Tuesday, 16 November 2010

A foul pact between the banks and the political class

The extent of the foul pact between the banks and the European political class at the expense of the people of Europe is becoming apparent. As leading Irish economist Morgan Kelly wrote on Monday 8th (H/T EU REFERENDUM)
September marked Ireland’s point of no return in the banking crisis. During that month, €55 billion of bank bonds (held mainly by UK, German, and French banks) matured and were repaid, mostly by borrowing from the European Central Bank.
Until September, Ireland had the legal option of terminating the bank guarantee on the grounds that three of the guaranteed banks had withheld material information about their solvency, in direct breach of the 1971 Central Bank Act. The way would then have been open to pass legislation along the lines of the UK’s Bank Resolution Regime, to turn the roughly €75 billion of outstanding bank debt into shares in those banks, and so end the banking crisis at a stroke.
With the €55 billion repaid, the possibility of resolving the bank crisis by sharing costs with the bondholders is now water under the bridge. Instead of the unpleasant showdown with the European Central Bank that a bank resolution would have entailed, everyone is a winner. Or everyone who matters, at least.
The German and French banks whose solvency is the overriding concern of the ECB get their money back. Senior Irish policymakers get to roll over and have their tummies tickled by their European overlords and be told what good sports they have been. And best of all, apart from some token departures of executives too old and rich to care less, the senior management of the banks that caused this crisis continue to enjoy their richly earned rewards.
And Peter Oborne writes in today's Telegraph;
The peripheral eurozone nations are being prevented from taking this sensible move (ditching the Euro) by a cynical alliance between the big banks and the Brussels elite. The banks cannot countenance any contraction of the eurozone because once Greece, Ireland, Portugal and Spain pull out, they will have no choice but to default on their debts. Such a move would bankrupt almost all European banks. Between them these four countries have a combined sovereign debt of well over £1 trillion. A very large part of this debt is owned by the major European banks. The Bank of International Settlements estimates, for example, that French financial institutions have lent the equivalent of 37 per cent of total French GDP to these failing countries.
So, reader, you are not going to be fleeced by George of another £2,000 this year to help some poor ordinary sod in Oughterard, Porto or Barca - though painful, I could grit my teeth and bear this - but to keep some privileged bastard of a Euro Banker in luxury. And that's way too much. It must end here.   


Weekend Yachtsman said...

I have heard that one of the aims of the Eurobosses is to gain control of Irish economic policy to the extent that they can remove Ireland's low rate of corporation tax, which they regard as "unfair tax competition".

Apparently this will be a condition of the forthcoming bailout, which we - naturally - will be helping to pay for (by borrowing more money ourselves).

As Richard North keeps saying, it really is time to rise up and slaughter them.

Anonymous said...

Yeah I read the Irish Times article a couple of days ago - it really lays bare the financial carnage that is yet to come and the depravity displayed by politicians in crewing over the people:

1) There are going to be mass mortgage defaults in Ireland - the people will realise there's simply no point paying a 250K mortgage on a property worth 150K.

2) He states quite simply the Irish politicians were presented with a stark choice, protect the Irish people or protect the French and German banks and screw the entire country and they chose the latter.

But overall the Irish are totally screwed, and we are going to get mullered...

If they do take the bailout, all it means is they have more debt and the problems cope up again but worse in 2 or three years time..