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G0ldfinger

Why Germany does not want to throw out a single PIIG

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The Half-a-Trillion Euro Bomb: (in German) http://www.spiegel.de/wirtschaft/soziales/0,1518,817004,00.html

 

The receivables of the Bundesbank against PIIGS (in the Target system) is virtually symmetric to the ever increasing debts of their central banksters.

 

The Bundesbank is fudged when the Euro breaks up.

 

That's why Greece needs to be squeezed for every last Euro before it's too late...

 

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I heard Bernd-Thomas Ramb talk about this last year as well. I don't like Sinn but he is probably onto something there.

 

Things will look pretty dire if that debt gets defaulted upon. What I don't get is whether this will be deflationary or inflationary.

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I heard Bernd-Thomas Ramb talk about this last year as well. I don't like Sinn but he is probably onto something there.

 

Things will look pretty dire if that debt gets defaulted upon. What I don't get is whether this will be deflationary or inflationary.

 

We don't have a 'flexible currency' to let defaults occur in the payments system! Any and all debt that is systemically important will be exchanged for cash.

 

I ran this through Google, but just to clarify, this reflects imbalances within the European payments system right? It looks like German vendor financing writ large.

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Whilst seeking relief from German translation, I hit their 'English' button only to find Int Min Friedrich saying Greece should be given an exit offer they cannot refuse!!

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My VERY basic understanding of this is the Germans have created a huge stick to be hit with,for a little longer in time for now, ie lend us more or we pull out, if a country now pulls out and can't repay aka Greece, then what is to stop the rest following falling like a deck of cards, leaving Germany with half a trillion of debt in a then defunct euro system! A bit of head scratching and heel kicking sorry we can't pay you gov. The Euro was yesterdays news etc! The power has transfered from the lender to the bankrupt borrowers?

 

Deflationary or Inflationary? If the euro goes down on tuesday a race to the bottom from ex euro countries could take place the next day to buy market share, Inflationary to everything ex- euro other than the new German Mark? Everybody would want to undercut each other to gain export orders and Market share against the Dollar and the Mark?

 

The German people wouldn't be very happy watching half a trillion go down the pan !! Also their undervalued euro currency would be gone and an expensive Mark in terms of exporting goods comparison, would be in its place tougher times ahead for Germany!!

 

Maybe just maybe somebody might think a gold standard backed currency might be a good idea and the chapter of Fiat currency might come to an end?

 

Next question Yanks to China how do you want your Dollars printing 1000 million notes or 1 Trillion when we settle the invoice?!!! :huh:;)

 

Regards

 

ML

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The more I think about this the less I understand it.

 

I have a rather simple (and perhaps stupid) question: Assuming the Euro breaks down tomorrow, all national CBs assume sovereignty again and the Bundesbank ends up with unpaid debt of €500bn - can't they just print the money?? I would have thought the goods that were exchanged were paid for, i.e. the banks and companies involved have received the money etc.

 

How can an institution that's in charge of the printing presses run out of money?

 

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The more I think about this the less I understand it.

 

I have a rather simple (and perhaps stupid) question: Assuming the Euro breaks down tomorrow, all national CBs assume sovereignty again and the Bundesbank ends up with unpaid debt of €500bn - can't they just print the money?? I would have thought the goods that were exchanged were paid for, i.e. the banks and companies involved have received the money etc.

 

How can an institution that's in charge of the printing presses run out of money?

They can't run "out of money". But they will always have to buy something to "print" money. As currency is their liability, they need to buy an "asset" for it. If they buy cr@p with supposedly "good" money, they are debasing the currency (inflationary). A default on their receivables is exactly this: the proof that they have bought $h!t with good Euros. They're giving them away for free. Short term it might look deflationary as someone might have to give them money to recapitalize (IF they don't just want to add a zero to the valuation of their gold reserves [which will happen anyway sooner or later IMHO]). But this is a misconception as in the end, there is money outstanding that won't be paid back and hence won't be 'drained' from the system, ergo inflation. So, the conception of it will also somewhat depend on how they choose to deal with it. The Fed for instance and IMHO will simply add zeros to their gold reserve in the end (accounted for at $42.22/oz at the moment).

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Maybe just maybe when the Sh&t finally hits the fan a real asset revaluation will take place, as it is the first time to my knowledge the whole world has been on a Fiat currency credit binge so it is a bit of an unknown !

 

1. Solution one, high real inflation huge injections of cash/printed cash into banks all assets retain value/increase in fiat value the further from the bottom of Exeters inverted pyramid the less inflation of value of the asset ! Debt is erradicated from the system, which is what is happenning now, debts ratios reduded, ministers make noises they want further lendng publicly to the people but then at the same time enforce stricter lending ratios on the banks, resulting in mortgage debt reduction as we are seeing now without a headline crash in values, hoping at the same time growth will appear from somewhere!

 

2. “Paper money eventually returns to its intrinsic value – ZERO” Voltaire 1729 ;):o

 

The worlds nightmare happens the sheeple see Fiats true value!!!!!!!! A huge deflation of all assets takes place again using Exeters inverted pryamid the items furthest away from the bottom of the Pyramid deflate the most against gold! :blink:

 

Edit. With the excepition of fiat cash whch will burn as in Weirmar Germany

 

Regards

 

ML

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Maybe Greece will make the decision for them. Just posted this on my euro to hell in a handbasket thread:

 

So what next for Greece? I attended a conference on the lessons from the Latin American defaults in London last month and one of the points made by one of the speakers there was: If a new government is elected shortly that decides it does not like what its current leaders have signed up to, it may just decide to strategically default, that is, simply announce it does not agree with what its previous leaders imposed on the country and stop servicing its debt despite in theory still being able to.

 

Strategic defaults have been avoided in the past and instead defaults have occurred when the country simply had no other choice (probably for the simple reason that heads of government usually get kicked out of office in the aftermath of a default), until Ecuador in 2008 when a new government said the debt of the previous government was illegitimate. Now there is a precedent that others may decide to follow.

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