Tuesday, May 18, 2010

Bad Gold dealer puts all dealers in Congressman Weiner's cross-hairs

Congressman Anthony Weiner (D-NY) held a press conference today during which he accused radio/television talking-head Glenn Beck and notoriously dissatisfaction-producing precious metals dealer Goldline International of engaging in an "unholy alliance" to "cheat consumers," and swore to save us all from Goldline and ourselves.

As covered in a CBSNews article and others, Mr Weiner's claims against Mr Beck and Goldline included the following:

1.) Goldline uses "aggressive sales tactics, conservative spokespeople and rhetoric to sell over-priced gold coins to unsuspecting consumers."

2.) Goldline's compensated "conservative spokespeople" use "their shows to prey on the public's fears of inflation and socialist takeovers while actively promoting the purchase of gold coins as insurance against this purported government overreach."

3.) Goldline spokesman Glenn Beck and others tell "tall tales about the future of gold to sell overpriced coins that can be bought somewhere else for cheaper."

4.) Goldline "grossly overcharges" for coins and "formed an unholy alliance with conservative pundits to drive a false narrative" that gold is a good investment.

Now, after reading the above list of "amazing" discoveries uncovered by the relentlessly rock-flipping Mr Weiner, you might be thinking, "Uh...Okay. We've known this about Goldline for years. So, I'll stipulate that Goldline did do all of those things. . .

. . . So what?"

Exactly! "So what?" would be the natural response of a free-enterprise respecting, libertarian-leaning, freedom-loving American who has no interest in being protected from his/her own mistakes--in gold or any other market--by an overbearing and overintrusive government that declares itself to "know better." And, therefore as you would expect, this response is galaxies away from the reaction of Mr Weiner, who, apparently, does "know better" than any of the thousands of ostensibly content (braindead?) Goldline customers, and better than anyone else who has purchased metals under the current market standards!

For the record, I have never done business with Goldline, and I don't ever intend to. I don't have a problem with Goldline: I just think they're outrageous expensive and unethical. And guess what? I didn't need Mr Weiner's amazing investigative super powers and rhetoric-packed press release to tell me that Goldline's premiums were way too high, their prices way too inflated, and their sales techniques way too high-pressure. Nah--turns out I can figure that out all on my lonesome, and did so years ago with a single phone call. In fact, if memory serves me correctly, I believe that phone call ended with my question, "Are you serious, or was that last price a joke?"

As it turns out, I didn't need a congressman to tell me when I wasn't getting a good deal at Goldline. But again--I don't have a problem with Goldline. Lots of other people apparently think that the huge premiums are worth the "buying experience" from Goldline, and they trust Goldline as a good dealer. I don't have a problem with these people, either . . . I just think they're crazy. You can check out Goldline's online store tonight for a perfect example. Note, the price will change on this link, but this is a link to the very limited online store. Most Goldline products are sold over the phone. Right now, spot gold is $1,216/oz. Goldline is listing an American Eagle 1-oz gold round at $1,337--a whopping $121 over spot. For comparison, APMEX has the same gold round for $1,277, and BD has it for $1,279, and larger purchases at either will reduce the premium to $49. It takes two minutes on the internet to figure this out: no congressman necessary. And considering that Goldline has such expensive mouthpieces as Glenn Beck, Laura Ingraham, Mark Levin, and Fred Thompson, it also takes only about two minutes to figure out why their premium is nearly 2.5 times that of APMEX or BD. Again, we don't need a congressman to tell us this.

But, of course, one congressman--Mr Weiner--thinks we do need him, primarily to protect us from ourselves. Perhaps this notion is most compactly folded into the following statement from Mr Weiner:

Goldline rips off consumers, uses misleading and possibly illegal sales tactics, and deliberately manipulates public fears of an impending government takeover – this is a trifecta of terrible business practices.”

I know that Goldline attempts to manipulate the fears of unsuspecting individuals who listen to Mr Beck and call them, but that Goldline would be able to single-handedly "deliberately manipulate public fears" is a fairly absurd statement on its face. Not to be outdone, however, Mr Weiner has matched Goldline's "tactics" with his own trifecta of terrible legislative abuse. The idea that a congressman would accuse a private company of using "possibly illegal sales tactics" without registering any specific examples whatsoever of such "illegal" practices has, unfortunately, lost its novelty through its frequency. However, that the same congressman would use this non-event as a springboard to regulate the entire precious metals market should be alarming. Yet this is exactly what Mr Weiner is attempting to do, thanks to his perception of a single dealer which happens to be widely-recognized by anyone who has done any research into dealers as one of the worst in the business.

