Commission proposes Single Resolution Mechanism for the Banking Union Post author By Philip Lane Post date July 10, 2013 Details here. Categories In Uncategorized 164 Comments on Commission proposes Single Resolution Mechanism for the Banking Union ← Industrial Policy in Ireland → Behavioural Economics and Public Policy 164 replies on “Commission proposes Single Resolution Mechanism for the Banking Union” Commission proposes and Germany procrastinates, postpones, and filly_busters. Is this an attempted power grab by the Commission? In the faced of outright opposition from the Germans it would appear to be a meaningless attempt to assert authority. As regards the proposal itself..this would appear to be half baked and rushed. Coupled with the new State aid rules announced today it looks like we are headed into an autumn of discontent. Interestingly, the IT is reporting that the state aid rules apply from August 1st and involve any bank requiring assistance to present a restructuring plan prior to receiving any aid. Wonder how that will work….I’m sure the bond markets and depositors will sit tight and wait months for an insolvent bank to get its act together. Of note is the lack of reference to depositors…again I wonder why. Perhaps this could be the reason… http://www.spiegel.de/international/europe/greek-austerity-reforms-failing-despite-billions-in-bailout-funds-a-910078.html Do the Commission have a hidden agenda? http://www.nytimes.com/2013/07/10/world/europe/currency-controls-in-cyprus-increase-worry-about-euro-system.html?pagewanted=1&_r=0&hp • “Under the supervision of the Single Resolution Board, national resolution authorities would be in charge of the execution of the resolution plan. • The Single Resolution Board would oversee the resolution. It would monitor the execution at national level by the national resolution authorities and, should a national resolution authority not comply with its decision, it could directly address executive orders to the troubled banks. • A Single Bank Resolution Fund would be set up under the control of the Single Resolution Board to ensure the availability of medium-term funding support while the bank was restructured. It would be funded by contributions from the banking sector, replacing the national resolution funds of the euro area Member States and of Member States participating in the Banking Union, as set up by the draft Bank Recovery and Resolution Directive. ” How much power will it have and how much firepower will it have? Will it be credible ? How will it escape national politics ? And what incentive will there be for “investors” to fund EZ banks ? It would be a pity if this discussion took off on the basis of a fundamental misunderstanding. Under the ‘Community method’, the role of the Commission is that of proposer of legislation that can command majority support among member states. It takes the view in this instance that only existing institutions of the EU can provide the appropriate mechanism under Article 114 TFEU; notably the Commission and the ECB. It is up to member states to decide whether this view is correct by adopting or rejecting the proposed legislation in co-decision with the European Parliament. The proposal is also in the form of a Regulation which requires no transposition measures by national authorities. The legislation becomes part of the legal order of the EU directly. The Commission already has been granted the necessary powers in relation to State Aid rules. “Commission proposes Single Resolution Mechanism for the Banking Union” It’s amazing, really, that the good ship Euro sailed without much in the way of disaster insurance in place. @ seafóid Are you suggesting that the solution is to allow it to sink? @ All FYI http://www.nytimes.com/2013/07/11/business/global/european-union-proposes-plan-for-failing-banks.html?pagewanted=1&_r=0 Europe is in shock at the imminent loss of Ireland’s greatest European since the hay days of Dick_een La Roche [Le Monde, Der Spiegel, The Times, Skibbereen Eagle, et al.]. Here is a link to some French thinking on the single resolution mechanism. Note that they add USA, Canada to Europe as being equeally risky for depositors and junior bond holders. Risk ratings and deposits flowing to low risk banks along with junior bond returns reflecting risk will be the thrust for the near future. I would take this in context with everything else you know. http://www.atlantico.fr/decryptage/que-gouvernement-ne-dit-pas-risques-confiscation-argent-que-croyez-abri-dans-banques-bruno-bertez-774501.html?page=0,0 DOD, You will miss her as she spends the winter of her political career sandwiched between Ming and Mattie McGrath, staring at the back of Shane Ross head. @Tull Too busy to respond now – I have been inundated, swamped, with texts and emails for not mentioning HELLO magazine …. now my web site has crashed …. Oh dearie dearie me … @The Intellectual Powerhouse aka H-Ello Magazine Mea culpa, mea culpa, mea maxima culpa. At birth the strength the strength of the Euro was attributed to each country individually, acting responsibly. 17 towers of strength. Now the perception is that its future can be assured by having countries jointly and severally responsible. This means one board of directors (Commissioners), one governor/president with executives. Essentially a Central Bank with a broad mandate acting independently of politicians (depoliticized). There are countries that will want to opt out of that arrangement but when the chips are down Germany will not be one of them. They do know what is in their best interest in the long run. The foisting of risk on to junior bondholders and depositors reduces the risk for the countries in the EMU. The order then becomes shareholders, junior bond holders, depositors (over Eu 100,000) , member countries of the EMU collectively. This pig can still fly and will because it is necessary even for Germany. This will be at least a three year project. What to do in the meantime as the mantra of austerity and structural economic changes rattles on. As Keynes said we are all dead in the long run. The EZ could easily blow up in short order even in Ireland as the deficit increases, GDP declines, unemployment rises and national debt continues its upward creep. The acid test will occur immediately after the German national election in September. We attribute German intransigence to political posturing and assume they will get down to brass tacks post September. If they do not then all bets are off. It seems all is not well with the proposal…. http://www.irishtimes.com/news/world/europe/dijsselbloem-questions-ec-bid-for-bank-control-1.1459749 A power grab…just as Angela is preparing for crucial elections. She won’t forgive that. And holy suffering god….. “The Commission indicated it proposed taking the lead role in solving banking crises because of legal constraints on other institutions. In a statement, it said ”the Commission has the necessary experience on bank restructuring” and added that it was ”the best placed among EU institutions to ensure that final decisions fully respect the principles underpinning the functioning of the EU.” The Commission insisted national authorities and the ECB would have a key role in leading the Commission’s actions.” You couldn’t make it up. @DOCM I just think it’s funny. In Ireland if you take out a mortgage you must have insurance cover in case of death. But there was no need to back up the Euro with anything. And of course TSHTF and everything has been done according to the ad hoc panic approach. Which is very expensive. @ Flj The EU has been making it up in this fashion for over half a century on the basis of the division of powers first established under the European Coal and Steel Community. http://en.wikipedia.org/wiki/High_Authority_of_the_European_Coal_and_Steel_Community The comment by Dijsselbloem had two central elements (i) the matter of the deciding authority in relation to bank resolution has not yet been decided and (ii) it would not be the ECB, both points on which there could be little dispute. @ Mickey Hickey Very well put IMHO. However, you may be overlooking the ugly sister. http://blogs.ft.com/brusselsblog/2013/07/dont-ignore-the-ugly-sister-of-bank-resolution-reforms/ fyi; ft Brussels sets up clash with Berlin over banks By Alex Barker in Brussels “This “Single Resolution Mechanism” would empower the European Commission with ultimate authority over the eurozone’s 6,400 banks, with responsibility to pull the trigger on a shaky lender and the clout to overrule its home state. http://www.ft.com/intl/cms/s/0/674f1eac-e924-11e2-9f11-00144feabdc0.html#axzz2YijntkGu .. ultimate … !!!??? @ seafóid If you’re reading, I left a poem for you and David O’D on the next thread down. On the subject of the thread agree with Fiatluxjnr, and am pretty gloomy. It’s over two years, I think, since the central banks of europe came up with a bank resolution system to protect tax-payers and I emailed back and forth with the EU Commission who initially expected to have it in place before Christmas 2011. This from Jan., 2011. http://www.irisheconomy.ie/index.php/2011/01/07/eu-commission-document-on-bank-resolution-framework/ @ Gavin The Eurocrats have to be on the edge of the cliff with the abyss in full view beneath before the survival mechanism kicks in and overrides the procrastination medication. @Gavin Neat poem – a reality for many – I know that area – a little further and you could have given St. Judes of bertie fame a mention @Irish Cricketers Nice one. Be awesome to win it! CARTOON OF THE DAY …. says it all really .. Banking Union: Moving at a snail’s pace 11 July 2013 Der Standard Vienna http://www.presseurop.eu/en/content/cartoon/3961271-moving-snail-s-pace LOL, the FT seems to have it first, 6:13 englander time, I cant find the WSJ link mentioned, somebody here ? John G? the opening salvo from the alpine marine to start the hostilities with the EC commission. I wondered why it took so long. “We in Germany have had a bad experience with enabling acts” “The spokesman noted Mr Götzl had not specifically mentioned Hitler or the Nazis.” Banking Union: Banking union hard to swallow in Berlin 11 July 2013 Presseurop La Tribune, Die Welt “Banking union: Germany hits the brakes again”, leads French online daily La Tribune following the European Commission’s proposals for the second stage of the banking union project, which “consists of creating a Single Resolution Mechanism (SRM) for bailing out or dismantling troubled banks”: […] In Berlin, daily Die Welt reports that “the EU is seeking a fight with Germany,” thus adopting the position of a German official who complains that Brussels “is exaggerating” by demanding to “have the last word”. On the other hand, in its leader article, the paper has “no objections, in principle” to the Commission’s plan, since “everybody knows […] that it is better for all those responsible to be sitting at the same table.” Die Welt nonetheless worries: The bailout of the euro has already given birth to too many temporary solutions: the shifting of banking supervision to the [ECB], for example. On the one hand, it must design its monetary policies in an independent manner, and on the other, it must make decisions that require […] democratic monitoring […]. The Commission’s current proposal shows that it already had doubts about this conflict of interest. It would be logical to allow the ECB the right to dismantle banks after having given it the responsibility to supervise them. But the Commission understands this is a sin of intervention. That is why it has been attributed the power to dismantle banks. It would require an amendment to the European Union Treaty for the framework of stability to itself become stable. http://www.presseurop.eu/en/content/news-brief/3960771-banking-union-hard-swallow-berlin errrrm, I forgot: http://www.ft.com/intl/cms/s/0/3b7a2ce4-ea33-11e2-b2f4-00144feabdc0.html#axzz2YQnYtUk3 @francis Evening Francis – glad to see you have turned up for your tutorial. Read two pages of Kant and a chapter of Marcuse then apply the vocabulary encountered in a panageric on Angela’s flawed ordoliberal dogma not exceeding 10 lines of blog text. Maith an buachaill! found it: http://blogs.wsj.com/moneybeat/2013/07/11/german-banker-invokes-hitler-in-slamming-eu-bank-proposals/ David O D, reading scripture and then reciting it on blogs “Habermas says”, is for stupid people only. the first mainstream in germany to report it, was http://www.sueddeutsche.de/wirtschaft/bayerischer-banker-mit-nazi-vergleich-ins-wall-street-journal-1.1719748 What is interesting is, that all those Frankfurt School guys, like this Claus Offe, show up at this site, which does some daily maintenance, but had its latest alleged reader response on 15. Feb 2013, and all of this S.J. names look pretty iffy nachdenkseiten.de/?cat=103 I think the total ignoring by the proletarian masses of those intellectual leaders must really hurt, what ever is left of there self esteem, maybe more than a worthless flood house ? Probably the Irish fraction of those residuals , present in this blog are about half of what is left of those geniuses : – ) fyi Europe’s Zombie Banks Daniel Gros BRUSSELS – What is wrong with Europe’s banks? The short answer is that the sector is too large, has too little capital, and contains too many players that lack a viable long-term business model. It is the combination of the last two factors – an overabundance of banks with no sustainable way to turn a profit – that constitutes the most serious and most difficult problem. Read more at http://www.project-syndicate.org/commentary/europe-s-zombie-banks-and-the-current-recession-by-daniel-gros#50KJqV22QRbVggmR.99 h/t nakedcapitalism.com Yves and Yannis Time for Francis, Tutorial #2 Thursday, July 11, 2013 Yanis Varoufakis: Europe Resorts to Authoritarianism to Paper Over Banking and Austerity Failures Yves here. Because the European slow-motion train wreck is turning out to be particularly slow, it’s almost become background noise