The Info Underground

The EU collapse will be Jew Engineered.... --CSR

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 <$>  
Eric M. Warburg (15 April 1900 - 9 July 1990) was a member of the prominent Warburg family of German-Jewish bankers. Although he was the founder of the small New York firm that later became Warburg Pincus, and a partner in M.M.Warburg & CO he is most known for his efforts to strengthen German-American relations, for which he was awarded the inaugural Eric M. Warburg Prize.

http://en.wikipedia.org/wiki/Eric_M._Warburg (http://en.wikipedia.org/wiki/Eric_M._Warburg)

Merkel was a Warburg Prize winner in 2009:
http://www.atlantik-bruecke.org/eng/ser ... e-ties.pdf (http://www.atlantik-bruecke.org/eng/service/documents/press-release-merkel-to-be-honored-with-warburg-award-for-strengthening-us-europe-ties.pdf)

QuoteBoard of Directors

Robert M. Kimmitt
Chairman, Deloitte Center for Cross-Border Investment;
Senior International Counsel, WilmerHale

Henry A. Kissinger  <$>  
Chairman
Kissinger Associates

Klaus Kleinfeld
Chairman and CEO
Alcoa Inc.

Alan S. MacDonald
Chief Client Officer
Citi

Joseph McLaughlin
Partner
Sidley Austin LLP

Dale L. Ponikvar
Senior Corporate Tax Partner
Milbank, Tweed, Hadley & McCloy LLP

Justin X. Ramsteck
Managing Director-European Clients Group
JPMorgan Chase & Co.

David M. Rubenstein
Managing Director
The Carlyle Group

Ulrike K. Schlafly
International Consultant
The Saint Louis Brewery, Inc.

Lt. Gen. Brent Scowcroft
President
The Scowcroft Group

Garrick Utley
President
The Levin Institute
State University of New York

Marie M. Warburg
Managing Director
Private Life BioMed AG

Stanford S. Warshawsky
Chairman
Bismarck Capital, LLC

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QuoteThe American Council on Germany (ACG)

Mission Statement


The American Council on Germany (ACG) is an independent, nonpartisan nonprofit organization which promotes dialogue among leaders from business, government, and the media in the United States and Europe. The ACG strengthens transatlantic understanding and coordinates policy initiatives on key issues in the post-September 11th world.

The ACG was incorporated in 1952 in New York to encourage reconciliation and understanding following the two disastrous wars in the first half of the 20th century. Among its early leaders were John J. and Ellen McCloy, General Lucius D. Clay, Christopher Emmet, Joseph Kaskell, Dr. George N. Shuster, and Eric M. Warburg. Because of their vision of transatlantic cooperation, the Council has served as a key bridge between Germany and the United States for more than 55 years. In the 21st century, transatlantic cooperation on a range of global economic, political, and social issues is more important than ever. As the European Union continues to evolve, the ACG provides Americans with a better understanding of Europe as a whole.

Through its range of programs and outreach activities, the ACG anticipates emerging challenges relevant to the transatlantic relationship and encourages innovative approaches to problem solving. The ACG supports the open exchange of views and builds personal networks among leaders on both sides of the Atlantic by:

• convening regular policy discussions in New York City and at its 19 Eric M. Warburg Chapters throughout the country to inform individuals about German and European affairs as well as current global challenges facing Europe and the United States.

• identifying leaders from the successor generation on both sides of the Atlantic for annual American-German Young Leaders Conferences as well as multi-year Young Leader Study Groups on the Future of Europe.

• organizing high-level conferences and study tours in Europe and the United States on political and economic issues of importance on both sides of the Atlantic.

• awarding fellowships to American and German professionals from the fields of agriculture, art, environmental affairs, journalism, and urban affairs, along with academia, to enable them to conduct research and meet with their professional counterparts.

