Thursday, March 28, 2013

----- Error in the story ---- see below

 Update: I made a unexcusable mistake. Lucke was interviewed in 2012 as a Professor and not as a party leader. The soft stance of the FAZ is due to that not as I claimed growing standing of the party.
 I apologize.

The head of the German euro-sceptic party AfD Prof. Lucke, said in an interview with the FAZ that he thinks, Greek "bankruptcy is perhaps only a matter of weeks" away. Of course he might hope that this is the case, but it seems utterly unlikely, since the Cyprus disaster should have woken everybody in charge up to the fact that even the smallest member states are important, when it comes to the often mentioned "confidence".

More important than what he said, was the tone of the interview in my opinion. A few weeks ago the party was portrayed as right wing travesty. I wrote (see first link):

This one bulletin point party is and will be irrelevant. But it got the media in Germany all dizzy, because some right wingers also want the Deutsche Mark back and therefore AfD is Hitler or something. Also it is dangerous, naive and have I mentioned Hitler?

Just a Reminder

"Merkel is Hitler" is not an argument, "Merkel is just like Hitler" is also not an argument. This nonsense - in German eyes - just destroys any justified criticism you might have had. The only result you will get is a massive push back. Looking through the letters to the editor in a newspaper today, I only found people defending Merkel. Not one talked about policy. They were all about various Nazi nonsense, and some called for an end to all help, with others going so far to call for a break up of the EMU.

This reaction should be expected by anybody who has ever discussed on the internet or in general. You call one side Hitler and no matter what your other ideas were, this is the only thing that will be remembered. For example Juan Torres López had in his comment some interesting and discussion worthy statements. He also compared current German policy to Hitler's. See for yourself what happened.

So should your plan be to cause an end to the EMU, by decreasing German support, then you are on the right path, if you call Merkel Hitler. If not you are doing it wrong. How come people don't get, that if you demonize the other side, they will push back equally hard.

Wednesday, March 27, 2013

Bavaria and Hesse no Longer Willing to "Bailout" Other German States

Germany has a system of several mechanisms to ensure that similar standards of living can be achieved in all states. One of these is the "Länderfinanzausgleich". The system is rather simple at first glance: stronger states have to pay, weaker ones receive money. Bavaria and Hesse believe, that the current system is unconstitutional and therefore this week decided to file a suit before the Constitutional Court (Bundesverfassungsgericht BVerfG). Some believe, that this is just a maneuver before the election, so it might matter for European rescues, also.

Tuesday, March 26, 2013

BMW i3 Pure Innovation?

File:BMW i3 Concept IAA.jpg

Something different. I like where BMW is going with their i3. Here is what I think about it:

The new compact BMW i3 model is a step forward for the company. The electric drive car will be available this Autumn. But it is not only BMW's first series produced electric car, it also introduces carbon-fibre-reinforced polymers in an industrial scale. The company risked a lot and here is why I think it will pay off.

Monday, March 25, 2013

NSU Terror - Just Another Mess Up

Next month the trial of the last surviving member and four helpers of the nazi terror group NSU begins. They murdered 8 small business owners of Turkish descent a Greek and a German police officer. No Turkish newspapers are allowed in. According to Sueddeutsche there are only 50 seats for journalists. The first ones to answer got the seats. Almost only Germans. I have written about the others so this was stupid, but probably the smallest mistake in a long history of messing up.

Just Can't Make This Up

One gets up in the morning, thinks that everything is messed up enough. Checks German papers: nothing new. Goes to Reuters and things go from ugly to crazyland.
Really, this is just madness:

No one knows exactly how much money has left Cyprus' banks, or where it has gone. The two banks at the center of the crisis - Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus - have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which put no restrictions on withdrawals in Russia.

It was all for nothing? Because of something so large  that cannot even be considered a loopholeNow I have mentioned that I thought the whole handling of the crisis was aweful, but I never expected this.

This is, in my opinion, the fault of the Cyprus government, well at least partly since they are only in office for a few weeks, and it will damage their own population, depending on how much money "left" No matter how much money was taken out of the bank accounts this just makes everything worse.

Dijsselbloem Attempting to Cause More Damage

Update: in an attempt to make things even worse, there is now a half-assed denial by his office:

Cyprus is a specific case with exceptional challenges which required the bail-in measures we have agreed upon yesterday.
Macro-economic adjustment programmes are tailor-made to the situation of the country concerned and no models or templates are used.
This doesn't deny what he said earlier.

He stated that in fact they are from now on looking at uninsured deposits before forcing the tax payer to step in. He also said that there would be no guarantee for any further rescues. It is in fact a non-denial. Just stuff that has nothing to do with the important things he said. Look I just have to delete a question, and three words; and my first comment remains correct.


Just a short note - according to Spiegel - Dijsselbloem decided it was about time to cause some more damage. Cyprus as role model for other rescues? So dear depositors in other countries that might face a new bailout, it is safer to get your money out of the banks.

Excellent plan there buddy. Why don't you just step infront of the press, that you want to end the Euro. This is exactly what your statement  really means. How is such madness even possible? Messing up royally as a rolemodel? Good night Euro!

Oh look I am being sciency

Update: the first title sucked and was unfair so i chnged it. 

While looking for comments on the Cyprus "deal", I stumbled across a "feminist" piece by Julia Voss on Archaeological and Biological anthropology. It is one of the most blatant examples of anti science literature - outside of religious fundamentalism - I have seen. The whole thing comes down to this:
Man are hunters, women gatherers? What nonsense.
 Even the arguments she uses in the beginning seem to be right out a creationist textbook.  Something about dinosaurs, science is changing therefore in the end our "science" will prevail. The only real difference I made out is, that she seems to think science is lying because of an evil patriarchy and not because it is evily anti christian.

The whole article boils down to a fundamental misunderstanding as to what the scientific method is. It is nothing but an attack at a straw man as I will show below the fold.

Cyprus Deal in the German Media

The day after the Cyprus "bailout/in", the German Media has a few comments to make:

Spiegel sees risk on the horizon. I personally agree with most that Stefan Kaiser wrote. But, there is something he gets wrong though (all my translations):

The only good thing in the Cyprus drama: It shows, that one can unwind an important bank and shrink another, without the financial markets going crazy.
No it does not show that at all. Compared to Cyprus' economy those banks where huge, but they have less total assets than Deutsche Bank has core tier 1 capital. These banks were important for the island only, in the grand theme of things, they just don't matter.