Along with his seemingly baseless accusations of "illegal sales tactics" against Goldline, Mr Weiner used today's podium to announce his intent to pursue legislation that would impact not just his loathed Goldline, but that could burden every precious metals dealer in the country with new federal regulations. As outlined by Patrick Heller, Mr Weiner's legislative goal is to pass federal regulations that would require dealers to list:

1) "hidden fees."
2) the premium above intrinsic metal value that the seller is charging for products.
3) the price that metal must reach in order for the customer’s purchase to be profitable.

Perhaps no one on his staff advanced to inform Mr Weiner that we already have a method for determining this, and its called a calculator (assuming that a pen and paper is too complicated and an abacus is unavailable). We even have the formulas!

1.) Premium: Product price - Spot = Premium.
2.) Price metal must reach to recover premium: Premium/Spot = Premium in %, which is same % as metal must rise to recover premium assuming a buyer/bidder at spot level.
3.) "Hidden fees": anything that cannot be calculated by 1) or 2).

There is nothing here that cannot be determined by a customer on his own, and as a precious metals investor, an individual buying precious metals has his own obligations to complete due diligence. Good dealers will explain these things to new buyers. Bad dealers won't. I very much like dealer Patrick Heller's commentary on the topic, which is worth reading. As a dealer, he details the notoriety of Goldline's inflated prices, which are, again, very obvious. But, also as a dealer, he also notes that there's no law against selling an overpriced item to an eager buyer. Though he (and I) take exception to Goldline's advice concerning PM IRA's, the fact is that such advice is subjective, as is much of the precious metals market itself. Like equities or bonds, metals and commodities are not for everyone, and no one should be making any "investment" decisions without considerable research and knowledge as a prerequisite base. Mr Weiner could just as well sight his cross-hairs on 401(K) plans, which very few people even understand despite their prevalence and popularity.

This brings us to another comment by the congressman. After the press conference, Mr Weiner stated that, “Commentators like Glenn Beck who are shilling for Goldline are either the worst financial advisers around or knowingly lying to their loyal viewers.” Obviously, Mr Weiner's opinion on Mr Beck or his viewers is utterly irrelevant. Personally, I don't know what Mr Beck and others see in Goldline if they really, honestly "like" the company, but as I'm not a customer, my opinion is also utterly irrelevant. I tell everyone I know not to deal with Goldline. But the fact of the matter is that, for whatever reason, Goldline has thousands of apparently happy customers, and a few very high-profile spokespeople. Many people apparently like Goldline, even if it is only because Glenn Beck tells them to buy there. I will say that Mr Beck doesn't fool me as the most genuine person on the planet, and I wouldn't trust him to tell me the time of day. Additionally, months ago I heard a routinely-aired commercial voiced by Mr Beck for Goldline wherein he stated that he'd "toured the Goldline factory." This struck me as ridiculous and likely an outright lie, as Goldline is located in Santa Monica, California, doesn't produce any rounds or coins themselves, and certainly doesn't have a "factory" to tour. This commercial has since been changed to omit any mention of a mysterious "factory," which makes me wonder if Mr Beck was even ever there or not. Of course, it doesn't much matter to me--again, I recommend everyone stay away from Goldline, and would courteously extend that recommendation to Mr Beck, too.

As I've made clear, I'm no fan of Goldline, but I have to say that while Mr Weiner accuses Goldline of deceptive practices that do not inform buyers of risk, this is something I actually find baseless. I know that there are plenty of unhappy Goldline customers (more, more, more) who will agree with Mr Weiner, but these customers were sold by their ears and not by their eyes. Goldline has perhaps the most detailed and easy-to-read "Risk Disclosure" statements of any dealer I've seen, and this statement actually clearly identifies the best reason not to buy from them, as well as offers an explanation of spreads:

"With the exception of the most common 1 oz. bullion coins, Goldline charges clients its numismatic spread, which currently ranges from 30% to 35%, on coins and currency. To earn a profit upon resale to us, your coins, currency or bullion must appreciate sufficiently to overcome this price differential."