• publishing occasional papers on a range of issues affecting the transatlantic relationship and distributing them to more than 1,000 individuals and a newsletter on German-American business relations for corporate members.

http://www.acgusa.org/about2.php?pagename=About+Us (http://www.acgusa.org/about2.php?pagename=About+Us)

Of course it would be impolite not to mention Niall Ferguson's work on the J-Triber Talmudic Take-over:

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Muckety is interesting...
http://www.muckety.com/Henry-A-Kissinger/1864.muckety (http://www.muckety.com/Henry-A-Kissinger/1864.muckety)

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 <$>

Siegmund Warburg, the City and the Financial Roots of European Integration

by
Niall Ferguson

QuoteThe division between the Six and the Seven is potentially very disruptive and splits Europe into
two parts which, if the present trend is allowed to continue, will not later merge. It was said that
Great Britain needs Germany as Marlborough needed Prince Eugene of Savoy and Castlereagh
needed Metternich. You are the unrivalled master in business mergers. As the most prominent
Anglo-German you are the best qualified to work for the consolidation of Europe. With you
background, knowledge, and your constructive, creative genius you should be successful in
completing this noble task of peace ... [leading] towards the unity of Europe, which I fervently
hope will be realised.

Fritz Oppenheimer to Siegmund Warburg, May 24, 1966

...
This article seeks to redress the balance by putting the Eurobond market at the
very centre of the history of West European integration in the 1960s. The key argument
advanced here is that it was bankers, not politicians, who made the running in this period.
In some measure, no doubt, their motive was narrowly self-interested; the prime motive
was the profit motive. Yet there is also compelling evidence that the architects of the
Eurobond market also had a political agenda. They regarded it not only as a way of
making money, but also as a potent device for advancing Europe's political integration.
In particular, they appreciated that European capital market integration could reinforce
the case for British membership of the EEC. Among the most powerful arguments against
British membership was the legacy of sterling's historic role as a reserve currency. The
accumulation in London of "sterling balances" by foreign governments and central banks
made the ailing British economy vulnerable to periodic crises of confidence, so long as
the country continued to run current account deficits. (Britain had international reserves
of foreign exchange and gold of little more than £1 billion, but the sterling balances rose
from just over £3 billion in 1958 to £6 billion ten year later.9) This was analogous to the
contemporaneous American problem with the dollar: the providers of international
reserve currencies had to run balance of payments deficits in order to supply the world
with their currencies, but in so doing their currencies became vulnerable to crises of
confidence. The French, convinced they were subsidizing the Americans, also feared they
would end up having to prop up sterling if Britain joined the EEC, since membership was
expected to worsen the UK balance of payments; this was a key reason for both de
Gaulle's vetoes of British membership in 1963 and 1967.10 The counterargument
developed by the pioneers of the Eurobond market was that the French could not exclude
Britain indefinitely if London re-established itself as Europe's financial centre for
transactions in currencies other than sterling.11 Part of the significance of the Eurobond
market for proponents of British membership was that it turned the City of London from
a liability into an asset.

In this story a leading role was played by the banker Siegmund Warburg. Though
born in Germany, Warburg had emigrated to England in 1934 and by the early 1960s had
established the bank he founded there with a group of other German-Jewish émigrés as
the most dynamic and innovative merchant bank in the City of London. Despite having
obtained a seat on the prestigious Accepting Houses Committee, S.G. Warburg & Co.
was in many ways quite different from the established merchant banks, even those that
had been founded by German-Jewish families in the previous century. The bank's core
business was the provision of high-quality financial advice to British companies, for
which it was able to charge substantial fees. This focus reflected the lessons Warburg and
his collaborators had learned from the Great Depression about the dangers of
conventional deposits-and-loans banking; it also reflected the changed circumstances of
the post-war world, in which national capital markets remained subject to a plethora of
exchange and capital controls. Nevertheless, Warburg always yearned for a return to the
days of less regulated international finance and spent much of his later career trying to
devise ways to link his London firm with other institutions in New York, Paris, Hamburg,
Frankfurt and Zurich. At the same time, he was also a convinced proponent of European
economic and political integration. In the 1920s and 1930s, he and other family members
had been generous supporters of the Pan-European movement founded by Richard, Count
Coudenhove-Kalergi.12 To Warburg there seemed no necessary conflict between global—
and particularly transatlantic—financial integration and European political integration.
On the contrary, the experience of the 1920s seemed to suggest that they were
complementary processes. It had been when capital was flowing across the Atlantic at the

