". . . a republic, if you can keep it."
Segregation is much more civilized than imprisonment.
Holland’s capital already has a special hit squad of municipal officials to identify the worst offenders for a compulsory six month course in how to behave.
Social housing problem families or tenants who do not show an improvement or refuse to go to the special units face eviction and homelessness. 
(Read more)
Despite the fall in the gold price this week, those thinking to buy gold bullion have been buoyed by talk of Germany auditing and repatriating their gold reserves held abroad. Below, Jan Skoyles looks at what this mean and says about the country.
This week few will have missed reports that Germany is getting closer to bringing its gold bullion reserves home. Following questions asked in Parliament earlier this year regarding the 3,396 tonnes of gold bullion, federal auditors have now instructed the Bundesbank to regularly inspect the gold bullion reserves held in the US Federal Reserve, Bank of England and Banque de France.
Der Speigel also report that the Bundesbank is planning to ship 150 tonnes of the gold reserves from the New York Federal Reserve back onto home soil, over the next three years. It is also only now becoming clear that the Bundesbank reduced 1,100 tonnes of gold holdings with the Bank of England to 500 tonnes between 2000 and 2001.
The mainstream media coverage of Germany’s actions regarding their gold reserves seems to have an underlying accusatory tone to it. It’s almost as if by the Bundesbank openly admitting it is looking out for its own finances, for its own country and its citizens, it is being unpatriotic to the global cause of pretending that a highly leveraged, fiat money, banker-centric, government-spending driven economy is exactly how things work best.
Germany isn’t the first country to ask questions about its gold, let alone repatriate it. Switzerland is also raising plenty of questions and Venezuela finished repatriating their gold earlier this year. So what does repatriating the country’s gold say about the sovereignty?
1. Changing geo-political landscape
There are two geopolitical reasons for a country taking custody of another’s gold; the first is for ease of transport for payment purposes, the second is to protect the gold from geopolitical risk.
The ease of transport for payment purposes can be argued to still be a relevant reason, particularly given moves by China, India, Russia and Iran to make gold payments for oil and wheat. However, the chances of the US, UK and France demanding payments in gold in the near future as they desperately try to prop up their own currencies is unlikely, particularly as Germany is a successful export nation to these countries. This was one of the reasons for Venezuela’s movement of gold into Brazilian and Chinese custody – they’re trading partners with useful exports and are more likely to accept gold.
Germany’s gold was primarily kept in the US on account of the physical threat from Russia. This seemed reasonable at the time; the US was the bigger and lesser of two evils. The big guy in the playground can be an allay, for a time.
Much of Germany’s gold held in the US has never made it to Germany; it started life as German gold reserves in a US vault somewhere. This was on account of the European country running trade surpluses between the 1950s and the end of the Bretton Woods. German gold reserves between 1950 and 1971 went from zero to 3,600 metric tonnes, in the same period US reserves fell by 11,000 tonnes.
But the threat no longer remains, so why hasn’t the gold been moved back to Germany?
2. Do not trust the custodian country to keep track of it when lending it out
Back in the mid-1920s, the head of the German Central Bank, Herr Hjalmar Schacht, went to New York to see Germany’s gold. However the NY Fed officials were unable to find the palette of Germany’s gold bullion. The Chairman of the Federal Reserve, Benjamin Strong was mortified, but to put him at ease Herr Schacht turned to him and said ‘Never mind, I believe you when you when you say the gold is there. Even if it weren’t you are good for its replacement.’
Both GATA and Bring Back Our Gold argue that central banks have either loaned or “sold short” the majority of the country’s gold. As GATA found out between 2008 and 2009 the Fed has gold-swap arrangements with foreign banks but keeps them secret. This practice of loaning out gold is not uncommon; it’s the worst kept secret ever.
. . . .
3. Do not trust the custodian country to protect the value of their own currency
As we said in the first point, much of the gold was originally stored abroad for safe keeping, particularly in regard to storing with the US Federal Reserve. However as two round of QE have shown and the third just beginning, the US aren’t even willing to protect their own assets in the long-term, so are they likely to look after those of another country’s when they realise the rest of the world doesn’t want to use their currency anymore.
