The Bill Is $50, No — Wait — $125 Billion (and Counting) for Spanish Banks
UPDATE: I’m scheduled to be on CNBC’s “The Kudlow Report” at 7:50 p.m. this evening talking about Europe.
UPDATE , June 12: Chancellor Merkel is right once again:
LONDON (MarketWatch)– German Chancellor Angela Merkel said on Tuesday that the debt crisis in Spain was a result of “the Spanish property bubble of the last 10 years” and not simply about macroeconomic factors, according to a Reuters report. “It was right for Spain to ask for help recapitalizing its banks,” Merkel said. The European banking Authority, she added, had failed to properly diagnose the problems of the Spanish banks, according to the Reuters report. Reuters reported that Merkel once again dismissed calls for jointly-issued euro-zone bonds. Bond yields on 10-year Spanish government debt breached euro-era highs on Tuesday.
* * * * * * * *
There must be somebody besides us ex-bankers-in-remission rolling around the floor laughing about the succession of headlines on Saturday afternoon. First came this:
WASHINGTON (AP) — The International Monetary Fund is estimating that Spanish banks need at least a euro40 billion ($49.87 billion) capital injection following a stress test it performed on the country’s financial sector.
and an hour or two later, this:
Spain will seek financial help from its Eurozone partners but exactly how much won’t be known until private audits are undertaken, the country’s economy minister announced Saturday. Earlier, European finance ministers discussed plans to offer Spain up to $125 billion (100 billion euros) in a bid to stabilize its banks — and ease concerns over the even bigger European debt crisis. That amount was described as an upper limit, not an indication of what Spain would ask for. After Spain’s announcement, the Eurozone ministers issued a statement that they expected a formal request “shortly” and are “willing to respond favorably.” Spain earlier said it wanted to wait for two independent audits — due by June 21 — before deciding on whether to seek aid, and it was not clear if those audits were being stepped up.
It’s $49 billion–no–its$125 billion! Either this is a particularly aggressive effort to soften up European sentiment for an even larger bailout, or it is the product of a general panic in the Spanish government and the European elite. In fact, the butcher’s bill probably will be a multiple of the promised $125 billion. As I wrote in an open letter to German Chancellor Angela Merkel last week, the 184 billion euros in bad loans to which Spanish banks admit is probably less than half the total. The Spanish elite bet the whole economy on a construction bubble which, relatively speaking, has three times the weight that America’s housing bubble did back in 2008. Even worse, Spanish banks have more than doubled their loans since 2008, apparently capitalizing interest (lending more to zombie borrowers in order to book interest payments and avoid a write-off).
Because the Spanish government and banks have engaged in a vast coverup of the financial crisis, it is of course impossible to say how deeply the banks are in the hole. My best guess (based on the lending volume of Spanish financial institutions) is that the real number will be in the $300 billion range. This is a scam, a ripoff, a Ponzi scheme, not a national economy. As I wrote to Chancellor Merkel, to save the credit of Germany and other solvent European countries, the best thing to do is to sacrifice Spain, and draw the line at helping the French banks (who own a lot of Spanish debt). My letter, published first in the Asia Times, was translated into a number of European languages and published in major Dutch, Belgian and Polish newspapers. Chancellor Merkel seems committed to the path of least resistance.
Political cowardice in the face of financial scams on an epic scale is not exactly news these days, but the utter incompetence of the European finance ministers and lack of coordination among the international organizations involved in the deliberations are deliciously new. Never before in the course of human events have so few wiped out so much credibility for so many.
This Eurodebt crisis is like a horror movie with many suspense buildups punctuated with brief respites, the monster long delayed. I have to confess a guilty fascination wondering what he’ll look like when he finally arrives.
If History is any guide, Vladimir Lenin or Adolf Hitler.
Sir, as a German I am thankful to read the truth in your articles,nobody in the German media is brave enough to tell.
These are really disturbing days.
As a Yank I’m not happy you are going through this – we are still barely treading water here, waiting for another political shoe to drop – but I’m thrilled to learn there are a few people left on your side of the pond who are still capable of dealing with reality. Was beginning to lose hope.
