While many search the web for evidence of the arrests of members of the criminal cabal, one such story has surely broken through the cabal imposed media blackout.
Three of Ireland’s leading bank executives, former Anglo-Irish Bank chief Sean Fitzpatrick, ex-Finance Director Willie McAteer, and managing director for Ireland Pat Whelan were arrested on Tuesday, 7/24/12, for their crimes that led to Ireland’s largest ever bank failure.
Three others, who happen to be among Ireland’s wealthiest residents, were also implicated for their roles in these crimes.
In other news, former International Monetary Fund and Bankia chief Rodrigo Rato was arrested on 7/6/12 and charged with criminal fraud for his role in the bankruptcy of Bankia, Spain’s 3rd largest banking institution, which is at the center of the country’s economic crash and occupy movement which was motivated, in part, after Bankia, which was only in business less than two years, received a bailout from taxpayers of over 19 Billion Euros.
On the Asian front, the elder brother of South Korean president Lee Myung-Buk has been arrested on corruption charges, leading to a possible regime change as elections for the country are later this year.
New Democracy. Syriza. Doesn’t matter. According to Citi’s senior political analyst Tina Fordham, chief economist Willem Buiter, and global economist Ebrahim Rahbari, «any new Greek government, regardless of its composition, will struggle with implementation challenges related to the imposition of further austerity measures demanded by the Troika in exchange for further assistance,» and as a result, they «consider it likely that a new troika deal would ultimately fall apart and lead to Grexit.»
Citi notes that there is growing sense among European leaders that «promotion of economic growth can no longer be subordinated completely, even in fiscally unsustainable euro area member states, to the requirements of fiscal austerity,» but no one has any idea what that means.
This seems to be the current thinking, according to Citi:
The only operational, practical consensus on growth is that austerity policies should not be unnecessarily pro-cyclical. If a deficit target is overshot because of bad luck (economic activity and government revenues are weaker than expected despite full adherence to all conditionality) rather than bad faith (there has been a failure to implement agreed measures or policies), the shortfall will not have to be made up immediately – in the original time frame. More time will be given to achieve the original objectives without the need for deeper and faster austerity than originally envisaged. Bad faith (non-compliance) will, for incentive-compatibility or moral hazard reasons, continue to be punished with demand for enhanced and faster austerity.
Warning. Also, reminder: «And of course, reduced austerity does not mean no austerity, let alone the reversal of austerity…fiscal policy will remain contractionary overall – just less contractionary.»
Citi’s doesn’t think Greece is able to handle any more austerity, and its rapidly deteriorating fiscal condition is hastening a day of reckoning. On how and when Greek membership in the euro ends:
A possible trigger would be the determination by the IMF following the first or second assessment, that it cannot disburse its next installment due under the current programme because the Greek programme is not fully funded for 12 months after the assessment. In that case some of the smaller core euro area member states that have made their contributions to the Greek EFSF programme conditional on the IMF disbursing would probably drop out too. The Greek sovereign would then be forced to default. Then the ECB would stop funding the Greek banks through the Eurosystem and through the Greek ELA. With neither the Greek sovereign nor the Greek banks having access to the lender of last resort, we believe Greece would probably leave the eurozone, as some liquidity through the issuance of New Drachma is better than no liquidity.
The Citi team says that «more generally, we are concerned at the prospect of formerly wealthy countries becoming ‘new, critical fragile states.'» This is where things get really messy. They don’t think the ECB, EU, et al. will even let Greece go financially when things get really bad as described above. More like this:
In order to prevent such a scenario, we believe that even if “Grexit” were to occur, Greece would stay in the European Union and receive some form of Troika or other external assistance, most likely through the Balance of Payments facility run by the European Commission and the IMF for non-euro area EU member states. Since 2008, Latvia, Hungary and Romania have been under such programmes. Support from the EIB, and from Structural and Cohesion funds would also be likely to be forthcoming. We would also expect the ECB to continue to support the Bank of Greece after a Grexit. After all, the Greek central bank would exit the Eurosystem with considerable euro-denominated debt to the Eurosystem (this could be its Target2 net debit balance – something around €100bn, or its share of the total losses suffered by the Eurosystem as a result of Greek exit, however this would be established, net of the capital it has paid into the ECB, which would, in principle, be refundable on exit).