. . . .
4. Foresee the need to protect the future of your own monetary system
Germany is the one country in the Eurozone which appears to be reminding everyone of how important it is to return to some resemblance of sound money. In the last few months we have listened to Jens Weidmann, President of the Bundesbank, compare the ECB’s plans to the ‘Faustian Pact’. However, thanks to the undemocratic nature of the Eurozone, fewseem to be listening.
. . . .
5. It’s yours, you want it where you can see it
As we work hard to show here at The Real Asset Company, when you buy allocated gold bullion, you own gold, only you can instruct what should happen to it. The Bundesbank, and Venezuela before it, has done nothing wrong. This is despite mainstream coverage which wants to imply that the Bundesbank’s decision to move 600 tonnes of gold from the Bank of England between 2000 and 2001 was a ‘shock’ and ‘mystery’. . . .
(Read more)
We noted earlier the somewhat surrealistic decision to award the Nobel Peace Prize to the European Union (though entirely consistent it would seem given their previous ‘Obama’ decision) but now UKIP’s Nigel Farage has weighed in with his ‘boots on the ground’ perspective of this farce. “You only have to open your eyes to see the increasing violence and division within the EU which is caused by the Euro project” he said, adding that “the awarding of this prize to the EU brings it into disrepute.” (Read more)
Bernard Arnault, the CEO of LVMH, and the richest man in France, has decided to forego hollow Buffetian rhetoric that paying extra tax is one’s sworn duty, and has sought Belgian citizenship. (Read more)
… in Spain, there are no special taxes or levies specific to the resale of gold bullion. There is thus great potential for gold (and silver) to become a money substitute among the population.
Patrick Barron:
“This decsion is a disaster for the German people and a disaster for the world. The flood gates of unlimited monetary inflation have been opened. German capital will be plundered by its neighbors. This is NOT a victory for Europe but a defeat for the original post war European vision of a peaceful and prosperous Europe. Now it is up to the German people to throw out Merkel and the Euro federalists and return to the original vision of a Europe of free trade, free mobility of labor, and free mobility of capital.”
For the first time, criminal charges have been pressed against a German rabbi for performing circumcisions, a Jewish weekly reported on Tuesday.
A doctor from Hesse filed a criminal complaint against Rabbi David Goldberg, who serves in the community of Hof, in Upper Franconia (northern Bavaria), according to the Juedische Allgemeine weekly newspaper. The chief prosecutor of Hof confirmed that charges had been filed against the rabbi. The charges are based on the controversial decision of a Cologne district court, which ruled in June that circumcisions for religious reasons constitute illegal bodily harm to newborn babies.
“I am shocked,” said Cologne Rabbi Yaron Engelmayer, co-chairman of the national umbrella group of Orthodox rabbis in Germany, in a first reaction to the report. (Read more)
This is worth watching. Philipp is the man when it comes to understanding the EU.
We are told that austerity in Europe has failed. The elections in France and Greece, for instance, are supposedly evidence of people’s opposition to severe cuts in spending. However, the growing anti-austerity backlash against Europe ignores one fundamental point: If there is austerity in Europe, in most cases it hasn’t taken the form of massive spending cuts. (Read more)
In today’s Telegraph, we argue:
‘It will not be the case that the south will get the so-called wealthy states to pay. Because then Europe would fall apart.” Thus spoke Horst Köhler, former German president, finance secretary and IMF head, almost two decades ago.
Köhler’s remarks are worth pondering. A series of multi-billion-euro bail-outs – and more to come – have now planted a north-south political divide at the heart of the European project. Taxpayers in Europe’s north resent underwriting their southern neighbours, while voters in the south are equally frustrated at having austerity imposed upon them from abroad. As has been noted repeatedly, this is the greatest tragedy of this crisis: a project that was meant to bring people together, now risks driving them further apart. Alas, events in the eurozone this autumn could further exacerbate this tension. There are at least five key stand-offs to watch over the next few months:
Greece v Germany: Greece managed narrowly to escape running out of money today by raising almost 4 billion euros in short-term debt. But Athens will face an excruciating autumn. On almost every count, Greece is miles away from meeting its EU-mandated austerity targets, which raises the questionof whether Germany – or the IMF – will pull the plug on the country in October when its next progress report is due.