Sunday, March 24, 2013

Cyprus Deal

A deal seems was reached between Cyprus, the troika, and the financial ministers of the Eurogroup. According to Bloomberg the deal

which is not yet final, calls for Cyprus Popular Bank Pcl (CPB) to be shut down and split. The Bank of Cyprus Plc would take over the viable assets of the failed bank along with 9 billion euros in central bank-provided emergency liquidity aid, according to three EU officials who asked not to be named because talks are ongoing.

The haircut for deposits above € 100.000 will be 40 % at Bank of Cyprus, while Laiki will see most of the deposits above that level wiped out.  There will be no vote in the Cyprus parliament.

I do not see how this alone solves anything at all. With capital controls now in place Cyprus will suffer economically. A lot of people will be unemployed after the shut down of Laiki. Even more will be affected indirectly. The message that deposits in other banks are not save is out there and it will slowly whittle down the bank deposits. Cyprus will now have a much higher debt to GDP ratio. At the same time it will face at least a heavy recession.

The German Government and the Handling of a Different Crisis

At the moment, we are all waiting how the Cyprus crisis will be solved evolve. Since I do not expect a "solution" before later today or even early in the morning tomorrow. I think one should - in the meantime - look at the handling of a different crisis by various German governments. The  Bosphorus serial murders or so called "Dönermorde", and - in my opinion very much connected - the attempts to ban the NPD.

Based on Krugman's headline about Cyprus, I'll ask:

Germany: the Sum of all FUBAR?

Saturday, March 23, 2013

Polls ask: Bank Deposits in Germany safe?

Two different representative polls asked if people in Germany believed that their deposits are safe. No answered 34 % and 42 %.

Perhaps, I have to rethink the Eurosceptic party ideas I had earlier. It might just become a political force if this continues. With Italy possibly declaring next week that no new government can be formed; it does not look like the new acute crisis phase will be over anytime soon.

Cyprus - a few numbers

So the German claim is that Cyprus is in this mess due to its own mistakes. Here are a few numbers to think about:

So one can safely assume that something was wrong with Caprus' businessmodel as Schäuble has. The first error was joining the Eurozone, the second was trusting that the Greek bailout would work, and the third was taking part in EFSF and ESM.
Of course the banking sector is also far too big, but as Icelend shows, the winding down can be handled IF you have your own currency.

So currently the island is planning to make one more mistake: believing that a bailout of Cyprus would work any better, than the other failed "rescues" suggest. They should agree if they want:

- 25 % unemployment
- a never ending depression
- 50 % youth unemployment
- more failed bailouts with ever increasing pain to the citizens

They should leave the Euro if they want any chance of things getting better, anytime soon.

Friday, March 22, 2013

Mad world?

Currently, two different political patterns can be oserved in the western world. On one hand, the inability to make any decision at all and on the other a willingness to not only carry on with failed plans but to ever increase the damage inflicted.

Cyprus last government is a perfect example of the latter. Its banks were heavily invested in Greece, so when the hair cut happened, they were hit hard. The goverment then decided that the state should take over a bank and help others. Which, whith a banking sector 8 times its GDP lead to large increases to it's own debt.

Ireland experiencing a seemingly similar situation, let the government at that time assume, that Cyprus would recieve a comparable bail-out. So it chose a plan, that already had not worked out well for the other devided European island. Still, it would have been acceptable.
Germany, sick and tired of rescues, with a Euro-sceptic party forming, and elections around a corner; just could not tolerate the fact that the bail-out would help Russian oligarchs.So it decided to force a levy on the deposits.

Cyprus new Government is a perfect example of the former. The newly elected government first agreed to the demands, then found out it could not get enough votes in the parliament. So it just could not come to any decision anymore. Then Friday night decided on something, which will likely not be accepted.
 There are only two options (a bank run will happen in either case - capital controls never help):
1) accept the plan, loose large parts of the banking sector, face a depression, stay in the Euro, don't recover
2) decide against it, loose large parts of the banking sector, face a depression, leave the Euro, recover

It is binary and simple, with one comparable example each. Ireland for number one and Iceland for two. The Irish debt to GDP ratio will pass 120 %, its economy can be described with the letter L, unemployment is at 14 %. Iceland will approach full employment in a year, its debt will stay under 100 %, the GDP is growing. The economy, banking sector, and government debt will have to be restructured anyways, either under the German plan to cause pain or on Cyprus' own terms. Still Cyprus is unable to decide.

The US managed to both with the sequester mess. "Hey, let's come up with a plan that is so damaging, that neither party can accept it."And then, of course, they were unable to make any other decision.

But we aren't any better. Germany needs the Euro for the export focussed economy, still the country is unable to decide on anything until it is almost already to late. The decisions taken then seem designed to bring an end of the Euro closer every time. The circle of stupidity, that has taken over Europe.

How is this even possible? Have we all gone mad?

Who said Germans don't have a sense of Humor?

The satire website postillon says Cyprus for sell on ebay.

It is still funny after the google translator had its fun with it.

Household Net Worth - an Attempt at some perspective

Yesterday, the Bundesbank published - among other data - the household net worth, not only for Germany but also for Spain, Italy, France and Austria. Italy has a median household net wealth that is three times higher than that of Germany. This was an attempt at giving some perspective to those numbers, it became something that asks more questions than it gives answers. But, hopefully discussion points that - even though I cannot give a conclusive answer are worth some time.

The Bundesbank survey, interviewed 3,565 households (4,000 planned) face-to-face and computer assisted between September 2010 and July 2011. The German study is part of a wider ECB effort (HFCN), in an attempt to harmonise the the data for all Euorzone countries.

Germany, with a median net worth of € 51,400 per household, was behind the other large countries of the monetary area. With both the crisis countries Spain and Italy coming in at more than three times that number. Comparing the averages, the distance to the other countries is lower, here Spains net worth (€ 285,800) is almost 1.5 times the German value (€ 195,000).

The Bundesbank also provided numbers for east and west Germany. Citizens living in the east have both on average( € 67,500/230,240) and median (€ 21,400/78,900) a significantly lower net worth compared to their western counterparts. Showing that the country is, still, over 20 years after the reunification not at a point of similar living standard in both parts. It is, therefore, best to only compare the west German number to that of the other Euro area countries. Also, it is safe to assume that there is some drag on the west due to measures to help the east. The "Solidaritätszuschlag" (5.5 % of wages), designed to help pay for the reunification costs, affects every German above a certain freshhold, but since wages in the "old" states are higher, it can safely be assumed, that those are more affected. Three states (Bavaria, Baden-Württemberg and Hessen) additionally pay the "Länderfinanzausgleich" which primarily, helps the eastern states.