Most Americans hope you hang tough and do not throw every thing that you have worked for down into a government designed sewer of socialism and financial suicide. Too bad our current administration is inept, corrupt, and does not even know who our friends are. January should be a turning point for the world economy, but it will be a slow wide turn.
Either this is a particularly aggressive effort to soften up European sentiment for an even larger bailout, or it is the product of a general panic…
History is important. To all of use. The failure of history has profound effects, as we’re seeing in a number of areas now (to wit: Islam). But, when gubmints start talking about “too big to fail” I think “well, then aren’t they too big to profit, too?” Banking holds a special place among industries because they give an economy the float needed to grow. Spengler, as a layperson I say from what I’ve seen you may be the world’s foremost economic historian. IMO, this is mainly the fruit of your knowledge of the present when it comes to finance and banking.
I’m skeptical of any claim made that’ll take away taxpayer money, and the specter of a run on banks leading to near total personal asset loss and broad economic failure is a powerful motivator. It sure gives me the creeps.
Question: without the bank bailouts, here a few years ago and now in Europe, would there really be a 1930s-style run on banks?
If you wanted to destroy free-market capitalism, what would you do? How would that be different from what major world politicians are currently doing?
The only diff would be the absence of what most leaders today have: an unspoken appreciation of the prosperity economic freedom delivers. Of course, they have that appreciation cuz they need the money to operate their pious Marxian gubmints. Even Karl himself had that need.
Alarmed Pig Farmer,
Friendly tip: Using words like “gubmit” or “goobermint” for “government,” “sheeple” for “people,” etc., is the written equivalent of hanging a big neon sign around your neck, saying “I am an idiot and nothing I say is to be taken seriously.” It’s also ironic, because the obvious intent of using such terms is to portray someone else as ignorant, while actually having the opposite effect. Plus it alarms the pigs.
If you read carefully, you will notice that David Goldman and other serious writers use standard English.
Don’t mean to hurt your feelings, just trying to help.
“…standard English.” Hmmm
No hurt feelings, we the unwashed and undereducated tend to ignore extreme condescension. Become familiar with the term, “sarcasm”.
–related, “sarchasm”: (n) the deep ditch one is in when one is oblivious to the sarcasm and then announces same to present company.
You really do hate Americans with a passion, don’t you? Pathetic.
BTW, my children serve in the US military, do yours?
‘Standard’ English?
As Bugs would say – what a maroon.
… the written equivalent of hanging a big neon sign around your neck, saying “I am an idiot and nothing I say is to be taken seriously.
This is probably true for people who judge by style instead of by content. I care about content, and that includes the fact that the mint is greatly featured in modern gubmints. I couldn’t care less how you react or what you think, and am certainly not looking for your advice.
That’s the reason we’re heading towards big trouble, entirely predictable trouble: people nowadays put form over content, so the ruling elites give them the form they want and keep the content for themselves. With vapidity comes opportunity.
Please, Mr. Spengler,
don’t disturb, everybody is watching the soccer match.
Not joking.
This *ss-covering blather from Spain should be named … “The running of the bull”
More important, nobody seems to be saying where this $125 billion for Spain is coming from. The Europeans are great for promising you the moon and then delivering nothing. How many times had the Europeans come to the “rescue” of Greece, only to have each plan eventually fall apart? The Europeans make these grand announcements just to calm the stock markets and then when things settle down a bit they decide not to pay, or at least not pay as much. All it does is kick the can down the road for a few more months until the whole thing explodes in their faces again. And it will always be this way until they fundamentally change the way their welfare states operate. And since that will never happen, there will never be financial stability in all of Europe.
So… we are about to find out if our bank bailouts were necessary? We’ll see what happens to Spain when their banks get declared insolvent.
The outcomes are:
a) their assets get bought up on the cheap in bankruptcy; the depositors get their deposits made good by the sales and by the government; the banks then get run by competent people; and the people who engaged in the fraudulent behavior get prosecuted.
b) the government just gives them a great big handout, thus rewarding the jackasses who made this mess, and no one gets punished.