"To illustrate how this spread works, consider the following example. If the spread on a coin is 35% and Goldline's ask/sell price is $500 for the coin, then Goldline's bid/buy price is $325. Your coin must appreciate more than $175 to earn a profit. If you choose to sell your coin back to Goldline, you must also pay a 1% liquidation fee (the minimum liquidation fee is $15). Purchases of less than $1,500 are subject to a small lot fee of $15."

Goldline says--right there--that they charge a numismatic spread on all but the "most common 1 oz bullion coins." As I showed above, even their spread on 1-oz bullion is 2.5 times that of other dealers. The disclosure also lists a good reason why not to listen to their "Account Executives:"

"The Account Executives at Goldline are generally commissioned salespersons. Their commissions are usually greatest on rare coins and semi-numismatic coins and least on bullion related products. Their work experience, knowledge, background and training vary widely. They and/or Goldline may receive, from time to time, undisclosed compensation for recommending specific coin or currency products (including but not limited to contests, cooperative advertising, and trading profits in coins that they may own and/or sell). Goldline's employees are not licensed as investment advisors and are not authorized to recommend the purchase or sale of any product or investment other than the products specifically sold by Goldline."

Seems pretty simple to me: Goldine's "advisors" are a random group of telephone salespeople who make the most dough hawking numismatics and "semi-numistmatics," a term that is an oxymoron as far as I'm concerned. Thus, these "Account Executives" make a much better paycheck pushing buyers Swiss Francs (ie 20's) than they do American Eagles, and Goldline is notorious for pushing Swiss Francs as "confiscation-proof," and at a 35% premium. I would take vociferous exemption to assertion of confiscation-proof, and I would never pay 35% for them! This is an incredibly profitably venture for Goldline, however,as they (and everyone else) certainly aren't buying Swiss 20's for anything near spot +35%! The "Account Executives" make the best commissions on these outrageously priced coins, as well, and thus push, push, and push them. As if these shady reasons are not enough, and anyone needed more convincing, you can read the Account and Storage Agreement, as well, where you'll learn about Goldline's "unique" practice of adjusting product pricing while they wait for your check to come in the mail! From this "agreement:"

"Bullion orders cannot be accepted prior to Goldline's receipt of good funds."

There are plenty of horror stories online about this little dousey! I'm just amazed that people can read and hear a line like that, and the just drop the check in the mail. As I mentioned, it is a "unique" practice indeed: I am not aware of any other dealer that requires a commitment to buy on an unsecured price. It should make the decision of whether or not to buy from Goldline a very, very easy one.

So, Mr Weiner is right that Goldline doesn't have the best prices, and he's right that they don't have most ethical practices--but when it comes to the law, I think the have their tails covered. People are walking into this scam eyes wide shut. As long as a steady stream of Glenn Beck, Laura Ingraham, Mark Levin, and other listeners and viewer keeping calling Goldline begging to buy overpriced metal, Goldline will be more than happy to sell it to them.

And finally, there was another statement on this matter that is so especially illogical, particularly baseless, and strangely so-ridiculous-that-its-actually-humorous from Congressman Weiner's office. According to CBS:

"Simply put, Goldline is little more than a gold peddler posing as an investment advisor, an unfortunate byproduct of the Tea Party movement," Weiner's office said.

Now this is just amazing: I've heard the Tea Party people accused of racism and even blamed by NYC Mayor Bloomberg for the failed Times Square bombing, but I didn't know the Tea Party people invented gold?! That is incredible! Who would have ever thought? Here I was thinking that gold has been around for a few thousand years as the original monetary unit of investment--but I was wrong! Turns out those sneaky Tea Partiers made it all along--wow!

Now that is some amazing research by Mr Weiner and company. With a mind like that, maybe we should all pay more attention to his attempt to regulate precious metals dealers with some burdens he thinks will be good methods to protect people from themselves and Goldline. All this time we thought gold was an element, and it turns out its just a byproduct of the Tea Party movement. Cool!

You learn something new every day!