in the US, almost a lesser version of the now two lost decades in Japan. But what is happing in Europe is less benign and less likely to be able to continue anywhere near that long. […] The Eurozone Crisis used to have three components. Now it has developed a fourth; possibly the most toxic. (Yanis) Read more at http://www.nakedcapitalism.com/2013/07/yanis-varoufakis-europe-resorts-to-authoritarianism-to-paper-over-banking-and-austerity-failures.html#moJsL0gB8g2CPJup.99 ” In short, Europe’s governments must increasingly rely on authoritarianism in order to ‘maintain course’, both in the manner in which they treat their citizens and in the manner in which the treat each other; the Northern governments their Southern counterparts in particular. Thus we have the fourth crisis: the crisis of European democracy. And the longer Europe remains in denial about the systemic nature of its crisis the larger the democratic deficit and the more Europeans will look at Europe as the problem (rather than the solution) [Yanis] +1 Hi francis yes read that earlier,MG moderated an interesting discussion other day for those that missed it.Now DOD man ball which ya wanna play….sure you want go there.Perhaps you can explain to francis your fondness for our gerry cause i sure as hell cant ! http://www.reuters.com/video/2013/07/09/europes-unfinished-banking-union?videoId=243866000&videoChannel=1 @john gallaher I’m very fond of Gerry Banks – in fact am a bit of a gerryphile all the way from Kant to Honneth, Offe and the magisterial Franz B. not to mention rolling over with Helga to Bethhoven and the entire cultural, intellectual and philosophical germanic tradition … that said, the present political lot don’t cut it … ” German banks don’t want to be saddled with the burden of allocating capital to support the banking systems in other nations. This reaction should, of course, be no surprise to anyone following the European crisis for any length of time. German EU policy has always been about protecting domestic banks. Anything that levels the playing field against Germany, including things like EU-wide deposit insurance, has always been knocked back. With Basel pushing for further reform on risk-weightings, I can only see this getting worse because the German banking system has a significantly understated capitalisation issues that it would like to keep as quiet as possible. [Yves from the link above] …. which is essentially the argument, based on empirical evidence, that I have been making for the past three years. See previous thread on role of Germany in EU Hi DOD,that decommissioned Semtex just keeps turning up in the unlikest of places,if I’m not mistaken some of it was found with a few of Gerry’s x comrades or brothers in arms recently,not up to date on the current moniker used by Gerry’s x soldiers. Reminiscent of that Monty Pyton sketch…. Now David,ask yourself who in their right mind would want touch an Irish bank,what else is lurking in the vaults? Stress tests delayed rescheduled,mortgages oh stop. No chance anyone is going retroactively get involved its nonsense to blame others for self inflicted wounds. Semtex, LOL, it was the Tir Na Nog in Boston, St Patrick 2001 (it is closed since a few years) when the collection box went around for the provisionals : – ) I still have my Johannes Most Nitro recipes at the ready : – ) John, your video link is 77 min, not even Asmussen gets that amount of time from me, without some specific (hr:min) hint. “German EU policy has always been about protecting domestic banks.” (Yves) +1 . Mlb apols.. @francis,I cede the posting to David here, I’m also at dinner….but he has frequently espoused the eh ehm economic,social actually no idea why he likes Sinn Fein,over you to DOD-your party played a blinder with Pedar…perhaps one the more talented TD’s but then again it’s such a shallow talent pool hard to say…. @ john gallagher I am not sure why you refer to ‘semtex’ or ‘gerry’, but, for the record, the armaments of the IRA and UDA were successfully decommissioned under an internationally agreed body. Some of the arms had previously been funded by way of donations from various private individuals and organisations in the US. The process went way beyond pubs and taverns, and included public representatives and media figures from the diaspora. The Fianna Fail party was started up by De Valera in a similar fashion many years ago, and this sort of thing happens all over the world. The semtex is a tiny part of a very big picture, and not really central to theirisheconomy.ie. The political reality today is that Sinn Fein is currently in government in NI and in parliament in both jurisdictions. Irrespective of the pervasive RTE/INM spinning, the reality is that Gerry Adams is not Sinn Fein. Where abortion is concerned, there are many Peadar Tobins in the Dail, and it is a measure of Sinn Fein’s mainstreaming and political maturation that there should be ‘dissenters’ in the parliamentary group. DOD is right to make reference to Germany’s great legacy of political and cultural activity, but, as you say, the ball not the man. As Eric Hobsbawn points out in his last book, ‘Fractured Times’, one of the long term consequences of the Nazi era was that is destroyed legitimate German claims to be a universal culture. Francis is making a serious mistake, IMHO, in dismissing the ideas of the Frankfurt school on the basis that they are outdated, or have been wrongly applied by others in the past. History matters, and ideas always matter. Even the conservatives agree that our current leadership has few ideas, and little sense of history. http://www.ft.com/intl/cms/s/0/37460eb4-e983-11e2-9f11-00144feabdc0.html#axzz2YoW61raG @paul quigley I am not sure why you refer to ’semtex’ or ‘gerry’, but, for the record, the armaments of the IRA and UDA were successfully decommissioned under an internationally agreed body. Good post, it always makes me suspicious of someone’s analytical powers (or bona fides) when they rubbish Sinn Fein on the basis they had a paramilitary arm. Unlike all the other major political parties in Ireland. Of course Nelson Mandela was only removed from the US terrorists watch list in 2008, so these things can take a while. On topic, almost: It really belongs in the earlier thread on the German position in Europe but Sony Kapoor’s latest INET piece on Germany is worth a read. http://www.sundayworld.com/top-stories/crime-desk/new-ira-arms-find-includes-old-provo-weapons @John Gallagher Not to say that the Sunday World has not turned out some fine investigative journalism in its time but you have to notice that the headline and opening paragraph seem a little disconnected from the rest of the piece. The headline “IRA splinter group discovered to have weapons, including antiques, taken when they splintered from IRA.” would not have had quite the same impact though and Tony O’Reilly’s organs have to maintain their distinct editorial voice. No mention of S&P upgrade of Ireland on here yet i see. How strange. @ BEB Which agency rated the toxic subprime mortgage bundles as AAA ? Or did they all do it… S&P is good news but won’t change much. The rating agencies have been behind the curve for a good while now. I suppose they believe in permagrowth as well. @Paul/Shay: DOD was kindly providingbfrancis with tutorials I was hoping for one too on say decommissing…. But agreed as I happen to admire some of the “new” SF and think they may be the first Irish political party to have a woman leader,”Pierce Doherty” is doing a terrific job too. http://www.rte.ie/news/2013/0711/461949-weapons-seized/ PQ, successfully decomissioned…not sure about that. The Gardai recentlyu came across a quantity of Semtex. Wonder where that came from? New SF..little more than old style SF with no guns…allegedly. Policies hat involve no bugetary constraint and a magic money tree at the bottom of the garden. @Bond. Eoin Bond Do you think the S&P upgrade is based on changed economic prospects or the need to give the best behaved prisoner in austerity camp a special badge? I mean the upgrade is good news, in some sense, but with the whole unemployment, recession thing and the killer blow of the Deutsche-bloc doing its very best to ensure the periphery picks up the full cost of the European component of the global financial crisis the upgrade does seem a bit paltry. Do I not understand the full significance of the upgrade? (real question) @Paul having fun yet I’m sure am…from your post above… “Where abortion is concerned, there are many Peadar Tobins in the Dail, and it is a measure of Sinn Fein’s mainstreaming and political maturation that there should be ‘dissenters’ in the parliamentary group.” Oh look how mature:) “As a consequence Peadar Toibín has been suspended from Sinn Féin for six months with immediate effect.” http://www.thejournal.ie/peadar-toibin-suspended-sinn-fein-six-months-989507-Jul2013/ @john gallagher I was under the impression that all my posts here refer to the commission’s proposals on decommissioning dead, toxic and zombie banks – which btw is the focus of the thread – and my, and others’, views on how Gerry and the Gerry political elite are stonewalling such efforts to protect the German financial system! Peut etre you have a little problem with substance …?_if so, the tutorial is the thread. Hi David,so you prefer a knackered German banking system,clearing the field for some say yank banks to dominate the financial system for the foreseeable future. Or no banks at all,revert to a ehm barter sytem…do you really think the US is not pursuing an agenda too ? Checked your SF site this morning for their ahem EU views,I mean you reference then quite a bit on here. Apparatly,they are a viable political party…last posting was vote NO to the Lisbon treaty ! But that rag “An Phoblact” has a lovely little video of party activists outside the central bank last weekend,calling for some jail time for bankers…the irony oh the sheer ridiculous nature of it all-woth checking out for a good laugh on a Friday. Mbl links complicated- later have a good one! How did it start with D O D? He came with the usual unspecific assessment (the usual slander in my view, John Gallagher pointed me to this Moody’s Christopher Mahoney here, some weeks ago) of Germany & banks http://www.irisheconomy.ie/index.php/2013/07/08/germanys-role-in-europe/#comment-438320 and maybe I should have asked a little more specific, when I responded with “@ David O Donnell, do you have any evidence, or do you just slander on principle ?” Then he comes with this Habermas(ter) ideological drivel. And it becomes subsequently clear that he is stuck in some time loop of the 1960ties. The hard left scene in Germany was famous for all this sectarians, the Maoists, trotskytes, KBW, MSB/Spartakus, KPD/AO, whatever. At some point this just became a laughing matter (the successors to the Frankfurt school became the wiki/Neue_Frankfurter_Schule , „Pardon“ a satiric magazine I enjoyed in the 1980ties, more than a quarter century ago, when I was a kid. Nobody took this serious anymore, and the ranting ideologues moved on to the green party. As I learned recently, some folks in the US actually take it as serious and react with the creation of hate groups (wiki/Frankfurt_School_conspiracy_theory) I actually tutored one of the MSB folks at that time, but they were all too stupid and lazy and got eliminated in the written tests. It has become very clear that some folks will never give up on racist slander, and trying to steal from us. But all they got so far is, what fiatlux called the “ugly sister” : – ) . They can continue to run into the rubber wall, until they are tired. Langweiler. Boring. The same goes for Niall Ferguson, slandering Keynes recently, the usual LSE crap, like de Grauwe, Kapoor, Rieschle. Boring, and it will not work. I will not take a crown of thorns, in the name of some silly theories. We have treaties “no bail out”, payment schedules, and failure to live up to them has drastic consequences. I have been looking out for quite a while, what might need fixing at my home, and to some surprise there is very little I have seen so far. The endless slander only thickens the skin. Just 1600 rounds, any self respecting Kansas Tea party member would weep about being so massively outgunned, …. “when the Feds come, and try to take our guns away”. LOL I am so with John G, looking at the tantrums thrown. fyi A Billion Angry Brains: The Four Types of Online Hostility “The Information Revolution is taking us back toward our better social instincts,” rhapsodized scientist Matt Ridley in 1996. Prognosticators at the dawn of the Internet offered up an abundance of starry-eyed convictions, with a majority predicting that the World Wide Web would foster tolerance, promote empathy, and reduce rancor. “The Internet will break down national borders and lead to world peace,” Nicholas Negroponte, founder of the MIT Media Lab, wrote in 1997. “In the future, children are not going to know what nationalism is.” Perhaps some Internet-saturated American children grew up to feel as warmly towards the North Koreans as they do towards North Dakotans. Perhaps there are some web-surfing Chinese who do not distinguish a tsunami in Japan from an earthquake in Shanghai. But never in their wildest nightmares did Negroponte and other digital pioneers foresee our discouraging reality: millions of adults attacking one another in the comments sections of news sites, responding to YouTube videos with a taunting “Y U MAD BRO”, or trolling social media with snarky put-downs, offensive jokes, and poorly-punctuated political screeds targeting specific groups. Bullies, trolls, hackers, and self-righteous crusaders have entrenched themselves as a permanent feature in the modern online landscape. These digital gargoyles spew a daily dose of hostility: partisan rants, catty insults, ALL CAPS flame wars, sanctimonious boycotts, blistering twitter feuds, Anonymous raids, and endless waves of outraged petitions all clamoring to get rid of