Quote12 Katiana Orluc, "A Wilhelmine Legacy? Coudenhove-Kalergi's 'Paneuropa' as an Alternative Path
towards a European (Post-)Modernity, 1922–1932", in Geoff Eley and James Retallack (eds),
Wilhelminism and its Legacies: German Modernities, Imperialism, and the Meanings of Reform, 1890-
1930 (Oxford / New York, 2003).

time of the Dawes Plan that the prospects for Franco-German rapprochement had seemed
rosiest. The breakdown of the global financial system in the Depression had been
followed in short order by European disintegration. A second lesson Warburg learned
from the 1930s, however, was that explicit calls for European union were unlikely to
succeed because of the resilience of nationalism throughout the continent. By the postwar
period, therefore, he had become convinced that the only way to advance the cause
of European integration was by economic means—reversing Europeans into a united
Europe through the back door of commercial and above all financial integration. Given
his outlook and ambitions, it is not surprising that it was Warburg who was the driving
force behind the creation of the Eurobond market. In its technical design—a
supranational market that could somehow co-exist with continued national limitations on
capital mobility—and its covert political function, it epitomized his subtle
Weltanschauung.

As a young man in the Germany of the 1920s, Siegmund Warburg had been a convinced
Pan-European. He believed, as he wrote to his friend Ernst Kocherthaler in 1927, "that
Europe has passed the culmination point of nationalism, or rather particularism, and is
moving with very slow steps in the direction of consolidation".13 He discussed with
Coudenhove-Kalergi ways of linking the latter's Pan-European movement to the
contemporaneous campaign for international disarmament. Among Warburg's proposals
at this time was one for "a central European ring of states united through a court of
arbitration with pooled sovereignty in military matters and consisting of Germany,
Holland and the Scandinavian states etc."14

Ten years later, with Hitler's dictatorship
firmly established and radical nationalists in power all over Central, Southern and Eastern
Europe, such notions had come to seem naïve. Nevertheless, Warburg continued to assist
Coudenhove-Kalergi—helping him, for example, to find an English publisher for his
books. Even after the outbreak of war in 1939, Warburg clung to the idea of some kind of
political union of Europe, seeing the wartime Anglo-French alliance as the potentially
"sound foundament [sic] for a new Commonwealth which should not be all embracing,
but a nucleus for a really strong combination of people with European background ..."15
With France defeated and no end to the war in sight, he continued to toy with schemes for
"West European Association", convinced that Britain's post-war future lay in developing
its ties with Europe, not the Empire.16 In 1942 he urged Stafford Cripps to "to use the
presence of all the refugee Governments residing here in order to declare the constitution
of some sort of the United States of Europe in however fragmentary form it may be".17 A
memorandum he drafted for Cripps proposed a post-war "Association of Western Europe
under British Leadership" that would act as the "the nucleus for a European
Commonwealth of Nations". This Association, Warburg suggested, would have
"Supreme Authority" over "(a) Military affairs; (b) Transport and Communications; (c)
Planning of Public Works [and] (d) Currency arrangements". There was no use, he
argued, in expecting the United States to make long-term commitments to Europe's postwar
stability. Instead, the United Kingdom should take the lead in "convert[ing] a
temporary coalition and war alliance into a free but durable and far-going merger of
economic interests and effective power".18

As in the 1920s, so in the 1940s, Warburg
therefore remained committed to the idea of explicit political union. In a draft manifesto
he sketched on the same theme, he explicitly called for an end to national sovereignty "in
the old legal sense", proposing that in post-war Europe, states would "have to delegate
certain privileges so far embedded in their sovereignty to their respective Federation,
which will delegate certain rights to common European Institutions". In late 1942, he
wrote an article entitled "The Principles of Federal Union", which developed this line of
argument further.19 He continued throughout the later 1940s to hope that some kind of
European union might emerge under joint Anglo-French leadership.20


http://www.wcfia.harvard.edu/sites/defa ... robond.pdf (http://www.wcfia.harvard.edu/sites/default/files/Ferguson_Eurobond.pdf)

