European Union Sets Banking Takeover for 2013

October 19, 2012 Leave a comment

By LUIS MIRANDA | THE REAL AGENDA | OCTOBER 19, 2012

The Heads of State and the Government of the European Union (EU) agreed Thursday to create a single banking supervisor. The entity should be ready next December and it will gradually begin its takeover of the banking system during 2013.

The EU leaders confirmed their commitment last June to create a bank union, which would work under the political framework of an agreement adopted back in late 2012. The announcement was made by EU spokesman Olivier Bailly, who posted a message on the social network Twitter.

Diplomatic sources explained that in practice this means that the complete takeover of the financial system by the European Central Bank (ECB) will only be completed in 2014.

With this agreement, the so-called European leaders solved the ‘differences’ regarding how to create and manage a banking supervisor. The disagreement between France and Germany stemmed from details related to the creation of the entity itself as well as the power it would have to manage all banking institutions in the old continent. While French president François Hollande pushed for its creation and effective activation for next January, German Chancellor Angela Merkel argued for delaying its implementation given the deterioration of her image at home and the coming German election.

Other diplomatic sources indicated that “Holland’s demands and proposals were simply unrealistic.” They added that even if the leaders reached an agreement by December, the process of creating such an entity  would not be completed before the end of the first semester of 2013, which means that the ECB would still require a minimum of 6 more months to fully implement its directives.

A few weeks ago, Merkel’s government questioned the schedule proposed by Hollande, while the president of the European Central Bank, Mario Draghi, added that the European Parliament would need a period of one year to adapt its structures to take on the task of supervising banks in the eurozone.

According to the European Commission’s plan, the centralized banking supervision mechanism will take effect in stages. The new system would only begin to be implemented on the first of January 2013 and initially affect banks that had requested or received public aid. The plan is to include all 6,000 banks that operate in the euro area.

The German delegation did not support the idea that the new supervising entity had the power to manage  all banks, especially regional banks.

Sources said that “the effective establishment of a Europe-wide monitoring system will take several months” from formal approval, as the ECB will have to hire some 1,600 “experts”, which in turn would further delay the possibility that the European Stability Mechanism (ESM) directly recapitalizes troubled banks.

France, Italy and Spain went to the summit with the intention to push for a quick implementation of the banking supervising entity as it was proposed by the ECB, while Germany, Finland, the Netherlands and Sweden advocated delaying its implementation.

Some countries that have not adopted the common currency said that the proposal issued by the EU needed changes because in its current form it creates a competitive disadvantage compared to banks in the euro zone.

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German Court Greenlights European Stability Mechanism

September 12, 2012

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 12, 2012

The constitutional court in Karlsruhe has decided that the German participation in the permanent mechanism for bailing out European nations is totally legitimate, but that their participation is limited to 190,000 million euros.

As expected, the German Constitutional Court on Wednesday approved the German participation in the European Stability Mechanism (ESM). The only condition is that Germany will not be an open checking account to rescue all other nations. That condition was the unexpected part of the decision.

The total proposed amount for the fund reaches 700,000 million euros, so theoretically Germany will split that amount with already indebted nations who are keen to provide funds for countries like Spain and Italy, and who are already providing money to other nations such as Greece and Portugal. The word from the court is not the final though, as the 190,000 million euros can be increased to whatever the German Parliament decides is necessary, explained the presiding judge, Andreas Vosskuhle in Karlsruhe.

The use of ESM funds to bailout European nations was initially scheduled for last July, but the need for ratification by at least 90% of participants had not been achieved until Germany issues its support, which has now happened.

Germany had requested some time to study and ratify the ESM last July, so the Constitutional Court could analyze in depth the claims for interim measures made ​​by different social groups, and the party of Eurosceptics who reported that adherence to these treaties involved a transfer of sovereignty and would require the revision of the German Constitution to weaken the supervisory capacity of the German Parliament about money of German taxpayers. The German Court has now approved of such surrender of sovereignty by accepting Germany’s participation in the fund.

The decision by the Court also requires that major decisions have the approval of ESM Bundestag either in full or a through a special committee, just as it happened with the temporary rescue fund. The President of the Board, Andreas Voßkuhle, acknowledged that some discussions were “very intense and complex.” With its decision, Germany will be the last of the seventeen countries in joining the euro rescue fund or ESM.

The impact that this decision has is less complex than the discussions mentioned by Voßkuhle, because the bankers will simply choose to make these so-called difficult decisions in private. In laymen’s terms, all responsibility has now been handed to the European bankers to spend the money of the European people as they please and with unlimited power.