The by far biggest source of wealth is real estate (average € 168,000 or 86 %). In Germany over half the population does not own a house or flat. In the other countries citizens are far less likely to rent.

The huge difference between the Eurozone countries is in dire need of of an explanation, especially since the GDP (PPP) numbers per capita show a very different picture, with Germany in second place behind Austria. It is clear that this is not a perfect indicator for the standard of living, still these numbers are worth being considered. According to the world bank, in 2011 Germany's GDP per capita in US dollars came in at almost $ 39,500 with Italy and Spain last at around $ 32,600 and $32,000. Disposable income numbers also seem to indicate that Germans could be wealthier.

One possible explanation for the discrepancy, that I have seen, was WWII. Yes the war did destroy a lot of wealth in Germany, both in industrial production capacity and private property but since Austria was less affected, and is at the same level and a similar country to west Germany (France, Italy and Spain [civil war] were also hit hard) one can savely assume that this is not the case.

So, those numbers could just reflect reality or there might be a systematic component that reduces the reported wealth in Germany compared to say Spain. (!) What now follows is purely anecdotal. It is just a personal assumption. It is not evidence. It is just an idea, which I find worth discussing but for now it is only speculation(!)
In Germany there is - in my opinion - a tendency to understate the wealth. The German middle class is reluctant to give an answer in the first place. Often people will not state their income, if asked. Also we likely look to hard numbers. Asking home owners what their house is worth will - in my opinion - likely result in the price they paid not a realistic estimate. These just might be 30 years old numbers. Again, even if directly asked to give an estimate there will in my opinion, be a tendency to understate house price inflation. This might explain some of the difference, since 86 % of the wealth in Germany is in real estate.
On the other end of the equation, Spaniards, for example, might - due to the housing bubble - show a tendency to overstate their wealth.

I have not found the questionaire on the Bundesbank homepage, so I do not know for a fact how or if such a possibility was taken into account. I have also not found a satisfying answer in the published paper, either. If, you find it feel free to contact me and I will update this.

German median household net worth is a lot lower than in other countries, which indicates higher inequality in Germany than in other countries, since the difference between the averages is not as high. This might reduce the will of the Germans to accept further rescue actions. The numbers published by the Bundesbank seem to contradict what GDP per capita indicates. One possible explanation is a different answering behavior of Germans compared to that of other countries.Other possibilites might be:

  • Paying rent reduces wealth so much that the country would have to find answers. This would explain the low median
  • Germans are spending much more than people of other countries. This seems to be contradicted by the savings rate. Only France has a higher savings rate. 
  • Perhaps export orientation isn't such a good business model after all.  
  • Germany is also the country which contributes the most to the EU. But that number does not seem to be significant enough to explain such a discrepancy

Thursday, March 21, 2013

Bundesbank - Household net wealth

According to a Bundesbank study, the median net household wealth in Germany was € 51,400 in the Year 2010. Which when compared to other industrial nations this is rather low. The US had a family net worth of about € 59,000 ($ 77,300/1.3), after plummeting over 40 % compared to before the crisis.According to the Bundesbank the German number compares to other Euro-nations as follows:

Household median net wort            Euro
France 113,500
Germany 51,400
Italy 163,900
Spain 178,300
Austria 76,400
Western Germany 78,900
Eastern Germany 21,400

Some of that difference might be due to different statistics. The low value for eastern Germany can in large parts be attributed to the "Wiedervereinigung" and the main source of household wealth is real estate which is still very cheap in some parts of eastern Germany.

Additionally, the  average net household wealth Spain (€ 285,800) is "only" 1.5 times as large as that of Germany (€ 195,000). An Italian number is not available.

Some good signs

Currently, Spanish and Italian bonds are still unaffected by the situation in Cyprus. I wrote, that this was to be expected. Still I consider it a good sign. Greek 10 year bonds reacted a little but no signs of panic as of now. The Euro is still worth 1.29 Dollars so we can conclude that as of now All quiet on the southern front.

There is a "solidarity fund" planned. What ever that means exactly. It is still unclear if Germany is going to accept it. Reuters quotes a German representative saying that:

The German representative[..]emphasized that "we stand ready to find a solution immediately" as long as the parameters of the bailout agreed among euro zone finance ministers on Saturday are respected.

Which leads me to think that this is increasingly a matter of principle for Germany, because that quote means nothing, Germany basically still says NEIN!(We are prepared for a compromise as long as it is exactly, the plan that you did not get through parliament?!). The Euro-Sceptic party will be extremely happy with any outcome that could still be achieved.

Additionally, Cypriots will not tolerate the banking situation much longer. One and a half weeks (until Tuesday next week)? And no real end in sight? No rescue. No reopened banks.

Planned obsolescence in the Green Party

Edit: A coorporation that was mentioned isn't anymore.

The Greens have published a study which finds widespread planned obsolescence (po). They claim that in order to sell more products, manufacturers deliberately put parts  into their products that will fail shortly after the guarantee ends. I think I can disprove that without even looking at the study. I will just use a bild article about it. I will show that it makes no sense; neither from an engineering point of view nor economically; and will neither help someone who wants to rip of custumors nor a manufacturer, who wants to resell new products faster.

The German word is not the same as the English one. If you look at the English wiki you will find several instances where PO actually does apply. In Germany PO just means making a product, that will fail on purpose a few years in.

In engineering something similar but not sinister is known. In the 19th century after having studied several rail way accidents, August Wöhler found the reason why parts will fail eventhough only loads, so small that there was no permanent (plastic) deformation, were aplied. It is called fatigue. Starting from the smallest material flaws, cyclical loading of parts will lead to ever growing cracks that will ultimately lead to the failure of the device. For example a polished drive shaft will in general survive more cycles that one that has mashine markings on it. Steel, unlike light metals, can be designed in a way that it at least in theory survives an unlimited number of loads.

Green Party members now might ask themselves, why don't we make all parts like this? They might even use more questionmarks to show their frustation (???????). The reasons are simple: the prize increases a lot, making customers less likely to buy. There is a limited design space available, a car for example is usally between 4 m and 5 m (13 ft and 16 ft) long. Also there is a weight limit. Greens might actually find the idea that 20 t cars flood the streets just as stupid as we do. A electric tooth-bruch weighing in at 5 pounds might just not be that practical. Additionally, there is corrosion which will in time reduce the cycles a part will survive. Some people might prefer functioning designs. So for some it might just be more important that an aircraft is able to fly, over an aircraft that is just unable to, but will never ever break. So from a technical perspective it is in most cases just utterly impossible to design something that will be functioning until doomsday. Also, cylces do NOT translate in time. A customer brushing his teeth 3 times a day for 3 minutes will make a product fail faster than a person only doing it before dates.