something. http://www.psychologytoday.com/blog/billion-wicked-thoughts/201307/billion-angry-brains-the-four-types-online-hostility?tr=HdrQuote @ All A link of possible interest! http://www.reuters.com/article/2013/07/12/eurozone-bankingunion-germany-idUSL6N0FI27420130712 Again, at the risk of boring people, (i) it is the Commission’s legal responsibility to table proposals and (ii) that of the European Court of Justice to decide whether the legal basis on which they are based is adequate or not. The German view in the matter, as expressed by Schaeuble, is entirely legitimate, nevertheless, as as that of other member states, should they care to express them. However, as the issue can only be addressed when the legislative text as adopted, the debate at this point is somewhat premature (except, perhaps, if an election is only months away). Meanwhile in another part of the forest. http://www.rte.ie/news/2013/0712/462077-economic-outlook/ @ All Eurointelligence reported the situation as follows. “We are approaching the moment of truth for Europe’s banking union. The European Commission yesterday presented its long-awaited proposal for a single resolution authority, but it was effectively vetoed by the German government, which insists that it is illegal under the European Treaties. In particular, Germany objects to any outside institution taking any decision that would implications for the taxpayer. But there was an interesting twist, as reported by Frankfurter Allgemeine. The SPD yesterday came out in favour of the European Commission’s proposal, and has urged the German government to accept it. Since there is no immediate decision, this tells us that the German position, if a Grand Coalition were to take over after the September elections, may well be different. Reuters, however, quotes Jorg Asmussen as saying that the position is unlikely to change after the election, and in case several other creditor countries supported Germany, including the Netherlands, Finland, Slovakia and Estonia.” That there may be less between the parties than meets the eye is, perhaps, reflected in this item from the Markets Section of the FT to which I linked on another thread in the following terms. FYI this pertinent commentary from the markets section of the FT. http://www.ft.com/intl/cms/s/0/42609af6-e4a3-11e2-875b-00144feabdc0.html#axzz2YOUpCA3K The really positive aspect of the analysis is the market reflection of the fact that the two core economies of the EA – Germany and France – are not diverging to any extent which would suggest political rupture. The negative aspect is the continuing difficulties confronting the “Club Med” countries. The positive aspect from an Irish point of view is that the country is no longer automatically included among the latter. @DOD nice non sequitur,what specifically in above do you find objectionable agreed its not exactly fast tracked but,a small step in right direction. So in summary your issues with this, is the under capitalization off the German banking sector… Do you still think your European partners are coming to rescue a flawed business and banking model,sorry paradigm shift involving paddies flipping gaffs to each other,banks arbitraging short term rates to fund long term commitments? @DOCM http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10172530/The-wheels-are-coming-off-the-whole-of-southern-Europe.html “Sooner or later, this immense bluff must surely be called.” Best policy Ireland can pursue for now is to stay light on its feet and take what opportunities come its way. “S&P said it saw more than a one-in-three probability it would raise Ireland’s credit rating during the next two years, citing expectations that national debt will fall from 122% of GDP in 2013 to 112% by 2016.” While welcome, the change in outlook by S&P is hardly earth shattering. A one in three probability would earn you good odds at PP. a 10% fall in debt/GDP in the space of two years seems unlikely given the latest economic outlook for the eu to 2014 and reports of 4% decline in exports last month doesn’t help. @ Paul W One of the great benefits of financial reality catching up with the Telegraph is that anyone who wishes to be informed on the latest fulminations of AEP has actually to pay for the pleasure. He has been singing from the same hymn sheet for decades as far as I can judge. It is not worth the expense. @ Flj I am no fan of rating agencies. But the harsh reality is that what they say actually has, unless I am misinformed, legal consequences for fund managers. This is, unfortunately, not true of blog comments. Some interesting comments from Merkel and Schauble… http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_12/07/2013_508991 Apparently the Greeks will have to do as they are told for the next seven years. @DOCM The law of averages, unlike S&P one third probability, would suggest that AEP will get it right at some stage. @ Flj Like a stopped clock; twice a day! Incidentally, the Brussels Blog of the FT has done the sums on Greece. http://blogs.ft.com/brusselsblog/2013/07/is-greeces-bailout-running-out-of-cash-part-2/ A health warning is, however, called for. Most Irish media coverage uses what the French disparagingly describe as the “Anglo-Saxon financial press” as source material and tend – with some very honourable exceptions, notably the European correspondents of the IT and the Examiner – to accept it without question. @ All Somewhat off topic but well worth a read the views of Cherie Blair on the the possible withdrawal of the UK from the European Convention on Human Rights, which, it must be stressed, is not an EU but a pan-European body based on the Council of Europe. However, the relationship of the EU with it is codified in the Lisbon Treaty. http://www.guardian.co.uk/commentisfree/2013/jul/12/european-convention-human-rights What the comment underlines is that skewed narratives with regard to international commitments exist in ALL countries of the EU. @ All France loses its last triple A rating! http://www.lefigaro.fr/conjoncture/2013/07/12/20002-20130712ARTFIG00554-la-france-perd-son-dernier-triple-a.php Portugal about to blow? http://www.telegraph.co.uk/finance/financialcrisis/10177055/Constitutional-crisis-pushes-Portugal-closer-to-the-brink.html Fiat, Great …a crisis to shake complacency about a month before the German elections. We know exactly where this is going to end. Debt restructuring and fiscal transfers. Perhaps, if I send my address to Francis he could just send me the cheque. Short work paper For those interested in more fundamental, structural changes, A paper about the German short work system, which says that explained about 20 % of the resilience of the German Job market in 2009, which , ……. Erm, leaves the other 80% unexplained ? http://www.voxeu.org/article/short-time-work-does-it-save-jobs Question: If an Irish company lays off people for lack of work, without being itself in lethal condition, yet, how much severance do they have to pay, or are typically paying, for, lets say, somebody 10 years employed, income at average level and/or twice that. @ DOCM I can access (rarely) the telegraph without paying. Do they have a kind of 10 article per month rule, or do they look at the IP adress where the request is coming from ? @ John, D O D The problem is, that this Moodys Mahoney is doing this constantly, comments in many places, this week the FT, http://www.ft.com/intl/cms/s/0/ad8cfe12-e982-11e2-9f11-00144feabdc0.html#axzz2YQnYtUk3 and often garnished with false statements like “German banks don’t fail”. The facts are: The Sachsen LB doesnt exist anymore. The HRE was nationalized and eliminated. Dresdener Bank doesnt exist anymore. West LB was devolved. We cleaned up, without trying to push the burden on others. If people have evidence that some more needs to be done, they shall show the information. But this way, this does not care about the stability of the (German) banking system, but trying to force Germany to pay for other problems, through the back door. @ Fiat Do you understand this portuguese president? He gave his OK for the reshuffle, but only sort of, “halber Segen” as German media (Focus) call it. Rates were already down to 6.7%, and then he throws the bomb on Thursday evening 7 pm EDT according to reuters. Doing about the maximum uncertainty damage possible Here is Barnier’s speech from yesterday in London and the NYT reporting on it,would appear the Q&A was the most interesting part.. http://europa.eu/rapid/press-release_SPEECH-13-636_en.htm?locale=en http://www.nytimes.com/2013/07/13/business/global/eu-offers-berlin-compromise-on-bank-union.html?ref=world Telegraph appears “free” stateside but I doubt I exceed more than 10 visits a month… @ Tull All this social cruelty in Portugal. The program in 2013 is now for real. It should raise the tax collection from some 14% GDP to 20, typical in mainland Europe is more 23 – 25% (excluding social insurance, always plenty of different ways to count) And the public employees now face the hardship of a 40 hours work week. Buuuuh, the world is so cruel. In Bavaria, with a 3% unemployment rate, they now also get a 40 hour week from this summer on, timely before the elections : – ), coming down from 42 hours after 2003 In Suebia, the green prime minister had promised to hire more of his teacher clientele, before the elections, now the target is to reduce by 12 000, or 12%, until 2020, can be done without layoffs. In NRW, the red/green again do not raise the police wages. Resulting in a new, creative way of protest: http://www.youtube.com/watch?v=3UFcN6btONw Even a part 2, explaining „indemnity“ to kids. I haven’t seen this anywhere else so far. Anybody here? But better than layoffs. The Länder have until maximum 2020, target 2017, to structurally clear up their budgets. Many here would also like to get a little more, but red/green blocked even the inflation adjustment of the tax rates. Francis, You can push all the propaganda you like but we all know how this is going to end. The debt of the periphery will be restructured. It already has. The cost of this will be carried largely by Germany. The alternative is default, the End of the EU, global depression and the Germans get the blame for destroying Europe again, The other outcome will be a rebalancing of tax and welfare systems and a removal of loads of snouts from the public trough. @ tull ‘ successfully decomissioned…not sure about that. The Gardai recently came across a quantity of Semtex. Wonder where that came from? For the record, I didn’t introduce the subject of semtex, or claim that SF policies are particularly coherent. I reiterate that the decommissioning process was conducted by a formally convened international agreed body. Republican and loyalist arms were placed beyond use, to the satisfaction of the commission, and the governments concerned. That was progress, by any standards. Most citizens are reasonable enough to see that an exercise of that type can never be 100% effective, but are willing to recognise that considerable discipline and responsibility was displayed by the key participants It is likely that other small residual arms stores will be seized in coming years, through public co-operation and police work, and responsible media would not sensationalise these events, or seek to exploit them, and confuse the public, for political gain. @ francis ‘We cleaned up, without trying to push the burden on others. If people have evidence that some more needs to be done, they shall show the information. But this way, this does not care about the stability of the (German) banking system, but trying to force Germany to pay for other problems, through the back door. The first part is accepted. The evidence for what needs to be done next cannot be shown, however, because DB is TBTF, and it is also too big to rescue, even for Germany. The evidence for that state of affairs is carefully concealed behind a balance sheet which is designed, in a truly magical way, to hide insolvency. And so the central banks must keep printing printing, just to keep things level while Europe slowly but surely stagnates. The recessionary waters will eventually rise in Germany, because, like it or not, Germany is part of Europe. Even a small wound in the foot can be fatal, francis, if complications develop. @ DOCM ‘I am no fan of rating agencies. But the harsh reality is that what they say actually has, unless I am misinformed, legal consequences for fund managers. This is, unfortunately, not true of blog comments’ Please. The global credit bubble could not occur if fund managers, accountants, rating agencies, tax advisers and lawyers were not motivated by unjustified and unjustifiable personal rewards. If the payoff is structured in the right way, and the legal and accounting loopholes are fully exploited, it’s perfectly possible to do nicely as manager of a failing fund. The central bankers money tap provides the ultimate backstop even when the rating agency makes a complete dog’s dinner of it. If there was not such prestige and wealth involved, citizens would have seen through the charade long ago. As Sammy Davis Jnr famously put it ‘Sincerity is everything. If you can fake that, you got it made’. @ john g ‘Do you still think your European partners are coming to rescue a flawed business and banking model, sorry paradigm shift involving paddies flipping gaffs to each other, banks arbitraging short term rates to fund long term commitments?’ What went on in Ireland was a shambles, but the Celtic shenanigans were fully enabled by EZ and global financial players.Notwithstanding its local impact, the Irish mess is peanuts compared to the devastation which is being wreaked by the leveraged speculating community. These folk have a lot of power, but they don’t deserve any respect. In the same way as women, children and other folk have got rights, the public will eventually see the need to protect themselves from the rule of plutocrats @ john g ‘ Oh look how mature:) “As a consequence Peadar Toibín has been suspended from Sinn Féin for six months with immediate effect.” @ john g ‘ Oh look how mature:) “As a consequence Peadar Toibín has been suspended from Sinn Féin for six months with immediate effect.” Other parties did not allow a free vote, but do not attract the labe immature. Expulsions and readmissions are normal and legitimate. Calls for bankers to be jailed have happened often in history, and many financiers were summarily executed over the centuries. The world is more civilised today, but the sums which were looted, and continue to be looted are simply mind-boggling. Most of the victims are not laughing, but are desperately seeking relief from debt. I would think that the control of white collar crime, and its MSM cheerleaders, is going to be one of the really big themes of this century. @Francis The President of Portugal obviously knew what he was doing and the consequences of same. I take a different view to you…I think the President chose his country over markets after a hastily cobbled together pact between the parties which had little democratic legitimacy. @paul agreed the irish banks were addicted to cheap and easy credit,enabled by the regulator and politicians.You didn’t have to take the money ! A number of commentators have often blamed the repeal of Glass Segal over here for the natural bust after the boom,well it’s back kinda-non starter but. Every bankers nightmare Elizabeth Warren proposed repealing it,actually sections off it this week with some cross party support. Wonk Blog at WP explains it quite well. “There are sound arguments to be made that the breaking up the big banks wouldn’t do all that much, or that its effects would actually be harmful; Canada, after all, had a very mild crisis despite having a very concentrated banking sector. Many of the companies that proved most fragile in the 2008 financial crisis were not mergers of commercial banking and investment banking: Bear Stearns and Lehman Brothers were pure securities firms, and AIG was an insurance company” http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/12/elizabeth-warren-and-john-mccain-want-glass-steagall-back-should-you/ As regards those dastardly bankers and leverage The Times discussed the implications and fun frocilics from leverage… http://economix.blogs.nytimes.com/2013/07/11/a-call-to-battle-on-bank-leverage/ Admirably the jabs at SF are first off topic and a bit spurious so apologies,happen to like “Pierce,Mary Lou,Peadar” I think they are doing excellent work,the old guard is a different story. But you are correct,they are just like any other political party…as one wag put it there is no room in SF for a pro life position…ok ok could not resist! Was surprised that SF were protesting outside the CB are they worried about deposit insurance,I thought withdrawals was more their game…bada boom oh stop it never gets old 🙂 @ John G Thanks for the 2 links ! It is quite educating to see Barnier charming the Englanders, with many words. How this is done, shortly contemplating, how I would have done it. Before he cuts to the case, in a lot less words: “But I know one thing. The single market cannot be ‘pick and mix’. I’ve heard some people suggest that financial services should be repatriated. It’s the wrong cause to fight for.” LOL, resistance is futile , : – ) As far as I see, the only time he mentions the “single resolution mechanism. With resolution and supervision aligned at a central level, banks in crisis can be managed more effectively in the banking union. And we can break the negative spiral between sovereign crises and ailing banks.” In this general form I/We can agree with this. And the “resolution and supervision aligned” was certainly not meant in a way, one could interpret them. You are correct, as nearly always : – ), that the Q&A in the NYT is more interesting with respect to the Single Resolution Mechanism (SRM) Sooo, a) I don’t think that the local credit union networks are on the table at all. Barnier tries to play a card he simply does not have wiki/Sparkassen-Finanzgruppe 423 units, 15295 locations, 3060 b Euro balance sheet wiki/Bundesverband_der_Deutschen_Volksbanken_und_Raiffeisenbanken 1121 units, 13211 locations 1058 b Euro b) I think Schäuble was extremely polite with: “The proposal DOES NOT MATCH the current legal, political and economic REALITIES and would create major risks,” Mr. Schäuble wrote, adding that the transfer of powers to the Commission was not backed by E.U. treaties.” (caps are mine : – ) On the day that would be voted on here, I would have stocked up on rope, to sell it with a good profit, on this mother of all wedge issues. That reminds me of that UK Clarkson TV car show video: (berlin to warsaw in one tank youtube), Which has been subsequently pulled, an odd version here: http://www.youtube.com/watch?v=mn2KB1taCBc The answer from Poland was funny as well: Berlin – London , daily delivery, with a Ju 52 in a DHL paint, and stuka sound, …., sigh, pulled as well, just in case anybody has some link to these 2, I would appreciate it c) general principles ca) not more institutions, with more byzantine election rules As long as possible, we should avoid the creation of new institutions, especially for non-regular purposes like bank resolution. The ESM is here to stay for quite some time, has banking expertise, the Commission? I don’t think so. cb) no urgency argument To argue, that we have some kind of urgency, and that therefore 5 years into the crisis, and 5 years to the bank union getting active, we have to do things a little bit of the rules, just puts me off. From now on, institutions are implemented on logical reasons only. No Go. Cc) matching of decision power with liability Most, if not all of the present problems arise, because people/ institutions making decisions are not the same as being liable for them. If incompetent Irish bankers and their supervision would have done their duty, we wouldn’t be in this situation now. To have 10 non-Euro members in the EC deciding about massive financial decisions for Euro members is a simple No Go. No Pay No Say. Period. Cd) The influence on the decision has to be matched to a significant degree, not necessarily 1:1 with the financial impact of it. The ECB council with the same one vote for Malta 0.07% or Cyprus 0.19% as Germany 27% is a simple No Go. From my perspective a Euro from Cyprus can not have more than 2x the influence as a German Euro. That the 9 members with 7.4% of the financial liability should be able to majorise the rest, is simply absurd. A 2/3rd rule to 16.8% also doesn’t cut it, and would induce the risk of paralysis at the exact wrong place. That leaves the ESM as the natural choice for the SRM, as the SSM to be placed at the ECB is somewhat hairy, but OK, IMHO. Does anybody here have a hard argument against the ESM to be SRM ? @ francis There are seven formal institutions of the EU (Article 13.1 TFEU) including the Commission and the ECB. The entire legal edifice of the EU is built around these institutions. The ESM is an intergovernmental treaty relating, as its name suggests, to maintaining economic stability between states. Not all EU states have subscribed to it. The logical institution to deal with bank resolution – if the rooted objections of Germany/Bundesbank to having the ECB do it are accepted – is the Commission. As Barnier points out, the Commission is not seeking greatness in this area but is having it thrust upon it. Courtesy Merkel, the EU has been led a merry institutional dance over the past five years (no less than five different institutional arrangements) and the other member states have reached their limit with regard to this approach. The actual structures that are legally effective (so-called Six Pack and Two-Pack) have been adopted in accordance with EU legal procedures. This will also be the case with the Commission proposal on banking resolution. The German objections are political and economic, not legal. The tactical objections to the use of Article 114 TFEU (the basic article dealing with the internal market) relate to the fact that the basis for decision is (i) qualified majority voting and (ii) in co-decision with the European parliament. The Lisbon Treaty changed the voting arrangements and linked the weights directly to population. Germany has not a leg to stand on. It will be interesting to see if the “Northern” creditor states join forces with her to block this essential forward step. @Phillip Lane or To Whom it May Concern Why has the archive of the Irisheconomy.ie been removed? Tull 1. when D O D makes unspecific rants against German (banks) that’s OK for you. If I bring specific, quantitative, comparable information, then this is propaganda for you. 2. Since Germany is blamed anyways for everything, I think it makes me feel better to start kicking some shinbones. According to the BBC popularity survey, we are number one, again, and still. Way to good, some folks also need to know, that we can also take the gloves off, if it gets too much. 3. GDP in PPP billions China: 12380 Greece 281 Ireland 191 Portugal 245 Sum GIP 717 Some Fed report and people like me interpret the Argentine default data as cutting over time their GDP by a factor of 2 against the (hypothetical) alternative. For Ireland, with no energy, much smaller, and owning the money to the people of Europe (of which Germany is just 27% backing), and not just a few anonymous banks, this could be a lot harder. The numbers for refusal of any further bailout were much higher in France (vs. Germany) in the last PEW survey. If you do stupid things, like default, and cut your GDP permanently in half, that would cut 95 b, less relevant than 0.77% accumulated slower growth of China, like going 9 months earlier from 7.5 to 6.5% growth per year, something they seem to do now, to fix their (shadow) credit problems. When you talk about causing a global depression, like cutting a global GDP of 83 trillion by more than the average 3% growth, or 2500 billion, you would have to take Italy and Spain with you into the abyss. And it would be a one off, we just survived in 2009. http://www.ft.com/intl/cms/s/0/f76a5202-e241-11e2-87ec-00144feabdc0.html “The danger point for the debt service ratio, …around 20-25 per cent, while increases in the ratio of five percentage points or more were problematic. Official figures for China are hard to find, but analyst Wei Yao at Société Générale says the ratio stands at about 39 per cent of GDP.” Oooops, that is about the same as their private consumption. The ESM was specifically designed to eliminate the urgency argument, and to remove any blackmail option for countries like Greece, Cyprus, ….. And this was initiated in 2011. 4. You eat what you kill Why should Ireland have the right to life of the labor of its neighbors, permanently consuming more than it is producing 40k$ GDP p.C.? Shouldn’t I have much more consideration for the plight of good NATO allies, like Romania 12.8k$ p.C GDP, who never got any kind of the extremely generous (100 % GDP , according to the money go around link I have given so often) Ireland and Greece got? @francis a few interesting comments on going solo specifically viz-a-viz negotiating with the US. The press conf. from wen is here but cant find Fridays-this one is only 17mins but not much there. http://ec.europa.eu/avservices/video/player.cfm?&ref=I080544&sitelang=en @DOCM here ya go…did some say legal opinion required ? “This point is well illustrated in a recent speech by Thomas Hoenig , FDIC Vice Chairman. Indeed, he reports that the bigger US banks show a leverage ratio of tangible equity over tangible total assets of 6.2%, using US accounting standards (US GAAP), whereas the main European Banks have a level of 3.7% when using IFRS accounting standards. However, according to FDIC calculations, if the US banks ratio would be calculated according to IFRS, the same as in Europe, the ratio comes down to 3.8% very similar to the European level. When calculated with the same accounting standards the average leverage ratios of the large American and European banks are quite similar. The explanation for this has to do with netting rules: under the US GAAP the American banks have total assets of 10 trillion dollars but applying IFRS that is changed into 16 trillion dollars. This huge difference explains the difference in the leverage ratios but, importantly, has necessarily to impact also the published risk-weighted capital ratios of European and American banks. This means that the capital ratios are then not comparable although that is many times ignored by market and media perceptions, clearly to the detriment of European banks.” http://www.ecb.europa.eu/press/key/date/2013/html/sp130712.en.html http://deutsche-wirtschafts-nachrichten.de/2013/06/26/merkel-verschiebt-banken-union-die-wahrheit-gibts-erst-nach-der-wahl/ Angela Merkel und Wolfgang Schäuble don’t want to talk about the banking union as it will unnerve voters. After the election so. Maybe. Makes no difference anyway because Deutsche and Co. and the pals from university call the shots. The rest is just Pippifax. Landesbanken are a walking disaster. German bank exposure resulted in Ireland’s ‘bailout’ Cant have the EU Commission looking at German black box too closely. All those property loans and exposure…. http://deutsche-wirtschafts-nachrichten.de/2013/07/08/spanien-deutsche-banken-sanieren-sich-auf-kosten-der-immobilien-besitzer/ Deutsche Banken investierten bis zum Platzen der Immobilien-Blase massiv in spanische Hypotheken. Diese Investitionen haben sich gelohnt. Denn die Hilfskredite der EU an Spanien dienten letztlich vor allem dazu, die ausländischen Gläubiger zu bezahlen That headline from the link above: German banks invest as much as possible in the Spanish property bubble. Because the loans to Spain from the EU serve to pay foreign bondholders. Bailout….. @paul this one is for you… http://www.nypost.com/p/news/local/manhattan/man_gets_punched_out_after_yelling_p5WHbNs3vZENuZ20QuOXOP @ JG Thanks for the link! The extract of relevance to this thread is the following. “The