UBS Says Save Us or Tanks In The Streets

UBS - The Swiss bank has come out with a report that declares that "The Euro Should Not Exist,"
which examines the problems of dealing with a Euro breakup. This story was broken by Zero Hedge and can be read here. This report is echoing German sentiment that it is time for the Euro and the European Union to end. However, the UBS report uses the "Hank Paulson Treatment" of a gun to the head of politicians across Europe with scare tactics that demand bail outs or there will be tanks in the streets.
This tactic worked in America in 2008 and we expect that it will work in Europe as well. On Wednesday,   the German Federal Constitutional Court will make its decision on the legality of German loans to the ECB for bailouts and if it is legal for the European Central Bank to buy the bonds of failing nations. I expect that the German Federal Court will vote to allow the ECB to buy bonds and let Germany make loans to the ECB. They don't have any choice. If they don't vote to allow bailout money,  Europe blows up on Thursday. Even if they do vote for the bailouts, problems persist in Germany.

The German Cabinet may have approved new powers for the Euro's bailout fund and the EFSF but German Chancellor Angela Merkel lost a test vote for the bailout fund yesterday. Greece has been the thorn in the side of the European Union needing bailout after bailout and is putting into question the viability of the Euro as a currency. This is what is driving the problems in Germany. The last two years of crisis have caused the Germans to question the Euro. 76% of Germans question the viability of the Euro, this is up 5% in just the last two months. The German people are tired of carrying Europes economy on their backs. They are still smarting from German Unification and the environmental cleanup of Eastern Germany. They don't want anymore bailouts. The German politicians, aren't listening and don't care. This will make for a caustic mix of priorities that will end up blowing up German politics as we know them.

So what will happen on Wednesday? The German Federal Court will vote to continue bailouts. I think you will start seeing a groundswell of anger towards bailing out Euroland PIIGS in Germany. So much so, that there will be rioting in Germany and Merkel's government will fail, which will be the end of the European Union as we know it today. Look for signs  of tension starting next week.