QuoteAshley Mote (EU): "Mr President, I wish to draw your  attention to the Global Security Fund, set up in the early  1990s under the auspices of Jacob Rothschild. This is a  Brussels-based fund and it is no ordinary fund: it does not  trade, it is not listed and it has a totally different  purpose. It is being used for geopolitical engineering  purposes, apparently under the guidance of the intelligence  services." "I have previously asked about the alleged  involvement of the European Union's own intelligence  resources in the management of slush funds in offshore  accounts, and I still await a reply. To that question I now  add another: what are the European Union's connections to  the Global Security Fund and what relationship does it have  with European Union institutions? "Recently, Ashley Mote of  the European Union (EU) asked this volatile question in a  public EU meeting, a question never answered,

Quotehttp://www.rense.com/general79/tril.htm (http://www.rense.com/general79/tril.htm)

2lncdrhg]

2lncdrhg]

(http://img196.imageshack.us/img196/7484/globalistjewmontage.jpg)

Keep an eye open...

QuoteEurobonds: The Issue That Could Shatter Europe    <$>

Would you pool your debt with a bunch of debt addicts that have no intention of reducing their wild spending habits?  Of course you wouldn't.  But that is exactly what Germany is being asked to do.  Increasingly, "eurobonds" are being touted as the best long-term solution to the financial crisis in Europe.  These eurobonds would represent jointly issued debt by all 17 members of the eurozone.  This debt would also be guaranteed by all 17 members of the eurozone.  This would allow all countries in the eurozone to enjoy the same credit rating that Germany does, and borrowing costs for nations such as Greece, Portugal, Italy and Spain would plummet.  But borrowing costs for Germany would rise substantially.  In fact, it is being estimated that Germany could be facing an extra 50 billion euros a year in interest expenses.  So over ten years that would come to about 500 billion euros.  Needless to say, Germany is not thrilled about this idea.  But new French President Francois Hollande is pushing eurobonds very hard, and he has the support of the OECD, the IMF and many top Italian politicians.  In the end, this could be the key to the future of the eurozone.  If the Germans give in and decide that they are willing to deeply subsidize their profligate neighbors indefinitely, then the euro could potentially be saved.  If not, then this issue could end up shattering Europe.

It is easy to try to portray the Germans as the "bad guys" in all this, but try to step into their shoes for a minute.

If you had some relatives that were spending wildly and that had already run up $100,000 in credit card debt, would you be a co-signer on their next credit card application?

Of course not.

The recent elections in France and Greece made it abundantly clear that the populations of those two countries are rejecting austerity.

Instead, they want a return to the debt-fueled prosperity that they have always enjoyed in the past.

Unfortunately, they need German help to be able to do that.

That is why new French President Francois Hollande is pushing so hard for eurobonds.  He wants the rest of the eurozone to be able to "piggyback" on Germany's sterling credit rating so that everyone can return to the days of wild borrowing and spending.

But Germans greatly fear what a co-mingling of eurozone debt could eventually mean.  Not only would Germany's borrowing costs rise dramatically, but there is also a concern that the rest of the eurozone could eventually pull Germany down with them.

Austria, Finland and the Netherlands are also against eurobonds, but the key is Germany.

For now, Germany is not budging on the issue of eurobonds at all.  The following is a statement that German Chancellor Angela Merkel made during a recent speech in Berlin....

    "It's just about not spending more than you collect. It's astonishing that this simple fact leads to such debates"

And she is right.

Why is it so controversial to insist that people not spend more than they bring in?

But this is the problem that is created when you create a false lifestyle fueled by debt that goes on for decades.  People become accustomed to that false standard of living and they throw hissy fits when that false standard of living begins to disappear.

