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The Bailout Emperor Has No Clothes

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 fundsIf 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.






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Reader Comments (15)

Joe Cassano is a very good liar, which is why it would be so hard to prosecute him for perjury. When testifying before The Financial Crisis Inquiry Commission, the former head of AIG Financial Products kept blending in half-truths with his audaciously dishonest claims, so that the overall effect was nonsensical. For instance, to justify his outrageous claim that, "the books were generally considered fully hedged," he explained that "we were using it basically in actuarial basis ...[so] it's not hedged in the conventional sense." (Translation: The book was never hedged in any sense. Nor was there any actuarial analysis, only a reliance on triple-A credit ratings.) These rhetorical tricks were designed to throw sand in everyone's face. But his tactics seem to have worked. The staunchly unregenerate Cassano framed a media narrative that deflected away from his dishonesty and gross incompetence.

Here's a reality check on some of his more ridiculous claims, in order of appearance:

Sep 28, 2010 at 6:34 AM | Registered CommenterDailyBail
Third Of Americans Can't Get Mortgages As Interest Rates Hit Record Lows: Zillow


So hard to qualify these days...even with 25% down...
Sep 28, 2010 at 6:35 AM | Registered CommenterDailyBail
WASHINGTON — Banks will have to share in the risk when they sell investments of the kind that rocked the financial system in 2008 under rules adopted Monday.

The Federal Deposit Insurance Corp. is requiring banks hold at least 5 percent of the securities on their books, as part of new rules the regulator adopted Monday that were required under the new financial overhaul law. Banks would be required to purchase their share of the securities beginning Jan. 1.


Bg f**king deal...5%...like that will stop them...
Sep 28, 2010 at 6:36 AM | Registered CommenterDailyBail
Bank Of America Stands Out For Poor HAMP Performance

Sep 28, 2010 at 6:37 AM | Registered CommenterDailyBail

When Fed Signals Stimulus, It's 'Balls To The Walls,' Says Hedge-Fund Manager (VIDEO)
Sep 28, 2010 at 6:42 AM | Registered CommenterDailyBail
Even as the economy continues to grow, unemployment could rise over the next year to as high as 10.1 percent, according to a new paper by the San Francisco Fed (hat tip to the Wall Street Journal).

Sep 28, 2010 at 6:42 AM | Registered CommenterDailyBail
Bg f**king deal...5%...like that will stop them...
O touché, mon frère!
Sep 28, 2010 at 9:35 AM | Registered CommenterDr. Pitchfork
Nice write-up on this, DB. Pitchfork just bangs it out on the keyboard and serves it up raw, but you've got style.

"You knew this already but you're just the audience. Steinbruck is the first of the actors to come clean on the staged deception."

Sep 28, 2010 at 9:40 AM | Registered CommenterDr. Pitchfork
I talked to TIMMY & BENNIE & will be receiving a bailout check Friday.Think I'll open a bank.
Sep 28, 2010 at 10:56 AM | Unregistered Commentertrod
Thanks pitchfork...i'm still shocked that steinbruck would be so honest with Der Spiegel...
Sep 28, 2010 at 11:42 AM | Registered CommenterDailyBail
Fractional private banking ruins every country in which it is introduced through the concommitant usury imposed - and it is inherent in the design by the banksters that the wealth of the nation ends up in the top .01% of the population over time.

The plan is a ruling oligarch elite and serfs (the rest of us). But an awakening is percolating through Iceland, Greece, Spain, Italy, Ireland and futher where THE PEOPLE are beginning to say NO to the IMF "bailouts" which are actually real wealth strip-mining of a country after creating fiat out of thin air, loaning it at interest (the sum of the two never existing, yielding debt by the country parasitized.

Jun 27, 2011 at 7:03 PM | Unregistered CommenterMouser
Let's eliminate all GOV'MENT regulation on private business. GO FREE ENTERPRISE!!!

Some need a job here. Screw Em let them move to Singapore.

Jun 27, 2011 at 7:18 PM | Unregistered CommenterTR
D.B., looks like Huffington saw you coming and ran, a mark of achievement and you are to be congratulated. Nothing like exposing stuffed shirts. Huffington post is the Milli Vanilli of the news industry/web. It is a relief to see signs that the royal colony/fiat banking at gunpoint profession is losing its teeth.

We must remember that an animal is most dangerous when it is backed into a corner. I, personally, believe that 9-11, the ARM banking fraud and robo-repos and Hillary as amazon are symptoms of this. Hillary has had 'pirate' training. Also, when we examine who sited and licensed the Fukushima plant and pointed the finger at TEPCO, we see this. The intentional DH oil well blow out and the recent series of HAARP attacks also stem from old world sources and authority, with domestic implementation. Search Dimona dozen v. Fukushima 50 (interview and website 1:52;30)and review dutchsinse.com before watching this fellow, dutch, document the creation of radical weather events. The History channel ran a documentary called 'Weather Wars? That's not Possible' which explains how they do weather manipulation more extensively. HAARP's original mission statement was for weather control. England owns HAARP-Alaska and most of the world's uranium mines.
Jun 27, 2011 at 8:12 PM | Unregistered CommenterHoward T. Lewis III
@TR, Goldman made the same threat in Britain last year.... If they didn't get their way (Surcharge on bonuses) they would move

.....drumroll please..... 1000 jobs to Spain.

Jun 27, 2011 at 8:24 PM | Unregistered Commenterjohn
Take the jobs, we are the Americans; we will make more. But, you take your whole fucking company, not just the jobs . We are nationalizing everything you can't pack in a shoebox. You have 72 hours to vacate Tinman Sucks; Lord of Flies and Scat. Send that to Ron Paul to promote!

Jun 27, 2011 at 10:02 PM | Unregistered CommenterGhana

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