European Commission announced last Wednesday a proposal for a Single Resolution Mechanism based on the concept of a an agency with wide of autonomy and ultimately dependent on the Commission for the crucial decision of putting a bank into resolution. Different alternative institutional setups could be conceived but the existence of a SRM is a key priority for Europe and I am very pleased to see in the proposal that the envisaged timeline takes this into account, with the entry into force foreseen for mid-2014 and operations commencing in January 2015. This aligns with the entry into force in 2015 of the new legal framework for resolution in Europe, the Bank Recovery and Resolution Directive (BRRD), which will provide a harmonised framework of resolution powers and tools. While it is still too early to provide an in-depth assessment of the Commission proposal and a more detailed assessment will be published in our ECB legal opinion, I would like to welcome, from a personal point of view, some important points contained in the Commission`s proposal. First, the Authority will have the capacity for truly European decision-making with no veto powers for national authorities. In my view this is key for dealing swiftly and impartially with large cross-border banks, although the proposal appropriately applies to all banks of the participating countries in the Single Supervisory Mechanism, thus ensuring a cohesive system. Second, the Authority would own a Single Resolution Fund which would be financed by ex ante risk based contributions to be complemented by ex post contributions both paid in by the industry. Although not specified, the proposal stipulates that the Fund would be able to borrow from both private and public alternative funding means. These borrowings would subsequently recouped from the industry, thus ensuring fiscal neutrality in the medium-term. I would have preferred, however, that the proposal would have considered explicitly the issue of a public backstop for the resolution fund in the form of a credit line that would have to be repaid afterwards, as it is the case with the US FDIC. The ECB has strongly advocated for an SRM comprising of these three elements: a single system, a single authority, and a single fund. The proposal contains these three elements and consequently reduces the harmful effects of sovereign-bank interactions by diminishing the importance of implicit sovereign guarantees. The SRM will operate in the legal framework established by the Bank Recovery and Resolution Directive (BRRD), which was recently agreed by Member States’ Governments. This Directive foresees that bail-in becomes the first line of defence in dealing with banking crisis – indeed, 8% of liabilities will have to be bailed-in before resolution funds or other public funds can be used, with depositors of persons and SME being given the highest preference. Nevertheless, the full bail-in tools that includes the possibility of burning senior bank bonds and uninsured deposits will entry into force only at the end of 2018. Before that date only shareholders capital and subordinated debt can be used to resolve a bank. Insured deposits, secured borrowing (including repos and covered bonds) are exempt from bail-in. I think that the bail-in principles approved by the Member States and the respective timeline until 2018 are appropriate to allow a transition period that is helpful to ensure stability in the bank bond market. This new rules should support the work of the SSM by strengthening incentives in the financial sector to exercise market discipline on problematic banks. To sum up, the euro area banking sector is becoming more stable overall, and given the euro area’s central role in global financial intermediation, this creates positive spillovers for the global economy. Banking Union will take this process forward by increasing confidence in supervision and ensuring that banks that need to be wound down, can be. To the extent that this supports credit growth to the private sector, this will also generate higher growth in the euro area and help the global economy through that channel, too.” One of the founding fathers of the EU, Jean Monnet, made the essential point decades ago when he said “Nothing is possible without people, nothing is lasting without institutions”. Merkel’s actions, doubtless a product of her upbringing, suggests to me that she simply has no grasp of what dictated the actions of the founding fathers in question. Whether Germany can afford to give her another (third!) period in office is very much open to question, to my mind. @ DJ There really are no surprises there! The interests of states and their banks are impossibly confused and it will take years to disentangle them; if ever! @DOCM trying to track down ‘that letter’ reuters has it but may be out there,no luck so far-the legal opinion will be worth a read. http://uk.reuters.com/article/2013/07/12/uk-eurozone-bankingunion-germany-idUKBRE96B0ER20130712 @DOCM Banks run the show alright as ever! Life goes on, we just have to get on with things. It’s a sunny evening! Dorothy, it is kind of the same response as to D O D with his frankfurt school fixation. Who is http://deutsche-wirtschafts-nachrichten.de/2013/07/05/erstausgabe-ausverkauft-werden-auch-sie-mitglied-im-dwn-foerderkreis/ „hunderte unserer Abonnenten“ a few hundreds ? since a few weeks? “Mit den Schulden werden Generationen zu Sklaven des Geldes, über die umfassende Überwachung mit den Mitteln der modernen Technologie kann der Staat jederzeit und gezielt in das Leben des Einzelnen eingreifen“ Another tiny group of ranting conspiracy theorists. http://www.freitag.de/autoren/ernstchen/deutsche-wirtschaftsnachrichten Die Deutschen Wirtschaftsnachrichten betreiben dem Inhalt nach zu urteilen ganz gezielt Anti-EU-Lobbyarbeit. Als Journalistin beurteile ich auch den Schreibstil als unseriös und suggestiv. Zudem verlinke sie auf andere unseriöse Quellen wie den Kopp-Verlag. Mein (und nicht nur mein) Eindruck: Look, about 2 years ago, I finally ended discussion with somebody I met at a bar here 10 years ago, Talking over the years about stocks, photovoltaics, politics, and at that time he was a reasonable person. And then he started with this Kopp Verlag stuff, buying physical gold for the coming financial Armageddon AND way out of the money GE call options, as a SIEMENS electrical engineer. Gentle nudges, that this just totally not fits together, totally ignored. With fukushima he had some weird ideas, how to fix radically the radioactivity coming out of the nuclear rods (Ichecked that he had never any educations on the basics of radioactivity physics), and my interventions, that all that is just totally against all we know, how that works on a very fundamental, basic level, again totally ignored. The fascinating thing is, during the day this guy seems to function perfectly in maintaining process control equipment, and from what I know (limited !), actually at a pretty sophisticated level. But beyond this, really nuts. Francis, Italy and Spain are just one global downturn away from default…especially Italy. Have you looked at Dutch house prices lately… Down 25% and no bid. There could be a NL in PIIGS very soon. Bottom line, the implementation of a post WW1 policy by the new axis powers in Europe will destroy the EU. @Tull 15pc oversupply of Office CRE in NL is building to a ‘disaster’. German banks and funds are getting burnt also e.g. HSH Nordbank, etc. Dutch banks trying to manage the situation but the trend is firmly downward and accelerating. Even Rabobank is very exposed (60pc of the domestic RE market). @ All A very good article by Colm McCarthy in the Sindo! http://www.independent.ie/opinion/analysis/eu-currency-system-is-broken-and-needs-fixing-29418443.html The answer to the rhetorical question that he poses – “Has a successful project (the union) been damaged by a premature and ill-designed rush to an unstable common currency with little evidence of intent to reform?” – must be yes. However, two central considerations seem to be missing from the article; recognition that the EU is neither a full federation nor a unitary state (i.e. comparing its actions to others that are does not get us very far) and the conditionality insisted upon by Germany addresses the structural and governance failures in the countries in difficulty which were a major, if not the major, cause of their collapse. The solution must lie in improved governance and a general re-balancing of the economies of Europe, coupled with the creation of a functioning banking union. EMU is a wider concept. The E, whatever about the M, could be said to be already in existence to a considerable extent. Further integration of the internal market was, indeed, the main plank in the defence by Barnier of the Commission’s banking resolution proposals. The euro is a currency without a country. Unless we invent a country it’s goodbye euro. http://www.handelsblatt.com/politik/deutschland/eu-plan-bundesregierung-verschaerft-ton-gegen-bankenunion/8479918.html Well there’ll be lot of very expensive well-made ‘handbags’ at the EU proposal, it’ll be like trying to herd cats, but fun to watch nonetheless. John Gallagher, or whoever else lives in the US, just a short question, what is your inflation, and if necessary, what should be done about it? http://reszatonline.wordpress.com/2013/07/14/german-bad-banks-links/ ‘From the beginning of the euro crisis, exposures of German bad banks to periphery countries and other risks limited the scope for policy crisis management’ writes Beate Reszat, this morning. ‘ john g ‘Was surprised that SF were protesting outside the CB are they worried about deposit insurance, I thought withdrawals was more their game…bada boom oh stop it never gets old 🙂 Here is something else which never gets old. Power corrupts. The Irish banks didn’t have to borrow the money, but lenders didn’t have to lend it either. The Irish banks had captured their own DoF and regulator, and were fully incentivised to loot, and bankrupt, their own companies. The lenders knew this, but ethics or rules are foreign concepts to them. Profit is the only principle, and the collection of debt is a religion. They see the central banks as their compliant servants. I do not defend bank robbery, but it is neither fair or reasonable to seek to divert attention from the crimes of bankers by reference to a single episode, involving a relatively small (in this context) sum, and which took place in a highly disturbed political and civil environment. Such an event has not recurred. Social magic is, as Bourdieu often points out, a very pervasive phenomenon. The best way to rob a bank really is through the front door. As long as a sufficient number of respected politicians and professionals are drawn into the web, protection from consequences for the perpetrators is ensured. That cannot be right. PQ, Should we also ignore the crimes against humanity committed by SF. Do I detect that you demand higher standards of our current democratic pols who have no record of military activity. @francis about 1% the target is 2%,Bernake gave speech Wensday it’s quite good,my money on Larry Summers to replace him….for now helicopter Ben is in charge. It’s first thing here will answer your philosophical question a bit later… http://www.federalreserve.gov/newsevents/speech/bernanke20130710a.htm @Paul again apologies as no offense meant at all,just having a bit off fun admittably perhaps a bit bad taste. Regarding the “plan” it would appear quite a few people missed that memo or email! Most bank employees got wiped out totally too,unlike say over here at Countrywide. Here a link to that video we are discussing. http://www.anphoblacht.com/contents/23230 thanks John! The reason I was asking: If some of you would have analyzed my response to Dorothy yesterday, it was also somewhat indirect, from the “deutsche wirtschafts nachrichten”, apparently a bran new sectarian group,but also good things start at some point as new : – ) to the criticism of others (freitag.de) and linking this to the kopp verlag lunatic followers. Making it actually somewhat difficult for all of you to judge by yourself, really. What you can all however check directly by yourself is http://deutsche-wirtschafts-nachrichten.de/2013/07/14/waehrungskrieg-us-notenbank-fordert-mehr-inflation/ Where they claim that the “real inflation” in the US is 8% vs the official 1%. This is something every reader can check by just calling one friend in the US. But they get away with this with their readership, gullible conspiracy believers. And, over the years, I found the question, whether people here believe that the “real inflation” is much higher, a pretty good screening criteria. None of them, and I have asked that at least 2 dozen times, ever made up any kind of systematic calculation. It takes actually only just something like 1 hour to collect a suitable number of prices, and our inflation here was pretty close to the 1.5% average in the last 10 years. Now, how much do I believe these deutsche-wirtschafts-nachrichten folks to describe appropriately a much more complex thing like german bank credits to spanish banks? Dorothy, I am actually curious how YOU got to this web site. How does this happen? John, do I get this right, that so far SF are the only ones to demand an enquiry? @francis By any chance are you confusing me with a woman who beat you up as a child? 