Economically, it also doesn't make sense to design something that will fail on purpose. The reasons are twofold: 1) Let's take one of their examples: a "milk frother", a simple device that cost only around 7 €. The producer expects 1,000,000 sales. He will be able to sell his product at 4 € and production costs are 3 €, yielding about 1 € in profits (yeah I know he is the best crap product manufacturer, ever). Now, the Green party assumed that he employed several engineers who designed, tested, and simulated the product to make sure it fails after two years. So instead of a designer a test engineer and a boss, working on the project for 3 months to make sure that the product does not fail after a short time, we now have twice as many people working twice as long making sure the product does fail after a certain amount of time (which I showed is impossible). Let's look at profits: at an average pay of 30.000 € p.a. (Chinese engineers and boss), he will be able to keep 970.000 € without PO in profits for the company. Applying PO will reduce that to 880.000 €.

Now the Greens assume the company owner does that, because he thinks, that after the product fails he will be able to sell the "happy" customers his newest product which will also fail within two years. Which brings us to 2): Let's look at that by using a different example they give. Some notebook casings make it close to impossible to clean the cooling fan. I own a A.A. notebook that has exactly this problem. Dirt accumulates infront of the gills. This has already lead to reduced power. I cannot play games anymore that I was able to a few months ago. The Greens make the assumption, that this is done so I will buy a new product faster. Well, this just might happen. I will probably get a new one pretty soon. But two things are 100 % clear. It will neither be an A. notebook nor one, there I cannot clean the fan easily. So actually, if they had done this on purpose, they are rather stupid. Because this also leads to me advising anybody who listens against A. notebooks. I am not the only one, we can savely assume that this happens to anybody using such a device. So this is not PO. This is an utterly stupid design decision which will cost them sales and also damages their brand.

Conclusion: if one buys cheap, he will get a crappy product and he will not buy a crappy product from the same company again. Also, for an engineer it is impossible to design a product that fails after a certain amount of time. PO - as the German Greens define it - is scientifically impossible and damages sales. The party obviously thinks that he who screams the loudest will get more attention. Sadly they are right, because the German "Quality Journalists" just copy+paste without thinking for one second.

Dsiclaimer: there are possibly a few idiot company owners out there who think PO, just like the Greens, makes sense. Those will be crushed in the end. Sadly, this does not apply to the party running around blaming engineers for something that is impossible. But we can safely assume that planned obsolescence makes sense for parties and journalists, since tomorrow then people come out and call them out on their BS they will have moved on. The Greens will haved placed their product in the news and the journalist will have increased their revenue with clicks, by just copy+pasting nonsense.

Wednesday, March 20, 2013

So Cyprus did present other plans

Well, as was to be expected: Cyprus did offer several other plans, how to reach the needed amount without gutting deposits at all. As Spiegel online reports none of those were even considered by the finance ministers and the Troika. Also with Russian help Cyprus expects to come up with a plan to leave deposits below 100.000 € unaffected. Sometimes it pays off to be a cynic.

Cypriots don't seem to like Mondays, next week there will be another holiday. All banks being closed until Tuesday will affect companys. It won't affect confidence in banks though, since it just cannot get worse. The people can get some money so they won't be all cash-strapped.

Still, there are only rumors over a Russian involvement as of now, so we don't know if there is a viable plan B. I think some of the banks will not survive this though. Cyprus has to take steps to regain some confidence in the banking system. Mergers and a bad bank might help. Also the current owners have to be wiped out. A new bank under new management will have the chance to survive. The FDIC can handle this in such a short timeframe. So I hope this could be a first case where the ECB steps up to that.

Sadly a disorderly bankruptcy of the country is not off the table just yet. Tomorrow will bring some clarity as the president Anastasiades will then announce if he has a new plan and how it should work.

A simpler way to solve the crisis.

This will be really short. Let's just assume Europe were a Union. This Union has a entity controlling and in the end liquidating the banks. We shall call this entity EDIC. Here is what would have happened. One Friday evening  about 6 months ago EDIC people would have taken over the banks. Tuesday the bank would have been resold,ropened, and the people with under 100.000 € would have kept all their money. The EDIC employee coming home to the partner would have answered to the question "how was it?" with "not that bad I have taken care of bigger issues."

There wouldn't have been any talks. No stupid name calling afterwards. It would have happened months ago. So why is there no such institution: FinMin Schäuble was against it, Economy minister Rösler was against it, Bundesbank president Weidman was against it, Merkel was against it, the biggest opposition party SPD was against it.

Now. How did your alternative work mister Schäuble? Oh I see it just blew up in your face. Good job.

Tuesday, March 19, 2013

ZEW Indicator of Economic Sentiment - overly optimistic?

The ZEW indicator for economic sentiment has increased again to 48.5. Those are all experts and I am not. To me the slugish new orders and stagnant production, for the whole last year advice against optimism. Read more. But hey unemployment still looks good. So they must be right.


Charles Wyplosz presents Scenarios how Cyprus crisis might pan out

On voxEU Charles Wyplosz presents three scenarios of how the crisis in Cyprus could evolve. A benign one, a less benign one and total disaster.

  • The benign scenario is that depositors in Cypriot banks will accept the tax and keep their remaining money where it is. Depositors in other troubled countries will accept that Cyprus is special and remain unmoved.
  • A less benign scenario is that depositors in Cypriot banks come to fear another round of optimal, time-inconsistent levies. This is what theory predicts. After all, if policymakers found it optimal once, why not twice, or more?
  • The really worrisome scenario is that the Cypriot bailout becomes euro-systemic – in which case the collapse of the Cypriot economy will be a sideshow. This will happen when and if depositors in troubled countries, say Italy or Spain, take notice of how fellow depositors were treated in Cyprus.
 It is a must read. Some aspects are somewhat unlikely in my opinion, though. The benign scenario will just not happen because the foreigners will just look for a safer tax haven. So as I have mentioned this is the first time that it makes sense to stage a bank run for every one, even though it will as always bankrupt the finacial sector. In my worst case scenario there will be worry in Italy and Spain but not a full fledged bank run. More a walk. Something that is controllable. But Greece will possibly face a bank run.