Though there is still scope for muddling through, almost any outcome will lead to rising political tensions. If Germany sticks to its guns, the popular disillusion in Greece will grow massively. If Berlin gives in, it faces a serious backlash from the country’s public – a majority of which wants to kick Greece out.
Spain v the North: Amid continued problems, Spain could possibly request EU cash as early as September. But the country is simply too big for a Greece-style bail-out, while Madrid would not accept having its economic policies fully decided in Brussels and Berlin. Instead a third way must be found involving less money and softer conditions, probably with heavy and controversial ECB involvement. The North will dislike such an arrangement – particularly cheap ECB money going to Spain – but may give in for fear of worse.
The bail-out funds v national democracy: On September 12, Germany’s constitutional court will rule on whether the eurozone’s permanent bail-out fund – the European Stability Mechanism (ESM) – is compatible with the country’s “basic law’, following a host of complaints. Though unlikely, should it strike it down, the markets will go absolutely crazy. Regardless, the ruling will leave a bad taste in Germany and shows how the ESM is becoming an increasingly toxic issue, with southern and northern politicians disagreeing fundamentally on its size and whether it should be given a direct credit line to the ECB.
The Dutch v Europe: September 12 will also see another example of national democracy reasserting itself: the Dutch elections. Geert Wilders, leader of the super-populist PVV, is seeking to turn the campaign into a referendum on Europe, hoping to tap into the Dutch anti-bail-out mood. At the same time, the Dutch socialists – currently leading in the polls – have vowed to resist both the EU fiscal treaty and further transfers of power to the EU without approval in referendums. A divided Dutch parliament and more assertive government will almost certainly make eurozone politics even more complicated.
Germany v France: This autumn will also see negotiations over whether the eurozone will take the next big leap towards an economic union, with an October EU summit tasked with providing a “road map” for more integration. Ideas include a banking union (with a single supervisor and joint backstop) and collective government borrowing in the form of eurobonds. The issues are tremendously complicated, subject to a cobweb of disagreements and will take years to clear away. But importantly, this could widen the gap between Germany and France, with the two disagreeing fundamentally on the order of events. Berlin wants a political union first, meaning greater German control over others’ finances in return for underwriting them – while Paris wants to press ahead with stronger bail-out mechanisms, via the ECB and others, leaving the oversight for later. The Franco-German axis is not about to break, but maintaining it will become increasingly difficult.
So how should Britain respond to all of this? Simple: try to control what it can control and leave the rest behind. The UK is right to seek to buffer up against a potential euro meltdown. It is also right to look for ways to ensure that further eurozone integration – such as a banking union – is not detrimental to Britain or the single market. But the UK government needs to stop giving unwelcome advice on the need to turn the eurozone into a “debt union” or for the ECB to start spraying the Continent with cheap money – both options effectively involving Angela Merkel completely running over her own voters.
The eurozone crisis has unleashed some seriously unpredictable political forces. EU leaders may have to choose between maintaining the euro and maintaining national democracy as we know it. In either case, we have no idea how voters – in the North and South alike – will respond. (Read more)
Patrick Barron:
From today’s Open Europe news summary:
The Times reports that the continuing eurozone crisis has compelled Royal Dutch Shell to withdraw some of its substantial cash reserves from European banks, intensifying fears of capital flight from the eurozone. Separately, the FT reports that in addition to reducing their net exposure to troubled eurozone countries, US banks have been working “behind the scenes” to ensure that if a country leaves the eurozone, they will not have to receive payments in its new devalued currency.
Times FT
This may be how the euro ends…large depositors and foreign banks pull their deposits, creating a liquidity crisis that the ECB tries to paper over with even more funny money…which merely causes even more depositors to pull their deposits until the euro loses its value completely. This is called an old-fashioned bank run, which exposes the fraud of fractional reserve banking.