“So… we are about to find out if our bank bailouts were necessary? We’ll see what happens to Spain when their banks get declared insolvent.”
Marc – I’m sure you know the answer to that question as well as many of us here. All it did was cover bets the high rollers made that were about to blow up in their collective face. It wouldn’t have been the Armageddon we were told it would be.
Letting banks go belly up would do the one thing that gets them in trouble – they’d quit betting on the next bubble. And they are quite capable of sorting out a bubble from a good investment – its just that like those gambling fools in Vegas they just can’t help themselves since there is so much to gain. Provided they don’t get caught at the end of the bubble. Taxpayer’s money should not be used to cover bubble bets. Period.
All it did was cover bets the high rollers made that were about to blow up in their collective face.
Reading this, for some reason Jon Corzine popped into my mind. I don’t know whether MF Global hurt itself with Spanish sovereign debt, but it did manage to misplace $1.8 billion in investor money. I wonder if the money was lost when cash stuffed manila envelopes got wedged between the filing cabinet and the wall.
Jon, the former Gubmint Sachs CEO who was cited by both the Prez and VP Biden as their “closest advisor” on how to handle the financial crisis in 2009, is looking to get off with a wrist slap on the mislaid $1.8 billion. Talk about high rollers. Those high finance guys are always so well connected, ya gotta love ‘em. You also gotta pay for them.
Good ol’ Jon. Biden has in the past referred to him as “the smartest guy in the room”. If the only other guy in the room with him was Biden, then it would have been true. After forever “misplacing” the $1.8B, Corzine still bundles contributions for Obama.
It is not just Europe. US debt is also from Marxist policy. The housing bubbles for both Europe, and the US needs to be talked about along with entitlements like medicaid, welfare food and housing, and illegal alien invasions to both Unions. I mean Europa Union, and the US.
When countries have Central Banks, and Marxist policies, it appears they do not have National interests.
What is/are the main goal/s for the Central Banks? Control? He who controls the money need not worry about who makes the laws. Are pensions, 401ks, and IRA’s in the crosshairs?
There is nothing explicitly ‘marxist’ in any American fiscal policy……….
It’s mere self-serving venality – the desire to gain a benefit without paying for it directly, but to have others pay for it eventually. Or, if anybody is truly enlightened, everybody forgets about it and we’re all happy……’>………
the utter incompetence of the European finance ministers and lack of coordination among the international organizations involved in the deliberations are deliciously new.
Steady there, not quite new: let’s not forget the UN or those wild, wacky and never-elected-much-less-accountable grandees in Brussels…
Meanwhile, today’s announcement seems parentless: MarketWatch reports the source of the messily spun announcement was ‘the Eurogroup’; they quote this mysterious organization at length. Apparently ‘the Eurogroup’ didn’t exist until last night and was invented on the fly by some anonymous well-wisher, likely not a million miles away from the offices of Van Rompuy, Barroso and Junkers, the bureaucrat’s bureaucrats at the bottom of the Brussels barrel. http://tinyurl.com/ccnxaba
It seems likely now that all market-moving participants — states, agencies, banks and institutions of all kinds — have now finished their analyses and are simply marking time in the highest-stakes game of musical chairs in history. Like the rest of us, beneath the chatter about fat tails, black swans and 7-sigma events, they haven’t a clue what the catalyst will be. Meanwhile, say something, say anything — but be ready to bolt for the exit when the music stops and hope you can execute the game plan well enough to stay afloat.
There will be a price to pay, you can be sure.
Meanwhile, hey, there’s time for a bit more bread’n'circuses: Spain and Italy meet in the European cup today and Rafa Nadal’s bangin’ away in Paris, to keep the proles down. But nothing will stop the Greek election on the 17th, or the fact that the ice is melting beneath Merkel’s feet.
The group has no official name, but is colloquially called the “Euro Group” (formerly Euro-X and then Euro-XI in relation to the number of states adopting the euro), was established at the request of France as a policy co-ordination and consultation forum on eurozone matters. The December 1997 European Council endorsed its creation and the first meeting was held on 4 June 1998 at the Chateau de Senningen in Luxembourg (Wikipedia)
Eurogroup has aso secret funds, and authorises ECB secret interventions:
“There has been no official announcement. No terms or conditions have been disclosed. But Greece’s banking system is being propped up by an estimated €100 billion or so of emergency liquidity provided by the country’s central bank — approved secretly by the European Central Bank in Frankfurt.