But I think there is a new scenario emerging. One that seems more likely by the hour. The parliament will vote against the bail out and the banks will not reopen ever again, well at least not in their current form. From here on I see two paths forward 1. Having stopped all banking activity might actually prove invaluable. There is a chance to now restructure the banks. Create bad banks, were they put say all the European and Russian deposits and good banks with Greek and Cypriot money. Gazprom might be the entity that makes a orderly restructuring possible.  The problem is that even though as Mr. Wyplosz rightly states, this just cannot be described as an emergency measure NO ONE is prepared. The Cypriot government has only been around a few weeks now. There just isn't any way they made any plans.

Which leads us to 2. Cyprus banks will default disorderly, the hits on deposits will be immense, the government will fail and the island will be forced to leave the Euro without a new currency. Still even in this scenario Gazprom might just be the "white knight" the guy who gets Cyprus's natural gas at a bargain and the island will be scared (There will be a Depression - there are just too many people working in banking) . Should this happen I think a bank run in Greece is pretty likely.

Monday, March 18, 2013

German Euro Sceptic Party

Germany now has its own Eurosceptic party, founded this Year by the journalist Conrad Adam, economics Professor Bernd Lucke and former IBM manager Henkel among others, the Alternative für Deutschland (Alternative for Germany) hopes to get into the Bundestag this September. The primary goal is to end the Euro of course but it is interesting how they want to achieve it.

We want to change the European Contracts so that any state is able to leave the Euro. Every nation has to be able to decide democratically over their currency.
Ok sounds reasonable. A nation can only be considered souvereign if it is able to choose its own currency. Of course this is for them just a means to achieve their goal of ending the Euro. The current plan sounds quite sinister, though:
We want that Germany enforces this right to leave the Euro by vetoing further  ESM loans.
So actually they don't want other nations to decide. Germany - through its power - will help them make this decision. This is also contrary to Lucke's statement that they want an orderly end of the Euro. What happens when Germany threatens its veto can currently be observed in Cyprus and nothing is orderly there.

There are a few more such talking points ranging from reduced EU bureaucracy to a simplified tax code but those wont help the all that much, since Merkel's CDU has either has a similar position or they are just generalities like: "Germany doesn't have enough children. It has to become more child and motherfriendly (sic)."

 In Germany a party has to get at least 5 % of the votes to get into the parliament. At this time it seems unlikely that the party will jump that hurdle. Even if it does AfD will definitely not become part of a coalition, so they will be rather irrelevant. But they might reduce the chances of the smallest partner in the Merkel government the struggling FDP to be in the next Bundestag.Thereby possibly preventing Merkel from being reelected. So we might see the former finance minister Steinbrück as chancellor.

This one bulletin point party is and will be irrelevant. But it got the media in Germany all dizzy, because some right wingers also want the Deutsche Mark back and therefore AfD is Hitler or something. Also it is dangerous, naive and have I mentioned Hitler? But the media also believes that the German economy is ever growing. They just make a habit of being wrong.

Contradicing press releases

Dear IMF,

in the press release 13/79  is stated that:

"Further progress towards a full embrace of a Union-wide approach to financial stability— crisis management, deposit insurance, supervision and resolution, with a common backstop for the banking system, especially for the monetary union is needed to strengthen the ability of the system to avert and withstand shocks."
In the press release 13/80  Christine Lagarde welcomes an agreement which has shown that there is no trustworthy deposit insurance in Cyprus and many think it reduced confidence in deposit insurance in other countries.
So I have four question I would really like answered:
1) Was the IMF aware that the IMF believes deposit insurance "is needed to strengthen the ability of the system to avert and withstand shocks"?
2) If so, why did the IMF welcome an agreement which clearly contradicts the advice of the IMF?
3) Since, the IMF is one of the parties, which showed that it lacks necessary crisis management skills concerning the Cyprus banking situation and caused a deepening of the crisis there, will the IMF advice against participation of IMF officials in future talks to avert shocks?
4) If so, does the IMF believe IMF officials care at all about IMF advice?

Yours Sicerely.

P.S.: I am sorry that these questions seem rather strange. But one must admit, that an institution which needs less than 24 hours to contradict itself is a pretty unique beast so it deserves special questions.

Schäuble and the Blame Game

One of the favorite games of the German government is blaming outside entities (usually the EU) for decisions made even though the German government government is deeply involved. Here is how it is played. Schäuble answered questions about Cyprus on the State TV news (ARD Tagesthemen) yesterday evening:

He answered to the question: "was it Your idea to take money from the private deposits of the Cypriots?" (my translation)
No it was the position of the Bundesregierung and the IMF that the major part of the funds needed to stabilize the banks should be taken from the owners and creditors, those are the investors, of the banks. But of course we would have honoured the desposit insurance of up to 100,000 €. But those who did not want a bail in, the Cyprus government, the European Commission and the ECB chose this solution and now they have to explain it to the Cypriot people.
Yes if you have a deposit at a bank you are now an investor in the eyes of the German government it is your own fault that you trusted in the deposit insurance and Germany also pledges to uphold the law IF everybody does as we say. He then said, that to reach the needed amount he wanted to achieve a large base to not overburden the rich, so he might not have been the one who came up with the tax but he was deeply involved in how the plan was carried out.

The Merkel government has a bad habit of using language not to explain something but to defend the indefensible. They use words that sound similar to something which was proposed but mean something toally different. Thursday last week a bank customer was not an investor. The finance minister changed that now. It is extremely annoying that one has to listen to every word exactly because the phrases used just don't mean what one thinks when listening for the first time. The interviewer helped by asking the wrong question. Who cares if it was Schäuble's idea. What matters is was this a plan that the German government proposed? I think it was.

Schäuble was very much against  a "rescue" of Cyprus less than two months ago. Both the coalition and the oposition parties wanted to punish the depositors, since they feared the backlash of the German voters in case that "Russian oligarchs" would be bailed out. So the minister basically did not explain a thing. He just blames Cyprus for choosing the pest over cholera. Even if it wasn't the Merkel government who pushed for this plan, which I find unlikey,  we are at least in part responsible for the outcome. We could have just said that the deposit insurance has to be honoured. We didn't.

Just a reminder, due to the way the ESM is set up Germany can veto any bail-out decision. At least 80 % of the votes are necessary for such a move and Germany controls 27 %. If we actually wanted to, we could have forced the protection of deposits up to 100.000 €. 

