PJ Media

I don’t think you will like what is said about the German Landesbaken here:

Interesting stuff Mr Livesey. Let me try and match up to your standard.

The seizure of Cajasur has not attracted the attention of we bloggers in the way I might have expected, despite a number of mentions by correspondents in these pages. I think it is mightily important.

Banks around the world, and most certainly across Europe, are exposed to many bad debt risks. The Italians have just removed the requirement for mark to market on bond holdings. why, one might ponder, do such a thing. Plainly the only reason can be to avoid Italian banks having to own up to trading while insolvent. The Swiss are famously opaque. French institutions often represent channels for their government to indulge in veiled trading and strategic acquisitions, or the funding thereof undertaken by key French industries. The German Landesbanken have been widely discussed vis a vis having massive undisclosed liabilities which if properly accounted would also render them insolvent. Spain (a country I love and admire) has had serial banking scandals in the boom years and very clearly the cajas must at best be in parlous condition given their property sector has utterly collapsed. add that to horribly high unemployment and it is difficult to see how the Spanish government can magic up the funds to rescue Cajasur, let alone if any others fail. In my work I have done business with European and other international institutions very widely, and can say with great conviction that the accounting perpetrated by most of them, barring usually the Aussies, Kiwis and Yanks, bears negligible relation to reality. Yes, I’m including the Germans in the list of Booker Prize nominees. China? Fantasy central.

My point?

For years, many institutions, including national governments, have lied themselves silly about their finances, sometimes underplaying profit, often refusing to account for losses or accrue for liabilities or bad debts. A prime example of fraud-raddled malfeasance is of course the EU itself. The consequence is that many are in truth bust (they may not even know it themselves), and it is nigh impossible tobe sure which are sound from unsound. That is one reason Uk gilts are seen as a safe haven. whatever else, they are obviously considered to be less prone to false book-keeping than most others.

The further consequence is the inevitable paralysis of markets, and that is why I think there will be a double dip, worse than before and probably accompanied by major civil unrest. I even wonder if we will not see a government overthrown. Extremism foments in just these circumstances.

Just think, all this for the sake of some votes and some bonuses.
Jonathan mercer
on May 26, 2010
at 05:57 AM

Which is found here: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7765383/Double-dip-fears-over-worldwide-credit-stress.html