What will germany do mauldin

Having moved away from the United States and de-emphasized military power in the rest of the European peninsula, Germany could find itself in its old position: vulnerable to Russian power, but without allies against Russia. But it is part of an ongoing process. As the international reality shifts from what Germany needs, Germany must find another path. In the short term, the United States is vulnerable to a cyclical recession, and hostility toward Germany is increasing in Europe—particularly in Eastern Europe.

China is facing internal challenges of its own. There are few other options than Russia, and Russia is historically a most dangerous option for Germany. The World Explained in Maps reveals the panorama of geopolitical landscapes influencing today's governments and global financial systems. You won't find political rhetoric or media hype here. The World Explained in Maps is an essential guide for every investor as takes shape. Get your copy now—free!

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Marketing Cookies These cookies track your online activity to help our advertisers deliver more relevant advertising. I wrote about the inherent weakness of Europe in my free e-book, The World Explained in Maps , which you can find here Poland and Germany have butted heads over the tension between the right to national self-determination and EU rules. In exchange, Russia can offer raw materials and a workforce. Graham Summers: Collapse of Europe is Guaranteed!

Words: One of them is higher inflation…[which] is going to be very positive for gold… because the central banks will be under pressure to print. When the supply of something is increased sharply relative to demand, the value of that commodity will decline. Nouriel Roubini has outlined a very clear plan for restructuring.

It is not without pain, but there are ways, if they can join what Greg Weldon calls a twelve-step plan for European bankers to deal with reality. Sidebar: for the record, there are reportedly massive bank runs in Greece, especially on large uninsured deposits.

It is hard to understand how people can ignore what I think are clear warning signs, but the following analysis shows us the process. My good friend and early mentor Dr. Gary North wrote a poignant piece in his Reality Check letter today about ignoring the signs of pending problems. I insert it here as the launching point for the close of the letter. On 30 January, Hitler became Chancellor. He asked Hindenburg to dissolve the government and schedule new elections for March 5, which Hindenburg did.

Maybe not. Maybe after the next election, the Nazis would have been defeated. One man did it, who admitted he had done it. Hitler immediately identified him as a Communist, although even today, it is not clear that he did anything but act alone. The Nazis did not have a majority. They had only a coalition majority. It took a two-thirds vote to do this. Hitler now possessed dictatorial powers. He had attained these by means of support by rival political parties.

Was it time to pack those bags? This was not government-directed. It was only symbolic. They made it illegal for Jews to be citizens. But that was only politics. How many votes did Jews have, anyway? Politics isn't everything. Between and , about half the Jews in Germany emigrated: , But half did not.

Most Jews sat tight until very late. He looked at the map. He concluded that the Nazis would wind up running Austria. Hitler was an Austrian, and he would want to control Austria. He packed his bags and took his first salaried teaching position, a job in Geneva, Switzerland. He warned Jewish friends to get out.

Economist Gottfried Haberler did, in Economist Fritz Machlup already had. He fled in Well, not quite. He was in the United States in , and he decided not to return to Austria. Both men found safe havens in the United States. So did Mises in , when he left Switzerland, barely escaping German troops in France as he and his wife road a bus toward Spain, and from there to Portugal and the United States. The gun was loaded. Then the hammer was cocked in March: the Enabling Act. They shall take effect on the day following the announcement, unless they prescribe a different date.

Articles 68 to 77 of the Constitution do not apply to laws enacted by the Reich government. The language was so procedural. But there was substance to it. Others do not. Some decide to get out while the getting is good. Most people ignore them. Sometimes it does. This is the sort of pressure point capable of triggering a liquidity panic unless Euroland policymakers become much more proactive in the interim. But, as noted, it may take more market stress now to force precisely this sort of policy response.

That implies a much greater correction for the euro against the US dollar than what has been seen thus far, and a further correlated sell-off in risk assets, including commodities Chris Wood, writing in Greed and Fear.

There are just so many risks in Europe that it is hard to make a list long enough. I think the risk to the world markets is higher than the subprime risk, at least from what I can see today. So did Bernanke in the summer of You cannot contain this until you actually admit the problem. Our credit institutions are so intertwined that a repeat of the credit crisis is entirely possible. Who plays the role of Lehman? Let me count the candidates.

The ECB. If it were not for interest, they would have an actual government surplus. While they are making progress, a European recession is not going to make it any easier.

Let's move on from Italy. Let's consider France. They just had an election, and to no one's surprise they voted a Socialist into the office of president. And it appears likely he will get a majority in the legislative branch as well, giving Hollande control of the government. And whatever he decides, he has no easy task. Not all of that requires France to make the interest payments, but just to cover any losses in case of a default.

And their problems are not a short-term cyclical issue. They have committed to relatively larger entitlements and pensions than even here in the US! And those bills are coming due in the same time frame as in the US. It does not get any easier, and the French are notoriously unwilling to accept cuts in pensions or labor conditions. Want to touch agricultural subsidies? Just saying. France has not balanced its budget since Hollande campaigned explicitly on an anti-austerity platform.

Angela Merkel campaigned for his opponent, Sarkozy. Not exactly the basis for a lasting friendship. And the rest of Europe is watching closely to see how this all works out.

What will Germany do? Louis Gave living in Hong Kong but still very French writes:. Fortunately, the head of the IMF happens to be French, though this may be a double-edged sword, as Christine Lagarde cannot be seen giving France a privileged deal.

In light of this rhetoric, and his promise of more spending, it is hard to think that Hollande and Angela Merkel will become fast friends. Meanwhile, Hollande's promise that his first act will be to pull France's troops out of Afghanistan is unlikely to endear him to the US administration.

In short, France will soon need friends, but those may be as rare as an interesting French presidential candidate. Meanwhile, we have to hope that, like Groucho Marx, Hollande is a man who will declare 'These are my principles and if you don't like them, I can change them.

France has enviable economic strengths: an educated and productive workforce, more big firms in the global Fortune than any other European country, and strength in services and high-end manufacturing. France has not balanced its books since The banks are under-capitalized. Exports are stagnating while they roar ahead in Germany. France now has the euro zone's largest current-account deficit in nominal terms.

Perhaps France could live on credit before the financial crisis, when borrowing was easy. Not anymore. Indeed , a sluggish and unreformed France might even find itself at the center of the next euro crisis. Look at this graph for Societe Generale:. While French banks are not the problem that Spanish banks are, they are far larger relative to the size of their home country.

Even a small problem can be large for the country. And French banks have very large exposure to European peripheral debt. A default by Spain would push them and a lot of other European banks over the edge. Which is one reason that Sarkozy was so loudly insistent that any bank problems should be treated as a European problem and not the problem of the host country.

Interesting idea if you are Irish! France simply cannot afford to deal with any problems in its banks while it is running such large deficits. And not while it is guaranteeing all sorts of European debt, which is at the heart of the problem. Germany needs France to help shoulder the financial burdens of Europe.

But if France loses that rating, then any European debt it guarantees clearly loses that rating as well. When you look at the actual balance sheet and total debt, France is not all that far from further downgrades, unless it embraces a new budget ethic, which is precisely what Hollande has said he will not do. That would be a real crisis for the eurozone.