How is a "bail-in" different from a deposit tax? Not very. Goldman is not sure if the action in Cyprus wasn't also the former. "Bail-in" describes using deposits to finance the banks, by forcing the bank customers into bank ownership. So instead of just outright losing money, the happy new investors would have had shares of a broken financial system. An actual journalist would have asked the finance minister why "out" was chosen over "in".  Instead German state TV just accepted that some one else is to blame. Also the interviewer did not even ask what the exact plan was that Schäuble claimed to favor. German Quality Journalism For The WIN.

What Schäuble also does not seem to understand is that no matter how the Cypriot parliament votes the banks will be insolvent. Once the confidence in the banks is destroyed it cannot be fixed easily, so when if the banks reopen, the customers will try to get their money out. Worse still is that of course spill over effects cannot be avoided even though Schäuble claims otherwise ("special case" "wont happen again" yadayadayada). As Krugman put it:

It’s as if the Europeans are holding up a neon sign, written in Greek and Italian, saying “time to stage a run on your banks!”

I am looking forward to what the ECB has to say. In the end no one will be responsible. The deposit tax just happened. Every body wanted to uphold the law but other entities didn't. Sometimes I think they come up with "plans" by playing a drinking game and the proposal of the "winner" has to be accepted. That also explains why no one remembers his own involvement in bad solutions.

Sunday, March 17, 2013

German Politics at the Core of Cyprus Decision

The excellent blog Wonkbook has a post about the "bail out" of Cyprus. I mostly agree but one thing caught my eye:

Those are the reasons the IMF has insisted on losses for depositors — those, and the fact that rescuing Cyprus’s finances without the 5.8 billion-euro contribution represented by depositors’ losses would have meant a bailout approximately equivalent to the country’s annual economic output, too much for the fund to stomach.

I disagree with this passage. The IMF is not the responsible party in this mess it has at least last year called to stand behind the deposit insurance, which is now being guttet. The decision to "tax" depositors was made due to German politics. Merkel has problems keeping her coalition together when votes are called for on "rescues". There are at several (up to 23) so called "Abweichler"  ("deviators")  primarily in the two smaller partners (CSU and FDP), who will vote against such packages. So Merkel needs the opposition to vote yes.

The Greens and the SPD, just like the coalition, said (for example SPD "expert" Carsten Schneider on Friday) that they would only vote for a rescue of Cyprus if the bank customers would be involved in the bail out. The only other party in the Bundestag- the left wing Die Linke - will most likely just say no to the rescue. All German "rescue" parties are scared that money will bail out Russian oligarchs. That is the primary reason why they want a tax on bank deposits.

Here is why the situation in Germany matters so much: the Constitutional Court made a vote on such packages mandatory, so Merkel's "governor" cannot agree to ESM money being pledged unless the parliament agrees. Here's the catch: Germany is one of two countries which always has a defacto veto in the ESM. Even if the ECB says a rescue is necessary at least 80 % must agree within the Board of Directors. The German "governor" controls 27 % of the votes, which equals the share of money Germany has contributed to the ESM. Making it impossible to "help" any country without Germany agreeing.

The party responsible for the unimaginably stupid "bail out" is Germany not the IMF.  What makes this even worse is that no matter who is elected in September, the next German government will consist of the very people who caused the already happening and the ensuing mess. Specifically, the destruction of the European deposit guarantee might just prove the last drop necessary to cause a breakup of the Euro area.

Cyprus - an update

 Update to the update: the Cypriot parliament will vote Tuesday evening. The original plan will most likely not be approved. If they will accept some different proposal e.g. a 20,000 € freshhold isn't known. It might just happen that Cyprus becomes the first country to leave th Eurozone.

Sueddeutsche tells us that the vote on the bail out has been moved to Monday. It is not clear if there is a majority for the plan to just steal take away up to 9.9 % of savings. Also, the President of the European Parliament Martin Schulz thinks that at least people with savings of under 25,000 € should be spared.

So they made this deeply damaging decision and on the next day they don't even know if they can find enough votes for the law? We now possibly have a situation where the deposit protection scheme in the EU might be wrecked beyond repair, a bank run is happening in Cyprus and at the same time the bail out plan might not even make it through the parliament there? What?! This is just outright brain dead.

At the same time the President of the European Parliament also has some at least less damaging ideasbut the 25,000 € freshhold idea is too little too late. Martin Schulz's comment shows that the only - at least somewhat - democratic EU institution, again, wasn't even involved in the decision making in the first place.

I think the whole thing has become a self-fulfilling-prophecy no matter what the decision in Cyprus will be. A bank run cannot be avoided once if the banks reopen. If the vote is NO people will just understand it as a "NO not Right Now" and the banking sector will just be days away from crumbling. In case of a Yes Cypriots and foreigners alike will fear that this is just a first step. Capital will flow out of the island. Ever more control over the movement of money will become necessary and in the end the savers will pay the price. The remaining question is: will there be spill over effects on other countries? I think yes at least for Greece. In the other crisis countries, the savers will be very wary of their banks and righfully fear that this will be the first but propably not the last time.

Saturday, March 16, 2013

Spiegel and Cyprus

Spiegel's Rickens comments on the Cyprus bail out. I think making the depositors pay was a dangerous decision, since it makes a bank run much more likely and the citizens less likely to bring any money to the banks in the first place. Here is what he has to say (my translation):

Es geht um Gerechtigkeit, aber auch um Pragmatismus: Zypern muss die Bankkunden des Landes teilenteignen, um die Schulden des Landes zu lindern. Ein richtiger Schritt.
It is about justice*, but also about pragmatism: Cyprus has to impose a hair cut on bank clients to reduce the debt of the country. A right step.

* Gerechtigkeit is a funny word since it means both justice and fairness at the same time.

It is in fact neither fair nor justifiable or even legal to first promise every one that deposits up to 100.000 € are safe and then take up to 6,750 € away. It is also not a pragmatic step since it is contrary to what every party involved said before: That the deposits are safe. So he is definitely not talking about "gerechtigkeit" for the Cypriots. He thinks it is fair for us Germans.

Sie liefert zunächst nicht mehr als einen symbolischen Beitrag für die Lösung der Zypern-Krise, aber vor allem liefert sie das richtige Signal 
It is for now a symbolic part in the solution of the Cyprus crisis, but more importantly it is the right signal.
Which fucking signal? That it is not safe to keep money at the bank for the EU will come and take it because Merkel has to win an election?