Sunday, May 9, 2010

US to foot $50 Billion for Eurozone bailout; $962 Billion plan is another massive international transfer of wealth

Breaking news tonight from Brussels, as the ECB's and IMF's weekend of collusion and conspiracy have resulted in a nearly $1 Trillion total Eurozone bailout operation. The plan to ostensibly backstop the euro stands to leave US taxpayers on the hook for $50,083,000,000 in what will be another massive international transfer of wealth.

This plan is another, separate eurozone-orchestrated bailout operation that is independent of, and in addition to, the Greek bailout adopted on Friday. To recap the Greek bailout, on April 26, I wrote a post detailing the $3.417 Billion planned contribution from US taxpayers to the Greek bondholders on a then €45 Billion ECB-IMF bailout. Before that plan could even be finalized, it was more than doubled to €110 Billion, entailing a $6.834 Billion US-backed contribution, on May 2. This second ( €110 Billion) plan was finally approved by all eurozone nations on Friday, and the IMF cleared the way Saturday for its €30 Billion contribution (of which $6.834 will come from the US).

This €110 Billion Greek bailout, however, was just the tip of the iceburg. We now know that the ECB, the IMF, and the EU and EMU finance ministers have spent the weekend colluding in Brussels to hammer out an even more massive taxpayer-backed bailout. This time the package is not for the salvation a specific eurozone nation, but for the salvation the euro itself. Last week, the euro fell 4.1% against the dollar, the most since the 2008 collapse, including a huge beat-down on Thursday, May 6, during the euro-linked 998 DJIA plunge in New York. Check out this video series to watch the drama unfold.

And now today, Sunday, an announcement has come that the ECB and IMF have concocted an incredible €750 Billion ($962 Billion) plan to backstop the faltering euro currency and its "P-I-I-G-S" bankrupt member nations, even as the "G" (Greece) has already been awarded the €110 Billion. The latest bailout is basically Euro-TARP 2010--but even larger than the $700 Billion TARP plan approved by the US Congress on October 3, 2008. Also, instead of propping up the banks as TARP was supposed to do, this ECB-IMF program is clearly intended to prop up the euro and the eurozone nations themselves. It is, according to the Financial Times, an attempt to "Shock and Awe" the bond markets into confidence in the euro. Bloomberg reported the words of Marco Annunziata, chief economist at UniCredit, as:

“This is Shock and Awe, Part II and in 3-D,” “This truly is overwhelming force, and should be more than sufficient to stabilize markets in the near term, prevent panic and contain the risk of contagion.”

Oh, sure--a central bank just knows everything is going well when it has to "shock and awe" the markets into believing in its competency, its member solvency, and its currency. Confidence in the euro remains solidly mixed. As I write this, the euro has rallied off the latest news of the huge backstop to over $1.29, from a 14-month low of under $1.26 on Thursday. Still, bets against the euro reached yet another record level on Friday, May 7, even after the Greek package was approved. A "bank funding crunch" has meanwhile developed, which is increasing both the cost of interbank lending and the reluctance of banks so to lend. Currently, interbank credit in Europe is the tightest and most fragile it has been since the collapse of Lehman Brothers in September 2008, when the bankruptcy cut the interbank liquidity strings and snapped lending to a standstill. The ECB-IMF plan announced is intended to protect the euro at any cost--starting at about $1 Trillion. From the latest Bloomberg article posted just hours ago:

"European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases as they spearheaded a global drive to stop a sovereign-debt crisis that threatened to shatter confidence in the euro.

"Jolted into action by last week’s slide in the currency and soaring bond yields in Portugal and Spain, the 16 euro nations agreed to offer financial assistance worth as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank will counter “severe tensions” in “certain” markets by purchasing government and private debt.

“The message has gotten through: the euro zone will defend its money,” French Finance Minister
Christine Lagarde told reporters in Brussels early today after the 14-hour meeting.
"Under pressure from the U.S. and Asia to stabilize markets, the European governments gambled that the show of financial force would prevent a sovereign-debt crisis and muffle speculation that the 11-year-old euro might break apart."

The $962 Billion plan makes it very clear that the ECB and IMF will take whatever desperate, confiscatory measures necessary to prevent the markets from ripping the euro to shreds, even without the consent or concurrence of the people of the eurozone nations to whom the bill will be addressed. The plan even includes monetizing the debt of member nations through support of bond auctions, and even intervention to the secondary bond markets to control the price of traded debt through the central-bank purchase of debt, if necessary. Considering this last point, you should not be surprised that the Federal Reserve is helping.