And the darkness is spreading through Europe. The «seeds of dystopia» are being planted:
Throughout the euro area periphery, and indeed beyond it in the ‘soft core’ of the euro area, the potential for the so-called “seeds of dystopia” referred to in the WEF Global Risks report remains a key long-term risk to European political stability and competitiveness, as youth unemployment rises and the social contract between states and citizens erodes. The burdens of this adjustment fall disproportionately on young people, as evidenced in youth unemployment exceeding 50% in Greece and Spain and unacceptably high everywhere in the periphery and the euro area at large. We continue to take the view that political change in Europe will continue to take place in the ballot box, but note the rising risk of frequent changes in government, street violence and other upheaval in a more fraught environment undermining both political and social consensus when it is most needed. However, unlike in the Middle East and North Africa, European countries do not have an age pyramid, but rather an inverted one, making it less likely that inter-generational conflict will propel rapid change in political outcomes towards more growth and employment-friendly policies.
EU SOURCES HAVE DISCUSSED IMPOSING CAPITAL CONTROLS AS WORST CASE SCENARIO IF GREECE LEAVES EUROZONE – RTRS
IMPOSING BORDER CHECKS, LIMITING ATM WITHDRAWALS ALSO PART OF WORST-CASE SCENARIO PLANNING – EU SOURCES – RTRS
SUSPENSION OF SCHENGEN ALSO DISCUSSED
In other words, that money you thought you had… You don’t really have it. We can only hope this message was not meant to restore confidence and prevent future bank runs. Because if Europe wanted a continental bank run, it may have just gotten one.
And crushing all hopes of pari passu treatment for Spanish bondholders, is this latest confirmation from the EU Commission.
Via Market News:
The European Commission will conduct its own assessment of the Spanish banking sector before deciding what conditions should be set in exchange for financial support from Eurozone governments.
…
Ultimately it would be the European Commission making the recommendations and the Eurogroup taking the decisions, the spokesman said.
He said it was too early to speculate on how exactly the aid would be delivered or how much interest Spain would pay, since that would depend on the exact structure of the aid and on the prevailing market conditions.
Any aid that might come from the European Stability Mechanism, which is expected to start work next month, would enjoy a preferred creditor status second-only to the IMF, the spokesman confirmed.
And there you have it (and hopefully this is not a harbinger of imminent IMF intervention as well. That would not go over too well in Spain).
The wind picked up across the plains, the windmill began to turn and “The Ingenious Gentleman Don Quixote of La Mancha” rode out once more to do battle. The ever faithful Sancho Panza, not wishing to be left behind, was in attendance and the windmills were now the banks and the regional debt of the country. You see, the Troubadour, Mariano Rajoy, does not wish the country to take any responsibility. It is to be the banks, not to injure the pride of the nation, that are the culprits and the banks, run by the empanada consortium, who are to be blamed. The IMF has released a statement claiming the banks need about $46bn which is the typical posture of the IMF these days; underestimating liabilities and then finding that more money is needed later; which they already knew of course. “Under estimate the liabilities and over estimate the assets” is the mantra sung at the IMF these days at the morning prayers as their credibility is as certain as the stature of the giants fought by Don Quixote.
The European financial ministers’ meeting started at 4:00 pm CET. What are they discussing? According to the WSJ, nothing short of «a commitment to provide as much as €100 billion ($125 billion) in support for Spain’s ailing banking sector.» At least we now know that that Spanish bank trot so widely avoided by the mainstream media was just a little more kinetically-charged than previously expected, because for Spain to actually demand the money, even if implicitly, it means it has a capital shortfall, which can only arise from an outflow of liquidity, as mere real estate impairments do not have any impact on liquidity. So far so good. There is only one problem: Spain has yet to formally request the money! According to newspaper ABC, «Spain wants to convince European partners that IMF shouldn’t participate in aid for country’s banks because of potential stigma.
