The above title comes from a short report on Zerohedge.com outlining the replacement of the Euro in Germany with the Deutsche mark:
Curious what the talking heads will be discussing all weekend parallel to the joke that is the European Summit #1, not to be confused with summit #666? Here is the answer, courtesy of the FT Deutschland, where not too subtly, right next to a lede saying “the Euro rescue has turned into a farce“, the publication has for the first time, set its price not in zEURo.qq but in Paul Tudor Jones’ favorite currency: the Deutsche Mark, or 4.11 DM to be precise. And courtesy of the FTD, we now know the When Issued exchange rate for the EURDEM is: 1.95, the same as was locked at the EUR inception. Said otherwise, stick a fork in the euro, it’s done.
Although the dollar has strengthened recently, this strength is relative. If two currencies are collapsing but one is collapsing faster relative to the first, they still are both collapsing. To make this point clearer, compare the value of the dollar relative to the Japanese yen today:
Longer view:
This is a post WWII low.
I have included the entire article from the German Financial Times below only because it is translated into English.
David DeGerolamo
There is no going back to the D-Mark!
The big top! This weekend he finally takes place! Fever across Europe indicate the date, in anticipation of the final rescue shot, of our politicians have left. But then suddenly come Thursday afternoon, reports that the summit may be postponed. Then again, it says: Yes, it takes place, only one topic, this ominous “leverage” of the euro-rescue package, he is excluded.
Typical of Europe: The most important point is shifted. And once again threatened a dispute between France and Germany, Europe’s future. It comes to the rescue EFSF, his new clout. Germany is ready, expand the capacity indirectly. Defined by the federal guarantee of a good sum of € 200 billion should not be exceeded.
And France? Nicolas Sarkozy wants the fund may deposit purchased government bonds at the ECB and for that money gets to where he can again buy bonds. So that he is acting like a private bank. This rejects Germany and the ECB – because this is a state financing by the central bank. And that is prohibited. Angela Merkel complained that Sarkozy had moved “an inch”. What a drama: The Chancellor has canceled its policy statement to the Summit on Friday morning.Another summit is here, in the next week, until then if this issue is resolved. Ah yes, the participation of the private sector on the second aid package for Greece should also be clarified.
How can this happen? Why is this back and forth, this dispute, this chaos?
We assume the €-rescuers that they have understood in two of these epochal crisis causes. We believe that they have created the tools to combat the crisis. They have recognized the urgency, they understand what is at stake. Therefore, no can understand how such a mess just hours before a major summit on future of Europe. At times, shake markets in which small half-sentences, he may not pass anything.
Especially since it was a long lever on the subject of compromise. Germany and France both have gone too far: Merkel suddenly spoke too loudly about a default ofGreece(especially the endangered French banks). Sarkozy, in turn grabbed an old favorite idea out again: the banking license for the shield EFSF. This dispute is unprofessional and highly dangerous, indeed suicidal.
Part 2: Gigantic expectation
The FTD will be released on Friday with a great editorial on the front page of this newspaper because the scheduled meeting at the weekend for a very, very important to keep. The pressure of expectation that has built up, is huge – even if Angela Merkel is trying to dampen it.
Without question: What is being decided or not, will determine our prosperity. No, that’s not too pathetic. Maybe that still have not internalized all: The euro may still fail.
What to do?
The crisis has reached in recent weeks, a new level. Since the last major emergency summit in July, three key things have changed: The world is facing a new recession. Furthermore, the situation in Greece has changed dramatically: people are exhausted, desperate and exhausted, the images of the protests are always terrible. The growth is weak, the debt out of control. The third problem: There is a new banking crisis. With the Franco-Belgian Dexia had the first institute to be collected by the state and is shattered. Once again, banks borrow any more money to each other, once again threatens to dry up the money system.
In this dramatic situation, Europe’s politicians have embarked on a new path: the rescue package for Greece in July will be unwrapped, the private sector should be more involved. In addition, banks should obtain fresh capital, if need be by force.
Once again,Europe has no time to lose. So once again a new rescue package with auxiliary billion?No. At the weekend is finally the great solution since the big bang to be risked.
It is no longer deny. Greece will not come out of its deep hole under its own power. A debt cut now seems certain, better, a debt. The FTD has long argued against a haircut, because the risk of infection was too great. This because it would not be done immediately would go after the markets are Portugal,Ireland,Spain and Italy.
Here, however, governments have learned: The risk of infection should be banned just so, by the larger shield and the recapitalization of banks. Because of Greece’s debt is now over 160 percent and climbs inexorably, is a relief for the country the only right way. But two conditions must be met. Who dares a controlled demolition, must secure the site.
Part 3: Greece is no precedent
Firstly, Europe must not occur in a rescheduling of the markets, the unmistakable signal that the special case of Greece is not a precedent. Each country, the embassy will defend it. Therefore, the question of the lever for the emergency fund is so elementary EFSF: Because building with the rescheduling of Greece, Europe needs a protective wall, the height of his verschlägt in not only the taxpayers breath – but above all the markets. The amount that is in play, in order: € 1000 billion. Can someone tell the exact amount? That would be presumptuous.
Only one thing is certain: The sum must be so large that they actually shields the euro zone. Vigor and determination, as history shows, are the main ingredients in a financial crisis. This was demonstrated in 1993 when the Bundesbank, Hans Tietmeyer supported the franc and announced to defend the attacked currency of France, which proved, as Angela Merkel and Peer Steinbrück guaranteed 2008 the Germans their savings, and this was only observed this summer, when the Swiss National Bank announced that bind to the Franks in the European currency.
The second condition for debt rescheduling, the new support of the banks. Sure, that angered many people who fear for their jobs and get excited about high banker bonuses. But you must explain to them that it is not without healthy banks: The economy needs money to live, and distribute the money the banks.
Admittedly, in view of these sums is one dizzy. Billion’s defense is a big experiment that can go wrong. Germany raises at least ten percent of its economic output to the front. But the alternative of doing nothing or even the D-Mark would re-introduce, for the really big disaster Germany.