Extensive use of “emergency liquidity assistance” (ELA) to help banks in the weakest economies has been one of the less-noticed features of the eurozone crisis. Separate from normal supplies of liquidity and meant originally as a temporary facility for national authorities to use when banks hit problems, ELA proved a lifesaver for the financial system Ireland and is now even more so in Greece. As such, it has given the ECB — which has ultimate control over the facility — considerable power to determine countries’ fates.
Nevertheless, ambiguity over how the ECB would really act gives it sway over eurozone politicians. An ECB threat in late 2010 to pull the plug helped persuade Ireland to accept an international bailout plan. No doubt, its governing council will hope to concentrate minds similarly in Athens.”
http://www.cnbc.com/id/47513542
there aremany things that we aren’t told by the Bilderberg plebe
I guess there’s always some council or committee to make the biggest decisions as privately as possible, usually to avoid criticism and interference from the population it represents. The EU was a pipe dream from the very start of the idea decades ago, but with the Euro came the need for the ECB, and with that the need for ELA to prop up the fantasy. Even Potemkin buildings need props.
But what is unfathomable to me is why the EU begat the EAD, the European Arab Dialog, which is leading to so many huge permanent costs in exchange for no identifiable advantage. Go to Malmo or Birmingham and you’ll see what I mean.
This seems to be the official source:
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/130778.pdf
There is no identifying info other than the url. Secretive and coy understates it. Are we all impressed? More important, how about bondholders based outside the EU, i.e., not captive to Brussels horseshit. Sooner or later, most likely sooner and all of a sudden, ‘confidence’ in the EU will evaporate entirely and sovereign loans just won’t rollover. CRASH BANG WALLOP!
Imagine you’re an institution outside the ezone, not beholden to Brussels in any way: would you want to be part of this charade? Remember, you have to justify your actions to your bondholders/shareholders/investors. This time around, you don’t even have the comfort of relying on the rating agencies, who are finally all pessimistic. Lotsa litigation likely, then.
“The One Thing You Never See In Europe: Bank Failures”
“The euro system leadership knows that bank runs can cause their 17-country, currency-zone system to collapse. All of banking history is supportive of this fact. Therefore, they faced the issue when their backs were to the wall”.
“Europe can fix or stopgap any illiquidity. They have the tools with the various funding sources like ESM, with the ELA and with the hands of the European Central Bank (ECB)”.
http://www.businessinsider.com/the-one-thing-you-never-see-in-europe-bank-failures-2012-6#ixzz1xTm5Kx88
“Europe can fix or stopgap any illiquidity.”
Well of course ‘they’ (the frightened apparatchiks in Brussels) can, it’s called running the printing presses, in the case of the EU just a question of accounting balance transfers choreographed via the ECB. History has hundreds of examples.
What they haven’t fixed — and can’t and therefore won’t fix — is the systemic problems of insolvency, sovereign impotence/incompetence, and structural contradictions. That penny hasn’t yet dropped in the heads of the EU masses, who are nothing if not slow. As for the typical EU pundit, well, a degree in sociology or socialist journalism simply doesn’t prepare the self-styled ‘elites’ for what’s ahead.
What an utter clown show this Eurogroup is! They announce a Spanish bailout. Spanish debt prices pop up, and then crash, along with the stock market everywhere.
I predict a hidden buyer will buy Spain for cash, and rename it “Goodfellas”
and he would not be disappointed
Spain – The Supermarket to the World.
Folks, at least during this malignant, metastasizing financial uproar savor the irony of Germany….Germany…having evolved as the financial backbone of the same Europe it has savaged since 1870-something. Spain and France….looking to ….Germany….as the source of new money after bad.
Savor our author Goldman here, as a former banker “in remission”, [his term] writing an “open letter” to the present day Chancellor of Germany ….Angela Merkel, she of the incredibly expressive face, pointing out that the Spaniards have probably underestimated their needs…..I can just see that lower lip of hers protruding….almost cantilevered…is her tongue sticking out?