Fitch Follows S&P, Slashes Spain By 3 Notches To BBB, Only Moody Is Left – Step 3 Collateral Downgrade Imminent
First it Egan-Jones (of course). Then S&P. Now Fitch (which sees the Spanish bank recap burden between €60 and a massive €100 billion!)joins the downgrade party of rating agencies that have Spain at a sub-A rating. Only Moody’s is left. What happens when Moody’s also cuts Spain to BBB or less? Bad things: as we explained on April 30, when everyone has Spain at BBB or less…
If all agencies downgrade Spain to BBB+ or below, the ECB could increase haircuts by 5% on SPGBs
The key aspect in terms of the Spanish downgrade(s) is the ECB’s LTRO. If all three rating agencies move Spain to BBB+ or below then under the ECB’s current framework it moves into the Step 3 collateral bucket which requires an additional 5% haircut across the maturities. In classifying its risk management buckets, the ECB uses the highest of the ratings to determine an asset’s position (unlike the sovereign benchmark indices which use the lowest rating, in general). Fitch and Moodys currently rate Spain at A and A3 respectively, with both having a negative outlook in place leaving only a small downgrade margin before Spain migrates to the lower ECB bucket.
Italy’s position is marginally more precarious in that it shares Spain’s A3 rating from Moody’s but is rated lower at A- by Fitch, and is similarly outlook negative from both agencies. One would hope ECB pragmatism would prevail and move to be more accommodative on its collateral haircut rules on sovereign debt.
The weakness of the eurozone’s growth outlook is undermining the efforts of many sovereigns to rein in budget deficits, thereby highlighting the self-defeating nature of the fiscal compact as currently defined. Including the political impact, this has potential to lead to further downgrades
γράφει πολιτικό θέατρο, αναπτύσσοντας διαλεκτικά το θέμα που δραματοποιεί.
Στο «Δεν πληρώνω! Δεν πληρώνω!» μας μιλά για την επανάσταση των απλών ανθρώπων, των εργατών, όταν η ακρίβεια έχει φτάσει στο απροχώρητο, όταν μαζικές απολύσεις ή μειώσεις ωραρίου και αμοιβών έχουν γίνει καθημερινές και η ζωή έχει γίνει δυσκολότερη από ποτέ.
Ό ένας μετά τον άλλο οι ήρωες του έργου υψώνουν το ανάστημα και τη φωνή τους: «Ακριβαίνετε εσείς τα πράγματα; Ε, κι εμείς λοιπόν, δεν τα πληρώνουμε, τα “απαλλοτριώνουμε”.
Μας κάνετε τη ζωή μας δυσβάσταχτη;
Σας κάνουμε την δική σας δύσκολη».
Το Διεθνές Νομισματικό Ταμείο καλωσορίζει την ευρωπαϊκή στήριξη προς την Ελλάδα και είναι έτοιμο να βοηθήσει δήλωσε η διευθύντρια εξωτερικών σχέσεων του οργανισμού Caroline Atkinson.
”Καλωσορίζουμε τη στήριξη για την Ελλάδα από τους εταίρους της, η οποία μαζί με τα μέτρα της ελληνικής κυβέρνησης αποτελούν σημαντικά βήματα για την αντιμετωπίσεων που αντιμετωπίζει η χώρα. Το ΔΝΤ “είναι έτοιμο να προσφέρει την εξειδίκευση και την υποστήριξή του εάν καταστεί απαραίτητο,” ανέφερε το στέλεχος του ΔΝΤ.
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ΝΕΑ ΧΩΡΙΣ ΦΙΛΤΡΟ ΦΕΛΛΟΥ 