Germany Is Just Buying For Time… More Bailout Funds Aren’t Coming!

• More clarity of thought and analysis by Graham Summers. Deflation is a No-No for the banking system. It is the end of it. Banksters prefer inflation because as asset price rises, their portfolio (collateral) increases in value ie. their balance sheet looks healthier. For eg., in deflation, the collateral posted by their borrowers lose value and when the borrowers default the banksters cannot recover their loan capital by selling the collateral. This is what is happening to American banks in the real estate market now. All the REO (Real Estate Own by banks) are losing value and their balance sheet are showing more and more losses! Most major western banks are bankrupt!
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• Gold works even better in a deflationary environment. When the banking/financial system collapses, everybody turn to gold ! Inflation or deflation: gold is still real money and has been so for 5000+ years!
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  Germany Is Just Buying For Time… More Bailout Funds Aren’t Coming! 
  by Graham Summers, Phoenix Capital Research, http://www.zerohedge.com/ 
  Deflation, particularly the dreaded debt deflation that Central Banks fear, is fast spreading throughout the financial system as the European banking system collapses. Indeed, the EU, in its current form, is most certainly in its final chapter as both the political environment and market conditions have rendered all proposed “solutions” to the crisis moot. To wit, the most recent proposals from EU leaders are:
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  1) To draft new budgetary requirements for EU members.
  2) To move the launch of the Emergency Stability Mechanism (ESM) one year ahead of its original launch date to July 2012.
  3) To send the IMF 200 billion Euros to use as aid in dealing with the EU Crisis
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  The media hailed these proposals as a bold step towards solving the current EU Crisis. However political and market realities show all of these proposals to be absurd, if not impossible.
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  Regarding #1, the EU already had budgetary constraints via the 1991 ratification of the Maastricht Treaty (all members were to maintain Deficit to GDP ratios lower than 3% and Debt to GDP ratios lower than 60%) which NO ONE has followed (not even Germany). So how does a new set of budgetary requirements change anything?
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  Secondly, in order to enact these new budgetary requirements, there needs to be unanimous consent from all EU members. Even if there was unanimous consent here (there isn’t nor will there be), basic math shows these new budgetary requirements to be pointless: how on earth does anyone expect a country like Greece, which is still bankrupt after two bailouts and quite a bit of debt forgiveness, to get its budget under control (hint: it would have to wipe out at a minimum 50% of ALL of its outstanding debt).
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  As for the proposal to the move the launch of the ESM a year earlier… the EU has already failed to fund ONE bailout fund (the EFSF hasn’t been able to raise even ten billion Euros in capital). So the idea that launching a second bailout fund earlier than originally intended is pointless.
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  The final and most absurd proposal concerns EU nations sending 200 billion Euros to the IMF for use in combating the EU Crisis. Setting aside the fact that this is completely insane (bankrupt EU countries are going to give money to the IMF to bail out other bankrupt countries?!?!), the political environment in Europe won’t permit this to happen. Case in point, Germany’s Bundesbank (its central bank) which is the real de facto monetary backstop for the EU today, has said it will send additional funds to the IMF ONLY IF:
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  … for more click here!

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