IS MERKEL THE FALL GAL?

Zero Hedge recently addressed the situation in Europe, and it was not good. Here is what their article had to say about Germany.

4. Germany is politically fed up and monetarily tapped out:
a. Merkel’s political party is getting destroyed in state elections due to her support of the EU. And Merkel is running for re-election in 2013.
b. Merkel is committing political suicide by continuing to put Germany on the hook for Europe’s problems. Speaking of which...
c. Germany is already on the hook for over €1 trillion in EU losses… and the ECB has made it so that it can roll the losses from its PIIGS portfolio back onto National Central Banks (AKA the Bundesbank).
d. Inflation is showing up in Germany and becoming a political issue: see recent union demands (and success) for pay raises.
e. The German constitution does not permit the creation of Eurobonds.
f. If Germany permits additional bailouts or funding it will lose its AAA rating, leaving Europe without an AAA rated large economy to fall back on.

[source : Here’s the REAL DEAL NO BS Situation with Europe (Warning What Follows is EXTREMELY BAD)., ZeroHedge, http://www.zerohedge.com/contributed/2012-21-24/here%E2%80%99s-real-deal-no-bs-situation-europe-warning-what-follows-extremely-bad, 24/05/2012]

But a report from a IMF meeting a month ago suggested that the IMF was hiding the true extent of the bail outs that European banks required.

A senior finance ministry official attending the ongoing IMF-World Bank annual spring meeting in Washington has reported that the IMF's annual survey, which warned of a 3.8 trillion dollar hole in the European banking system, was rewritten to vastly understate the actual magnitude of the blowout. An earlier draft report, seen by the source, painted a much worse picture of the non-performing debt on the books of the big European banks. The actual IMF estimate is that at least 7 trillion euro (over $9 trillion) will be needed to bail out the private European banks this year.

[source : Even In Bleak Annual Survey, IMF Doctored the Data, LPAC, http://larouchepac.com/node/22437, 22/04/2012]

Yesterday the German government announced a plan for growth for Europe modelled on the same mechanism that enabled East and West Germany to fuse after the fall of the Berlin Wall. The plan includes privatisation with the creation of a European Privatisation Board, and special economic zones that would have tax incentives and relaxed regulation to attract business.

But The New York Times appears to be sceptical about this idea. The union of East and West Germany apparently cost more than $2 trillion over 20 years, and what is the result?

“We performed a real-life experiment,” said Hans-Werner Sinn, president of the Ifo Institute for Economic Research here.

While unemployment in the former West Germany is 6 percent, it remains stubbornly higher, at 11.2 percent, in the east. In 2010 gross domestic product per capita was more than $40,000 in the former West and just under $30,000 in the former East, compared with 1991 figures of $27,500 in the West and about $12,000 in the East. But much of the narrowing in the gaps between east and west, experts say, is attributed to the migration of job seekers westward as much as to any significant improvement in the east.

There have been success stories in the revival of cities like Dresden and Leipzig, and some regions, especially on the southern edge of the former East Germany, are doing better. But the eastern part of the country today is known for perfectly rebuilt town squares that sit empty for much of the day and new stretches of autobahn with few drivers on them.

“Germany made huge investments in infrastructure in East Germany,” said Klaus Adam, a professor of economics at the University of Mannheim. “The hope that the rest would follow has not been fulfilled. You need to get the productivity figures up.”

[source : Germany Looks to Its Own Costly Reunification in Resisting Stimulus for Greece, NYT, http://www.nytimes.com/2012/05/26/world/europe/german-reunification-pains-inform-stance-on-greece.html?pagewanted=1&gwh=F8C98BC88A2B52ABC6CBD63C0997B2FC&ref=global-home, 26/05/2012]

So to create a united Germany cost $2 trillion over 20 years and has not had the perfect effect (but Germany is still the dominant economic force on the European mainland), and the IMF may be hiding the fact that Europe will need $9 trillion this year alone just to bail out banks and not explicitly for growth!

I am wondering if all this talk about Eurobonds is to lay blame for a possible engineered collapse of Europe on Merkel, knowing that it would take an awful lot to persuade Germany to agree to Eurobonds.