Germany’s 2012 Bid for European Dominemption
Paul 0. Martin
In the meantime, economists worldwide are forecasting an end-of-year financial panic that’s expected to drive the multitudes to abandon paper-based currency in exchange for a gold backed economic system.
How does one say “Timing is everything” in German?
Germany’s “European Redemption Pact”
With a potential 3000 tons between Spain, Italy and Portugal alone, maybe this latest scheme from Germany is an attempt to exploit vulnerable Euro zone countries to get its hands on their gold reserves while they are over a barrel. Either way, it's an old plan that has been revived as the Euro zone crisis deepens.
EuroZone states immediately shot the German plan down when it was originally proposed last November, but economic conditions have worsened since then and with it being the only viable plan available – most agree that it’s only a matter of time
More On Germany's "European Redemption Pact"
Italy would switch $958B, Germany $578B, France $498B, and so forth. The total was well over $2.4 trillion as of November but is rising fast as Europe’s slump corrupts debt dynamics. The sinking fund would slowly retire debt over twenty years, using designated tithes akin to Germany’s “Solidarity Surcharge”.
In effect, Germany would share its credit card to slash debt costs for Italy, Spain and others. Yet it is the exact opposition of fiscal union. While eurobonds are a federalizing catalyst, the fund would be temporary and self-extinguishing. “The fund is a return to the discipline of Maastricht with sovereign control over budgets,” said Dr Benjamin Weigert, the Council of Expert’s general-secretary.
The solution gets around the German Constitutional ruling passed last year.
The ingenious design gets around the German constitutional court, which ruled in September that the budgetary powers of the Bundestag cannot be alienated to any EU body under the Basic Law — the founding text of Germany’s vibrant post-War democracy.
“The Bard” Works His Magic – And So Goes “The Rub” …
Some critics find it telling that some of the countries in need of assistance are the same ones that are having problems with the Pact’s repayment terms.
There you have it, no free lunch, so much for European solidarity if true and the potential for Germany to get its hands on 3,000 tons of gold.
Germany would have a lock hold over the fund, able to enforce discipline. Each state would have to pledge 20% of their debt as collateral. “The assets could be taken from the country’s currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations,” said the proposal.
This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tons of gold, valued at $98B in March.
Alessandro di Carpegna Brivio, a gold expert at Camperio Sim in Milan, said Italy should treat such proposals with care. “Everything being done at a European level is in the interests of Germany and France, to save their banks. It is not in the interest of Italy,” he said.
“We should use our gold to take care of our own debt, collateralizing bonds above 100% of GDP. That would be a far more targeted approach,” he said.
ZeroHedge had a very interesting viewpoint, which backs up the importance of gold, despite the PTB claiming gold is unimportant in this global financial system.