TESTOSTERONE PIT

WHERE THE TRUTH COMES HOME TO ROOST

Recent Publications

Favorite Reads

The Softer Side

INDEX

DEBTOR NATION

Chapter 1 ♦ AIRMAIL FROM AFTERLIFE

1976

One rainy summer day, I packed my backpack and went to America. I was seventeen. I knew what I was doing: I was escaping from the debacle at home. And I was looking for something. For what exactly, I didn’t know, but I’d go look for it in America. There, the heat burned in my nostrils. Lawns were brown. Cars were big and air-conditioned. Girls went gaga over my accent. Guys thought I was cool. And I fell in love with it all.
          Three years later, I was paying my way through college in Texas when the notion of home, distant and convoluted as it had become, blew up with gratuitous violence. A Boeing had crashed into a mountain in Turkey, killing all 155 people aboard. I heard about it on the radio. But I didn’t connect the dots.
          A few days later, I found a message from the operator in my campus PO Box. Telegram, call Western Union, it said. I called from one of the pay phones. My heart was pounding in my temples, and I had trouble hearing the lady on the other end.
          “I’d read it to you,” she said. “But it’s in German. I think you better come by and get it.”
          “I’m fixing to go to work. Can’t you try to read it to me?”
          “Oh dear.”
          “Is it long?”
          “Two lines.”
          “Can you spell it?”
          “Well, I guess I could. Are you ready?”
          I pulled out a notepad and pen. “Ready,” I said, though I knew that I wasn’t ready, that I’d never be ready for whatever she was about to spell.
          “E-L-T-E-R-N new word,” she said, “A-M new word M-O-N-T-A-G new word M-I-T new word F-L-U-G-Z-E-U-G new word I-N new word D-E-R new word T-U-R-K-E-I—”
          “Stop! Please.” I couldn’t write anymore. Parents on Monday with plane in Turkey.... German sentences, even in abbreviated telegram style, had the main verb at the end, but I didn’t want to hear the main verb, didn’t want to hear it spelled out letter by torturous letter. “Thank you. That’s enough.”
          I’d escaped the debacle at home and had gone as far away as possible. But this wasn’t what I’d had in mind. I stood there in a daze, brain deadlocked, numb, clutching the receiver, drowning in abysmal emotions.
          Then I went to work. It was just a part-time job, but now I needed the money more than ever. Afterward, I drove to the Western Union office and picked up the yellow slip of paper with twelve lines of all-caps alphanumeric gibberish and two lines of readable text. It was from my sister, sent from the town where she was staying with friends. But it didn’t include their phone number. And my brother was on vacation somewhere. So there was no way to reach him either.

Next....

TESTOSTERONE PIT, the novel

Wolf Richter

Chapter 1 ♦ Circle Jerk

It was Saturday, the biggest day of the week, and everyone was working bell to bell, over forty salesmen, though Ferronickel didn’t know exactly how many he had because some hadn’t shown up and might have started selling cars some other place, and because he’d hired a bunch of new guys an hour ago.

“It’s a beautiful day,” he sang in a basso profundo voice as he marched across the showroom in his asymmetric gait. He was the general sales manager at the Ford Superstore. His Tabasco Sauce tie was loosened, his collar unbuttoned. His gut that hung over his belt strained his shirt. He had puffy eyes and was full of mean energy, ready to explode, ready to force things to happen. He blew out the door, came to a halt on the porch that surrounded the showroom on three sides, and lit a cigarette.

Al Millikin, one of his four sales managers and perhaps the best closer in town, was watching Mad Boxer work a customer on the truck lot. Potential deal.

“Why can’t he bring that guy inside and write him up?” Ferronickel said.

“He ought to tell him we got free pussy on the showroom,” Millikin said.

“Don’t give me any ideas for our next live remote.”

“Come to think of it, that would be a hell of a lot more effective than the classical rock-and-roll shit we’ve been doing.”

