Spreading To Germany?

[Wonkish1]

I warned folks that Germany's fiscal position isn't squeaky clean. Its good compared to the rest of Euro, but that is just like saying your the healthiest person at a fat camp.

http://www.reuters.com/article/2011/11/23/us-eurozone-idUSTRE7AM0VR20111123

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Uh oh! This is why Germany can't go all in on the rest of Europe. They don't have anything to go all in with and they are just putting themselves at risk. They exit the Euro and their interest rates plummet to near 0 overnight and they can then wash themselves of this entire mess. How they are allowing themselves to be sucked into this mess is just amazing.

[Beet]

Dude, their position is awesome, aside from their mental position. Even the healthiest person in the world will die if he points a loaded gun at his own head and pulls the trigger.

[republicanism]

Germany is the parasite in the Euro zone.
The politics of our governments and economists have been to hold back wages, focus on the exports and compete our neighbors. The Euro helped us a great deal in this, otherwise our exports would have been much more expensive.
Now our neighbors are bankrupt, and we try to implement our agenda of wage restrain, privatization etc. on them.
Of course this plan will collapse, and rightly so.

[Wonkish1]

Dude, their position is awesome, aside from their mental position. Even the healthiest person in the world will die if he points a loaded gun at his own head and pulls the trigger.

How many times do I have to point out that their way overleveraged banking system is very, very weak.

[Beet]

Dude, their position is awesome, aside from their mental position. Even the healthiest person in the world will die if he points a loaded gun at his own head and pulls the trigger.

How many times do I have to point out that their way overleveraged banking system is very, very weak.

All the banks over there are weakening, but there are obvious reasons for that- central bank policy.

[Wonkish1]

Dude, their position is awesome, aside from their mental position. Even the healthiest person in the world will die if he points a loaded gun at his own head and pulls the trigger.

How many times do I have to point out that their way overleveraged banking system is very, very weak.

All the banks over there are weakening, but there are obvious reasons for that- central bank policy.

Well they were allowed to lever up and their tier one is sovereign debt that is very risky right now.

Once you add the banking risk onto the total government Debt to GDP Germany no longer looks like that great of a sovereign risk any more. They work worse than the US for example.

[Beet]

Dude, their position is awesome, aside from their mental position. Even the healthiest person in the world will die if he points a loaded gun at his own head and pulls the trigger.

How many times do I have to point out that their way overleveraged banking system is very, very weak.

All the banks over there are weakening, but there are obvious reasons for that- central bank policy.

Well they were allowed to lever up and their tier one is sovereign debt that is very risky right now.

Once you add the banking risk onto the total government Debt to GDP Germany no longer looks like that great of a sovereign risk any more. They work worse than the US for example.

But sovereign debt wouldn't be a problem if the ECB were to intervene, hence bank debt wouldn't be a problem. And in any case, Debt to GDP by itself is not an accurate predictor of crisis. If it were, Japan would have been hit first, and Spain would have been one of the last.

[Wonkish1]

Dude, their position is awesome, aside from their mental position. Even the healthiest person in the world will die if he points a loaded gun at his own head and pulls the trigger.

How many times do I have to point out that their way overleveraged banking system is very, very weak.

All the banks over there are weakening, but there are obvious reasons for that- central bank policy.

Well they were allowed to lever up and their tier one is sovereign debt that is very risky right now.

Once you add the banking risk onto the total government Debt to GDP Germany no longer looks like that great of a sovereign risk any more. They work worse than the US for example.

But sovereign debt wouldn't be a problem if the ECB were to intervene, hence bank debt wouldn't be a problem. And in any case, Debt to GDP by itself is not an accurate predictor of crisis. If it were, Japan would have been hit first, and Spain would have been one of the last.

Always coming back to the ECB is the magic bullet, eh?

Debt to GDP isn't an accurate predictor of which one will go *first* into crisis. There are other factors when we talk catalysts. Also I just pointed out an example of the banking system adding risk to a Sovereign bond and you then reiterated me that Debt to GDP isn't everything.

[Beet]

Always coming back to the ECB is the magic bullet, eh?

Yes. I've been pretty much making the same point for over a year now. During that time, I have been joined by numerous individuals, including Nobel Laureate Paul Krugman, Chairman of the Financial Services Authority Adair Turner, noted economist Barry Eichengreen, US Treasury Secretary Timothy Geithner, Nomura Securities head of research Richard Koo, French Finance Minister Francois Baroin, former Bank of England policy maker and Citi chief economist Willem Buiter, Irish Prime Minister Enda Kenny, Polish Finance Minister Jacek Rostowski, IG Markets analyst Soledad Pellon, Barclays Capital economist Antonio Garcia Pascual, the editorial boards at both the Economist and Bloomberg Businesweek, and many, many more.

When I started pushing it a year ago hardly anyone was agreeing with me. Now, many, many people are, but not the ones who matter.

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Exactly, there are many other factors. And it's not just an incomplete catalyst predictor, it's also an incomplete predictor, period. When Argentina defaulted in 2001, its debt to GDP ratio was only 65%. Many countries have had higher ratios than that and eventually brought it much lower. Even if you look at a single predictor, there are many better ones out there.

[opebo]

Germany is the parasite in the Euro zone.
The politics of our governments and economists have been to hold back wages, focus on the exports and compete our neighbors. The Euro helped us a great deal in this, otherwise our exports would have been much more expensive.
Now our neighbors are bankrupt, and we try to implement our agenda of wage restrain, privatization etc. on them.
Of course this plan will collapse, and rightly so.

Precisely! Beautifully put!

[Wonkish1]

Always coming back to the ECB is the magic bullet, eh?

Yes. I've been pretty much making the same point for over a year now. During that time, I have been joined by numerous individuals, including Nobel Laureate Paul Krugman, Chairman of the Financial Services Authority Adair Turner, noted economist Barry Eichengreen, US Treasury Secretary Timothy Geithner, Nomura Securities head of research Richard Koo, French Finance Minister Francois Baroin, former Bank of England policy maker and Citi chief economist Willem Buiter, Irish Prime Minister Enda Kenny, Polish Finance Minister Jacek Rostowski, IG Markets analyst Soledad Pellon, Barclays Capital economist Antonio Garcia Pascual, the editorial boards at both the Economist and Bloomberg Businesweek, and many, many more.

When I started pushing it a year ago hardly anyone was agreeing with me. Now, many, many people are, but not the ones who matter.

You must be logged in to read this quote.

Exactly, there are many other factors. And it's not just an incomplete catalyst predictor, it's also an incomplete predictor, period. When Argentina defaulted in 2001, its debt to GDP ratio was only 65%. Many countries have had higher ratios than that and eventually brought it much lower. Even if you look at a single predictor, there are many better ones out there.

I have plenty of very, very smart and respectable folks on my side of the argument as well. I don't feel the need to tout them out because of any sense of weakness in my own credibility.


Guess that notion that a country with a central bank can monetize away any chance of a default hasn't been historically accurate then, huh?