level of a farce. (…) Merkel takes a long time to act, but then she acts with brute force and at the last second. That is not parliamentarianism but a regrettably short-sighted and amateurish style of governing.”

“The new treaties involve enormous sums of money and contain legal constructs that the law has never known before. It will create an ESM company that is above the law. The company will be able to sue but cannot be sued in return. It will be able to do and be what it wants. Is such a euro absolutism necessary to save the euro? How can one control it democratically? (…) One should be able to talk, discuss and deliberate about this. How should people’s trust in Europe grow when the government doesn’t trust the representatives of the people?”

“The ESM and the fiscal pact impinge on the core of the Bundestag’s budgetary autonomy. The constitutional court judges will probably rule that the constitution’s possibilities have been exhausted. They will then only accept the new treaties, when, within a reasonable amount of time, the people are also allowed to decide.”

Even the firmly Right-wing Frankfurter Allgemeine Zeitung writes:

“(The debate between the parties) … is obscuring that fact that nothing less is being negotiated than a reorganisation of Germany’s fiscal constitution. The power struggle between the federal government and the states over the burdens of the fiscal pact leads the issue right back to where it belongs — namely out of the party political arena and into the constitutional arena.”

“It won’t be the first time that the Constitutional Court rather than the Bundestag has the final word on such an issue, either. As caustic as the Karlsruhe court sounded on Thursday, it absolutely wants to have this last word. And although it might not be timely, it will be legally binding.”

Finally, normally hysterical mass-circulation tabloid Bild said:

“The ESM euro rescue fund and the fiscal pact were supposed to be forced through the Bundestag and Bundesrat at top speed. Merkel’s government hoped that it would be signed into law by the president the same night. But that is not going to happen. And justifiably so.”

“This is because the euro bailout cannot operate according to the motto that necessity knows no law. The president and the constitutional court have to thoroughly examine these laws. And that requires time. Especially when it’s a question of our money.”

It’s a long time since Left, Right, quality and tabloid opeds were so negatively united than that, but then from the start of her Reign as Euroqueen, Angela Merkel and her truly unpleasant, interfering, anti-democratic control freak money-man Wolfgang Schäuble have pulled off this feat of getting completely up the nasal passages of otherwise easy-going people. George Osborne describes the German Finance Minister in private as “creepy”, Nicolas Sarkozy once shouted along an Elysees corridor, “That f**king Kraut bitch is reverting to type”, and former Greek Premier Papandreou told a colleague over last Christmas that “beneath a chilly exterior she is ice-cold”. A senior British diplomat remarked to me last Summer, “I met Schäuble, and while this is an obvious cliched thought, I could not lose the feeling that this was Peter Sellers doing Doctor Strangelove”.

Truth be told, while The Slog never misses an opportunity to take the piss out of the current Berlin regime, I remain very deutschlich. Very happily married into an orginally German family – and with a long history of enjoying most things about Germany – the Weimar Republic and how it fell was my thesis topic at University, and is still a passionate interest. So it should come as no surprise when I tell Sloggers that without the correctness of German constitutional forms and the fierce independence of its press, Merkel would be even more encouraged as to her infallible personal deity than she is already. Wolfgang Schäuble in particular has been quite rightly hounded by the press for his ineluctable tendency to illiberal dictatorship…be the government involved Germany, Spain, Italy, Greece, or Great Britain.

Not for nothing has Schäuble been called ‘ethereal’ and ‘will o’ the wisp’ in his style. He would in fact be Martin Bormann to Merkel’s Fuhrerin, were it not for that uncontrollably irascible Prussian nature that compels him to be rude about everyone who isn’t German. Were he to get the job earmarked for him by Merkel as Obersturmbannfuhrer Eurodosh, everyone in Europe – especially the Brits – would have to watch their backs and count their fingers.

But tonight, what we should mainly be counting is our blessings. Without the German press and the Bundesrepublik’s constitutional balances, we would all be heading unstoppably for Onkel Wolfie’s Fiskal Korrection Lager. As it is, we now have a chance for events to wreak their damage to the mad plans of the few German thinkers who don’t see the dangers of their unthinking arrogance.

If this interested you, then try Time for Merkel to recognise the Rule of Law

Catharsis Ours

Saturday, June 23, 2012

Mark Grant - The Simplification of Europe in 1 -2-3...... Merkel has a wrench thrown into her hurry up and pass game

Europe 1-2-3

MERKEL’S HURRY-HURRY ESM TACTICS: Full spectrum of German press gives her a drubbing

Germany is gradually waking up to the danger

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