All of these entangling ironies should not only be savored (not too maliciously, mind you…no one is immune to this greed…) but studied as lessons to be applied as broadly as possible to us Americans on the cusp of Chameleon-in-Chief-Obama’s socialism with our demographics preventing enough of a tax base to pay for the burgeoning number of us Seniors who’ll be “entitled” by giddy fiat to receive pensions of ever decreasing purchasing power.
Those greased presses of our Bureau of Engraving here on 14th Street will be rumbling long into the future.
Those “Entangling Alliances” cautioned against by our First Commander-In-Chief have big fat letters on them spelling out…”PANDORA’s”.
Ironies abound.
…..head smacking Irony-omitting moment…..
Does anyone know how the existing Sharia-lawfare will apply here to these empty Treasuries in bedraggled Europistan as the Muslims/Islamists will be inheriting a linked-in(!) Euro lofted by a hot air pump? “Hoist on their own petard”?
It’s a safe bet that the Saudis and Iraqis coveting their new oil revenues will be very reluctant to bend their rules on ….gasp!…hold a breath here for emphasis…evil capitalistic, materialistic…Europistan’s Interest installments.
Hypocrisy rampant.
There will be a great rending of Imams’ head-wraps and gilded garments. Fatwahs will be hurled as lightning bolts, and fall clanging down on burst Bourses.
What is going on in Europe now is nothing short of a spectacle. All these steps are being taken to forestall a market collapse. In the end, Europe – as an economic entity – will gradually, steadily decline in importance until no one cares about these silly little maneuvers anymore.
When the Soviet Union collapsed, everyone was amazed how quickly it went, and with so few casualties. After all the MAD (mutually assured destruction) scenarios we were fed during the 1970′s and 80′s, the Evil Empire went out with a whimper, afterall.
Europe will probably go in the same sort of fashion. No abrupt collapse, no barbarians storming the gates. Just a slow dribble of economic erosion of the assets, with investors discreetly heading for the exits.
Don’t ever, ever belittle, in your flippant phrase, “After all the MAD (mutually assured destruction) scenarios we were fed during the 1970′s and 80′s,..”
Good grief…do you think we were “fed” that deadly reality as theatrical scenarios? Was that “feeding” something provided by those U.S Administrations since 1946 until 1989 for the benefit of Lockheed, Boeing, and myriad others…Dr Strangelove-like?
Not that politicals aren’t shorting the market or selling the rally on each and every one of these announcements.
“What an utter clown show this Eurogroup is!”
An increasingly rich and well connected clown show- failing up!
Buying up all that depressed real estate next to their Egyptian and Russian friends, I’d guess.
“Europe will probably go in the same sort of fashion. No abrupt collapse, no barbarians storming the gates. Just a slow dribble of economic erosion of the assets, with investors discreetly heading for the exits.”
I disagree. The USSR was never much more than a Third World country with atom bombs and rockets. There wasn’t much of a collapse, for they didn’t have very far to fall. For millions of rural Russians, life went on much the same as before. Western Europe, being much more dependent on high technology and a complex infrastructure, is going to experience a much more radical change in standard of living.
David,
How about a little free investment strategy for us mere mortals. What vehicles do you think offer the best hope for wealth preservation in the short and medium term?
In the titanic struggle between deflation and inflation, bet on the Titanic to run true to form.
Invest in airlines, then? Thanks!
If I were a good communist, I would want to delay Europe’s and China’s financial collapse until late January 2013. Why?
–so Obama can hook Santa off the stage and show the captured –i mean, captive –audience his new Busby Bolshevik song and dance troupe ?