“For our male customers.”

“We could alternate. Free pussy one day, free Godiva chocolates the next. We’d have both ends of the spectrum covered.”

“You’re a fucking Einstein, Millikin.”

Reginald Pierce, another sales manager, a big guy with a shortish Afro, was jumpy and his eyes darted about. He fretted about Whacker Packer, Hackman Jones, JoAnn Delouche, and several other salesmen who’d formed a dope ring by the plate-glass window. If left alone, they’d make up rumors, complain about dealership coffee, and infect each other with morale problems. He singled out a young guy.

“Freddie T, are you going to participate in a circle jerk?” he growled. They called him Freddie T because of his unpronounceable Greek last name. “Or are you going to sell something?”

It startled them; they’d forgotten all about selling. And they drifted apart.

Lou Massago gesticulated on the phone in one of the closing booths. He wore a white button-down shirt, a red and blue tie, slacks, and ostrich-skin boots. A scar curved upward from the right corner of his mouth, giving him a lopsided grin even when he was serious. His eyes were set close together and peered out from under his bushy eyebrows with ferocious intensity. But he had a soft voice when he wanted to, and now he wanted to because he was talking to a customer about a 15-passenger van that had come out of the rental fleet. There were ten of them. They were scratched and dented and had too many miles on them, and they were overpriced, and no one could sell them, but he was king of sales, and if he could sell them, it would prove he could sell anything.

He hated working the phone. He needed his customers in front of him, needed to stare into the whites of their eyes. But no one had sold any of those vans yet, and to prove he was king of sales and could sell anything, he’d decided to sell them all. Besides, the Saturday rush hadn’t begun yet, and calling old customers was more productive than standing around waiting for something to happen.

Next....

Friday

Jan272012

Germany Frets As Bailouts And Risks Balloon

Friday, January 27, 2012 at 10:00AM

In her speech at the Davos World Economic Forum, Chancellor Angela Merkel warned that Germany might be overwhelmed by its efforts to bail out the Eurozone. Germany must not make promises that in the end can’t be kept, she said. It doesn't make sense to demand a doubling or tripling of Germany's contribution. "How long will that remain credible?" she asked.

The government’s reluctance has made Germany the favorite punching bag of the economic world, and most certainly of George Soros, who mused in Davos: "It's Germany that dictates European policy ... the trouble is that the austerity that Germany wants to impose will push Europe into a deflationary debt spiral."

But demands for more money never cease. EU Finance Commissioner Olli Rehn, also hobnobbing in Davos, stated that even the second bailout package for Greece, €130 billion, wouldn’t be enough to deal with Greece's collapsing economy and mounting pile of debt. Every few months, the amounts to bail out Greece are rising. But it’s not just Greece. Other countries are on life support as well.

And so the bailout mechanisms have become a bewildering and expanding array of direct and indirect contributions, commitments, and guarantees that, theoretically, all 17 member states of the Eurozone would share proportionately. But five of them—Portugal, Ireland, Italy, Greece, and Spain—are in trouble. So the remaining 12 have to shoulder their burden, and some of them are teetering.

Now all eyes are on Germany. CESIfo, the Munich-based economic research group that publishes the closely-followed Ifo Business Climate index, has put a pencil to Germany’s maximum exposure over time, given today’s commitments. In addition to the bailout mechanisms, the report takes into account Germany’s exposure through its 27.1% share of the ECB and its 6% voting rights of the IMF. Total exposure: 635 billion ($831 billion), a whopping 27% of Germany’s GDP. And it doesn’t even include any bailouts within Germany. The details:

- €22 billion for the first bailout package for Greece, agreed upon in May 2010. The Eurozone would contribute €80 billion and the IMF €30 billion—to be paid out in tranches. Hiccups developed immediately. Slovakia didn't participate. Ireland and Portugal dropped out as both were put on life support. Germany's share is based on its share of the ECB (27.1%).