The Germans don't want to make great sacrifices just so the Greeks, the French and the Italians can go back to borrowing and spending wildly.

Why would the Germans want to do that?

And as a recent CNN article noted, German politicians believe that eurobonds are explicitly banned under existing EU treaties anyway....

    "There is no way of introducing them under the current [EU] treaties. Indeed, there is an explicit ban on them," one senior German official said, adding Berlin would not drop its opposition in the foreseeable future. "That's a firm conviction which will not change in June."

But politicians such as Hollande are complaining that austerity could seriously damage living standards throughout Europe.

And Hollande is right about that.

When you inflate your standard of living with borrowed money for many years, eventually there comes a time when you must pay a great price.

Anyone that has ever been in trouble with credit card debt knows how painful that can be.

It is shameful for the rest of Europe to be pleading and begging Germany to help them.

They should take care of themselves.

As I wrote about the other day, Greece would be much better off in the long run if it left the euro and created a new financial system based on sound financial principles.

But in the financial press all over the world there are calls for someone to come up with a "plan" to "rescue" Europe.  For example, the following is from a recent Wall Street Journal article....

    There have been two main responses to the crisis: austerity, and kicking cans down roads. Austerity, in case you haven't noticed, is so last year. It's out. Which means that unless something else is found, some other comprehensive plan, the other main response, can kicking, is going to run out of road.

    Just about everybody backed the idea of eurobonds, except for the Germans, and since they're the ones with all the money, they're kind of the only ones whose vote counts anyway. So, it's time to go to plan B. Only there's no Plan B, and there's no time, either.

If Germany does not agree to subsidize the rest of the eurozone, will that ultimately mean that the eurozone will be forced to break up?

Probably.

And that would cause a huge amount of pain in the short-term.

But the euro never was a good idea in the first place.  It was foolish to expect a monetary union to work smoothly in the absence of fiscal and political union.

And to be honest, the entire world would be a better place with less European integration.  The EU has become a horrifying bureaucratic nightmare and it would be wonderful if the entire thing broke up.

But for now, the only thing that is in danger is the euro.

Increasingly, it is looking like Greece may be the first country to exit the euro.

This week, former Greek Prime Minister Lucas Papademos admitted that the Greek government is considering making preparations for Greece to leave the euro.

Not only that, Reuters is reporting that top officials in the eurozone are now working on "contingency plans" for a Greek exit from the euro....

    Each euro zone country will have to prepare a contingency plan for the eventuality of Greece leaving the single currency, euro zone sources said on Wednesday.

    Officials reached the consensus on Monday afternoon during an hour-long teleconference of the Eurogroup Working Group (EWG).

    As well as confirmation from three euro zone officials, Reuters has seen a memo drawn up by one member state detailing some of the elements that euro zone countries should consider.

So obviously a Greek exit from the euro has become a very real possibility.

A recent Bloomberg article detailed how a Greek exit from the euro could play out during the 46 hours that global financial markets are closed over the weekend....

    Greece may have only a 46-hour window of opportunity should it need to plot a route out of the euro.

    That's how much time the country's leaders would probably have to enact any departure from the single currency while global markets are largely closed, from the end of trading in New York on a Friday to Monday's market opening in Wellington, New Zealand, based on a synthesis of euro-exit scenarios from 21 economists, analysts and academics.

    Over the two days, leaders would have to calm civil unrest while managing a potential sovereign default, planning a new currency, recapitalizing the banks, stemming the outflow of capital and seeking a way to pay bills once the bailout lifeline is cut. The risk is that the task would overwhelm any new government in a country that has had to be rescued twice since 2010 because it couldn't manage its public finances.

Right now, nobody is quite sure what is going to happen next and panic is spreading throughout the European financial system.

At this point, everyone is afraid of what is going to happen if Greece is forced to start issuing drachmas again.  As CNBC is reporting, some big European corporations are already beginning to implement their own "contingency plans"....

