Saturday, March 16, 2013

Wolf Richter — IMF: Eurozone Banks Are In Trouble, Trample Taxpayers And Democracy To Bail Them Out!

Why is it that 17 nations have to fundamentally reorganize themselves and shift sovereignty away from national parliaments to new layers of centralized bureaucracies beyond democratic controls that can decide at will to extract untold wealth from taxpayers—just to save the banks?
That’s what the Eurozone has to do, according to the “first ever European Union-wideassessment of the soundness and stability of the financial sector,” released Friday by the institution that the world couldn’t do without, the IMF.
“Financial stability has not been assured,” the report stated flatly about the fiasco in the Eurozone, despite ceaseless hope-mongering by Eurocrats and politicians, and banks remain “vulnerable to shocks.” The report, which never mentioned banks or countries by name, discussed a number of “risks” that could topple these banks, with some of these “risks” already having transitioned to reality:
“Declining growth.” Banks with “excessive leverage, risky business models, and an adverse feedback loop with sovereigns and the real economy” are particularly vulnerable. Hence, most banks. A number of European countries have been in a deep recession, some of them for years. So “declining growth” is a reality, and these “shocks” are happening now, said the IMF in its more or less subtle ways.
“Further drop in asset prices.” Real estate prices are now dropping in some countries that didn’t see a collapse during the first wave, including France and the Netherlands—where it already took down SNS Reaal, the country’s fourth largest bank [A Taxpayer Revolt Against Bank Bailouts In the Eurozone]. So hurry up and do something, the IMF said.....
Conclusion?
The dictum that there is never an alternative to bailouts would be cemented into the system. Democracy, which always gets trampled during bailouts, would be essentially abolished when it comes to transferring money from citizens to bank investors. And that’s of course the ultimate goal of the banking industry. 
The Testosterone Pit
IMF: Eurozone Banks Are In Trouble, Trample Taxpayers And Democracy To Bail Them Out!
Wolf Richter

3 comments:

Ryan Harris said...

I'm curious about the logic behind the evil financiers and banks meme.

Banks lend primarily to individuals in advanced economies. And most of that lending goes for business and consumer credit and housing. The risks they took were largely reasonable if government managed incomes and inflation according to government forecasts. The banks lend assuming that economists at the central banks and government set +/- reasonable estimates of future growth.

When governments go off the rails and collapse the economy by designing bad currency systems, allowing incomes to stagnate or decrease for the majority of people, allow unemployment to skyrocket, fail to regulate financial markets, and chronically run deficits smaller than current account deficits, Is it reasonable to expect financial institutions to expect and prepare for mass suffering and poverty inflicted by failed governments? Is it criminal to expect that a government would promote common good and welfare? I'm leery of punishing people that expected government to succeed in its duties to govern. Democracy and capitalism, we were led to believe works. Obviously now, it is clear, it has failed. None the less no one can expect financier to be more informed participants in the economy than the people who get paid to manage and design the economic system?

Tom Hickey said...

Ryan, have you been keeping up with Bill Black? Doesn't sound like you are aware of the Ponzi finance and control fraud in which virtually of the Big Banks were and are involved. Predatory loans, fraudulent loans, and procedure that violates the law are null and void under the law — unless the courts are packed with cronies that legalized corruption.

Ryan Harris said...
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