I just cannot resist a short comment. I never thought a banker, let alone one in remission, could announce the work of the Un-Holy Spirit. This morning at the gym, I made some “converts”. To what? Effectively to the Tea Party. Why? Simple! The normal (and not so normal) German citizen does not want to pay for the splurges of, well, Greece, Ireland and, and …now Spain. I used to visit Spain yearly and watched the government induced building boom(as was the one in America), at times in places where the transportation infrastructure was not yet fully built. There are literally in places ghost towns not yet fully constructed. Dead on arrival! Behind my “missionary” endeavors hovers the Un-Holy Spirit, revealed my Goldman, working wonders. It seems that Germans (including naturalized Germans with darker skin complexion than Obama) simply do not want to pay for the deficit joys of others. This is sound thinking, though unholy news for the big spenders. Alas, I am not so sure that Merkel fully controls the flow of things here in Germany. The Obama-ite types appear to me to be gaining the upper hand. So, my converts might soon be condemned to a monetary martyrdom. This might be alright, but MY money is mostly in euros and I pay taxes here as well as in America. I may soon find myself soon in a double fiscal purgatory. The point of this silly comment is simply that the 50->125 billion dollar almost overnight inflatio, produces some enlightment in the eyes of those who must pay for the deficits. This all so human trait allows me to make America comprehensible to Germans. A few days ago a Robert Goldmann, a German living in NY, wrote a perfectly distorted article in a German newspaper about what is going on in America. The man, I presume no relative to our banker, simply cannot understand the dynamics in America because he remains caught in the misinformation that Germans receive by means of the CNN->German news connection. I wish simply to thank Mr. Goldman for his aid in my “missionary” work amongst the unbenighted.
the German plebe, like any other EU ple aren’t requested to give their opinion.
Germans taxpayers so far didn’t give money awway, unlike their banks collapse, which isn’t still in the EU/Potzdam agenda, though expected by the world financial plebe.
“… to save the credit of Germany and other solvent European countries, the best thing is to sacrifice Spain and draw the line at helping the French banks (who own a lot of Spanish debts..). Why help French banks? Because American shareholders own French debts? Except the useless SPD ( Hollande means victory) and die Grünen(Trittin was invited by Bilderberg, Welt online reported), nobody wants to save the French. The term “French” stands for French glory, nothing else. And French glory is and was always related to German misery. I will always prefer Switzerland to France.
“Let’s begin with the observation that irresponsible borrowers can’t exist without irresponsible lenders. Germany’s banks were Greece’s enablers. Thanks partly to lax regulation, German banks built up precarious exposures to Europe’s peripheral countries in the years before the crisis. By December 2009, according to the Bank for International Settlements, German banks had amassed claims of $704 billion on Greece, Ireland, Italy, Portugal and Spain, much more than the German banks’ aggregate capital. In other words, they lent more than they could afford”
“Hey, Germany you got a Bailout too”
http://www.bloomberg.com/news/2012-05-23/merkel-should-know-her-country-has-been-bailed-out-too.html
“Moody downgrades 6 german bank groups”
-http://www.fxstreet.com/fundamental/market-view/european-crisis/2012/06/05/03/?fb_ref=.t86djntko54.like&fb_source=timeline
you don’t believe it?
-http://static3.businessinsider.com/image/4de7a71c49e2aed24d290000/chart.jpg
We don’t need your hypocrit charity, you’re the epitome of the very persons with whom we don’t want to be associate with,
spare me the refrain of french glory, you’re just a nostalgic of the Reichs era, and each time you tried to rule Europe you ended into a wall !
Every listed financial institution in the Euro-zone is INSOLVENT and has been since 2008. Here in the United States the only “real world” solvent bank at this time is Goldman Sachs, all the rest are surviving on mark to unicorn accounting and stealth bailouts via the Federal Reserve.
As with all things none of this matters, until it does… the problem is in Europe this systemic insolvency is now starting to matter, soon it will be the United States turn… get your popcorn, bullion, beans and bullets ready.
