TOTAL DESPERATION: G20 Asks Germany To Pledge Its Gold For EFSF Rescue Fund – Bundesbank Refuses

In Act of Desperation, G20 Asks Germany to Pledge its Gold for EFSF Rescue Fund, Bundesbank Refuses; Grateful for the Arrogance (Global Economic Analysis, November 06, 2011):

The gall and arrogance of the G20 and Euro-nanny finance minister clowns is staggering.

German newspapers report that the G20 discussed asking Germany to pledge its gold to bail out Greece and the Piigs, and to fund the EFSF.

The Bundesbank, Germany’s central bank said “We know this plan and we reject it.”

One might think that would be enough to stop such idiotic talk, but one would be wrong. In spite of Bundesbank opposition, euro zone finance ministers will discuss the idea next week.

Please consider Bundesbank: central bank reserves will not help fund EFSF

The Frankfurter Allgemeine Sonntagszeitung (FAS) reported that Bundesbank reserves — including foreign currency and gold — would be used to increase Germany’s contribution to the crisis fund, the European Financial Stability Facility (EFSF) by more than 15 billion euros ($20 billion).

The European Central Bank (ECB) would own the reserves, according to the paper, citing sources at the G20 meeting held in Cannes this week.

The Welt am Sonntag newspaper, citing similar plans, said 15 billion euros would come from special drawing rights (SDR) that the Bundesbank holds.

G20 leaders in Cannes discussed the idea that the European System of Central Banks could pawn their total foreign exchange reserves of 50-60 billion euros to a trust of the European crisis fund in the form of special drawing rights from the International Monetary Fund (IMF), the newspapers said.

“We know this plan and we reject it,” a Bundesbank spokesman said.

The newspapers had said the issue was taken off the agenda at the G20 following Bundesbank opposition but that it would be debated on Monday at a Eurogroup meeting of euro zone finance ministers.

Grateful for the Arrogance

In spite of the stupidity of discussing something that is not going to happen, here are three reasons to be grateful they did.

  1. The proposal highlights the desperation, blatant arrogance, and sheer pig-headedness of the G20 and Eurozone finance ministers.
  2. The proposal shows that gold is money.
  3. Sooner or later, one of these asinine proposals will will cause Germany to realize the EMU is a lost cause. The sooner Germany realizes that, the better off everyone will be.

ZeroHedge addresses the question why will this be debated?

Why will it be debated? Because when at first you don’t succeed, try, try again. Germany may be crossed off the list, but here is who is next in order of appearance. Sooner or later, Europe will stumble on that one “leader” whose gold is less valuable than their political stability.

If France and Italy want to expand the EFSF, why don’t they pledge their own gold rather than asking Germany to pledge its gold?

One possible answer is that any country dumb enough to pledge its gold will very quickly lose its AAA rating. However, the Euro-nanny finance minister clowns are probably not bright enough to figure that out.

Mike “Mish” Shedlock


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1 thought on “TOTAL DESPERATION: G20 Asks Germany To Pledge Its Gold For EFSF Rescue Fund – Bundesbank Refuses”

  1. Excellent article, thank you. Since the crash began in 2001, I have followed the money. Enron accounting was unveiled when it collapsed. I Googled it the other day &found the definition carefully cleaned up. Moodys exported Enron accounting practices around the world to all nations and banks. We are in the process of a global economic collapse.

    Enron would take $100 million of debt and move it into a shell corporation listing it as an asset instead of a debt. The debt didn’t show on their balance sheet that way. Next, the shell corporation would give Enron huge work orders they could show as income. It worked until the market went down.
    Normal procedures for banks and governments today is to take $100 million and leverage it into $100 billion, 1000:1.
    The entire global economy averages $50-65 Trillion a year. The real numbers are probably a third of that at best, most exists only on paper.
    The shadow banking on Wall Street alone, CDS, Hedge bets, etc, is estimated between $600-800 Trillion a year!
    In the European deal that collapsed last week, one condition was all banks must have 9% of their so-called balance sheets on deposit. The banks would have had to borrow the money, that is how bad it really is….the leveraging is too deep, far beyond redemption.
    In 1929, one could open a brokerage account & leverage $100.00 into $190.00 worth of stock. That worked until the market went down, the margin calls came, investors raced to the banks to draw out the necessary funds only to find the banks didn’t have the money. The run on the banks was on & they rightfully collapsed.
    In 1929, our money was backed with gold, we were the world’s largest lending nation and an emerging mfg power. Today, the opposite is true.
    The same crooks who caused the worst global economic collapse in history are the only ones getting bailed out on the backs of workers all over the world. It is an expanding global corporate oligarchy, the only growth is debt packaged in austerity measures sure to fuel revolution everywhere. This cannot go on much longer. People all over the world are waking up and they don’t like what they are seeing and experiencing.
    Thanks for a great report!
    Marilyn Gjerdrum


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