US cost, Federal Reserve involvement
Included in the ECB-IMF plan is a staggering €250 Billion ($324 Billion) from the IMF. With a 17% stake, the US contribution to save the euro, monetize debt, and otherwise intervene in the bond markets will therefore be €42.5 Billion, or over $50 Billion (at the current 1.295 conversion rate).

Additionally, the Federal Reserve has re-opened the euro-dollar swap facility. This special facility was created during the crisis to fund the demand for dollars internationally during the crunch, and all lines were closed in February 2010. Now, months later and at the request of the ECB and IMF, the Mr Bernanke has agreed to re-open the swap lines. Euro-dollar swaps are agreements between the Federal Reserve and ECB to exchange currencies with the obligation to reverse the transaction in the future; the ECB then sells the dollars to European banks, and the Federal Reserve either sells the euros or holds them. The agreement entangles the dollar in this euro mess even more than it already is, and is meant to decrease the pressure on euro in dollar terms, as banks can have assured access to dollars through the ECB's swap at a certain price. The agreement will allow the ECB to sell unlimited amounts of US dollars.

The ECB might receive more help from the Federal Reserve--not in the form of more swaps, but in the form of advice. The ECB today announced that it too will pursue the path of monetization of debt, a path well-pounded by the the Federal Reserve. Just as the Federal Reserve has recently (they claim) completed the "buying" at least $300 Billion in US Treasuries from auctions and secondary markets, the ECB will soon embark upon a monetization of euro debt in an attempt to keep the yields low and the price of financing within reach of the over-extended eurozone nations such as Greece, Spain, Italy, Ireland, and Portgual. As last week's routing demonstrated, lenders to these eurozone nations are currently demanding a serious premium in return for buying what the market considers risky debt.

This weekend's developements cast an even more suspicious angle on the market plunge we witnessed on Thursday. Like everyone else, I'm still investigating that day. I've already noticed the similarities between October 1, 2008 and May 6, 2010, as I'm sure you have too. I've noticed the difference is TARP in 2008 and euro in 2010. This $962 Billion bombshell makes these similarities even more suspicious. I wonder if the phrase "martial law" surfaced in Brussells this weekend as it did in Washington in 2008.

I won't be surprised it if did.

Saturday, May 8, 2010

Victory: Utah ousts pro-bankster Senator Bennett!

A huge victory for freedom-loving Americans in all States played out today in Utah. After 18 years in office, and seeking a fourth term despite having initially promised to run only twice, Republican pro-TARP Senator Bob Bennett has been ousted from the race today at the GOP's nominating convention. The influence of the Tea Party movement was evident at the convention--which included chants of "TARP! TARP! TARP!" upon sight of Mr Bennett.

Senator Bennett limped away from today's convention having placed third in delegate votes as the GOP searched for the 2010 Republican senatorial candidate, well behind candidates Mike Lee and Tim Bridgewater. Neither Lee nor Bridgewater have held political offices previously. But, apparently more important to the GOP delegates in Utah was the fact that neither of them voted for TARP, either!

Bennett's defeat is huge: Bennett is the first incumbent to face the consequences of his voting record, and hopefully he won't be the last. Others have retired in the face of defeat, and so this active elimination of a pro-TARP senator from the 2010 race is a powerful demonstration of the seriousness of the people, especially the Tea Party people at the convention. A significant factor in his fate was his apparent lack of concern for the Constitution, a characteristic which he made manifestly clear with his support for the $700 Billion TARP bankster bailout legislation under Bush, as well as his support for the unconstitutional individual mandate for health insurance under Obama.
Bennett recently stated (emphasis added):

"We all need to remember the constitution provides real, practical solutions. It's not just sound bites, it's not just talking points, it is a document that sets in motion ancient principles, wise principles, inspired principles, that can protect us from an overreaching government."

Apparently, Mr Bennett's bizarre interpretation of the Constitution includes the word "can" instead of "does," as well as includes an idea that underwriting $24.7 Trillion in bailouts and backstops to the banks on the banks of the taxpayers and mandating the purchase of health insurance is not "an overreaching government," as he voted for both. It can perhaps be speculated that Mr Bennett would not know the Constitution if struck over the head with it--but thank goodness the delegates in Utah today did just that!