The German Constitutional ruling, which also gave the green light for the Fiscal Pact, has been very well received in the markets. The Spanish risk premium (or yield spread required for Spanish 10-year bonds versus German) has decreased below the 400 basis points (4 percentage points) for the first time since April. The Spanish stock market has shot upward and the euro has also marked its highest against the dollar since May.

This means that the markets still do not understand that more debt will make it things worse. Like a drug addict, government leaders and financial market managers continue to see the consumption of more drugs (debt) as the only solution to the addiction problem.

The ruling will allow the bailout fund to become operational in the short term and therefore it will be seen as a loss publicly for German Prime Minister Angela Merkel, who in public always showed to buying sovereign debt from failing and bankrupt countries. Now, the German president, Joachim Gauck, will have to sign a legislative package that includes the ESM and the fiscal pact, the last obstacle before the fund can begin its operation.

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Merkel and Hollande want Greece Destruction to Remain on Schedule

August 24, 2012

Both Merkel’s and Holland’s stances are that Greece must suffer the pain related to being owned by European banksters. The PM’s have said they won’t move a muscle to easy the destruction and consolidation of the mediterranean country.

By STEPHEN BROWN | REUTERS | AUGUST 24, 2012

Angela Merkel and Francois Hollande presented a united front towards Greece on Thursday, telling Athens it should not expect leeway on its bailout agreement unless it sticks to tough reform targets.

The German and French leaders met in Berlin to fine-tune their message to Prime Minister Antonis Samaras, who begins a charm offensive in Berlin and Paris this week in the hope of persuading Europe’s big powers that Greece deserves patience.

Merkel stuck to her policy of deferring to a report due in September on Athens’ progress by the “troika” of international lenders before discussing flexibility on the bailout terms, but said it was vital “that we all stay true to our commitments”.

“But we will, and I will, encourage Greece to continue on its path to reform, which has demanded a lot of the Greek people,” she told reporters before a dinner with Hollande set to be dominated by Greece.

“We want, I want, Greece to be in the euro zone, it’s a desire we have expressed since the start of the crisis. It’s up to the Greeks to make the effort that is essential for that goal to be met,” said France’s Socialist president, standing alongside Merkel.

German sources who attended the working dinner later told Reuters the two leaders had vowed to work “together and with resolve” to overcome the euro zone crisis and had also agreed that “credibility” was the key to rescuing Greece.

A source close to the French presidency said the two leaders had wanted to have a “straightforward” talk on a host of hot-button topics, from the euro zone to Syria.

Hollande plans to visit Spain on August 31 and Italy in early September, the source said. Both countries have seen their borrowing costs shoot up this summer amid market fears that the euro zone may start to unravel.

Samaras has given interviews to German media stressing that while Athens may seek more time to meet its fiscal targets, it is not asking for more money. But German Finance Minister Wolfgang Schaeuble and others seemed unconvinced.

“More time is not a solution to the problems,” Schaeuble said, addressing Samaras’ hopes that his country might be given four years instead of two to push through painful economic reforms, to alleviate the impact on the Greek people.

Schaeuble said more time could also mean “more money” and Europe’s help for Greece had already “gone to the limits of what is economically viable”.

From the sidelines, Dutch Finance Minister Jan Kees De Jager – a staunch ally of Berlin – urged Germany to “stick with its strict position” and giving Greece more time would not help.

European leaders say any decisions on Greece will depend on the report by inspectors from the “troika” – the European Commission, the European Central Bank and the International Monetary Fund.

Samaras is seeking what he calls “a bit of air to breathe” at a moment of rare optimism on financial markets that the EU and ECB are poised for decisive action on the euro debt crisis.

Behind their stern public message, Berlin and Paris may have little choice but to show some flexibility, with little appetite in either capital for forcing Greece out of the euro zone.

AFTER MERKOZY

In talks that also touched on banking supervision in Europe and the role of the ECB, as well as civil war in Syria, Merkel and Hollande hoped to replicate the “Merkozy” alliance that gave the euro zone some semblance of unified leadership under Hollande’s predecessor Nicolas Sarkozy.

The German sources described the atmosphere at Thursday’s dinner as good.

The Franco-German axis has been strained by Hollande’s calls for more measures to stimulate growth, a rebuff to Merkel’s strict agenda of austerity. Some German officials say the relationship with Hollande is off to a rocky start.

As Merkel prepares to campaign for a third term in 2013, in a country where the media is taking an increasingly tough line with Greece, she cannot cede too much to Samaras – or to the French Socialist government, which is allied with her main domestic opponents, the Social Democrats.

