Dog and pony show and tell. One of the charlatans finally told the truth. The ridiculous charade of worthless government guarantees has finally been exposed by a key player.
From Peer Steinbruck, former German Minister of Bailout Propaganda:
- "To this day, I'm surprised that the lawmakers never asked: For God's sake, what exactly have you done?"
More color from Der Spiegel's interview with Peer Steinbruck (read his comments on Paulson), who reveals in great detail how government backstops, guarantees and bailouts are actually made up on the fly, intentionally ambiguous to create the illusion of greater strength, of dubious legal construct, and when they work, the bailout propaganda ministers are themselves surprised by the success of their empty rhetoric.
You knew this already but you're just the audience. Steinbruck is the first of the actors to come clean on the staged deception.
Brilliant video is at the bottom of the story.
---
SPIEGEL: The credit business came to a standstill after the Lehman bankruptcy, and confidence in banks evaporated, even in Germany. Were you worried that the system of monetary transactions could collapse?
Steinbrück: There was palpable uncertainty, and people began withdrawing their money from the banks. This reduced the lenders' liquidity, which in turn undermined confidence in banks. A vicious circle threatened to develop, which is why Chancellor (Angela) Merkel and I finally decided to make our now-famous statement that all savings deposits would be guaranteed by the state. It worked. Don't ask me what would have happened if it hadn't worked.
SPIEGEL: But we are asking you. What would you have done if the guarantee had come due?
- Steinbrück: We would have tried to pay up, of course. But we would have had to ask the parliament to approve the necessary funds. If they hadn't lived up to our commitment in such a situation, Germany would have been plunged into chaos.
SPIEGEL: But the amount guaranteed would have come to hundreds of billions of euros.
STEINBRUCK: Possibly. That's why we concentrated our pledge on savings deposits. Although we did, on the Sunday in question, prudently leave it somewhat unclear as to what exactly was meant by the term savings deposits.
SPIEGEL: It's been said that Merkel wanted to issue the guarantee on her own at first, without your support. Is that correct?
Steinbrück: There was a little back-and-forth on that day. It is true that Merkel wanted to appear before the cameras alone at first. But then, I believe, the then-cabinet spokesman Ulrich Wilhelm made it clear to her that she had to appear with the finance minister in that sort of situation. The overall impact would have been lost if we had turned the statement into a coalition issue. Ms Merkel was certainly receptive to such arguments. It took about five minutes, but then it was clear that we were going to do it together.
DB interruption. Here comes the money quote:
- SPIEGEL: In that moment, were you actually aware of all the consequences of the statement?
- Steinbrück: We knew that we were skating on thin ice. To be frank, we lacked the authority to make such a statement. There was no legal basis or parliamentary support. To this day, I'm surprised that the lawmakers never asked, after the fact: For God's sake, what exactly have you done?
SPIEGEL: The state guarantees saved many banks from failure. Did the banks ever thank you during that period?
Steinbrück: There was no gratitude, just recognition, if anything.
---
A genius video if you've not seen it before.
Clarke & Dawe on the insanity of bailouts among bankrupt nations.