The nature of our banks: Since some years Germany has only two relatively big banks, the Deutsche Bank and the Commerzbank. All other banks have been taken over by Italian or Spanish banks and some Landesbanken run into difficulties because they hit rules. At least the Deutsche Bank operates more from London than from Germany. The average Germans incl. small German companies are customers of Raiffeisenbanken, Volksbanken ( cooperate banking associations) and Sparkassen. It is very difficult for any of us (private persons and small companies alike) to borrow money. We have to say the truth about our income, our expenditures and all the rest. Not saying the truth about our financial situation is some sort of criminal act. Responsible lenders? What a joke. All responsibility is on side of the borrower. We want Porsches too and we would even pay for them – at least the price an American has to pay. We tend to pay more and the arguments applied are very weak. I persume that lending and borrowing is a cultural affair. We even cannot buy a house and then walk away when we can no longer pay for it. And we have to pay back the amount of money stated on our Mastercard every month. We have not several cards we may play around.
Somehow we are very poor people – in every respect.
The German government subsidizes automobile exports to the U.S. to make them more competitive. This is typical of Germany’s policy to promote exports. The German people pay for the subsidies in the form of higher prices and taxes.
Yes, and DeutscheBank and Commerzbank are large but not strong or well run.
As for cars, the German VAT (sales tax) rate is currently, what, 19%? Look at it this way, there is a fate worse than death itself: you could be French (19.6%) or Norwegian (25%). Punitive taxation is just part of daily life in Euro-Utopia.
For now, the crushing weight of socialism is still seen as unAmerican in the US, though our socialist president isn’t convinced.
din’t notice that you were so happy in your paradaise with no taxes
Just in case any of you missed this. And in spite of our host’s (and PJM’s) love affair with the Germans, here is a link illustrating the most rational solution, short of bringing the Germans to heel in an united Europe. All the rest is hot air. Enjoy
http://www.bloomberg.com/news/2012-06-10/forget-greece-a-german-euro-exit-might-be-better.html
Yep, it’s way past time that we take account of moral hazard and let these banks fail. Sure, the misery to the “common people” will be significant, but if people are so dumb, and their elites so corrupt, as to not regulate their banks properly, to keep them from engaging in risky behavior which threatens the entire financial system, they deserve what they get. Regulate your financial institutions in a proper way, so they cannot create outsize risk with depositor’s funds (like we do in America)or suffer.
An item just came across Bloomberg citing a Fed study that the average American family lost 39% of its net worth between 2007 and 2010. That’s pretty ugly. Guess what: the average European family also has lost a pile of its net worth. The Irish and Greeks have seen this already. But in Europe’s case, the phony paper isn’t subprime debt or home mortgages, but bank bonds in pension funds and insurance companies, that is, regulated institutions. So the politicians have to break the news to people that they are a lot poorer than they thought. That’s the source of the crisis. The cautious, risk-averse, pension-happy Europeans are finding out that their end-all and be-all, namely personal security, doesn’t look so great. And they are very, very angry.
It seems the risks the Americans took was not worth it. Risk or risk-averse the result was the same for the common people: no money in the end.
Most people don´t understand true values. And the grand-scale finance industries use this non-understanding for their own evil game of course with the help of their political departements that means our governments.
The social democrats began to recommend and organise financial products around 15 years ago in Germany. Chancellor Schröder did it for his finance friends (AWD). Stupid, complicated papers sold by nasty people. If you bought gold, you know, you are much better off now.
Somehow, I don’t think the political Industry is going out of business anytime soon- there is still a quite a lot left to steal
There is nothing to add. Only how is the next or the running stealing program structured and will they be able to let it end not i a general catastrophe.
Ah a Franco-German row. Good times. But both sides are right. The German people are mostly being exploited by offshore London based banksters. The recent French government moves though won’t end well either.
You’re a loonie. The German people are being exploited by lazy Spanish real estate speculators.
Of course, there are several parties who want to loot us. The whole €-game developed in this direction. Bankers are not the main problem, it is more political. The French know why they chose their left in both last elections. I even understand that, but if the Germans do the same we can forget Europe definitely. I have seen this miserable feudal society the first 30 years of my life in the East of Germany. There are many people in the old Europe who need their bankrupt now.
–not just another Franco-German row, but another set off by a Spanish succession. This’s number –what –three or four since young Louie XIV the Sun King at the turn of the 17th century took on a few Prussian states and the British in the War of the Spanish Succession.
Not sure why no one ever thinks to post the video for you appearances on Kudlow
http://video.cnbc.com/gallery/?video=3000095866&play=1