With German patience wearing thin after repeated requests for financial help from Greece, Spain, Portugal and Ireland, Merkel is under pressure to defend taxpayers’ interests while also upholding the stability of the currency.

Merkel will be watching Hollande’s attempts to meet his own deficit targets with spending cuts and tax measures in the 2013 budget, German officials say.

“If Hollande gives up on his targets because of rising domestic political resistance, we can hardly expect more painful reforms from states like Italy or Spain,” said one government source in Berlin, speaking on condition of anonymity.

There are signs that Merkel’s conservatives, if not ready to postpone Greek reform targets, may also find ways to be flexible if the troika finds Athens is broadly in compliance.

“With Greece, we cannot change the cornerstones of the aid package or tamper with the principle of conditionality. But I can imagine we could adapt certain things within that framework such as interest rates or maturities on credit, like we already did with the first package,” said Norbert Barthle, a member of parliament from Merkel’s ruling center-right coalition.

Jean-Claude Juncker, head of the Eurogroup of euro zone finance ministers, said Greece was staring at its “last chance” to avoid bankruptcy.

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Rothschild bets on the Euro zone Collapse

August 21, 2012

Meanwhile, financial publications forecast a Greece style rescue for Spain.

By LUIS MIRANDA | THE REAL AGENDA | AUGUST 21, 2012

If there was any doubt on anyone’s mind that the Euro zone will collapse, this is the time to change your mind. Not only is the main stream media predicting more financial rescues for EU nations, but one of the most influential bankers from one of the most influential families in Europe has now bet against the recovery of the Euro.

Lord Jacob Rothschild, from the Rothschild banking mob has wager $200 million against the European currency — euro — and with it he is basically expressing his strong belief that the Euro will collapse and so will the euro zone. Lord Rothschild is a member of the dynasty that has, at least in part, ruled the world through powerful banking institutions. It is the same family that has made a killing before, during and after every single major financial crisis by using the asset and power consolidation model first seen when 5 Rothschild children were unleashed around Europe to build and manage the central banking system that rules the planet today.

According to NBC, Lord Jacob, one of the elders of the Rothschild family “has taken the position against the euro through RIT Capital Partners, the 1.9 billion pound investment trust of which he is executive chairman.” The report says that Rothschild’s position on the Euro comes as he sees the currency weakening day after day due to the many problems that European nations face, especially the sovereign debt issue, which are working as separate ailments against the single currency.

Both Italy and Spain have called for “decisive action” from the European Central Bank to curb the current crisis, especially the lack of confidence on those two nations  as their credit worthiness is downgraded by the banker created credit rating agencies. Just as it happened with Greece, Spain is finding it too difficult to pay its debt, and there are now talks emerging about a possible debt forgiving scheme to help beaten up countries remain financially alive. But the government in Brussels has been clear that it will not seek or encourage financial or fiscal amnesty for any nation.

The government in Brussels is the head the banking structure in Europe, where all banking deals are closed for European nations. According to banking sources, the EU government is not contemplating any type of payment forgiveness, because it considers that such action does not produce any revenue while it gives the wrong message about financial responsibility. This is an interesting position to have if one takes into account that the banking institutions are the entities responsible for most of the debt accrued on the debt sheets of the European nations.

Both in Europe and in North America, the rhetoric regarding the real state of the economies has experienced a 360 degree change, even on the main stream press, where both financial experts and teleprompter readers have now confessed that we have been slaves to the banking institutions for a long, long time, and that only a centralized banking entity will have the ability to solve the debt problem.

In an article published yesterday, the Wall Street Journal is assuring the public that Spain will definitely go through a financial rescue the same way that Greece did as the bankers seek to extend the painful economic and financial depression for as long as possible in every nation that belongs to the Euro zone. Editor Mary Anastasia O’Grady said that if the current crisis took too long to be solved, Spain ran the risk of having to be rescued by the central bankers, a scenario widely denied by the Spanish Prime Minister Mariano Rajoy.

O’Grady said in her article that Spain needs to become serious about structural changes that she said are necessary to get the economy going, as well as to propose and execute clear policies that promote growth. Spain needs to “liberalize businesses” so that business owners find it attractive to take risks against extreme austerity measures and cuts that the government has implemented, which do not help address “the path of growth.” She added that Spain can recover all the potential it had, but reforms must continue deeply and seriously.

This does not seem to be the scenario envisioned by Lord Rothschild, however, since he has bet big time against the recovery of the Euro. His position contrasts talking points issued by German Chancellor Angela Merkel and European Central Bank head Mario Draghi, who have said they will do whatever it takes to save the euro. But not all euro members necessarily agree with the “whatever it takes” part of their speech as more divisiveness seems to be growing among European leaders about the way things should be done to save — or not — the countries that are unable to paid the banker created debt.

