Sheila McKinney

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.