🙂 Dorothy @francis that’s from zerohedge,yes the metric is a subject of on going debate. http://www.zerohedge.com/…/inflation-too-low... To the best of my knowledge everyone has supported the idea of an inquiry but the exuction is somewhat lacking. @francis this may clarify some of the confusion… ” Inflation in the United States has softened this year, complicating the Fed’s decision whether to reduce its $85 billion monthly bond purchase program later this year. Some Fed policymakers raised concerns that reducing stimulus too soon might exacerbate the risk of deflation, a downward price spiral that crippled Japan’s economy for a decade. The core rate on personal consumption expenditure, the Fed’s preferred inflation gauge, was 1.1 percent in May, far below its 2 percent goal. U.S. inflation data released on Friday, however, suggested the worrisome price trend might be turning around with the expected pickup in business activity and consumer spending in the second half. On Friday, the government said producer prices grew 0.8 percent in June, faster than the 0.5 percent forecast by economists polled by Reuters. ” http://www.reuters.com/article/2013/07/12/markets-usa-bonds-idUSL1N0FI0UW20130712 Was MLB the above link may be a bit dodgy so here is another one… “But what Bernanke will never admit is that the official inflation rate is a total sham. The way that inflation is calculated has changed more than 20 times since 1978, and each time it has been changed the goal has been to make it appear to be lower than it actually is. If the rate of inflation was still calculated the way that it was back in 1980, it would be about 8 percent right now and everyone would be screaming about the fact that inflation is way too high.” http://www.zerohedge.com/news/2013-07-12/inflation-too-low-are-you-kidding-us-bernanke @ john g No problemo. Lets move on, if that is possible in all of the current circs 🙂 John, I am actually familiar with the inflation discussion, and all the various definitions and merits of them to go by for what, US and EU, PCE ex food and energy, historic difficulties, hedonistic method, even english RPI vs CPI, I am aware of the cumulative 28% deflation 1929 -33 in the US and what that did to the thinking of people, and why that was not a good idea, how you can use that in times people are scared of other things, to get rid of some debt : ), like after 1944 in the US, ROFL. The way inflation is calculated is changed continously, because today most of dont buy anymore scientific pocket calculators and tape recorders, do we. Will people change their behavior because we run a few years a little 1% of the 2.0% target, I dont think so. What I wanted to emphasize was, that there is no honest way in hell to argue from the official 1% all the way to the alleged 8%, even the table in your zero hedge link translates via the median into a average inflation of 3.6%, on which I agree on for that part of the consumption. My number for dutchess county is 3.4% for a similar range of products, which do not include gas, housing, services, etc. @ tull ‘PQ, Should we also ignore the crimes against humanity committed by SF. Do I detect that you demand higher standards of our current democratic pols who have no record of military activity’ I really don’t want to go here, but reason needs to be applied. As the Gospel says, it is easier to see the mote in someone else’s eye, than the beam in your own. If we are going to make reference to armed conflict, the least that needs to be recognised is that there were/are at least two sides involved. Neither all of the right, or all of wrong, can reasonably be attributed to ant party. The biggest crimes against humanity were committed by powerful states. While state crimes in N Ireland were not on the scale committed elsewhere, but they did include assassination and internment without trial. Violent and vicious resistance was inevitable in what rapidly evolved into a dirty war. Thank God democracy, and dialogue, finally prevailed. State crime has not gone away. Democratically elected politicians arrange for drones to land on poor villages, economic refugees are kept in concentration camps, and arms are sold freely to known butchers. That’s not the half of it, but the thread is about banking issues, on which subject I mostly concur with you. @Dorothy Jones “Angela Merkel und Wolfgang Schäuble don’t want to talk about the banking union as it will unnerve voters. After the election so. Maybe. Makes no difference anyway because Deutsche and Co. and the pals from university call the shots. The rest is just Pippifax. Landesbanken are a walking disaster. German bank exposure resulted in Ireland’s ‘bailout’ Cant have the EU Commission looking at German black box too closely. All those property loans and exposure…. +1 @John Gallagher & francis Would you two like a room? Great value at the mo … @all Does anyone remember The Greatest Bank Heist in Irish History? 70-90 Billion or so .. PQ, However bad the Anglo boys were they never resorted to shooting Gradai in a hail of machine gun outside a post office or killing children by planting a bomb in a waste basket in Warrington or Eniiskillen or La Mon or etc etc. I was not referring to conflict but a record of criminality by a movement which now is on the cusp of power after the next election. @DOD some of your positions perplex me,that is when you not being juniville and a misognist..For example I found your comments on a rather courageous stand by Lucinda sexist and chauvinist-Hello like really that’s it! But back on topic now David,lets say we agree that the entire European specifically German financial and banking system is absoluty bankrupt,knackered and fuc*ed. Where does that leave little old Ireland,then…given your burn rate at present who’s gonna fund ya? Default by all means exit via the gift shop…the yanks are just over the hill will dollars to lend you,gimme a break they too busy loading up with swag,shower of carpetbaggers. Perhaps the Brits then…yeah right. Solo run….trying convincing the electorate of that but who cares,huh what the majority wants in a democracy. Note Angela Merkel’s comments in response to Putin’s opposition to aid for Syrian rebels. This is a woman who is not for speaking out both sides of her mouth. Sticks to principles through thick and thin. http://www.paulcraigroberts.org/2013/07/10/putin-dresses-down-the-group-of-eight/ fyi Black box German bank 2013/07/11 Slowly, public awareness is growing in Germany that bank riskiness is not only a problem in Southern Europe. On July 1, for example, Süddeutsche.de had a long article about the lack of transparency of financial institutions focussing on the latest financial statement of Deutsche Bank, and on July 9, Handelsblatt mused about the risks hidden in German bad banks in an article titled “Gefährliche Altlasten” (dangerous legacy). This legacy is probably one of the reasons why, as Reuters put is, it is “unlikely that Berlin would accept the creation of a new agency in Brussels or elsewhere with powers to overrule its own national authorities on the sensitive issue of whether to save or close an ailing bank” . In recent years, both German financial institutions and their regulators have developed a high level of bad-bank sophistication. In May 2009, a German „bad-bank law“ (Gesetz zur Fortentwicklung der Finanzmarktstabilisierung) has been established which allows banks to “clean” their balance sheets by transferring non-performing loans and other loss-generating assets to special institutions. https://reszatonline.wordpress.com/2013/07/11/black-box-german-bank-2/ h/t Dorothty Jones in German .. er .. “Leadership” thread @ All Those interested in the actual subject of this thread may find this link informative. http://www.publications.parliament.uk/pa/cm200809/cmselect/cmeuleg/19xxx/1905.htm#note13 Allowance has to be made for the pressures generated by an increasingly fraught election campaign in Germany. The bottom line, however, remains that of the willingness of the countries of the EU to respect the rule of law. They cannot individually dictate what it happens to be. The Commission has made a proposal. It is up to the member states, in co-decision with the European Parliament according to the legal rules that they have collectively ratified, to adopt, amend or reject it. @ All Wolfgang Munchau shoots the messenger! http://www.ft.com/intl/cms/s/0/3b2d9f32-ea3d-11e2-b2f4-00144feabdc0.html#axzz2Z36yGxrs DOCM, No..he is just pointing out that Herr Nero is fiddling while Rome burns. The lads are denying that there is a fire and arguing over who supplies the hose. @ TMD Not so! Munchau in particular should know that the EU institutional structure parallels in many ways that which exists in Germany i.e. a “federal” structure where the laender are,in fact, the executive of the policies of the federation. Try finding “Brussels” in the month of August! There is nobody there! Nor does there need to be! If the member states are incapable of agreeing, there is not much the officials can do about it. @ All FYI Merkel discovers a sudden enthusiasm for legislative action at an EU level! http://www.ft.com/intl/cms/s/0/7a4b26d8-eca6-11e2-a0a4-00144feabdc0.html#axzz2Z36yGxrs @francis the discussion on appropriate metrics and the ones utilized for measuring inflation,to be continued,the speech and fed minutes from Wensday are extensively covered thur/fri in the WSJ etc. @paul have to say “Pearse Doherty” after Joan Burton may just be one the most talented TD’s,never to be minister of finance,but you never know…. The link above. “for you ” went viral here in NY,the article has since been revised,originally it was a GS banker/employee that got knocked out…they since deny he is/was an employee. @ DOD Tks for regurgating DJ’s post and your comment to get a room with francis,that’s either homophobic or chauvinistic depending on francis gender…actually in Berlin in September hope springs eternal.. Noticeably you singled out a woman politician for your ire,is Peter Mathews not worthy of a spread in say Maxim or Pedar in Loaded:) Either way surfs up sun is shinning,most importantly in life dont….. http://m.youtube.com/watch?v=39NS7h92WcA&desktop_uri=%2Fwatch%3Fv%3D39NS7h92WcA It nice to see everyone turning corners…..who was it the started that in Ire? http://www.reuters.com/article/2013/07/14/us-spain-economy-rajoy-idUSBRE96D05R20130714 And in France.. http://www.reuters.com/article/2013/07/14/us-france-hollande-idUSBRE96D08720130714 Though they could end up at square one. @ tull ‘PQ, However bad the Anglo boys were they never resorted to shooting Gardai in a hail of machine gun outside a post office or killing children by planting a bomb in a waste basket in Warrington or Enniskillen or La Mon or etc etc. I was not referring to conflict but a record of criminality by a movement which now is on the cusp of power after the next election.’ You say potato I say potato. You have 1916 I have the Somme. Or vice versa. Ours not to reason why, ours but to do or die. The President laid a wreath today for the dead of all wars, mostly ordinary men, some teens, and many women and children too. RIP and we remember them all. We don’t have to forget the past, but we have to try to build something saner. @Tull Yesterdays murderous revolutionaries become tomorrows responsible government. 1916 to the end of the civil war was no pacifistic walk in the park. Power has a sobering effect since the electorate has expectations that they expect to be met. Firebrand rhetoric and take no prisoners behaviour will evaporate in days. At the end of two terms they will have adopted mainstream political behaviour complete with favours granted for campaign contributions as well as cronyism, nepotism and cute hoorism running rampant. Plus ca change plus c’est la meme chose. The Irish gene pool, culture, education and religion are similar for all of us. I have experienced parties who were promising hell, fire and brimstone turn into pussy cats within 30 days of gaining power. Life never becomes as exciting as it promises to become. I expect a new party to emerge out of the ashes of FF/FG . It may not win the first election but it will be a player. Men may come and men may go but Ireland struggles on ceaselessly. Here is a compelling interview……I think it is appropriate to the thread.. http://www.bloomberg.com/video/warren-high-stakes-gambling-not-with-our-savings-BP_oLgUTTpq2DWk7yw~Ahg.html Anyone find the following bait peculiar….from a report in the IT… “The report reveals that the JAAB has never used its power to interview applicants. It argues that there are “serious practical obstacles” to conducting such a process routinely and that generally the board has sufficient information from the documents submitted by applicants. “This is in the context that the board does not have any function in deciding whom should be appointed to judicial office,” it states. “Moreover, the board in submitting the names of persons whom it considers suitable for appointment does not make a decision or give an indication with regard to the relative merits of persons so submitted.” In its report, the JAAB referred to concerns it raised in 2002 about the absence of any procedure for ensuring that a person who is recommended by them and who is subsequently appointed, undergoes a medical examination. The JAAB is chaired by Chief Justice Ms Justice Susan Denham and includes the presidents of each court, the attorney general, the chairman of the Bar Council, a representative of the Law Society and three people nominated by the Minister for Justice.” Correction Anyone find the following a bit peculiar @Fiatluxjnr terrific link to the Elizabeth Warren piece,thanks. PQ, As someone who witters on without cease about the short comings of official Ireland and the need to improve governance it seems to me that you are missing the fairlly obvious point that it will not improve if a bunch of people with a criminal past get hold of the levers of power. @ tull The status quo is, as you frequently say, not sustainable. Our Dail is weak, and dominated by the executive. Our political parties and state are largely captured by vested interests. I think we should welcome any party which is prepared to pursue the issue of corruption, because that will be the rock on which austerity policies, or indeed banking policies, founder. Some of the more interesting articles on banks are coming from literary and general interest magazines. The second paragraph addresses some of our problems. Wheeling and dealing is thriving but real economic growth is stagnating. http://www.lrb.co.uk/v35/n14/john-lanchester/lets-consider-kate? PQ, In