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Gold To Be Remonetized

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Interesting interview with John Butler over the future and eventual re-monetization of Gold. Butler claims there is a massive financial earthquake to come with paper currencies are repudiated. 2008 was only a fore-shock.

The German Bundesbank under the Constitution can go to court if it feels the German currency (i.e euro) is under threat from the ECB. In that case the markets would immediately react negatively and the “shit would hit the fan”. In other words, the future of the euro may well be in the German Bundesbank’s hands.

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Eurozone Banks Stop Lending To Each Other

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The eurozone banks have stopped lending to each other in a clear sign that mistrust has entered the system. We already know that Deutsche Bank is 60 times over leveraged with a massive derivative exposure. As Irish economist Karl Whelan put it best “At any point in time, this thing can blow up”.

euroEUROZONE banks are refusing to lend to peers in other countries in the common currency bloc, signalling a worrying fall in confidence that appears to have worsened since the Cyprus bailout earlier this year, data analysed by Reuters shows.
European Central Bank data shows the share of inter-bank funding that crosses borders within the eurozone dropped by one-third, to just 22.5pc in April from 34.5pc at the start of 2008.

The silent retreat to within national borders is most pronounced in the troubled economies of southern Europe, but is even seen in Germany.

Cross-border inter-bank funding of German banks was down by 11.2pc year-on-year in March, equivalent to banks elsewhere in Europe withdrawing €29.5bn from its biggest economy.

Eurozone banks’ stock of lending to their Greek peers was a startling 68pc lower in April than in the same month a year earlier, equivalent to €18bn withdrawn. In Portugal, the decrease was roughly a quarter.

The ECB figures include lending between separate banks in different eurozone countries and within a single banking group to its cross-border units.

CYPRUS

Faltering confidence may be responsible for the reduction in cross-border lending, due in part to a bailout of Cyprus that closed one of its two main banks.

Lobbyists for the banking industry also say a soon-to-be-finalised EU law making it possible to impose losses, or “haircuts”, on bank creditors could hurt confidence.

“At any point in time, this thing can blow up,” said Karl Whelan, an economist at University College Dublin, warning of a potential spillover on to regular savers.

“We are relying on an absence of panic among depositors while we sit around and work out who to haircut. There is a risk of large-scale deposit withdrawals in Spanish banks, in particular. They are the obvious tinder box.”

A spokesman for the European Central Bank countered that the trend was due to a general shift towards secured lending and funding via retail deposits. Banks were deleveraging, which increases the importance of stable retail deposits. (Reuters)

Source: Irish Independent

ANALYSIS: WHY THE REAL EU FUHRER IS NOW MARIO DRAGHI

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During the week the Telegraph broke the story of how the ESM will be used to bailout broke banks. The article from the Slog explores how all the power now resides with Draghi.

ANALYSIS: WHY THE REAL EU FUHRER IS NOW MARIO DRAGHI.

German Court Case Has Potential To Force Euro Exit

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Last summer to avert the euro crisis, Mario Draghi announced Outright Monetary Transactions (OMT) to support the Spanish and Italian bonds. Now finally the German constitutional court is to hold hearings this week on the legality of the ECB using OMT as a tool to finance deficits in bankrupt states. Already Bundesbank’s Jens Weidmann has submitted a report to the court objecting to OMT but the panel looks split and the ruling could go either way. This has the potential to possibly force a German euro exit or at very least throw the eurozone back into a full blown crisis.

Udo di Fabio, the constitutional court’s euro expert until last year, said the explosive case on the legality of the European Monetary Union rescue machinery could provoke a showdown between Germany and the European Central Bank (ECB) and ultimately cause the collapse of monetary union.

“In so far as the ECB is acting ‘ultra vires’, and these violations are deemed prolonged and serious, the court must decide whether Germany can remain a member of monetary union on constitutional grounds,” he wrote in a report for the German Foundation for Family Businesses.

“His arguments are dynamite,” said Mats Persson from Open Europe, which is issuing its own legal survey on the case on Monday.

Dr Di Fabio wrote the court’s provisional ruling last year on the European Stability Mechanism (ESM), the €500bn (£425bn) bail-out fund. His comments offer a rare window into thinking on the eight-strong panel in Karlsruhe, loosely split 4:4 on European Union issues.

The court is holding two days of hearings, though it may not issue a ruling for several weeks. The key bone of contention is the ECB’s back-stop support for the Spanish and Italian bond markets or Outright Monetary Transactions (OMT), the “game-changer” plan that stopped the Spanish debt crisis spiralling out of control last July and vastly reduced the risk of a euro break-up.

germanThe case stems from legal complaints by 37,000 citizens, including the Left Party, the More Democracy movement, and a core of eurosceptic professors, most arguing that the ECB has overstepped its mandate by financing the deficits of bankrupt states.

