Tradefair & Financials
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LONDON—Governments in Europe are tying themselves in knots to prop up their banks, desperate to blunt the cost and embarrassment of a fresh wave of taxpayer-funded bailouts.
In Italy, for example, the government is encouraging banks to buy public properties that the banks then can use to borrow money. As part of a broader deficit-reduction program in Portugal, the government essentially is borrowing money from bank pension funds and could use some of the funds to help state-owned companies repay bank loans.
Governments in Germany and Spain also are using unorthodox measures to support their ailing banks.
The unusual moves come as euro-zone countries are under growing pressure to reel in soaring borrowing costs by showing investors in government bonds that their budgets are under control. In addition, bank bailouts are politically toxic, especially for governments that have sought to reassure markets about the health of their banking systems.
Some economists say such moves aren't an adequate substitute for a broader rescue package that would include recapitalizing the lenders and helping them issue new debt.
"Most of these backdoor-type schemes seem to be limited in size and don't address the broader problem," said Jacques Cailloux, chief European economist at Royal Bank of Scotland.
In some ways, the recent efforts are emblematic of what critics view as Europe's piecemeal crisis-fighting measures.
In the past few years, individual governments in countries like Ireland, Germany and Spain have recapitalized their banks. The European Central Bank this week is making it easier for banks to borrow emergency funds, by offering three-year loans and accepting a wider range of collateral.
But there has been widespread resistance to adopting sweeping measures aimed at banks' deep underlying problems. Some of the recent European plans resemble the supplemental measures adopted by the U.S. at the height of its financial crisis.
In November 2008, the Federal Reserve launched the Term Asset-Backed Securities Loan Facility to resuscitate the securitization market and lending to consumers and small businesses. That was followed about four months later by the Public-Private Investment Program, designed to help rid banks of their troubled assets.
But those programs were sideshows to the U.S. government's sweeping recapitalization of hundreds of banks, both strong and ailing, which played a key role in restoring confidence in the industry. In Europe, no such program exists.
The Italian government has been among the most innovative at finding ways to help its banks conserve capital or come up with fresh funds.
The country's five top banks were holding a total of €156 billion ($202.8 billion) of Italian government debt as of Sept. 30, and the plunging values of those bonds have raised concerns about the banks' viability. As a result, banks have struggled to borrow money from traditional sources, which are now wary of lending to the banks.
A provision tucked into the Italian government's budget law last month is designed to defuse some of those pressures. It allows the banks to use their government bonds to purchase army barracks, office buildings and other state-owned real estate that the government has been trying to sell.
The government would then lease the properties back from their new owners. And the banks can package the income-producing properties into asset-backed securities, which can be pledged as collateral with the ECB in exchange for loans, analysts say.
Italy's real-estate-for-sovereign-bonds maneuver also gives a boost to the government. Not only can it rid itself of unwanted properties, but the government also will be able to retire the bonds that banks use to purchase the real estate—thereby reducing Italy's heavy debt load.
In Germany, Commerzbank AG is in talks with the finance ministry to transfer part or all of its troubled real-estate finance unit Eurohypo into a government-owned "bad" bank. The bank and government are in talks about ways to structure the deal so it isn't considered a bailout, possibly by protecting the government against some losses or paying the government a nominal fee, according to people familiar with the matter.
That is an important stipulation. Commerzbank executives have repeatedly promised they won't take more taxpayer money, following a 2009 bailout that still has the bank 25%-owned by the government. But Commerzbank needs to come up with €5.3 billion in new capital by next summer in order to meet the demands of European regulators.
In Portugal, the government is planning an intricate financial maneuver that could give the country's banks some relief from the mountains of unpaid loans they hold from Portugal's state-owned companies. The state just closed a plan to transfer banks' future pension responsibilities to the state balance sheet in exchange for €6 billion in assets, which include cash, stocks and bonds. Most of the money will help the government meet deficit targets.
But about €2 billion may be shifted to struggling government-owned companies, such as transport providers. Under the plan, these companies would use the funds to pay off debts to Portugal's banks.
"The move will allow debt repayments to public entities, contributing to a cut in loan-to-deposit ratios of Portuguese banks and helping the financing of the economy," Finance Minister Vitor Gaspar told parliament recently.
In Spain, the government used €5.2 billion in funds from the country's deposit-guarantee plan to clean up nationalized lender Caja de Ahorros del Mediterraneo and broker its sale to Banco Sabadell SA earlier this month.
Instead of raising more money through a Spanish government bailout fund, a central-bank spokesman said that tapping the deposit-insurance plan would leave the country's budget goals this year intact. The deposit-guarantee fund will be refilled early next year, and the government will provide a back-stop in the meantime.