your desperation for change you seem to have fallen for the SF anti corruption spin. Look at how the 6 counties are run- a rotten borough with the available spoils carved up between two sectarian gangs. How can any party led by people with a criminal past ever be taken seriously on corruption? At this stage the obvious question must be posed -shinnerbot or useful idiot? @ tull Many of your posts I find reasonable, but there is a really blind spot on matters concerning northern Ireland. Governance there has vastly improved, in that the minority population are no longer disenfranchised. Normal democratic processes take place at the various levels of representation. The public services, especially and including the police, now carry out their duties in a proper, impartial way. Sectarianism is not easily eradicated, but its evil effects have been blunted, to the considerable relief of citizens on both sides. The path has been a rocky one, but northern Ireland is in a better place, and that is surely good news for the rest of us. The Queen has been received in Dublin and apparently enjoyed herself. I have worked on both sides of the border, and I know the adjustment which I required in moving from the ‘Belfast’ worldview to the ‘Dublin’ worldview. Not better or worse on either side, just different. As far as ‘brown bag’ corruption is concerned, I would guess there is less of it in the north, simply because the British regulatory environment is more modern. Labelling Ulster people or parties as ‘gangs’ is no better than the old unionist jibes about pigs in the Irish parlour. As Mickey Hickey says on the previous thread, economic development doesn’t have to be a zero sum game, and it is time to move on from the stereotyping. I would welcome a few northern voices on this board. A legal opinion-report below… “Germany has not found any allies to support its legal position. The German government is putting the common efforts to establish a European banking union at risk by using spurious legal arguments. This is irresponsible because effective banking resolution is a vital part of the banking union which is a vitally important tool to face the European crisis. Further delays will increase poverty and unemployment in Europe.” http://www.greens-efa.eu/single-resolution-mechanism-10326.html “The Greens in the European Parliament commissioned a legal study that disproves these legalistic arguments. The study, by René Repasi of the Heidelberg University Institute for German and European Company and Corporate Law, was presented today. It supports the position of the legal services in the Council and EU Commission. ” http://www.sven-giegold.de/wp-content/uploads/2013/07/130710-Gutachten-SRM-René-Repasi.pdf An executive summary in English should be available here shortly if not will get a translation-Francis calm down:) http://www.sven-giegold.de/2013/single-resolution-mechanism-save-the-banking-union/ @paul quigley “I would welcome a few northern voices on this board. +1 The view from the SW periphery is that SF people are honest. Off setting that is their dyed in the wool (de souche) Irishness which appears naive and old fashioned to most of us. We are deathly afraid that they will adopt the “Ourselves alone standing independently. Poverty stricken but sticking to the principles that impoverished us.”. We have had and still have the option of cleaning out the Kildare St. stables as well as not re-electing TDs’ that have engaged in near criminal or criminal activity. Instead we have our age old attitude of “better the devil you know”. So now here we are moaning, groaning and ologoning about the havoc wreaked by decades of rule by tweedle dum and tweedle dee. Immediately the reaction is oh! my god things are so messed up them amadans in off the rack suits, culchie hair cuts, who do not know their filet mignon from their crubeens could get into power. Brigid darlin’ did you know Nostradamus never predicted Ireland would end in 2015. You don’t say Mairead, I never knew that. The FUD (fear, uncertainty and doubt) factor was a well known sales tactic developed, refined and employed by IBM back in the day when minis’ and the PCs’ threatened the mainframe business. Today in Ireland we are all too familiar with those feelings. We can stand transfixed in the headlights like rabbits or Cowen on national TV or we can actually do something positive for a change. We have numerous options but re-electing tweedle dum or tweedle dee or a coalition of the two (save us) would doom us to failure. SF will play a role in our resurrection. It is up to us how large a role they will play. Will they form a majority or will a party acceptable to a significant minority of us emerge before the 2015 election. The best outcome would be a new party in a coalition with SF. The new party would have to go to great lengths to prove they are not reheated FG/FF/Lab toast. As to the Northern Irish a viewpoint shared by myself and my brothers who have employed and worked with them is they are fine people, competent and willing workers. Then one day you realise that they sabotage each other and the hatred is bone deep. An impediment to productivity one could say. I used to say you look, walk and talk like ducks why can’t you act like ducks. Looks of incomprehension. Hi John Gallagher, I am calm, I read it at lunch. I am pondering, shall I a) have his liver raw for breakfast, or b) more the traditional style, sauted with onion on mashed potatoes, or c) try something new, molecular cuisine, maybe 2 weeks like Foie de Gras, than pump it up with liquid nitrogen, and burn the unneeded rest away with a flame thrower. What do you think? Now, getting serious, ROFL The last time I shared room with somebody non-family was at the womens faculty club in Berkeley. Some organizational hiccup. Baaaad breakfast, but watching Intel CEO Otellini sweating from a few meters distance was worth it. And it reminds me, Berkeley is the only place in the world, where I do not know, where I can sit outside, drink, and smoke. Anybody? Please! Ok, back to Sven Giegold. What the guy describes MARCH 2013 in your somewhat screwed up pdf link, is very different from what the commission wants now. All kinds of veto rights, European and National parliaments, exemptions for local banks, exactly not the hard decision over a weekend, needed. Enforcement of IFRS rules by the ECB explicitely ruled out, ….. huuuugh? wiki/Sven_Giegold born 1969. Mother photo lab assistant, doesn’t exactly sound rich. Finished some obscure master in Birmingham in 1996, but started another study in Bremen, seemingly never finished. Some Attac activist who never worked a day, became a green party member in 2008, just to become MEP in 2009. Lutheran church, seems to become more common with them now, the intolerant preaching tone. So he has to make some noises now, to get renominated for 2014 for a classical apparatchik career, not directly elected ever anywhere: – ) Now that looks like the typical 70% of the green politicians, but also at least 20% of the other parties. People, you wouldn’t buy a used car from. But hey, don’t look at the guy, but only at the merits of the argument, he has now a legal expertise. Where did he get it from? From one single Ass. iur. René Repasi Born 1979, final degree 2nd exam in 2008, just barely sufficient to practice, never worked in the real world, SPD politician, his web page (repasi.eu) is status pre 7. June 2009 !!!! With a Gore T-Shirt, and only that he likes french music of the 1950ties, to cook and drink red wine, listed after his 2nd exam. ROFL http://www.igw.uni-heidelberg.de/lehrstuehle/prof_mg/mitarbeiter_repasi.php4 no publications linked, the few titles in obscure places like StudZR (a student newspaper !), before 2008, about family and heritage rights in Europe. Does this sound like an “expert” in global (central) banking law, or more like the complete dilettante, exclusively politics driven? He is shown as “wiss. Mitarbeiter”, but hasn’t published anything the last 6 years? What is he doing? If you then go into that “expertise” Gutachten-zur-rechtlichen-Machbarkeit.pdf, I smile a little bit, how they try to abuse the Art. 114 Abs. 1 AEUV „die Errichtung und das Funktionieren des Binnenmarktes“ somewhat like the US did use the “interstate commerce”, (wiki/Commerce_Clause, nice try, pals, but thanks, no thanks, I did read the founding fathers) The point is just, in the moment, you ask, why this is then not used to let the European Commision rule over non-Euro banks, the whole argument collapses like an overdue soufflé. The rest of the “expertise” is just slight variations of the same mangled trickery. intellectual Garbage, complete garbage, from total loosers and obvious partisan hacks. That provides actually some motivation to not go only after the commission criminals, barroso and barnier, but after the german greenies in general. There is a point, when it is just too much. @francis The elephant in the Reichstag is that Deutschebank with over 2 trillion in assets has an equity ratio of 1.63%. German prosperity is sitting on the razors edge. Now with the Nederlands going into the tank and Finland plus Austria too small to matter we (the non Germans) are becoming very concerned that by September Germany too will be firmly in the clutches of a downward spiral. It would be of very little comfort (not even schadenfreude) to any of us if austerity turns around and kicks Germany where it hurts. @ Mickey, please read the post from John Gallagher July 13th, 2013 at 6:12 pm above with respect to the capital ratios 3.7 vs 3.8%, if calculated by IFRS, before you too, again, repeat the endless vicious nationalist slander. @ JG The study by René Repasi is rather good and politically very astute. It heads off at the pass the many legal stratagems advanced by the current German government. It deals not only with the EU legal aspects but also those raised by the German constitutional court. The quality of the response may be gauged from the attached. http://www.spiegel.de/wirtschaft/bankenfunktionaer-stephan-goetzl-verteidigt-nazi-vergleich-a-910813.html#ref=rss This particular stand-off has, curiously, been brewing from the time of the Maastrciht Treaty and a judgement adopted by the constitutional court at that time. It boils down to a confrontation between it and the European Court of Justice, the German court being, at this stage, with the possible exception of the Czech equivalent, alone in denying the competence of the ECJ to decide issues relating to EU law. @ JG Please read; “in denying to the ECJ the role of final arbiter in issues relating to EU law”. The general point, of course, is that this farrago is a failure of political leadership of historical proportions, not just on the part of German leaders but of European political leaders in general. The idea that responsibility for the future political direction of Europe could be abdicated to disputed legal opinions would be entirely foreign to a previous generation of European leaders. The phenomenon is not confined to Europe! @ All FYI http://uk.reuters.com/article/2013/07/14/uk-germany-eu-energy-idUKBRE96D04S20130714 oh….here is DB’s position..h/t DOCM for tiny url. tip. “While the German government cites legal reasons for this, the truth is that key member states have embarked on inter-governmentalism as the new governance model for the EU. There is, therefore, little support amongst member states for ceding (resolution) powers to the EU level – and there is also little interest in pooling funds and deposit guarantee schemes. Sadly, thus, it is likely that Banking Union will remain a torso and will not instil confidence.” http://tinyurl.com/q4vjl74 @francis yes i was browsing hotels.com for a room,also not a roomer,last time a friend had won/awarded an all expenses trip to Hawaii,recently broke up with his girlfriend invited me.Unknow to us it was an awards event for entire firm…he went golfing,surfing,diving…i was with the spouses/girlfriends shopping,spa,sandcastle building…fun times but never again. Regarding our friend Sven,agreed but important to put out there both sides of an argument/discussion. @DOCM thanks hectic day here will get to them a little later,if you do not already you may find this interesting apols have to dash. http://libraryeuroparl.wordpress.com/2013/07/15/towards-the-european-banking-union-the-single-supervisory-mechanism/ @ JG The – larger – countries of the EU have embarked on inter-governmentalism many times and continue until they run into the inevitable cul-de-sac inherent in the approach. An example is to be found in the interview with Merkel on the “Energiewende” – her doing – as reported by Reuters and linked to above. “We urgently need an amendment to the renewable energy law,” Merkel told ARD television. “There are even critical questions coming from Brussels,” she said, adding rising energy costs were a problem. She urged Germany’s federal states to cooperate on the changes which she has previously said will include reining in renewables subsidies.” All, Re German risk weighting. Commerzbank sold a chunk of UK CRE today-1.5bn RWA on 5bn of assets of which 1.2bn were NPL. if the RW on the NPL was 100% it means the RWA on the 3.8bn was 0.3bn or 8%. To my suspicious mind this seems low. RWA models on some highly leveraged Eurozone banks are too low. Meethinks Oberst Francis doth protest too much. fyi Northern Ireland: ‘Turn in the rioters’ Northern Ireland Protestant organisation The Orange Order has been urged to cooperate with police and turn in any members who have participated in three nights of riots in Belfast, writes The Belfast Telegraph. http://www.presseurop.eu/en/content/news-brief/3968501-turn-rioters Eurozone: France loses its third triple-A: a threat for the eurozone? 