Greece Needs Another Aid Programme

According to the Twitterverse, German Finance Minister Wolfgang Schaeuble has said that Greece will need another aid programme.

This should come as no surprise, given that the Bundesbank said the self same thing the other week.

Greece Imploding

Greece is continuing on its downward spiral to financial implosion.

To add to the woes of the good people of Greece, on top of last week's truly shocking youth unemployment statistics (close to 65%), Reuters reports that Greece's economy shrank at annual pace of 4.6% in the second quarter, contributing to a slump of more than 20% in real terms since 2008.

Ironically, in the delusional world of economists, these figures were slightly better than the 5% contraction forecast.

Delusions aside, Der Spiegel has blown the whole charade of bailing out the Greek economy wide open. It quoted an internal document prepared by the Bundesbank as saying that Europe "will certainly agree a new aid programme for Greece" by early next year at the latest.

The Bundesbank also described the risks associated with the existing aid package for Greece as "extremely high", and said the approval last month of a 5.8 billion euro aid instalment to Athens had been "politically motivated".

As I have noted many times before, in order to survive as a democracy and civilised society Greece needs to exit the Eurozone now; others such as Cyprus need also to consider their positions. 

Bundesbank Repatriates Gold Bullion

The Bundesbank is to repatriate gold reserves held abroad in order to tighten control and combat future currency crises. It will repatriate a large percentage of its holdings from New York and all of its bullion from Paris.

This move signals the demise of the the Dollar as a reserve currency (as the gold stored in the Fed can be pledged to shore up the Dollar), and the resurgence of a quasi gold standard.

The lesson is clear, if you invest in gold do not rely on mere paper certificates to validate your holding.

Bundesbank Challenges ECB To Pissing Contest

In an interview conducted in June, but "conveniently" published on the Bundesbank's website today, the Bundesbank president Jens Weidmann has stressed that the ECB should not exceed its mandate.

He also noted that the Bundesbank is more "important" than others in the eurozone.

The Telegraph quotes him:

"[The ECB] must be aware that its independence obliges it to respect its own mandate and not to exceed it. 

We are the largest and most important central bank in the Eurosystem and we have a greater say than many other central banks in the Eurosystem."

It seems that the Bundesbank has just challenged the ECB to a pissing contest!

Bundesbank Shoots Draghi's Fox

Yesterday Mario Draghi, head of the ECB, was making all sorts of rash promises about the ECB doing whatever was needed to prop up the Euro etc.

I noted:

"Draghi then reverted to type, and promised that the ECB will "do whatever it takes to preserve the euro".

This of course is patently untrue."

Today the Bundesbank has verified my conclusion, by stating that it remains opposed to further bond buying by the ECB.

Whatever Draghi might like to do, the Bundesbank won't allow him to do it; ie they have shot his fox.

Greek Bonds Worthless

The Bundesbank announced yesterday that it will refuse to accept Greek, Irish or Portuguese sovereign/bank bonds; ie it will cease to lend to commercial banks that use Greek, Irish or Portuguese bonds as collateral. As ekathimerini points out:

"It also means that the credibility of the new bonds issued is no different to that of the old ones they have replaced."

This effectively kills the European peripheral bond market and, by definition, the current structure of the Eurozone.

It is now only a matter of time before Greece, and other peripheral nations, leave or are kicked out of the Eurozone.