It seems that Mr Bennett would more likely recognize a balance sheet than the Bill of Rights. Opensecrets.org has a nice breakdown of Mr Bennett's major contributors. First and second on the list you'll find Citigroup, followed by JPMorgan Chase. Other notables include:

Morgan Stanley,
American Bankers Association,
Fannie Mae,
Bank of America,
Blue Cross/Blue Shield,
Zions Bancorp,
FMR Group (Fidelity Investments),
Goldman Sachs,
PricewaterhouseCoopers, and
Wells Fargo.

You'll even find UBS AG--Union Bank of Switzerland--on Mr Bennett's donor list, including a $28,000 contribution from the Swiss bank's PAC (I will have to assume that this is the American employees' PAC). For the record, USB's headquarters is in Basel, Switzerland.

Additionally, Mr Bennett voted earlier this year to approve the re-appointment of Federal Reserve Chairman Ben Bernanke. The vote scheduled this weekend for the newly-compromised and watered-down Senate verison of Congressman Ron Paul's HR 1207 attempt to audit the Federal Reserve was delayed until Tuesday because of Mr Bennett's trip to Utah. His vote is not yet determined.

More to come?
Today's toss-out in Utah is hopefully just the first of many shake-up's to come. Every single senator and representative who voted for the bankster bailout MUST GO. Every single one.

In case you've forgotten how each member of Congress voted on the October 2008 bankster bailout plan, the Emergency Economic Stabilization Act, you can refresh your memory through the links below:

House votes.
Senate votes.

Click here to see the list of senators up for re-election this fall (called Class-III senators because their terms expire in 2011). The following are up for re-election and voted for the bailout, and therefore must go (alphabetical by State):

AK: Lisa Murkowski (R)
AR: Blanche Lincoln (D)
AZ: John McCain (R)
CA: Barbara Boxer (D)
CO: Michael Bennet (D)
CT: Chris Dodd (D) -- NOT RUNNING
GA: Johnny Isakson (R)
HI: Dan Inouye (D)
IA: Chuck Grassley (R)
IN: Evan Bayh (D) -- NOT RUNNING
MD: Barbara Mikulski (D)
MO: Kit Bond (R) -- NOT RUNNING
NC: Richard Burr (R)
NH: Judd Gregg (R) -- NOT RUNNING
NV: Harry Reid (D)
NY: Chuck Schumer (D)
OH: George Voinovich (R) -- NOT RUNNING
OK: Tom Coburn (R)
PA: Alren Specter (D)
SD: John Thune (R)
UT: Robert Bennett (R) --NOT RUNNING
VT: Patrick Leahy (D)
WA: Patty Murray (D)

Looking at this list, its more clear than ever that they are, as Rollye James has famously articulated, the "Demopublicans and Republocrats." To them, we say, "Out with the lot, and in with the Constitution!"

Good job, Utah!

Sunday, May 2, 2010

Update: US payment to Greek toxic debt-holding banks now doubles; "Unbelievably big support" for German suit to stop bailout

Earlier this week, the original planned bailout of the Swiss, French, and German banks holding billions in toxic Greek debt included contributions from the EU and IMF of €45 Billion and €15 Billion, respectively. This bankster plan entailed a contribution from the US taxpayer (through the IMF) of some $3,417,000,000. This was bad enough--but, amazingly, that amount has since doubled.

The latest EU/IMF bailout packages has risen substantially since earlier this week--substantially meaning that the plan has ballooned from an emergency €45 Billion bridge-loan to a staggering
€110 Billion ($146 Billion), multi-year total bailout operation. The IMF contribution has risen from €15 Billion to €30 Billion, and thus the associated US taxpayer contribution has doubled.

The new number for your contribution to the irresponsible Swiss, French, German, Dutch, English, and American bank-rollers of the out-of-control socialist entitlement nation of Greece is:


And to add to this outrage, this is likely just the minimum payment on what will likely be an even larger bailout. Considering that the plan has increased from €60 Billion to €110 Billion in the gap of time from Monday to Friday, it should not be surprising if that €110 Billion skyrockets to €150 Billion, or perhaps €200 Billion in the gap of time from the first payment this month to last scheduled payment in 2012. In fact, an increase is already being reported: today, the
Wall Street Journal is reporting that according to unnamed sources of the German newspaper Sueddeutsche Zeitung, Greece will need €150 Billion by the end of 2012--27% more than is currently slated.