    Big tourism operators like TUI of Germany and Kuoni of Britain are demanding the addition of so-called drachma clauses to contracts with Greek hoteliers should the euro no longer be in use here. British newspapers are filled with advice columns for travelers worried about the wisdom of planning a vacation in Greece, or even Portugal and Spain, should the euro crisis worsen. Large multinational companies like Vodafone Group, Reckitt Benckiser and Diageo have taken to sweeping cash every day from euro accounts back to Britain to limit their exposure.

Sadly, this is probably only a small taste of the financial anarchy that is coming.

France is likely to keep pushing hard for the creation of eurobonds.

Germany is likely to keep fiercely resisting this.

At some point, a moment of crisis will arrive and a call will have to be made.

Will Germany give in or will political turmoil end up shattering Europe?

It will be interesting to see how all of this plays out.

http://theeconomiccollapseblog.com/arch ... ter-europe (http://theeconomiccollapseblog.com/archives/eurobonds-the-issue-that-could-shatter-europe)

Niall Ferguson... totally clueless to J-Triber control of the Eurobond...--CSR
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Are The Europeans About To Start The Second Half Of Our Great Depression?
Tyler Durden's picture
Submitted by Tyler Durden on 05/26/2012 19:58

"Just when we think the worst is over - and let's face it we have been in this crisis for five years - we get the second half; are the Europeans about to start the second half our Great Depression with massive bank runs" are the Jaws-music-inspired words that recent media-favorite (yes, us too) Niall Ferguson uses in an interview with CBC. His main concern is that this kind of (bank-run) event can quickly spiral out of the control of even the ECB as he uncomfortably conjures the image of the initial US stabilization that occurred in 1930 to May 1931 only to be knocked back into a greater depression by the failure of Credit-Anstalt, which set off bank failures and eventually defaults in 1932 on many government debts. The deposit run potential is the single-biggest reason to care about Greek-exit - in itself it is not large enough economically to interfere with global growth but it is the message and contagion that it sends that is critical in bringing forth a pan-European banking crisis and implicitly spilling over to the US and Asia via global trade and banking transmission channels. An excellent brief interview that summarizes the exact fears that face Europe and implicitly the US, explains the rather simple solution of fiscal federalism and the fact that today's German politik is very different from 1989's Helmut Kohl-era with regard to their commitment to the Federal outcome. His conclusions are worrisome. Germany is the key - and there is not a good understanding of financial markets in Berlin.

Six minutes well-spent on a Saturday evening...

 

Europe is a part of North America's destiny because the financial systems are so intertwined - and remember even the all-knowing Fed massively under-estimated the second-order effects of Lehman.

    "It's a total fantasy to think that the meltdown that I am discussing that could happen in a matter of weeks would not have a major impact on North America's prospects of sustained recovery."

Jew Bank Runs follow as people see their insolvent Jew-banks collapse ...

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http://www.zerohedge.com/news/are-europ ... depression (http://www.zerohedge.com/news/are-europeans-about-start-second-half-our-great-depression)

Looks like Germany is going to be the EU Jew "Honeypot" before the collective London-NY Jew-HedgeFund  Teams blow up the Deustch Banks and demand "Gold"  from their failed banks as well.  Merkel is a Jew Warburg puppet (like Obama).  Pure deviousness.  They plan to get back all they lost in WWII when the "goyim" basically kicked their scamming asses out and got back what was theirs... people must learn what is the ultimate goal in all of this. The Eurobond is a Jewish creation.    <$>
 

QuoteEurope's debtors must pawn their gold for Eurobond Redemption    <$>

Southern Europe's debtor states must pledge their gold reserves and national treasure as collateral under a €2.3 trillion stabilisation plan gaining momentum in Germany.

This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tonnes of gold, valued at €98bn in March.
Ambrose Evans-Pritchard

By Ambrose Evans-Pritchard, International business editor

5:22PM BST 29 May 2012

The German scheme -- known as the European Redemption Pact -- offers a form of "Eurobonds Lite" that can be squared with the German constitution and breaks the political logjam. It is a highly creative way out of the debt crisis, but is not a soft option for Italy, Spain, Portugal, and other states in trouble.

