JANE BURGERMEISTER REPORT:’German Finance Minister’s proposal dismissed as a “Trojan horse” to buy time for banks to offload more Greek debt onto tax payers’
German Finance Minister’s proposal dismissed as a “Trojan horse” to buy time for banks to offload more Greek debt onto tax payers
The proposal of Germany’s Finance Minister Wolfgang Schäuble to roll over Greek debt for a period of seven years has come under fire from economist Hans Werner Sinn for being too far little to return Greece to solvency and to stop the meltdown of the eurozone.
FDP politician Franz Schäffler called the proposal a „Trojan horse” to win the backing of sceptical German lawmakers for a new 90 billion euro Greek ”bailout” on Friday, which has been put forward only to buy time for the banks to transfer all of Greece’s debts to tax payers.
His comments come as it emerged that the Bundesbank has bought up billions of euros of Greek bonds from German banks in violation of rules.
According to a report in the Financial Times Deutschland, banks in Germany have offloaded a third of their Greek souvereign bonds onto the Bundesbank for which tax payers will ultimately have to pay since May 2010.
German banks held only 10,3 billion euros of bonds n January and February 2011 compared to 16 billion euros of bonds at the end of April 2010.
It is left to journalists to comb through the Bundesbank accounts to detect the growing pile of debt being put on the shoulders of the tax payers by stealth. The banks are transferring the debts to tax payers by stealth because this breaches the rules governing eurozone central banks, responsible for price stability, not for handing out billions of euros to banks for collateral that is highly inflated.
The German government is failing to inform the general public about what is going on, putting it in danger of losing its credibility.
Frank Schäffler notes that the Bundesbank and ECB are giving billions of euros in loans to banks at 1.25% interest — or even 0% interest – in return for doubtful assets as collateral. These banks then use the loans from the ECB to give loans to the insolvent governments but at much higher, penal interest rates, ensuring astronomical profits for the banks at the expense of the tax payer in what is a truly outrageous scam.
French and Luxemburg banks are among the main beneficiaries of this scam and their governments are opposing any reduction in Greece’s debt burden, also Schäuble’s proposal which would knock 30 billion euros off Greece’s bill for interest payments.
For the Bundesbank and ECB to argue as they do that reducing Greece’s debt burden will jeopardise the financial system only underlines the point.
Reducing the debt burden on Greece can only jeopardise the financial system because insolvent banks are being propped up with the help of the Bundesbank and the ECB with tax payer money even when it is explicitly against all the rules.
For the IMF, EU and ECB Troika to conclude that Greek banks are fundamentally sound — and so “bailout” funds should keep being funnelled to Greece when the bond markets are asking 25% interest rate on Greek debt – is an obvious falsehood given the facts and given ECB’s own implicit admission that Greek banks can only keep going because of tax payer money.
It is time to put these insolvent banks into managed insolvency and also to put the obviously insolvent Greek and Irish governments into managed insolvency. Schäuble has put forward no plan to achieve this objective.
It is not just Greece but also Ireland which is locked into an unsustainable debt burden at penal interest rates, according to leading Irish economists. Portugal has just entered a similar debt death spiral and it will not be long before Spain is sucked in to generate enough revenue to keep this public-sector Ponzi scheme, as Argentinian former central bank governor Mario Blejer called it, going.
Hans Werner Sinn estimates that 400 billion euros of liabilities out of 1,5 trillion are rolling onto the German tax payer from the various bailout funds alone. This, at a time, when Germany has a per capital public debt only slightly lower than that of Greece and its exports are slowing down.
For the Bundesbank and ECB to keep financing insolvent banks in Greece, Ireland and Portugal in return for doubtful collateral while drawing down the corresponding credit or money available for the more competitive economies not only violates all the rules. It is also happening on such a huge scale that it is going to make the euro financial system unviable in just two years, according to Hans Werner Sinn.
In just two years, the entire money supply in the European central bank system will be used for financing insolvent banks and governments if the ECB continues to direct flows of central bank money at the same pace in the same direction.
This is, therefore, a financial Ponzi system designed to crash very soon to allow a new IMF global currency. The euro has no future if this Ponzi scheme continues.
It is time for the German Bundestag to act as responsible lawmakers and reject the plan of Wolfgang Schäuble as insufificient to address the key issue – how to get Greece back to solvency and give lasting relief to the tax payers and put the euro financial system on a sound footing again.
