Posted by Karl Denninger
May 5 (Bloomberg) — European Central Bank council member Axel Weber said Greece’s fiscal crisis is threatening “grave contagion effects” in the euro area, justifying Germany’s contribution to a 110 billion-euro ($142 billion) aid package.
Ok, so Germany should bail out Greece because if they don’t, there may be “grave danger.” Got it.
But what does Weber say later?
“The legitimate aim of preventing contagion effects in Europe’s financial system doesn’t justify using every means,” Weber said. “Measures that damage the fundamental principles of the currency union and the trust of the people would be mistaken and more expensive for the economy in the longer term.”
So let me see if I get this right.
Greece lied to get into the Euro in the first place. They engaged in hinky deals with various large banks, including but not limited to Goldman, with the explicit intent (and effect) of falsifying their financials.
The ECB and Euro nations admitted Greece to the union on the basis, in part, of this intentionally false and misleading information. That is, they relied upon materially and intentionally false information, and in doing so harmed themselves as a whole (this is pretty much the definition of fraud, by the way.)
Having done so, and now having the deception exposed, Germany is now being told that even though it did not create the fraud and in fact was harmed by it the German people must pay as a consequence of the fraud, instead of those institutions, nations and individuals who committed it, including those very same large international banks that were involved.
But – the ECB should not, even though it would be difficult to believe that the ECB was not aware of the deception, just as it is nearly impossible to believe that The Fed did not know of Lehman’s deception (other than through willful and intentional blindness.)
Germany should tell the ECB to go screw a goat, withdraw from the Euro and return to the Deutche Mark. Those banks in Germany that were complicit in the Greek cheating should be thrown to the wolves and their executives prosecuted for frauds committed upon the German people.
Under no circumstances should this sort of behavior be rewarded, irrespective of the alleged claimed risks. Yes, there is pain to be taken, but there’s no reason for those who were innocent to pay for the sins of the guilty, especially when one considers that there is no evidence whatsoever that the situation in Greece is stable, that the public will accept it (unless you consider burning banks and rioting “acceptance”.) Worse, there is plenty of reason to believe that Greece is just the beginning of a disintegration of public finances and games played in other European nations, including Portugal and Spain.
Let’s hope the Germans aren’t fools and that they tell Weber to go pound sand.