Article Will Germany’s Bailout Save Europe?

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With the final approval of Germany’s supreme court in hand, Germany can now legally join the latest eurozone bailout attempt in the hopes of offering more time and more stability to an area still roiling with the fallout of sovereign debt crises in multiple states. While the citizens and governments of many other European countries would no doubt deeply resent the idea of the European Stability Mechanism (ESM) as a “German bailout,” make no mistake – without Germany’s ongoing participation and financing, there would be serious turmoil in European financial markets. 
In for a Pfennig, in for 190 Billion EurosWith the approval of Germany’s supreme court in mid-September, the ESM can now move forward as the latest effort to stem the ongoing chaos caused by the sovereign debt troubles in countries like Greece and Spain.
Because of the nature of the ESM, multiple levels of ratification were needed across the eurozone, but Germany’s approval was the real key. Roughly 27% of the...

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Greece simply are trapped - they are not competitive under the Euro. Also, while they are part of the EU (and actually this would be a problem anyway), capital flight is a huge risk as they can simply move in a two hour plane flight.


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some interesting comments ...........ultimately one must realise that each Country is currently doing what it can to stem/defer the inevitable Step change in global Economics and Finance


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You save that Germany (amongst others) has put money in which is true, but as of now (Jan 2013) they have yet to lose any. Merkel and Lagarde fought over an OSI when Greece was made to do the buyback for the next traunch, and Merkel sort of won. Even though it is looking more like a deal where the IMF agreed to hold back forcing an OSI till after the German elections in September this year. That is going to have to happen as the ECB cannot take a haircut (State financing is illegal under Treaty), the private investors have had their 75% haircut which only leaves the taxpayer to take theirs. As the debt in Greece is out of control, and no amount of Dr Pangloss projections can alter that fact the debt levels will increase (something like 200% of GDP), and the IMF mandate is that only sustainable loans are allowed, so there will be a crunch time.

On Spain, where you have the paradox of the 'Draghi Put' lowering bonds, so they do not have to apply for the OMT, yet without the promise of the OMT, would need a bailout. The 'good' news in the eurozone of resent months all seems to hang on the Draghi Put, an untested bluff, which might some day be tested, but as Germany is the main contributor they have the main clout. The price for that clout is none of the others are allowed to play up before Merkel gets passed her election. That to my mind is the story for this year. They have relaxed a bit on Greece, will do the same for others, Cyprus is a pain, and more to do with getting them taxpayers money without annoying them as they are bailing out Russian spivs, but all will be done to calm the markets.

Problem, none of the fundermentals are fixed, the same systemic problems with the debt and the construct of the euro are there, and there in real terms hasn't been any real fix. At some point it is going to come to a head and when those liabilities turn into real losses, that is when the fun will begin.

Okay, there are things which can blow that all of course, the debt ceiling in the USA, Greek government falling, whatever.... Though what i would like to know is how can an interest in fundermentals help my trading stratagy?
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