Berenberg Bank said the case was now “the most important event risk” looming over the eurozone, with concerns mounting over an “awkward verdict” that may constrain or even block ECB action.

Dr Di Fabio said the court, or Verfassungsgericht, does not have “procedural leverage” to force the ECB to change policy but it can issue a “declaratory” ultimatum. If the ECB carries on with bond purchases regardless, the court can and should then prohibit the Bundesbank from taking part.

The Bundesbank’s Jens Weidmann needs no encouragement, say experts. He submitted a report to the court in December attacking the ECB head Mario Draghi’s pledge on debt as highly risky, a breach of both ECB independence and fundamental principles. The ECB does not have a legal mandate to uphold the “current composition of monetary union”, he wrote.

Dr Di Fabio said it was hard to imagine that an “integration-friendly court” would push the EMU “exit button”, but it can force a halt to bond purchases. This may amount to the same thing, reviving the eurozone crisis instantly.

“It would pull the rug from under the whole project. It is the OMT alone that has calmed markets and saved the periphery,” said Andrew Roberts from Royal Bank of Scotland. Mr Draghi said last week that the OMT was the “most successful monetary policy in recent times”.

The court dates back to the Reichskammergericht of the Holy Roman Empire created in 1490, but it was revived after the Second World War along the lines of the US Supreme Court.

It has emerged as the chief defender of the sovereign nation state in the EU system, asserting the supremacy of the German Grundgesetz over EU law, hence the German term “Verfassungspatriotismus”, or constitution patriotism.

The court backed the Lisbon Treaty but also ruled that Europe’s states are “Masters of the Treaties” and not the other way round, and reminded Europe that national parliaments are the only legitimate form of democracy. It said Germany must “refuse further participation in the EU” if it ever threatens the powers of the elected Bundestag.

It issued another “yes, but” ruling last September. It threw out an injunction intended to freeze the ESM, but it also tied Berlin’s hands by capping Germany’s ESM share at €190bn, and blocked an ESM bank licence. It killed off hope of eurobonds, debt-pooling, or fiscal union by prohibiting the Bundestag from “accepting liability for decisions by other states”.

Crucially, the court said the Bundestag may not lawfully alienate its tax and spending powers to EU bodies, even if it wants to, for this would undermine German democracy.

Chief Justice Andreas Vosskuhle said at the time that Germany had reached the limits of EU integration. Any further steps would require a “new constitution”, and that in turn would require a referendum.

 

Source: The Telegraph

EURO: Cock-Up or Conspiracy?

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Godfrey Bloom MEP discusses how the Euro was doomed to failure to force fiscal integration. Where is the democratic remit for fiscal integration since nobody was asked?

Karl Albrecht Schachtschneider, Professor of Law at Erlangen-Nurnberg University said of the euro:

The euro will inevitably fail. It was always clear that the euro-project would not succeed. Already in 1993 I have processed the Maastricht law suit that was mostly against the introduction of the monetary union. Without the consent of the nations comprising the EU, the euro is being used as a political lever to make the EU a super state that, for example, goes against Russia, and at the same time, serves as a counterbalance against China, the USA and other economic giants. But this lever was always economically doomed to failure.

 

German Finance Minister Who Launched Euro, Calls For Its Breakup

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euroThat the euro has been a disaster is now beyond question.  Even the German Finance Minister, Oskar Lafontaine who was responsible for Germany launching the euro is now calling for its breakup. He believes countries would unite against Germany, forcing change. Ambrose Evans-Pritchard writes:

Oskar Lafontaine, the German finance minister who launched the euro, has called for a break-up of the single currency to let southern Europe recover, warning that the current course is “leading to disaster”.

“The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt,” he said.

“The Germans have not yet realised that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later,” he said, blaming much of the crisis on Germany’s wage squeeze to gain export share.


Mr Lafontaine said on the parliamentary website of Germany’s Left Party that Chancellor Angela Merkel will “awake from her self-righteous slumber” once the countries in trouble unite to force a change in crisis policy at Germany’s expense.

His prediction appeared confirmed as French finance minister Pierre Moscovici yesterday proclaimed the end of austerity and a triumph of French policy, risking further damage to the tattered relations between Paris and Berlin.

“Austerity is finished. This is a decisive turn in the history of the EU project since the euro,” he told French TV. “We’re seeing the end of austerity dogma. It’s a victory of the French point of view.”

Mr Moscovici’s comments follow a deal with Brussels to give France and Spain two extra years to meet a deficit target of 3pc of GDP. The triumphalist tone may enrage hard-liners in Berlin and confirm fears that concessions will lead to a slippery slope towards fiscal chaos.