15 July 2013 PresseuropLes Echos, De Morgen http://www.presseurop.eu/en/content/news-brief/3969831-france-loses-its-third-triple-threat-eurozone @francis Tutorial #3 slander is ‘verbal’; libel is ‘written’ whatever about the former we have witnessed many empirics on your facility with the latter, notwithstanding your disdain for empirics in general. tull, thats the central job of the CoBa folks, to get rid of the overleveraged, international stuff. They have been deemed not systemically relevant, the scythe goes through the work force left and right. They are fighting for their survival, and they know it. And that means, that their will be no anti-social crime, not one german cent for non German banks. D O D, the Frankfurt school, especially Habermas(ter) is the mother of all non-empirical ideological drivel. How about you write a comment on their nachdenkenseite.de, so that they know there is one support alive every half a year (first since 15.Feb) in as far away as Ireland. That would make them happy, I am sure, and you could discuss “critical theory” with irish Characteristics with them all day : – ) fyi Monday, July 15, 2013 Let Them Eat Credit: Has Financial Capitalism Failed the World? By Lambert Strether of Corrente. The Institute for New Economic Thinking reposts this video from “Head to Head: Al Jazeera’s new forum of ideas — a gladiatorial contest* tackling big issues,” held this time at the Oxford Union. For your morning coffee instead of NPR! […] Basically, what we have here are representatives of various British ruling class factions — the great and the good — all confessing, each in their own way, their utter bafflement on how to rebalance the regulatory system to disfavor big banks. I transcribed this passage starting at 8:48: MEHDI HASAN: You mentioned the thinking that has led to some of these intellectual mistakes; we talked about the role of regulators, but as you say it wasn’t limited to this group or government, there were international institutions, like the International Monetary Fund which was hailing all this financial innovation [ADAIR: It was, it was]; there were the credit ratings agencies, which were giving AAA ratings to some of these toxic assets; but none of these guys — put punishment to one side, justice — in terms of actually getting rid of them from the scene, they’re all still hanging around the scene, these economists who got it wrong, the IMF, the ratings agencies… How can you move forward when you’ve got all the people who caused the crash still in influential global positions? LORD ADAIR TURNER: When you get mistakes made, sometimes there are people who’ve made mistakes who have the technical skills of economists who are capable of seeing what’s gone wrong. I don’t think you can say we’ve got to completely get rid of the entire set of people who’ve been involved in that process. But it’s very, very important that we learn from those mistakes and we understand what a deep set of mistakes were made. And along with the Great Depression of the early 1930s, this is the biggest setback, other than global wars, this is the biggest peacetime setback to the growth of prosperity that’s occurred. “Mistakes were made.” Mistakes were made?! WTF?!?! Of course, one loses patience after awhile. Read more at http://www.nakedcapitalism.com/2013/07/let-them-eat-credit-has-financial-capitalism-failed-the-world.html#eqbhTwfdrGX96T0z.99 Patience? Patients more like … Francis, You completely ignore the point that CBK was understating the risk associated with the assets on its balance sheet….telling porkies in,other words. One way or another the Germans are going to pay either through default by the periphery or fiscal transfer or inflation. Think of it as reparations. @ Mickey ‘As to the Northern Irish a viewpoint shared by myself and my brothers who have employed and worked with them is they are fine people, competent and willing workers. Then one day you realise that they sabotage each other and the hatred is bone deep. An impediment to productivity one could say. I used to say you look, walk and talk like ducks why can’t you act like ducks. Looks of incomprehension’ I thought you said it was the Kerry people who were stabbing each other in the back 🙂 Sectarian division is just one sort of division. Keep on hiring. @ tull Would you ever stick a flower in that Lee Enfield. We are trying to talk with the Other Sort here. @tull http://www.bloomberg.com/news/2013-07-15/commerzbank-sale-hides-as-much-as-it-reveals.html Because the transparency of Commerzbank’s financial statements is so poor, investors can’t see if Commerzbank might have sold its best loans and kept the worst ones stashed on its books at inflated historical values. Smart move given the CMBS numbers out today c’mon NAMA pick up the pace jay…sus what are you waiting for? Summary apols about paywalls-basically CMBS-commercial backed mortgage securities-basket of Comm RE loans pooled together sold to investors.The default rate is a good guide/indicator to the health of the commercial RE sector-depends on vintage/shop that underwrote them etc but a decent signpost.These are legacy Hypo loans which shall we say was a funky lender in NY not sure about London-no was not an oft used word a bit like Anglo racing too the bottom for mkt. share.Keep in mind London has performed exceptionally well phew for the Irish taxpayer.Pricing looks decent Wells also bought part off the then Anglo US book as an aside. http://online.wsj.com/article/SB10001424127887323848804578607472457725966.html ‘The loans sold Monday by Commerzbank comprise the entire commercial real estate financing activities of Hypothekenbank Frankfurt in the U.K. and are largely focused on London. Wells Fargo will own the portfolio’s £2.7 billion in performing loans and is providing financing to Lone Star for £1.3 billion in nonperforming assets.” Interesting implications for NAMA/IRBC proposed loan sales. ‘Defaults among financial instruments backed by European commercial mortgage payments have more than doubled, highlighting the widespread problems facing the region’s moribund commercial property market.” “A report by Moody’s predicted that nearly 60 per cent of European CMBS loans would not repay in 2013 and that in the next five years losses in the pool of loans could hit €10bn.” As a comp the US numbers-report in todays/tomorrows FT suggest defaults at a 3 year low and trending downwards -thanks Ben ! @DOCM,thanks for the link,some commentators have suggested its simply a negotiating tactic,but i expect a ‘decent’ legal opinion soon.francis perhaps from someone a bit more qualified-great link tks:) sorry here is the FT links on CMBS. Europe http://www.ft.com/intl/cms/s/0/d248f52e-eb14-11e2-bfdb-00144feabdc0.html#axzz2ZAcaJIqI US http://www.ft.com/intl/cms/s/0/4c764980-ed60-11e2-8d7c-00144feabdc0.html#axzz2ZAcaJIqI Nobody seems to have noticed that Moody’s issued a warning on Irish debt situation….curious? @ Paul I think Tull has described quite well the fundamentally criminal mindset behind this banking union, “reparation” @ John I am very aware of the condition of the CoBa. They triied to sell last fall a friend of mine some 5 year junior debt as a safe investment with a great interest rate (I think some 350 bp risk premium), until I explained to him a little bit how that works with junior and not systemic, LOL The problem with the Greenies is, they do this all the time, trotting out complete clowns as experts. Nominally they have nearly the same fraction of PhDs, but when you look in what fields, it comes as no surprise, that the average greenie in a political function is just some unrelated ideologue. They simply dont know any different and think this is normal. Soooo, good bye everybody, it was quite educating. Francis, Come October you will be choking on your soup when the deal is done. Restructuring for the periphery. Athen rüstet sich für den Besuch Schäubles – mit alten Forderungen nach Reparationen. Der Bundesfinanzminister verteidigt das Recht der Kreditgeber, sich um ihr Geld zu sorgen. http://www.faz.net/aktuell/politik/ausland/europa/schaeubles-besuch-in-athen-der-deutsche-und-die-griechen-12283054.html Athens wants reparation, Schäuble defends creditors’ right to repayment. He’s off to visit them now before the election. @francis like I said I think it was a good idea to sell,however DJ raised a fair point,one that Ireland’s bad bank has been accused off.NAMA has been flogging the family silver in London but appears emotionally attached to Irish property,CoBa positions explained below. The counter argument which has some validity is that the yield differential/spread btw. London and Dublin,certainly for prime is out off whack and in time will narrow,was in London recently and tend to agree that given the decreased risk off a Euro breakup,Irish prime property is tremendous value relative to say similar type in London,never mind stateside.There was a safe haven component pressuring yields in London,not much off a post Olympic boom from my observations unlike Atlanta,I think yields will move out also. Either way bleeding or averaging property piecemeal into the market like NAMA did only enriches the chartered surveyors and other professionals,at least “CoBa” pulled the trigger on the entire portfolio similar to Anglo stateside.Close the offices get rid off some deadweight and move on….clean,simple and nicely executed good price too. The rationale for this sale is kinda explained here… “Commerzbank considers the UK as a weaker market, relative to other country exposures, with greater downside potential relative to expectations for markets such as Germany, Poland and France. The legacy Hypothekenbank UK CRE loan book, which fell by €500m to €5.2bn over the final quarter of last year, is classified with a higher risk assessment than the CRE loan books for Italy and Portugal, on Commerzbank’s analysis, for which the remaining exposure is €2.2bn and €1.9bn, respectively. Italy and Portugal have been reclassified as “medium risk”, while the UK is grouped alongside bank’s €3.6bn Spanish and €0.3bn Hungary CRE loan exposures.” http://www.costar.co.uk/en/assets/news/2013/February/Bearish-Commerzbank-assigns-legacy-Eurohypo-52bn-UK-CRE-loan-book-high-risk/ Anyway,according to a widely re-reported Reuters piece from earlier this year about 600 Bil to come onto mkt. http://www.reuters.com/article/2013/05/07/germany-banks-disposals-idUSL6N0DC3WR20130507 Regarding the “Greens” I was looking for a legal opinion it appears to be the only one out there,as flaky as it may be,but will wait for a more substantial one to come out before deciding.Naturally Germany has a few reservations about the above proposal,as Ireland really no longer has a banking sector and failed miserably at regulating the one they had,they welcome any proposal regarding breaking the doom loop btw banks/sovereigns they have about 60bil reasons. Enjoyed the exchange as always and I certainly enjoy your posts and contributions on here.One the criticism off the Irish business community is a herd like mentality or group think,so they should welcome outside opinions or voices…but old habits die hard in little old Ireland….as they say in duchess county have a good one! Normally I would feel guilty about going off topic but given the thread that is in it this paragraph from a recent Wolfgang Munchau piece “The dangers of Europe’s technocratic busybodies” might make you smile with recognition at his description of Europe’s technocrats, their lobbyists and fellow travelers. One problem here is what optical engineers would describe as perspective distortion. If you work in Brussels, you get obsessed with those inter-institutional dogfights – the European Commission versus the European Council versus the European parliament. In the policy circles of Brussels, the economic depression is not near the top of your to-do-list. You are more likely to be obsessed with the question of who is going to be the next president of the commission, and whether it can make up the political ground it has lost under its current head, José Manuel Barroso. ….. The problem is thus not a general lack of reaction, but a busybody technocratic response that can be relied upon to miss the point ….. So when you say that you have done more than I thought you would, you are merely telling me how bad things have become, how much you are lagging behind and how little you care what is going on in the economy. Read the whole piece and then you can feel ahead of the curve when it turns up in official histories ten years from now. Like the dangers of the Irish property bubble in 2007 the role of the European Commission in worsening the European component of the global financial crisis is common knowledge to anyone not invested in its success. The Commission’s self interested and self self satisfied rejection of well understood economic principles, along with the influence of the financial sector and the German blocs nineteenth century perspective on macroeconomic policy have not only ruined the EU as a progressive project but inflicted huge waste and human suffering on Europe. The biggest question now is how we can restore some democratic accountability so that their is some personal and professional cost for the institutions of the EU and the German government for their serial errors. @ francis Not Johnson or Hoenig this time. http://www.faz.net/aktuell/wirtschaft/wirtschaftspolitik/neue-aufsichtsregeln-fuer-banken-nur-eigenkapital-schafft-vertrauen-12285789.html @ John Gallaher There will be no shortage of legal opinions! All the institutions involved have their own legal services which, by a remarkable coincidence, seem always to find the legal arguments to favour their own institution’s position. Even Professor Sinn has a view, while accepting that the constitutional court has no power over the ECB, that it can – and will – bind the actions of the Bundesbank and the German government and will do so to an extent that they would either failing in their EU obligations or boycotting action by the ECB. (Hat tip Eurointelligence). http://www.welt.de/wirtschaft/article118139522/Sinn-sagt-unabwendbare-demografische-Krise-voraus.html He also predicts disaster with regard to Germany’s demographic development. Comments are closed.