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Angela Merkel Will NOT Lose Germany’s AAA Status Before Her Re-election

Politics / Eurozone Debt Crisis Aug 02, 2012 - 07:33 AM GMT

By: Graham_Summers

Politics

Best Financial Markets Analysis ArticleHere’s a story you might not have heard… In some areas of Germany, you can once again use Deutsche Marks as legal tender:

Who Needs the Euro When You Can Pay With Deutsche Marks?

Shopping for pain reliever here on a recent sunny morning, Ulrike Berger giddily counted her coins and approached the pharmacy counter. She had just enough to make the purchase: 31.09 deutsche marks.


They just feel nice to hold again,” the 55-year-old preschool teacher marveled, cupping the grubby coins fished from the crevices of her castaway living room sofa. “And they’re still worth something.”

Behind the counter of Rolf-Dieter Schaetzle’s pharmacy in this southern German village lay a tray full of deutsche mark notes and coins—a month’s worth of sales.

Germans have yet to give up on the euro. But as Europe’s debt crisis rages on, many are indulging their nostalgia for the abandoned mark by shopping with it again—and retailers are happily going along.

As defunct currencies go, “die gute alte D-mark,” or “the good old D-mark,” as it is still affectionately called, is far from dead. Germans officially traded in the currency for euro bills and coins on Jan. 1, 2002, and the mark immediately ceased to be legal tender. But 13.2 billion marks—worth €6.75 billion ($8.3 billion)—remain tucked in mattresses, old prayer books, coat pockets or otherwise in circulation, according to the Bundesbank, more lucre than the euro bloc’s 16 other ex-currencies combined.

http://online.wsj.com/article/SB10...

My question to investors today is…why would Germany start allowing Deutsche Marks to be used again? Moreover, if Spain and Greece are on the brink, why has Germany refused to increase the funding of the EFSF and ESM bailout funds AND tied up its ratification of the ESM in legal proceedings that won’t even begin until September?

The answer is simple: Germany knows that the game is up. Its best bet is to put off the implementation of various bailout funds (for legal reasons) while looking as though it wants to help… and let the EU crash and burn around it.

Consider the following stories:

            Top German court to announce ESM ruling Sept. 12

Germany’s Federal Constitutional Court will announce a decision on lawsuits challenging the country’s participation in the permanent euro-zone rescue fund, the European Stability Mechanism, and the fiscal pact on Sept. 12, the court said Monday in a statement on its website. The court held a public hearing earlier this month to examine complaints that participation in the fund and the fiscal pact violated German law by taking some authority over the national budget away from parliament.

http://articles.marketwatch.com/2012-07-16...

German court dumps election law that favored Merkel

Indeed, if we read between the lines of the political proceedings coming out of Germany

Germany’s top court ruled on Wednesday that the country’s election law is unconstitutional, leaving Europe’s biggest economy with no valid rules on how to distribute seats in the Bundestag lower house just over a year before the next vote.

The Karlsruhe-based Constitutional Court upheld a case brought by the opposition Social Democrats (SPD), the Greens and more than over 3,000 citizens against the law, which was altered by Chancellor Angela Merkel’s center-right coalition last year.

Germany’s complex system, which can end up creating extra or “overhang” parliamentary seats that benefit the bigger parties, breaches citizens’ rights to take part in direct, free and equal elections as enshrined in the constitution, the court said.

Merkel’s government, preoccupied with trying to stem the euro zone debt crisis, now has to come up with a new law by autumn 2013, when the next federal election is due.

http://www.chicagotribune.com/news/sns-rt-us...

Europe is imploding and Spain is so desperate for cash that its Finance Minster flew to Germany to meet in private with German officials, begging for €300 billion… and Germany won’t vote to even ratify the ESM, let alone raise capital for it until September 12!?!?

On top of this, Germany suddenly decided that its election process is unconstitutional and needs to be revised? Why now? Aren’t there more pressing issues such as the implosion of the European banking system? (remember, Germany has already created a firewall around its own banks… read the former issue titled, Germany: The Smoking Gun)

To me the message is clear, Germany is going to do all it can to appear ready to help, but it will forestall any actual helping, especially if it involves increasing Germany’s exposure to the PIIGS (note: Merkel stated that there would never be Euro-bonds for as long as she lived).

This is not political posturing. Germany has already brought its own solvency into question (see the Moody’s warning) by propping up the EU. Angela Merkel is not going to lose Germany’s AAA status the year before she’s up for re-election.

So don’t count on Germany to come to save the day. Look at the country’s actions, not what its leaders are saying. The writing is clear here.

Those investors looking for actionable investment ideas could also consider our Private Wealth Advisory newsletter: a bi-weekly detailed investment advisory service that distills the most important geopolitical, economic, and financial developments in the markets into concise investment strategies for individual investors.

To learn more about Private Wealth Advisory and how it can help you navigate the markets successfully…

Click Here Now!!!

Graham Summers

Chief Market Strategist

Good Investing!

http://gainspainscapital.com

PS. If you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.

I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).

Again, this is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com and click on FREE REPORTS.

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

© 2012 Copyright Graham Summers - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Graham Summers Archive

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