STOCK MARKET WATCH -- Monday, 9 July 2012

[DemReadingDU]

43. TAE: Angela Merkel is Playing You For Fools

A different perspective...

6/29/12 Angela Merkel is Playing You For Fools by Ilargi at The Automatic Earth

Oh come on, leave the girl alone already. First off, all those people talking about a solution for the eurozone need to finally understand there ain't no such thing. And whatever slim chance of a solution the most optimistic - delusional - among them may be so desperate to cling on to, at least they should recognize that Angela doesn't hold the keys to the city. She herself knows it: she's just another gal knocking at the gates, even if she's dressed as the empress.

A thought experiment: how would you solve the euro crisis if Germany were not part of the equation? If you would have to put the de facto German contribution to the puzzle at zero, neutral? What would you be left with then, and what steps would have to be taken to come to a solution? If the sole remaining big players were, let's see, France, Spain and Italy?

That changes the picture, doesn't it? Take Germany out and all you're left with is pretty much roadkill. Plus a motley crue of comparatively small barely breathing rodents like Holland, Finland and Austria.

See? With bailouts for Spain and Italy now all but inevitable, if you leave Germany out of the picture for the moment, you're left with no-one at all to pay for those bailouts. Not even a complete and immediate move towards a fiscal, banking and political union would do anything to resolve Europe's financial quagmire if Germany is not present.

In other words: it all comes down to Germany. Berlin is on the hook for everything. The required funding for the EFSF and ESM emergency funds would, with Spain and Italy moving into roles as debtors instead of creditors, have to come from Germany to the tune of what would fast approach 50% or so.

Does anyone think that is realistic? That Germany can make the markets truly, as in for more than a day or so, believe it has that kind of money lying around, and is wiling to gamble it? Or is it perhaps more likely that, if the Germans would even try it, the markets would turn on Berlin the next morning? If you look at bunds right now, there's no doubt they're perceived as a safe haven. But what are the chances that perception would last if Merkel agreed to take on the Savior Of All Of Europe part?
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Meanwhile, she plays the part of one who's falling behind and doing all sorts of things against her will. She may just be playing a lot of you for fools. She may also be ready to make her big next move as soon as she sees fit. Which would explain why she doesn't care any longer about leaving the impression that she's giving in to some demands, even if they're bound to be fought over at home. After all, why worry about making a few promises if you know you will never have to keep them?

http://theautomaticearth.com/Finance/angela-merkel-is-playing-you-for-fools.html