Sueddeutsche Zeitung might be on to something, as the Germans are watching their government-sanctioned mugging and transfer-of-wealth very carefully. We US taxpayers should be outraged at the IMF-funneled contribution of $6.834 Billion, but no one even seems to understand that such a transfer is even happening on this side of the Atlantic. Conversely, German taxpayers are well aware of the operation, and are hopping mad that they are made to be on the hook for at least €8.4 Billion ($11.2 Billion) this year alone, and are in for a total of
28% of the total EU contribution. Given the size of the current package, the German contribution equates to €22.4 Billion ($30 Billion). The German people are overwhelming against any bailout of Greek bondholders, but that obviously doesn't mean much to Merkel or the other so-called leaders in the EU. On Friday, the Parliament in Berlin will vote on the measure to grant €22 Billion in aid--which brings us to the second part of my headline.

Germans threaten suit against Greek bailout
While the German and EU leaders are readying to transfer billions from the pockets of their citizens to save the bondholders of Greece, the entire operation is apparently in violation of the euro-zone's founding document, the Maastricht Treaty, in the first place. In fact, a leading German economist and retired professor at Tuebingen University,
Joachim Starbatty, declared in mid-April that the entire deal is outright illegal, and he will challenge it.

In his
March 28 New York Times editorial piece, Mr Starbatty explained that the euro "began on a grand illusion," and elaborated that:

"Germany and other “euro-optimists” hoped that the introduction of a common currency and the global economic competitiveness it spurred would quickly lead to sweeping economic and societal modernization across the union. But the opposite has occurred. Rather than pulling the lagging countries forward, the low interest rates of the European Central Bank have lured governments and households, especially in the southern part of the euro zone, into frivolous budgetary policies and excessive consumption."

Mr Starbatty continues that "single euro zone economy is false," and warns that, "In short, the euro is headed for collapse." He states that Greece should leave the euro zone, return to the drachma, devalue its currency to increase competitiveness, and allow for re-structuring and re-negotiation of its foreign debt in an "international conference." As Mr Starbatty and others have noted, however, there is
no provision within the Treaty that outlines the procedure for exiting the euro zone. But, according to the economist, somebody's gotta go: alternatively, Mr Starbatty states that Germany could leave the euro with the stronger euro zone nations and start their own currency. No where in his article is there any mention of Germany bailing out Greece, and since March, Mr Starbatty's stalwartness against any such measures has only increased with the stakes.

In the case that Friday's up-coming vote in the German Parliament authorizes the extension of €22 Billion in credit to Greece, Mr Starbatty et al have a
simple plan:

"We will file a suit at the Constitutional Court against the credit from euro states."

The group not only enjoys considerable support from the outraged German masses, but they are supported--incontrovertibly--by the Masstricht Treaty itself. Read Article 104, paragraph 1 for yourself, and see that the economist is right:

Masstricht Treaty, Article 104, paragraph 1 (pdf, pg 13):
"Overdraft facilities or any other type of credit facility with the ECB or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the ECB or national central banks of debt instruments."

Seems pretty clear to me--and to Mr Starbatty, and to millions of Germans.
Also on board is former Bundesbank governor Wilhelm Noelling, fellow economist Wilhelm Hankel, and constitutional law expert, Karl Albrecht Schachtschneider. As Mr Starbatty told the Wall Street Journal:

"We will make our lawsuit public once the law has been approved by the upper house," he said. "We can't challenge that Greece wants aid but what the government wants to do isn't in line with the Constitution. For this, we need the law. We will then act immediately."

And so Friday may be the day. As for his predictions on whether the suit will be granted the consideration it deserves, Mr Starbatty told a Czech newspaper on Thursday that, "We expect that the Federal Constitutional Court will not reject our suit, because our initiative has unbelievably big support." The bailout plan, meanwhile, has a mere
16% approval among Germans.

Good luck and best wishes to Mr Starbatty and his coalition of constitutionalists