Great Analogy!

From Charles Gave of Gavekal Research:

"Germans might as well load much of their auto exports headed to eurozone countries on to a boat and sink it outside of Hamburg. It would do as much good as selling Audis in exchange for IOUs issued by bankrupt countries."

Mr. Gave goes on to point out the the ECB's TARGET2 balances continue to increase. TARGET2 is an accounting fiction at the ECB whereby bank deposits in deficit countries do not have to fund deposits that their customers transferred to more responsible banks in more responsible countries. They simply get to carry a gigantic overdraft balance at the ECB. The responsible nations carry a credit balance that is unfunded. It is a backdoor bailout that few understand. As of the end of August the Bundesbank's (Germany's central bank) TARGET2 credit balance stood at 573 billion euros. That is money that is owed Germany by the ECB. It represents nothing substantial, not even mostly worthless Greek bonds. Yet Germany continues to deny that it is being robbed by the rest of Europe via the misconstructed European Monetary Union. It has better wake up before its economy is completely depleted of capital.