Then comes mostly irrelevant stuff. Phantasising about phases of the crisis and some Greece, Spain, and Italy for some reason(it is a waste of time to even translate it).
But he does get, that a bank run will happen in Cyprus, he just totally fails to understand what that means. So he is OK with it. But Cyprus is not "safe". The banks will loose most of their deposits. So just how big is the banking sector of that island? In 2009 it was 8 times larger than the GDP. Also the biggest chunk (5.5 times GDP) of that is in the domestic branches of the banks. With a bank run causing the destruction of the whole sector we can be pretty sure that the "bail out" just won't cut it. With a GDP of 17.9 billion Euros and a banking sector which might just be in ruins at the end of next week, the total of 13 Billion € seems rather low.

Here is what this bail out was: a sudden unlawful decision imposed from outside to take money from depositors - so much money that one can safely keep his money at home for at least two years and be still better off than those who deposit it at the banks. So now we have a interesting situation. For the whole population it would be best to keep all the money at the banks, but for the indiviual it might be better if he is the first to get it out. But there is a wild card. The Russians might all cut their losses and leave. So possibly not even all Cypriots keeping their money at the banks will make any difference and the banks still fail. There isn't even a dilemma here. This will probably be the first bank run which actually makes sense for every one without exception due to the high amount of money deposited by foreigners. Should an actual bank run happen the GDP will shrink in depression dimensions but there is more.

Confidence in the banks was be damaged not only in Cyprus but also in Greece possibly even in Spain and Portugal. Ones money is not safe at a bank. This is why the whole decision was terrible for all of the Eurozone.

The Spiegel article is nothing more than key phrases losely connected by the believe that Merkel is doing everything right. This is typical for German newspapers. German Quality Journalism!

Cyprus and Horrible Decisions

Cyprus has a deposit protection scheme any other EU country. It protects deposits up to 100,000 €. Such a scheme is in place to avoid bank runs. People fearing that they could loose money will try to get all of it out of banks and hide it under their mattress. Today it was decided, that to "save" Cyprus it's best to show that such a scheme isn't worth the paper it is written on (or the energy it takes to download it).

According to bloomberg deposits under this freshhold will be taxed with 6.75 % deposits above that with 9.9 % to finance the bail out. This decision is just another in a never ending stream of bad decisions that is dragging the EU downhill. But this might just be a breaking point because it shows to the citizens of the other countries having trouble that in order to save their deposits they need to get them out of their countries. Germany is save, so I expect an ever growing money inflow from Spain Portugal and Greece.

Today bank runs can be rather quiet. It wasn't in Cyprus though where people tried frantically to save their money. It will be and was in Greece. With opening a deposit in another European country or even Switzerland for that matter loosing up to 10 % can be avoided. This can today be done online no more lines infront of banks. It can also be better organized. Just tell your 400 Facebook "friends" that you have opened a deposit with Deutsche Bank (actually it would be better to say you have undertaken measures to save your money) and within minutes your's and other people's message will spread to most of the country.

Here is what I think will more likely than not happen: a bank run in Cyprus cannot is unlikely to be avoided anymore. It will start once the banks reopen on Wednesday and most of it will be silent from home offices. Before the authorities know the banks might have lost so much liquidity that the next bailout is just around the corner. Also I expect the panic to spread to Greece, while the citizens of other Portugal and Spain will become quite uneasy.

tl;dr: A haircut for depositors under the 100,000 € freshhold was an all around horrible decision which will probably cause a bank run in Cyprus that might just spread to Greece.

Friday, March 15, 2013

The strength of the German economy as described by Spiegel

German newspapers in general manufacture a pretty positive view show their reality of a strong strong economy in our country. To that end, they use experts like professors and their findings. Spiegel found two institutes with a pretty differing view on the future of the German economy. Lets see which one and which numbers get more space. The title translates "German economy: experts predict solid growth" (all translations by me) The first sentences are:

Die Aussichten für Deutschland verbessern sich: Führende Ökonomen haben ihre Prognosen nach oben geschraubt. Um bis zu 2,4 Prozent soll die Wirtschaft im kommenden Jahr wachsen.
The outlook for Germany is improving: leading economists have corrected their predictions upwards. The Economy is said to improve up to 2.4 % in the next year.
2.4 % sounds pretty good. But there is of course a catch. They are talking about 2014. These are the numbers of the IWH who predict 1.3 % GdP growth in 2013 which is mentioned in the article. They also use data of ifw Kiel. Here they high-light the increase from the older prediction for 2013 (0.6 % instead of 0.3 %). Yeah thats still quite an abysmal prediction, but you just need to know how to sell it. 0.6 % so much better than 0.3 %. Let's all chant: "GER MA NY; GER MA MY; GER MA NY"

Then they try really REALLY hard to find some positive economic numbers. They talk about exports in the last Quarter of 2012. They only use positive numbers, which are correct but misleading. The forth quarter exports were down 2.4 % seasonally adjusted compared to QIII. Yeah great, that we had better numbers that QIV 2011. Still exports actually tanked.

Here are a few more numbers from the "Statistisches Bundesamt":

New Orders:01-2013 down 1.5 % compared to last year, down 1.9 % SA compared to last month
Production: 01-2013 unchanged compared to both last month (SA) and last year. But down 1,3 % SA compared to last year(my calculation)
Real GDP: down 0.6 % in QIV

SA New orders and Production in Germany (Y-Axis starts at 70 % !)
So the picture is painting is quite different from the real one above graphs. Especially new orders don't look good at all and are the leading indicator for production. How the IWH came to the conclusion that growth this year will be 1.3 % is also currently beyond me. There is a clear downwards trend in manufactoring new orders. Foreign new orders have fallen from from a maximum of 110.7 % (100 %=2010) in November 2010 to 102,4 % in January 2013. So I just do not understand why exports should grow by 2.8 %. But I am just an engineer what do I know about the world dominating, utopia generating concept of the "return of confidence" (Rückkehr des Vertrauens [just to show my confidence in confidence]).

Thursday, March 14, 2013

Me, myself, and Thomas de Maiziere

For many people a book they have read in their youth, becomes their guiding light in life. For some it is religious writings, for some it is Atlas Shrugged, for people like Paul Ryan it is a incompatable combination of both the atheistic writings of Rand, which favor a voracious Capitalism and the story about Jesus, who wanted to bring a socialist utopia down to earth (creating nourishment out of thin air and then just giving it away kinda goes against Rand). I think de Maiziere and I loved the same book: Orwell's excellent Nineteen Eighty-Four.

