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Friday, 29 June 2012

Liberty means responsibility, most men dread it.

Germany has the second largest gold reserve
in the world, but they could become a whole
lot bigger if Italy, Spain, Portugal or
France default on new loans 
“If you put the government in charge of the Sahara Desert, in five years there'd be a shortage of sand.” ― Milton Friedman

The breaking news over night was that a new agreement had been reached between Germany and the rest of the European Union. Germany has apparently shifted position and will no longer demand austerity in return for keeping the other nations afloat. Angela Merkel did not take part in the press conference.

There is clearly something we are not being told and I suspect that once the details emerge we will see that these loans (which will be made directly to banks and not to countries) are secured on whatever assets it is worth stripping from these countries - gold, natural resources, the share capital of the banks themselves.

As we have been reporting for some time this is the end game for Germany, it will probably lose some money but what it will end up with everything worth having and then be able to remove itself from a Euro which will sink as soon as Germany's intention to leave is publicly announced.

The nations of Southern Europe including Ireland and now France too are just not prepared to take responsibility for themselves but like any concerned parent Germany will at some point have to push them from the nest if they will not fly free on their own. Liberty means responsibility and that is why some people just do not want it.

More to follow but as new details are released look to see exactly what is securing these new loans and realise that it is a foregone conclusion that the PIIGS nations and France will default on them, at least this time Germany will get something for its money.

France and Italy both have sizable
gold reserves too 
“Democracy is not freedom. Democracy is two wolves and a lamb voting on what to eat for lunch."  ― Judge Andrew P. Napolitano

Germany is one of the main holders of Gold but following World War II a large amount of it was split between the US, the UK and France and carted off, now the Germans are getting nervous about it.

Speigel reported recently
Germany has gold reserves of just under 3,400 tons, the second-largest reserves in the world after the United States. Much of that is in the safekeeping of central banks outside Germany, especially in the US Federal Reserve in New York. One would think that with such a valuable stash, worth around €133 billion ($170 billion), the German government would want to keep a close eye on its whereabouts. But now a bizarre dispute has broken out between different German institutions over how closely the reserves should be checked.

Germany's federal audit office, the Bundesrechnungshof, which monitors the German government's financial management, is unhappy with how Germany's central bank, the Bundesbank, keeps tabs on its gold. According to media reports, the auditors are dissatisfied with the fact that gold reserves in Frankfurt are more closely monitored than those held abroad.

In Germany, spot checks are carried out to make sure that the gold bars are in the right place. But for the German gold that is stored on the Bundesbank's behalf by the US Federal Reserve in New York, the Bank of England in London and the Banque de France in France, the German central bank relies on the assurances of its foreign counterparts that the gold is where it should be. The three foreign central banks give the Bundesbank annual statements confirming the size of the reserves, but the Germans do not usually carry out physical inspections of the bars.
Germany's gold reserves could soon be growing.