One month after Germany implemented border controls with Austria in order to stem Europe's worst refugee crisis in history, in a move that we predicted is the beginning of the end of Europe's Schengen customs union, things are going from bad to worse. As we wrote on Friday, following the latest escalation in the European anti-Schengen falling dominoes which took place after Hungary closed off its border with Croatia only to unleash a new migrant passage through Slovenia, which is likewise expected to close its border shortly...

... Germany's untouchable until recently Iron Chancellor Angela Merkel is facing of a "national disaster" at home, where politicians across the spectrum increasingly demand shuttering the borders as Germany expects up to one million migrants this year, or else hinting it will be Merkel's scalp.

"The chancellor is walking on thin ice," judged the conservative daily Die Welt, pointing to a "growing gap" between Merkel and the base of her centre-right Christian Democrats (CDU) who demand she stem the record influx. "The chancellor believes the nation can manage the crisis, but this belief is rapidly vanishing in the country," said the newspaper.

Popular unease with Merkel's actions has also manifested itself in tumbling support for Merkel's CDU, which according to a Bild poll, has seen its approval rating drop to 37%, the lowest since May 2013.

But until now, despite rising anger, there has been no firm recommendation how to approach the unprecedented inflow of Syrian migrants, among which there are increasingly more frequent media reports of terrorists, either of ISIS or al Qaeda origin.

That changed earlier today when none other than Germany's police union chief, Rainer Wendt, called for a fence to be built along the country's border to stem the flow of migrants.

Wendt's call is simple: end Europe's customs union, one where cold war border fences are once again the norm.

He told the "Welt am Sonntag" newspaper that after Germany led by example, other countries would then follow suit: the police union chief said the move would trigger a chain reaction in other European countries which have seen hundreds of thousands of refugees from Syria and elsewhere flood over their borders.

"If we close our borders in this way, Austria will also close the border with Slovenia. That's exactly the effect we need," Wendt, the chairman of the German Police Union (DPolG), is quoted as saying.

Hungary enlisted prisoners and the country's military to help construct a fence along its border with Serbia.

Indeed it is, however such a domino effect would confirm what many have been saying for years, namely that Europe simply can not exist as a borderless zone.

According to Deutsche Welle, the German then voiced support Germany's plans to create temporary migrant transit zones along its border, which would see people filtered according to their likelihood of gaining asylum. But he said that would only work with a frontier sealed by a new fence.

The transit zone concept has been criticized by one of the German chancellor's main coalition partners, the Social Democrats (SPD), as inhumane and impossible to implement.

Not surprisingly, Wendt's comments contradict the German government's fierce condemnation of a similar 3.5 meter (11.5 foot) fence built by Hungary, along its 175 kilometer (108 mile) border with Serbia , to keep irregular migrants out. The structure, which was finished last month, was accompanied by new draconian measures to punish anyone who tried to cross the frontier.

And just to make sure that Merkel heard the police union chief, he also hinted at a veiled warning of what will happen if Merkel keeps ignoring the migrant crisis: Wendt said Germany was facing "social unrest" due to the large number of migrants entering the country.

"Our internal (law and) order is at risk...Someone needs to pull the emergency brake now," he cautioned.



Germany expects more than 800,000 people to apply for asylum this year and has recently toughened its regulations surrounding the asylum process. But Merkel has ruled out placing limits on the number of refugees taken in, adding that she was convinced the country could cope. The southern German state of Bavaria, which has been inundated with refugees crossing from Austria, has threatened legal action against the Federal government, adding that it may consider sending migrants back across the border.

Finally, for those wondering how this, too, is spun as bullish for stocks - just like everything else for the past 7 years - the answer is simple: since Germany will have to fund billion in social payments to accommodate all the new refugees, and since that spending will have to be funded with new debt, these incremental debt sales will provide the ECB with much needed debt which to monetize, which in turn will inject even more outside "money" into the stock market, if not the economy, and push the Eurostoxx, and why not the S&P500, to fresh all time highs.

Once again, everyone wins, except for the traditional loser: the middle class.