Saturday, October 1, 2011

Is Germany Cutting Off the PIIGS?

It's too early to tell if this is for real or just posing, but, German Finance Minister Wolfgang Schaeuble ruled out Germany contributing any more money to the EU bail-out fund than the 211 billion euros approved by parliament, in an interview published Saturday, AFP is reporting.

"The European Financial Stability Facility has a ceiling of 440 billion euros ($590 billion), 211 billion of which is down to Germany. And that is it. Finished," he told the magazine Super-Illu.

He also suggested the European Stability Mechanism, which is due to replace the EFSF by 2013 at the latest, would be smaller.

"Then it will be only a matter of 190 billion in total, for which we will be guarantors, including interest," he explained.

If Germany does cut off the PIIGS, the EuroZone in its current form is finished.


  1. In theory, won't it be a hell lot of cheaper for Germany to lend out 211 billion euros if they return to the D-mark ....... ? :)

    I like this development, it is becoming VERY interesting. One could argue that Schaubles choice of language seems to indicate that Germany has decided their sacrifice, and it does not include accepting devaluation of a common currency (preliminary EZ inflation at 3.0% should cause some fury at the Bundesbank)

    Maybe I'm dreaming again, but the economic and political future of Europe would look about a million times as bright if Germany just created some political anarchy.

  2. THe Germans will always bail out the PIIGS. The Vote was OVERWHELMING in favor of stealing from the German productive and handing the loot over to the primitive bums on the Med. The Germans will always pay and always grumble about it.

  3. The vote passed the Bundestag by a large majority -- 523 in favor to 85 against, with three abstentions.

    Germany is not cutting off anything...They are willingly enslaving themselves to beach bums.

  4. What is going on here is the german politicians always bailing out the PIIGS and then talking hard to please the german voters. Thats it.

    All the news you hear about austerity and not increasing the help is just political talk to fool the german citizens. But the german politicians want the EU and know they have to make their citizens pay for it.

  5. Sadly, I can't believe that it's more than just talk until something actually happens. We hear the same rigamarole every few weeks.

  6. Merkel, and with her Schäuble, are on a tight rope walk. On one hand they need to force the PIIGs, especially Greece to become competitive. On the other hand they need to please German voters, who mostly just think we are paying for the PIIGs. So far it actually Germany saved quite a bit with its historically low interests on the Bund.

    Not to forget the German industry. Since the economist called Germany the sick man of Europe things have changed fundamentally. It turns out, that having a industrial base really producing sophisticated products is not too bad after all.
    And for the German industry the single currency is certainly an advantage.

  7. The other day I found a very well done four-minute video that highlights some of the less savory (i.e. more criminal) aspects of the EU's proposed "European Stability Mechanism" treaty. It was produced by a German group (in English): ‪EU: Treaty of debt (ESM) - stop it now!‬.

    [I know I am posting this comment on an old blog entry, but it would be off-topic on all of your more recent entries.]