While a potential short-term solution, economists say such moves are a reflection of European governments' piecemeal approach to addressing deeper bank problems, such as low growth, problem assets and sovereign exposures. Governments "haven't been proactive and gotten on top of the situation," said Gerard Lyons, chief economist at Standard Chartered PLC.
—Laura Stevens and Christopher Emsden contributed to this article.
http://online.wsj.com/article/SB10001424052970204058404577108723777515602.html?mod=WSJ_hp_us_mostpop_read
In Italy, for example, the government is encouraging banks to buy public properties that the banks then can use to borrow money. As part of a broader deficit-reduction program in Portugal, the government essentially is borrowing money from bank pension funds and could use some of the funds to help state-owned companies repay bank loans.
Governments in Germany and Spain also are using unorthodox measures to support their ailing banks.
The unusual moves come as euro-zone countries are under growing pressure to reel in soaring borrowing costs by showing investors in government bonds that their budgets are under control. In addition, bank bailouts are politically toxic, especially for governments that have sought to reassure markets about the health of their banking systems.
Some economists say such moves aren't an adequate substitute for a broader rescue package that would include recapitalizing the lenders and helping them issue new debt.
"Most of these backdoor-type schemes seem to be limited in size and don't address the broader problem," said Jacques Cailloux, chief European economist at Royal Bank of Scotland.
In some ways, the recent efforts are emblematic of what critics view as Europe's piecemeal crisis-fighting measures.
In the past few years, individual governments in countries like Ireland, Germany and Spain have recapitalized their banks. The European Central Bank this week is making it easier for banks to borrow emergency funds, by offering three-year loans and accepting a wider range of collateral.
But there has been widespread resistance to adopting sweeping measures aimed at banks' deep underlying problems. Some of the recent European plans resemble the supplemental measures adopted by the U.S. at the height of its financial crisis.
In November 2008, the Federal Reserve launched the Term Asset-Backed Securities Loan Facility to resuscitate the securitization market and lending to consumers and small businesses. That was followed about four months later by the Public-Private Investment Program, designed to help rid banks of their troubled assets.
But those programs were sideshows to the U.S. government's sweeping recapitalization of hundreds of banks, both strong and ailing, which played a key role in restoring confidence in the industry. In Europe, no such program exists.
The Italian government has been among the most innovative at finding ways to help its banks conserve capital or come up with fresh funds.
The country's five top banks were holding a total of €156 billion ($202.8 billion) of Italian government debt as of Sept. 30, and the plunging values of those bonds have raised concerns about the banks' viability. As a result, banks have struggled to borrow money from traditional sources, which are now wary of lending to the banks.
A provision tucked into the Italian government's budget law last month is designed to defuse some of those pressures. It allows the banks to use their government bonds to purchase army barracks, office buildings and other state-owned real estate that the government has been trying to sell.
The government would then lease the properties back from their new owners. And the banks can package the income-producing properties into asset-backed securities, which can be pledged as collateral with the ECB in exchange for loans, analysts say.
Italy's real-estate-for-sovereign-bonds maneuver also gives a boost to the government. Not only can it rid itself of unwanted properties, but the government also will be able to retire the bonds that banks use to purchase the real estate—thereby reducing Italy's heavy debt load.
In Germany, Commerzbank AG is in talks with the finance ministry to transfer part or all of its troubled real-estate finance unit Eurohypo into a government-owned "bad" bank. The bank and government are in talks about ways to structure the deal so it isn't considered a bailout, possibly by protecting the government against some losses or paying the government a nominal fee, according to people familiar with the matter.
That is an important stipulation. Commerzbank executives have repeatedly promised they won't take more taxpayer money, following a 2009 bailout that still has the bank 25%-owned by the government. But Commerzbank needs to come up with €5.3 billion in new capital by next summer in order to meet the demands of European regulators.
In Portugal, the government is planning an intricate financial maneuver that could give the country's banks some relief from the mountains of unpaid loans they hold from Portugal's state-owned companies. The state just closed a plan to transfer banks' future pension responsibilities to the state balance sheet in exchange for €6 billion in assets, which include cash, stocks and bonds. Most of the money will help the government meet deficit targets.
But about €2 billion may be shifted to struggling government-owned companies, such as transport providers. Under the plan, these companies would use the funds to pay off debts to Portugal's banks.
"The move will allow debt repayments to public entities, contributing to a cut in loan-to-deposit ratios of Portuguese banks and helping the financing of the economy," Finance Minister Vitor Gaspar told parliament recently.
In Spain, the government used €5.2 billion in funds from the country's deposit-guarantee plan to clean up nationalized lender Caja de Ahorros del Mediterraneo and broker its sale to Banco Sabadell SA earlier this month.
Instead of raising more money through a Spanish government bailout fund, a central-bank spokesman said that tapping the deposit-insurance plan would leave the country's budget goals this year intact. The deposit-guarantee fund will be refilled early next year, and the government will provide a back-stop in the meantime.