German Vice-Chancellor Philipp Rösler lashed out at the European Commission over the weekend, calling it “irresponsible” for undermining the belt-tightening agenda.

The Franco-German alliance that has driven EU politics for half a century is in ruins after France’s Socialist Party hit out at the “selfish intransigence” of Mrs Merkel, accusing her thinking only of the “German savers, her trade balance, and her electoral future”.

It is unclear whether the EU retreat from austerity goes much beyond rhetoric. Mr Moscovici conceded last week that the budget delay merely avoids extra austerity cuts to close the shortfall in tax revenues caused by the recession.

The new policy allows automatic fiscal stabilisers to kick in, but France will stay the course on the original austerity. “It is not about relaxing the effort to cut spending. There will no extra adjustment just to satisfy a number,” he said.

Mr Lafontaine said he backed EMU but no longer believes it is sustainable. “Hopes that the creation of the euro would force rational economic behaviour on all sides were in vain,” he said, adding that the policy of forcing Spain, Portugal, and Greece to carry out internal devaluations was a “catastrophe”.

Mr Lafontaine was labelled “Europe’s Most Dangerous Man” by The Sun after he called for a “united Europe” and the “end of the nation state” in 1998. The euro was launched on January 1 1999, with bank notes following three years later. He later left the Social Democrats to found the Left Party.

Remember Helmut Kohl’s recent comments on introducing the euro in an interview that was conducted by Jens Peter Paul, a German journalist in 2002, but only recently published. Kohl said that he would have lost any popular vote on the euro by an overwhelming majority.

“If a Chancellor is trying to push something through, he must be a man of power. And if he’s smart, he knows when the time is ripe. In one case – the euro – I was like a dictator …

“I knew that I could never win a referendum in Germany,” he said. “We would have lost a referendum on the introduction of the euro. That’s quite clear. I would have lost and by seven to three.”

So there you have it, stuck with a currency that was rammed through against peoples wishes and a completely predictable disaster. Of course a currency union, as the elites point out, cannot work without a fiscal union. That has always been the end game, to hand over all economic power to the EUSSR. In other words a “power grab”. Hegelian dialect, the method to implement something you want by creating a problem which induces a reaction , whereby you already have the solution. After all, the Soviet Union was based on Hegelian dialectic techniques.

Source: The Telegraph

Solvenian Banks Close To Collapse

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After Cyprus, next up looks to be Slovenia. Over the weekend there has been an official denial that the banks are about to collapse and we know what that means. If it does turn out to be the case, then another  “bail in” would cause panic right across the Euro area.

 

SloveniaTYE2012Are Slovenian depositors about to get Cyprus’d with a wealth/deposit confiscation?  If the intensity of the denials by Slovenian officials are any indication, a bank crisis is imminent for the tiny balkan nation. 
New Prime Minister Alenka Bratusek attempted to calm Slovenians over the weekend stating: We are absolutely no Cyprus. We don’t need help. All we need is time.
If and when the 2nd bail-in episode in the EU is attempted, expect all hell to break loose across the European banking system as depositors in Greece, Italy, Spain, Portugal, and even France realize that as DISELBOOM openly admitted, Cyprus really was the template for bank failures going forward.

As the AP reports, the official denial is in:


Slovenian officials have a message for the world: Don’t panic — we won’t be the next to fall.
The tiny European Union member is trying to convince its people and foreign investors that it won’t be the next in line for a banking system collapse and a messy international bailout.
“We are absolutely no Cyprus,” says new Slovenian Prime Minister Alenka Bratusek. “We don’t need help. All we need is time.”

Contrary to PM Bratusek’s claims, a recent report by the Organization for Economic Cooperation claims that the equity in Slovenian state banks has been “virtually wiped out.”:

The Alpine country’s banks have been on a lending spree for years, loaning money to unprofitable state companies or privileged officials who used the cash to buy the firms they ran, using the state assets as collateral.
Many such businesses have now collapsed or have huge debts. A recent report by the Organization for Economic Cooperation says that the equity of the state banks has been “virtually wiped out.” As much as 15 percent of all loans are now non-performing, the third-highest ratio in the eurozone, the Paris-based group said.

Which brings us to the important question: Exactly how much gold does Slovenia supposedly own as its reserves that are about to be confiscated by the ECB?  3.20 tons according to Slovenia’s latest report…all likely stored in London and already rehypothecated and leased to bullion banks 1,000 times over.

Que the MSM reports that Slovenia’s 3.2 tons of gold will need to be liquidated.

Source: SilverDoctors

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