Tuesday, September 27, 2011

Germany Slams Geithner

Rumors have been circulating that the EuroZone is about to increase its current emergency lending limit of €440bn  by up to €2 trillion. The plan is based on an outline suggested by US Treasury Secretary Geithner.

It, bottom line, would result in the European Central Bank most likely printing money to create the funds for the larger lending pool. Markets for the last 24 hours have climbed on anticipation of the announcement of the plan.

Now that plan appears in jeopardy as  German finance minister Wolfgang Schauble said it is a "stupid" plan.

Ambrose Evans-Pritchard reports:
"I don't understand how anyone in the European Commission can have such a stupid idea. The result would be to endanger the AAA sovereign debt ratings of other member states. It makes no sense," he said.
Mr Schauble told Washington to mind its own business after President Barack Obama rebuked EU leaders for failing to recapitalise banks and allowing the debt crisis to escalate to the point where it is "scaring the world".
"It's always much easier to give advice to others than to decide for yourself. I am well prepared to give advice to the US government," he said.
In perhaps the understatement of his career, Evans-Pritchard continues:
The comments risk irritating the White House. US Treasury Secretary Tim Geithner has been a key driver of plans to give the EFSF enough firepower to shore up Italy and Spain, fearing a drift into "cascading default, bank runs and catastrophic risk" without dramatic action.
The EZ is a mad structure, with Germany talking out of both sides of its mouth. German Chancellor Angela Merkel continues to lead the tough talk in line with her Finance Minister. The tough talk, in her case, though, is the result of domestic pressures, she is a bankster puppet, rather than a true hardliner like Schauble.

When all is said and done, and the shouting stops, Greece will get it's next tranche of money, due in October, but the Geithner/bankster long-term  plan will be suspended in air. 

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