While a potential short-term solution, economists say such moves are a reflection of European governments' piecemeal approach to addressing deeper bank problems, such as low growth, problem assets and sovereign exposures. Governments "haven't been proactive and gotten on top of the situation," said Gerard Lyons, chief economist at Standard Chartered PLC.
—Laura Stevens and Christopher Emsden contributed to this article.
http://online.wsj.com/article/SB10001424052970204058404577108723777515602.html?mod=WSJ_hp_us_mostpop_read
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Nowt new there or is there ?
I want to see some of these senior banking executives falling on their swords. Being stripped of their retirement pension rights, not getting big redundancy payouts etc. I want to see some real pain at the top. The masses need some sort of reassurance that these people are being held accountable to a degree for this unholy mess. |
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Code RED, code RED, everyone head to the nearest bomb shelter, every thread is under a carpet bombing attack. God save our souls.........on the bright side, we can at least all die laughing.
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On a more serious note, you don't need to spend the 5 minutes required to read the article posted. Let me sum up and make it more clear in about 30 seconds:
THE EUROPEAN BANKS ARE INSOLVENT, BUST, BROKE, TOTALLY GONE (they all are globally but I'll save that for a different time). The politicians who are owned by the banking cartel will continue to try to prop up the massively insolvent banking system by shifting liabilities unto the public. It's either "save the banks" under the cover of "they must lend in order for the economy to grow" or let them collapse and the status quo gets destroyed with them.....and there's blood in the streets. Not much of a choice. The problem is that the countries trying to do that are also INSOLVENT, BUST, BROKE, TOTALLY GONE so.......enter the IMF who has no money accept what other INSOLVENT, BUST, BROKE TOTALLY GONE euro countries contribute to it (if anyone says China at this point, I will deduct points) and the ECB that is loaded to the rafters with worthless bonds that will default from INSOLVENT, BUST, BROKE, TOTALLY GONE eurozone countries. Are you starting to see the problem here? It's over folks. The point of no return has been crossed, all that remains now is the convulsions politicians will put us through trying to delay the eventual reset......and the hyperinflation that goes with it of course.  |
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"--- of course "
Just about sums up every last one of Menelaus' posts. Boringly predictive. I just wish someone would push his reset button. According to him, we might as well all go down to the pub and drink to the end of the world as we know it. As if the world has never faced bigger problems and come through in the end. A couple of world wars. Mere nothings in the grand scheme of current events, as being summarized by Menelaus. Menelaus is perhaps your typical modern man. Everything is new and bears no relation to history. The innate creative survivability of mankind means nothing. Zilch. Nada. Give us all a break Menelaus, and go peddle your morbid, doom ridden propaganda elsewhere. Is he being paid by some cartel with its own secret agenda to do all this ?. Geez it must contagious. Now I'm starting to get paranoid ?. |
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Oooops, I miscalculated. I thought I was posting under the veil of darkness but I've been spotted by the bombing squadron again. Best go find cover again...good night...
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I must say that I do at least find it refreshing when Menelaus tries to lighten things up a bit.
We certainly deserve some sort of break from all the doom ridden angst. Btw does Menelaus sound slightly communist in his perpetual rants against the capitalist system as is ?. Or is that just my newly obtained paranoia kicking in ? He certainly doesn't sound to me as if he has two feet planted firmly in the capitalist camp. Has he somehow missed the boat, as in having rorted/exploited the current system along with most of his fellow high flying banker compatriots ? He wants another go at things ? Hence his call for the reset button ? His posting motives do somewhat puzzle me tbh. |
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My stalker is still asleep, the lonely clueless man is a night owl, so I think it's safe to post now.
The ONLY thing you need to know going forward is this: WE REACHED PEAK DEBT. There is not enough organic growth to pay the coupon. The disappearance of cheap oil, combined with epic greed by the 1pc the last 20 years, destroyed any possibility of new growth going forward. The system collapses under a "no growth" scenario, it was designed that way from the outset. There's no way of getting around that. The only thing left for them to do, and that's what they have been trying to do, is to flood the system with liquidity in an attempt to save the financial system and create new borrowing (growth), or at least the illusion of it. It's failing, here, in the EZ, in the US (anyone who thinks the US economic data is getting better, you've been conned), in Japan (a complete basket case), everywhere (yes, including China - their slow down is real). They have been injecting all this liquidity in stages, carefully managing perceptions, so the public's trust in fiat money that they can create out of thin air is not lost. This is one area where they have been very successful. It was easy for them, after all most of the public doesn't know or understand how many gets created. The problem for them (that's the banking cartel, in case you haven't clued in yet) is that the hole left behind by an ever increasing amount of defaulting paper (deflation) is too huge to cover with money printing without finally destroying the currency. But the choice has already been made, and destroy they will. All their doing by hiding their ultimate intention is buying time hoping for a miracle. There's no miracle coming, it's over.It's that simple. My favorite quote in 2011 came from Jim Grant: "At this point of the crisis and given the response of every major central bank, we need to ask ourselves the question....WHAT IS MONEY?". |
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Not sleeping, just out and about mixing with other apparently clueless people, wondering and asking around how this con of such epic proportions has been carried out, without most of the world being none the wiser.