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Global Banking Authority will Open for Business in Europe

June 5, 2012

Just as advertised, the all mighty global bank has now been announced by European nations in order to save the Eurozone

By JUERGEN BAETZ | AP | JUNE 5, 2012

German Chancellor Angela Merkel said Monday that she is open to establishing a European banking authority as a long-term solution to the continent’s financial crisis. Her support as leader of the EU’s biggest economy could be crucial for the concept, which aims to strengthen the eurozone and calm jittery markets.

Europe’s worsening debt crisis is raising concerns well beyond the continent. Finance ministers and central bank presidents of the world’s seven wealthiest countries – which includes Germany – were expected to hold an emergency conference call on Tuesday to discuss the situation.

The proposal to create a Europe-wide authority overseeing and ultimately guaranteeing the banks’ stability was first floated last week by the European Commission, the executive body of the EU. But rich countries such as Germany have been lukewarm about the idea because of fears it could eventually lead to them bailing out other countries’ banks.

Merkel told reporters ahead of a private session with EU Commission President Jose Manuel Barroso that the pair “will also talk about to what extent we have to put systemically (important) banks under a specific European oversight.”

And while she expressed willingness to consider the concept, she stressed that a banking union cannot be set forth as a quick fix, but rather as a more long-term goal.

The European Central Bank is the joint monetary authority for the 17 nations who use the euro currency, but each country is responsible for overseeing its own banks. So when things go wrong, each country has to decide whether or not to bail its banks.

For instance, Spain – already under market pressure due to its debt burden and declining economy – needs to provide (EURO)19 billion ($23.6 billion) in government aid to rescue its most ailing lender. And although the Spanish government has promised to help Bankia S.A., it has yet to explain where the bulk of the money will come from.

Spanish officials have called for Europe’s new permanent rescue fund to be able to recapitalize banks directly, but German officials, among others, have ruled that out, noting that Europe cannot bail out national banks if it has no supervision over them.

Barroso maintained that a “banking union with more integrated financial supervision and deposit guarantees” was the necessary step to complete the monetary union with an economic union.

Europeans must do “whatever is necessary to ensure the stability of our currency,” he added.

European Central Bank President Mario Draghi last week warned the ECB cannot “fill the vacuum of the lack of action by national governments,” calling the monetary union’s current structure “unsustainable unless further steps are taken.”

He strongly endorsed the Commission’s proposal to create a Europe-wide banking regulator.

Merkel reiterated her conviction that the short-term priority in tackling the continent’s financial crisis must be combining fiscal consolidation with fostering economic growth through reforms and better use of existing funds.

Still, she echoed Barroso’s call to strengthen European integration. “It is completely obvious, and I have often said that: In the eurozone we need at minimum more Europe and not less Europe,” she said.

Merkel said Europe’s institutions, such as the Commission need more powers, “otherwise a currency union cannot work.” Europe’s new treaty, which enshrines fiscal discipline and creates a more centralized oversight, is “a first step” in that direction, she added.

Merkel and Barroso were set to discuss their ideas on reforming Europe over a dinner of veal cutlet with asparagus from the Berlin region, preparing the ground for a full EU summit late next month.

The intensified debate on policy ideas to strengthen the bloc’s political union comes as the eurozone enters another tumultuous period of financial and political instability.

Investors are worried that Spain will be unable to prop up its banks that are burdened by toxic bad loans – and that it will follow Greece, Portugal and Ireland in asking for an international bailout the eurozone can ill afford. These jitters have sent Spain’s borrowing costs soaring and stock markets plummeting.

And in two weeks Greece returns to the polls with the real possibility that it might elect a government that rejects the terms of its multibillion-dollar bailout. This could force the country out of the euro, fracturing the eurozone and further roiling markets.

Perhaps the clearest sign of danger is the state of the euro itself: It is trading around two-year lows against the dollar as investors pull money out of euro countries.

Canadian Finance Minister James Flaherty told reporters Monday that he would raise Europe’s troubles with his Group of Seven colleagues during Tuesday’s emergency conference call. The G-7 includes the United States, Japan, Germany, France, Britain, Italy and Canada.

Flaherty did not give a time for the conference call, which is confidential and not open to reporters.

The U.S. Treasury Department wouldn’t comment on the call. But officials said the United States expects more action to strengthen the European banking system in the next two weeks in advance of a meeting of the Group of 20 major economies in Los Cabos, Mexico, later this month.

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