The plan is drafted by the German Council of Economic Experts and inspired by Alexander Hamilton's Sinking Fund in the United States -- created in 1790 to clean up the morass of debts left by the Revolutionary War. Flourishing Virginia was comparable to Germany today.

Chancellor Angela Merkel shot down the proposals last November as "completely impossible", but Europe's crisis has since festered, and her Christian Democrat party has since suffered crushing defeats in regional elections.

The Social Democrat opposition supports the idea. The Greens say they will block ratification of the EU Fiscal Compact in the German Bundesrat -- or upper house -- unless Mrs Merkel relents.

"The Redemption Pact cleverly combines the advantages of lower interest rates through joint European borrowing with a reduction of debt," says Green leader Jürgen Trittin. "Joint liability would be limited in both time and scale."
Related Articles

The plan splits the public debts of EMU states. Anything up to the Maastricht limit of 60pc of GDP would remain sovereign. Anything over 60pc would be transfered gradually into the redemption fund. This would be covered by joint bonds.

Italy would switch €958bn, Germany €578bn, France €498bn, and so forth. The total was €2.326 trillion as of November but is rising fast as Europe's slump corrupts debt dynamics. The sinking fund would slowly retire debt over twenty years, using designated tithes akin to Germany's "Solidarity Surcharge".

In effect, Germany would share its credit card to slash debt costs for Italy, Spain and others. Yet it is the exact opposition of fiscal union. While eurobonds are a federalising catalyst, the fund would be temporary and self-extinguishing. "The fund is a return to the discipline of Maastricht with sovereign control over budgets," said Dr Benjamin Weigert, the Council of Experts's general-secretary.

The ingenious design gets around the German constitutional court, which ruled in September that the budgetary powers of the Bundestag cannot be alienated to any EU body under the Basic Law -- the founding text of Germany's vibrant post-War democracy.

The court warned that open-ended liabilities are unconstitutional. The Bundestag may not establish "permanent mechanisms which result in an assumption of liability for other states' voluntary decisions, especially if they have consequences whose impact is difficult to calculate," it ruled. Chief Justice Andreas Vosskuhle said that any major step towards EU fiscal union would require "a new constitution" and a referendum.

The fund implies a big sacrifice for Germany. Its interest costs on joint debt would be much higher than today's safe-haven rate of 1.37pc on 10-year Bunds. Jefferies Fixed Income says it would cost 0.6pc of German GDP annually. The Council of Experts -- or `Five Wise Men' -- argue that this would be modest compared to the growth adrenaline of rescusitating monetary union.

Yet it is not charity either. One official said a key motive is to relieve the European Central Bank of its duties as chief fire-fighter. "We have got to get the ECB out of the game of distributing money, and separate fiscal and monetary policy. Germany has only two votes on the ECB Council and has no way to control consolidation," he said.

Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20pc of their debt as collateral. "The assets could be taken from the country's currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal.

This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tonnes of gold, valued at €98bn in March.

Alessandro di Carpegna Brivio, a gold expert at Camperio Sim in Milan, said Italy should treat such proposals with care. "Everything being done at a European level is in the interests of Germany and France, to save their banks. It is not in the interest of Italy," he said.

"We should use our gold to take care of our own debt, collateralizing bonds above 100pc of GDP. That would be a far more targeted approach," he said.

David Marsh, author of books on the euro and the Bundesbank, said Germany is not yet ready for the redemption fund. "The Germans have to do something, but I don't think it will happen before the elections next year. Spain will have to go through storm first," he said.

Ultimately, a sinking fund cannot tackle the root cause of the eurozone crisis. It may cap debt costs but it does not alter the intra-EMU currency misalignment between North and South, or help the Latin states close the chasm in labour competitiveness.

The South would still face the long grind of "internal devaluation" -- or wage deflation -- breaking societies on the wheel. Yet the Redemption Pact is at least a first step back from Purgatory.


Mervyn King, governor of the Bank of England, listens during a news conference at the Bank of England in London, U.K    <:^0
Mervyn King: challenge is to find route back to normality