Of course there is a difference between me and our current Defense Minister and former Minister of the Interior in Germany in the perception of the book. He seems to think that the true hero is Ampleforth - the intellectual at Minitrue, who understood the principles of newspeak all too well.

In the ironically named book "Damit der Staat den Menschen dient. Über Macht und Regieren." "That the state serves man.[..]" aka "freedom is slavery" he described how a failure to apply newspeak can lead to the unintended consequence of people thinking - leading to opposition to a law which would have made state surveillance over every person at any time possible. The people at (probably the only ones who read the thing) showed a quote of de Maiziere that just had me think of Ampleforth freely describing the concept of newspeak:

Dabei freilich kann man mal wieder lernen, welche Wirkung Begrifflichkeiten haben können. Beim Wort »Vorratsdatenspeicherung« wird bei vielen der Eindruck erweckt, der Staat wolle auf Vorrat alles speichern.
Here one can again learn about the effects of  terms. The word "Vorratsdatenspeicherung(VDS)" leads to many people thinking that the state wants to save and store [your internet connection data, mobile phone connections].
 See it is just a failure to apply newspeak. If they had only chosen a different word the perception would have been all different.

He then goes on to explain that VDS is the wrong word since the state just forces private companies to store these data. Of course this is totally different from the above concept, since the state can then - possibly without a search warrant - get all the data it did not store. So he also explains the concept of doublethink. The end result is exactly the same. The state can check what you did, where u did it, and with whom you did it. To a person unable to use doublethink the entity that stores this information does not make a difference if in the end Government agencies can get the data through pressing a button. To de Maiziere it makes all the difference.

Luckily, in his new job he was more succesful in the application of newspeak: not being able to use drones to kill people was excellently described as "Fähigkeitslücke" "ability gap" IMO something not unlike the "doomsday or mineshaft gaps".

Of course there is nothing wrong with the state knowing everything about you. If you apply enough doublethink you just can't find any examples of a German state doing anything bad to its citizens ever.

Wednesday, March 13, 2013

German Quality Journalism

Yeah I know I have chosen a rather strange abbreviation for my blog. Also one that might seem rather arrogant. Quality Journalism?! Here is the story behind the name: the German newspapers are for the most part unable to generate enough revenue on the internet. Google News they claim is at fault. Or if not that at least Google should pay for linking to German newspapers, because they are producing Quality Journalism(TM) and the momopolist provides them with much needed traffic steals their articles. This is the story of how nonsense became law and everyone is fully aware.

German newspapers are having trouble - a lot of it. Two of the seven newspapers which publish everywhere in Germany went into bankruptcy last year. This is in part due to dropping sales figures, combined with less revenue from advertisement because of the Euro crisis but also a big chunk is that none of the German newspapers has a working online business plan.The biggst issue in my opinion is redundancy. In the last century most newspapers had their own little monopoly which generated a ever growing revenue stream. This has changed and the publishers are in trouble.

The publishers think they found someone else responsible for that: the internet and the Gratiskultur (everything free culture) in it. For years they had warned against this dangerous place. Everyday they showed the horrors of this place full of thieves, sexual predators, „killergames“ and whatnot. Who else could be at fault for their failed business model but this awful place? Since one can't just improve their business model by blaming a medium they had to find some entity within it to blame. They found Google.

They helped to get our current coalition in power reported neutrally and for this they demanded asked for the Power Protection Law (this is the translation of Leistungsschutzrecht which describes its purpose best): it was supposed to make it illegal for search engines and news aggregators to quote online news at all. No more snipplets in searches unless the publishers get payed a license fee. Well you might think this is kind of silly since they can already tell the crawler of the search engine to not use snipplets and you would in fact be right. Robots.txt has a function by which the publisher can tell the crawler exactly that called nosnipplet. There was almost no truthful information available in the German media about the cons of the PPL. It was a coordinated misinformation campaign second only to the one in the advent of the Iraq war. Here a a few of my favorite examples:

"Wir glauben dem Google-Slogan ‚Don't be evil’ und denken, die netten Jungs mit dem bunten Logo meinen es doch nur gut. In Wirklichkeit will Google nur erzkapitalistische Interessen durchsetzen und sein Geschäftsmodell optimieren"

„We believe in the Google slogan ‚Don't be evil’ and think that the nice guys with the colorful logo just want something positiv. In reality google only wants to enforce archcapitalistic interests and to optimize its business plan.“

Really? That comes from Döpfner the CEO of  Springer who publish our archcapitalistc yellowpress thing BILD (the equivalent to FoxNation with more BOOOBIES).In the interview he then goes on to tell how he wants to just help to feed the world optimize his archcapitalistic businessplan.

The boss of the lobby organisation about the google campaign against the PPL:
"Der Internetriese nutzt seine marktbeherrschende Stellung einseitig im Eigeninteresse und scheut sich nicht, seine Nutzer dafür zu instrumentalisieren."
"The internet giant uses its monopoly onesided in its interest and instrumentalizes its users to that end"
Jeder sollte wissen, Google ist noch zu viel mehr im Stande – ohne sich wie die deutsche Presse der Wahrheit verpflichtet zu fühlen.
Everybody should know that google could do even more – without feeling bound to the truth like the German press“

Ok? Well lets see how the truthiness bound German press handles this robots.txt situation. Here the chief bild lobbiest and „father“ of the PPL:

„Sehr gern würden die Verlage auf eine Möglichkeit zurückgreifen, von Suchmaschinen und Aggregatoren nur indexiert und vielleicht mit einer Überschrift zitiert zu werden. Doch genau diese Differenzierungsmöglichkeit bietet Google wie die allermeisten anderen Aggregatoren nicht an „
„The publishers would really like to use an option which would allow us to be only indexed or perhaps quoted with the heading. But this differenciation possibility is not offered by google[..].

Not only was the whole idea behind the PPL based on the lie, that they could do nothing about snipplets. They even lied about their supporters. Claiming that the industry was ok with the PPL. Made stories up about Professors who opposed the law. All in all the way the German news media behaved was nothing but a disgrace.  In the end the massive campain - rightly described as lying for the Leistungsschutzrecht by Stefan Niggemeier - lead to a law which now allows "single words or smallest (sic!) text excerpts" to be used by search engines. No one knows what that means. The publishers claim this means that snipplets are still not allowed. Most others think snipplets will be OK. In the end the courts will decide.