Your browser does not support the HTML5 canvas tag.

23 July, 2013

Why banksters laugh with the recent ECOFIN decision

by system failure

Many people today, know about the case of Agglo-Irish bank's higher executives, where two of them have been recorded talking about how they misled Irish government, by asking 7 billion euros bailout for a start, while they knew that this amount was not enough for the bank rescue. In these recordings that have been revealed by the Irish Independent (http://www.independent.ie/business/irish/inside-anglo-the-secret-recordings-29366837.html), banksters appear to hide the real damage of the collapsing bank, in order to drag government in a repeated cycle of bailout packages, at the expense of taxpayers of course. The final bailout for the Agglo-Irish bank, reached the amount of 30 billion euros, nearly 22 per cent of Ireland's GDP!

It is almost certain that, the banksters will laugh this time, with the European Economic and Financial Affairs Council's (ECOFIN) decision, taken about a month ago, concerning the participation of shareholders and depositors in future possible damages of the banks, what they called "bail in". And this because, in such deregulation conditions, banksters will have the opportunity, not only to get away without paying a cent, in a potential banking crisis, but on the contrary, to gain from such a situation according various possible scenarios.

For a start, the decision transforms the depositors into "investors against their will", but with a major difference since they will not have any right on the investment options of any bank. Just think that, three decades ago, or earlier, the deposits in banks, enjoyed security and high interest rates. Through this decision, the depositors, not only left unprotected from golden boys' choices, which are guided exclusively by their greed, but they will be considered equally responsible for these choices, and will participate in damages, without having the right to decide.

On the basis of a potential scenario, the key shareholders and depositors of special privileges, who will have the suitable access on "inside information" about an oncoming banking crisis, will have the opportunity to withdraw capitals and deposits on time, leaving the rest, therefore mostly, small depositors and independent shareholders, to pay the bill. After that, they will have the opportunity to "come back" - if they want and if the bank is still alive - under different investment fund formations, as saviors of the collapsing bank, obtaining again the basic control, and gaining from the whole situation since they will not have to contribute with their original capital in the required minimum fractional reserve.

This, of course, is just one of the many potential scenarios. Beyond this, the decision hits particularly the small commercial banks, which depend to a great extent on deposits, and thus, they become even easier victims for the big investment banks, which control the money flow in eurozone, and are mainly responsible for the last big economic crisis in the United States and Europe, according to the US Financial Crisis Inquiry Commission report.

The biggest insurance companies will also benefit from the decision since, in a potential "bail in", those who will be called first for the bank rescue, besides shareholders, will be the uninsuranced creditors and the uninsuranced deposits of big companies.

Additionally, ECOFIN's officials, didn't bother to clarify, what will happen with the decision of the European leaders, about a year ago in the European summit, an initiative of the Italian ex-Prime Minister, Mario Monti, according to which, European banks will be re-capitalized straightly from the European support mechanisms, without the "annoying" inspection of each member-state separately, but in expense, of course, of the European taxpayers as a whole.

Thus, the pointless effort of the European authorities to put some rules in a system which has been deregulated by them, and which they continue to deregulate further, guided by the Greek crisis, for the benefit of the big capital, seems that makes banksters laugh again. But the rest of us, as we experiencing the tragic consequences of the crisis they created, unfortunately, we don't have the ... luxury to laugh.

No comments:

Post a Comment