Thursday, May 24, 2012
Is Germany Preparing to Dump the Euro???
While the second Greek Bailout may or may not be complete
depending on whether we get a credit event as a result of
it, Germany can and will walk from the euro if it needs to.
This is an unforeseen black swan everyone was ignoring.
Germany's top political team is fully aware that German
voters will not agree to bailouts of any other country
other than Greece, such as Spain or Portugal, given that
Germany already pays the largest portion of the bailout
funds.
Germany has put in place a contingency plan that would
permit it to leave the euro if it had to. Also, during
the past six months, Germany has put legislation into
place that would allow it to opt out of the euro without
losing its membership in the European Union. German
legislation would allow German banks to get rid of any
government bond based on the euro.
What has great importance is that Germany restructured
the Special Financial Market Stablibization Fund (SOFFIN)
which would be used if large banks, considered too big
too fail, were on the verge of bankruptcy. SOFFIN will
receive 400 billion euors ($521 billion), of which 80
billion ($104.2 billion) are to be used to recapitalize
German banks if needed, something that might be necessary
if Germany should dump the euro.
Germany has put 480 billion euro ($642.2) firewall around
its banks. It can literally pull out of the euro any time
it wants to... Germany could very easily leave the euro...
This is the black swam no one is talking out. If Germany
bails on the euro, the EU will collapse.