Apparently all knowledgeable persons must thus either be part of this self-interested " banking cartel " or have been totally and absolutely silenced by the " controlled media ". As neither of these two alternative scenarios seem at all entirely reasonable to me, and knowing for a fact that there are innumerable academic and non-academic parties out there interested in not only their own personal welfare, but also the wider general welfare of the world they live in, I can only deduce that there are alternative future scenarios that are more likely to play out. The mere fact that Menelaus says that he alone knows there aren't, and that seemingly he is some sort of lone voice in the wilderness not being listened to by any persons out there of import and influence, just doesn't sit comfortably realistically with me. I just get images of a soap box at Hyde Park corner. Now Menelaus may indeed turn out to be right, but history has a habit of proving these sorts of frothy mouthed fanatics as being just that. I'll go with history on this one, and also btw the majority of both the informed and uninformed in the world, thank you very much Menelaus. Nothing personal Menelaus, but I think you are a slightly deranged crank, highly educated and intelligent but equally highly stupid and unwordly and just plain wrong. No point debating this on a general economic theory basis, as that sort of debate can be spun and twisted any way want to or you are clever enough to do ( and it helps to be an over educated economist or to have a hired one handy, to do exactly this ). The debate should be more on the grounds of the common sense perspective that you can fool some of the people some of the time, but not all of the people all of the time. Paricularly not when their whole communal well being is at stake. |
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The uncovering of the whole fraud of money has only started over the past few years. When one considers the majority of the western populace rely on the red tops for their financial education it is not hard to fathom how the illusion of money has been carried out so convincingly for so many years. I thought the fact the world is bust was becoming commonly known, the politicians will obviously try and convince people otherwise but the fact is World plc is bust.
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Money is basically merely a means to pay people for services they render to others.
Always has been, always will be. Nothing more, nothing less. A real common sense, non-hysterical, view of the current world problems acknowledges this basic tenet, and recognizes that people will carry on living their daily lives, irregardles of what the policy makers do in practice to improve or worsen their lot. The current crises in the world can be broken down into two areas. - The US collapse brought about by the greed and duplicity of a small coterie of investment bankers and mortgage brokers. It's quite amusing to read that when options and warrants were first traded over the counter when the CBOE was first created, not that long ago in fact, someone very prescient said " It just looks like a new way to lose money ". - The European collapse brought about by the inevitable fact that when the union was created it was never clear how one politician in one democratic country ( with a local populace to satisfy and consequent agenda) was ever going to work in tandem with another politician in another country ( with a different populace to satisfy and a different consequent agenda). A collapse was thus probably inevitable. Neither of these two problems has been basically caused by the failure of the fiat money system. So why expand these problems into some sort of bigger one, calling into question the whole monetary polcy of the whole world for the past half a century or so ? |
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Muqbil Joined: 18 May 03
Replies: 3393 21 Dec 11 12:26 The uncovering of the whole fraud of money has only started over the past few years. When one considers the majority of the western populace rely on the red tops for their financial education it is not hard to fathom how the illusion of money has been carried out so convincingly for so many years. I thought the fact the world is bust was becoming commonly known, the politicians will obviously try and convince people otherwise but the fact is World plc is bust. Rejoice, **THERE IS** intelligent life on this forum after all. |
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Yes there is Menelaus.
It's only you who has not realised that. Look folks. We have for years been spending beyond our means. We have been binging on credit. Undisputed facts. No doubt at all. So now we have to put a stop to it. Fair enough. We'll do just that. Tough times ahead for many no doubt. But in talking the problem up as most of you on this forum seem to want to do, instead of talking it down and getting on with the hard grind of solving it, you're just making matters worse. In bringing into question the whole philosophy of using crdeit to create wealth ( and it works if it is controlled properly) you're in danger of throwing the baby out with the bathwater. People like Menelaus are destructive, non builders by nature, pessimists, theoreticians etc etc. I made my money from inventing something. Out of nothing I created my wealth. But without the credit mechanism my idea and lots of others more worthy than mine, would never get off the ground. There are many like me who are not destructive by nature, not pessimistic by nature. We do things. we solve problems as they arise. We do not collapse and give up at the first sign of trouble. We do not blame others ( or secret cartels) for our weaknesses, our failures, our excesses. This forum is really a very dispiriting place overall at times. I just hope ( and I know it isn't in fact) a fair reflection of the wider community. Thank God for small mercies. |