The lesson of Germany’s recent past is that it is not enough for the political functionaries to obey mindlessly the higher ups while parroting abstract slogans about “European unity” and the euro as a symbol of peace when the facts show that they are passing laws that are bringing financial armageddon to the people of Europe as well as social unrest and possibly civil war, and German economists are telling them this, black and white, day in, day out.
The economists are issuing crystal clear warnings about the impending debt tsunami, and it is up to the Bundestag to address these facts, draw the consequences and stop this looming disaster by blocking the legislation that is leading to an accelerating financial meltdown as well as political and social breakdown across the eurozone even if Schäuble is not pleased.
It is the function of parliaments in a democracy to act as an effective check on an out of control Chancellor and Cabinet complicit with bankers. Lawmakers in a democracy are not slaves or servants. They are not lackeys and blind followers who are there only to please the higher ups. They are people who have responsibilities, including the responsibility to look around them and uphold the law. German lawmakers also have that responsibility if the country really is a democracy.
Greece is the future of Germany if nothing is done. Greece is today with unemployment soaring, with car sales collapsing by almost 60% and industrial output by 11% in April alone will be Germany in one or two years when the creditors start to demanding ever higher payment for all the guarantees the German parliament has so generously given to Greece, Portugal, Ireland, Spain without bothering to consult, inform or act in the interests of the people.
Look at the people who are homeless in Greece, who have no jobs, no future, who are filling the squares, who are calling for a revolution because the banks have looted their country with the help of a corrupt local political elite.
Is it acceptable that the German political and financial class should once more be the motor of this act of looting of their European neighbours under the thin veil of slogans about “Europe”? Does the German political and financial class realise what the symbols of the Swastika and Nazis mean to their former victims? Do they realise in Berlin what it means when people who have been subjected to Nazi terror and mass murder from the German and local Gauleiters once more get out the flags of the Swastikas and wave them openly in squares in Athens? When even the mainstream media of Ireland which has never been in a direct war with Germany, refer to their financial fixers as Gauleiters?
Do the lawmakers in Berlin realise that people will not accept their jackboot for long, not their military jackboot and not their jackboot? Do they remember recent history when the German class cruised along thinking victory was so close and found their country in ashes and could not figure how come victory had eluded them, after all? Do they remember the arrogance and indifference, the immorality and lies of the German political and financial class of the past and what was the long term consequence for them, too, when the people rose against them?
It is time for Bundestag to show the world that Germany has reached political maturity, functions as a genuine parliamentary democracy and that the parliamentarians have made a break with a history of total and abject self interested servility to even the most brazen and corrupt of powers, including Adolf Hitler. Hitler did not abolish the Reichstag. He didn’t need to bother. The parliamentarians were ready to betray every principle and violate every law if they could get some advantage out of it.
The hour has come when the Bundestag needs to show that lawmakers in Germany understand the responsibilities as well as the privileges of their office in a democracy as opposed to a dictatorship.
The responsibility for each individual, single lawmaker who choses to take on this job of their free will and who is paid handsomely by the tax payers is to look at the facts impartially, and make the decision that is in the interest of the people of Germany and Europe – and not just in their own callous interests, succumbing to the threats of the higher ups in their political party.
Hans Werner Sinn has said the German politicians are acting in a way that is “irresponsible.”
It is an open question whether the Bundestag members are responsible or not and whether they will defend the rights of the people, the principle of law and order and spirit of true democracy for once in history or whether the German political and financial class succumb to the same old, same old greed and are so doomed to make the same mistakes over and over in their arrogance and immorality along with the rest of this international financial mafia in France, Luxembourg, the City of London and New York and Washington, whose activities were analysed by anti corruption expert Wolfgang Hetzer.
This time the people of Germany will not be behind the corrupt political and financial class any more than the people of Greece or Ireland because the people of Germany are also the victims of this Ponzi scheme along with everyone else in the eurozone. There will be no divide and conquer tactics, no false flags, no ruses that will stop the awareness among the people of Europe from creating the kind of honest government that is needed for a prosperous and democratic future for all people in the eurozone.
Schäuble’s proposal may modify but it nevertheless perpetuates the Ponzi scheme in the eurozone. It must be rejected if teh Bundestag is to have any credibility left.
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