- €1.8 billion for Germany's share (6%) of the IMF’s €30 billion contribution to the package.

- €12 billion for the European Financial Stability Mechanism (EFSM) of €60 billion, established in May 2010—based on Germany's 20% share of the EU budget.

- €253 billion for the European Financial Stability Facility (EFSF), established in June 2010 and enlarged in October 2011 to €780 billion. Germany’s share is 27.1% (based on its share of the ECB), or €211 billion. Also included is the 20% increase allowed under German law.

- €15 billion for the IMF’s €250 billion commitment to the EFSF. Germany’s liability is based on its 6% voting rights of the IMF.

- €94 billion for the ECB’s purchases of sovereign bonds. The "Securities Markets Program," launched in May 2010, has grown to €219 billion. Germany’s exposure is composed of two factors: its share of the ECB (27.1%) and its portion of the share of Portugal, Ireland, Italy, Greece, and Spain, which won’t be able to fulfill their commitments to pay the ECB for losses. For a total of 43%.

- €237 billion through “Target2.” Target2 and its predecessor “Target” were a mundane part of the ECB's interbank payment system. The ECB would temporarily borrow money from the central bank of one country and lend it to the central bank of another. In 2008, however, as capital flight from periphery countries began, the credit flow became one-sided and ballooned with each new outbreak of the debt crisis. Thus, these once ordinary credits became the first de facto bailout of crisis-struck countries. By November 2011, total amount in credits extended to the central banks of Greece, Ireland, Portugal, Spain, and Italy was €556 billion, according to Ifo.

Germany's share of Target2 balances is based on its share of the ECB (27.1%). Since Greece, Ireland, Portugal, Spain, and Italy won’t be able to bear their share of any losses, the remaining 12 countries would have to bear them proportionately, giving Germany 43% in total exposure to Target2 balances.

And so Merkel's question—"How long will that remain credible?"—has become a litmus test for Eurozone bailouts. But bailouts take on a life of their own. In September 2008, Treasury Secretary “Hank” Paulson walked into the Capitol and threatened that the whole world would collapse if his demands weren’t met. Paulson's extortion worked. So, Greek prime ministers imitated him. And now Christine Lagarde, managing director at the IMF, tried it too. Read.... The Art Of Extortion: Now At The IMF.

Follow @testosteronepit

7 Comments | |

Email Article

Reader Comments (7)

Great post of a complex and huge problem.

January 27, 2012 |

John

I read some articles that were critical of Germany recently. But just looking at what they have already committed to bailing out other countries (and maybe their own), that criticism doesn't seem appropriate. If this keeps going, German taxpayers are going to revolt. Then the party is over anyway.

January 27, 2012 |

Mary Tightwad

Thanks Wolf!
Deutschland Unter Alles!

January 27, 2012 |

blankfiend

Thanks Blankfiend for stopping by. Great posts on your blog: http://blankfiendsew.blogspot.com/

Mary Tightwad - From what little I know about the German tax system, people are taxed out the wazoo. In addition to all the income,social security, and solidarity taxes and what not, they have a 19% sales tax (VAT) and a confiscatory gasoline tax. So maybe they'll raise their voice some day.

January 27, 2012 |

Wolf

Excellent info on business sentiment in Germany- thanks!

January 28, 2012 |

Hawkeye760

Thanks Hawkeye.

January 29, 2012 |

Wolf Richter

No german taxpayer will revolt, no one will revolt.

Its not in there genes.

Before they revolt something really really bad must happen.

Its as one of their kings once said:

Ease is the citizens first duty

Smile and be happy .. things could go worse

February 9, 2012 |

Jin Tsu

Post a New Comment

Enter your information below to add a new comment.

Author:

Author Email (optional):

Author URL (optional):

Post:

↓ | ↑

All HTML will be escaped. Hyperlinks will be created for URLs automatically.