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Delendum est Vadum Francorum

by Migeru Sat Nov 27th, 2010 at 06:40:09 AM EST

Enough is enough.

FXStreet: EU denies pusing Portugal to seek for aid (Friday, Nov 26 2010)

On Friday, Europe woke up alarmed by the rumors that the Eurozone was pushing Portugal towards bailout. Portugal's bonds fell on concern they could follow Ireland and Greece and present a formal request for Europe's rescue fund.  

Later the same day, European officers denied "absolutely false" reports Portugal was being demanded to ask for aid. The Financial Times Deutschland quoted unidentified sources as saying some Eurozone states are trying to force Portugal in order to save Spain of any such need to look for financial help.

Some other people are dumb enough, or feel impune enough, to not bother hiding "off the record".
The paper quoted Germany's finance ministry as saying: "If Portugal were to use the fund, it would be good for Spain, because the country is heavily exposed to Portugal."
Accrording to Spanish radio (see this comment yesterday), the ECB itself was also one of the pressuring parties
The Financial Times, in its German edition, claims that a majority of Eurozone countries and the ECB are demanding that Portugal request a financial aid package
This is not the first time they do it, either. Last June, malicious rumours about Spain's insolvency were spread via the FT-Deutschland by unidentified German government officials. As I wrote then:
Reuters: German-Spanish whispering wars hit euro zone (June 18, 2010)
The Germans seem to have fired the first shot, telling journalists in Berlin on condition of anonymity on June 7 -- the day the German coalition agreed on its own austerity package -- that Spain was on the brink of seeking a European Union bailout.

Two German officials told Reuters that the Spanish government would make an announcement concerning the European Financial Stability Facility that day, when European finance ministers were meeting in Luxembourg to finalise details of the 440 billion euro backstop arrangement for euro zone states.

...

After extensive checks, Reuters decided there were no facts to report. But the rumours were already affecting the markets.

It appears journalistic integrity is in short supply at Financial Times Deutschland and Frankfurter Allgemeine Zeitung.
It does appear the journalistic integrity of the Financial Times Deutschland hasn't improved in the intervening 6 months. It also appears the integrity of the Frankfurt economic elite (ECB, Bundesbank, FT-D) hasn't improved.

But that would be okay if it weren't the second time in two weeks a country is forced to take a bailout of its banks by the ECB. See this comment of mine

WSJ.com: Europe Steps Up Pressure for an Irish Bailout (November 16, 2010)
Wrangling over whether Ireland needs an international bailout escalated Monday, with European officials amping up pressure on the country to accept a rescue and Irish officials digging in hard to resist.
"Please take our free money!

No, thanks!

Hoping to prevent Ireland's woes from infecting other euro-zone countries such as Spain and Portugal, officials at the European Central Bank and elsewhere in Europe have been urging their Irish counterparts to seek financial aid from the International Monetary Fund and a European Union rescue fund.
Because the ECB cannot create Euros at will?
An EU official said Ireland's problem isn't the government's own budget, which it is dealing with effectively, but banks that have grown huge compared with the size of the economy. But he said Ireland couldn't be pushed into calling for help if officials felt the country doesn't need it, and its banks could still turn for support to the ECB.
But the ECB would rather Ireland apply to the IMF to bail out the banks.
which prompted calls of 'treason!' from myself and others here. Now, they're doing it again. And if they're not, they're feeding lies to the press to the effect that they are.

The conclusion is inescapable: the ECB must be burned to the ground and the fire stoked with FT-D paper.

Delendum est Vadum Francorum!


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Central bankers, central wankers.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010
by Migeru (migeru at eurotrib dot com) on Sat Nov 27th, 2010 at 06:41:06 AM EST
What is European Parlamentarian Eva Joly doing in Reykjavík investigating corruption and incompetence at the highest levels of the political and economic establishment of Iceland...

...when she should be in Frankfurt investigating European and German officials for market manipulation and incompetence?

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Migeru (migeru at eurotrib dot com) on Sat Nov 27th, 2010 at 06:54:34 AM EST
by kukute on Sat Nov 27th, 2010 at 07:45:34 AM EST
Look also at another Golem post on the Irish bank bondholders:

Golem XIV - Thoughts: Who are the bond holders we are bailing out?

So where do these wealthy bond holders live and work?

Germany has the most with 15 of the bond holders. Who between them hold 5.3 trillion euros.
France is next with 10 bond holders.  Who have about 4 trillion to keep them warm.
Britain is third with 9 who have around 3 trillion.
The Swiss have 6 but who have about 8.5 trillion.
America has only three and hold only a trillion.
Other nations include, Spain, Belgium, Portugal, Holland Finland, Norway, Sweden, Poland, South Africa and Italy.

All these figures are very rough.  The figure for Switzerland is certainly under because Private Swiss banks just don't publish figures.  What we can say for sure, figures or no figures, is these are not banks investing widow's pensions or orphan's pennies.
So who are they? Well many of the bond holders are privately held banks, which list their activities as asset management for off-shore, non-resident and high value individuals.  To give you an example, one of the private banks is EFG Bank of Luxembourg.  EFG stands for European Financial Group which is the third largest private bank group in Switzerland.  It manages over €7.5 trillion in assets.  It is 'mostly', 40%, owned  by Mr Spiro Latsis, son of a Greek shipping magnate.  He also owns 30% of Hellenic Petroleum.  His personal fortune is estimated to be about $9 Billion. 

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 27th, 2010 at 08:38:00 AM EST
[ Parent ]
So, why is the ECB doing their bidding?

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010
by Migeru (migeru at eurotrib dot com) on Sat Nov 27th, 2010 at 09:04:58 AM EST
[ Parent ]
Trillion as in 1,000 million (US billion), I presume....

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Sat Nov 27th, 2010 at 10:32:16 AM EST
[ Parent ]
LOL

You're right, some serious innumeracy there. There's no way anyone's Irish bond holdings is in the trillions, be it European (million million million) or American (thousand thousand million).

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

by Migeru (migeru at eurotrib dot com) on Sat Nov 27th, 2010 at 10:50:02 AM EST
[ Parent ]
Those are the total assets under management of those institutions, not their Irish bondholdings.

Golem may be talking BS, for all I know. But read the post first?

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 27th, 2010 at 11:12:47 AM EST
[ Parent ]
I presumed "hold bonds" meant "hold Irish bonds" both times it is used...
So where do these wealthy bond holders live and work?

Germany has the most with 15 of the bond holders. Who between them hold 5.3 trillion euros.



Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010
by Migeru (migeru at eurotrib dot com) on Sat Nov 27th, 2010 at 11:56:21 AM EST
[ Parent ]
So go on a quick scan of the quote, if you prefer...
by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 27th, 2010 at 12:34:55 PM EST
[ Parent ]
Golem (David Malone) writes:

"The total assets under management which I was able to compile from publicly available figures is €20,871,150,000,000.   That is an underestimate because the bond holders who turn out to be Private and Swiss banks don't publish any figures.  So Anglo Irish's 'bond holders' hold and invest MORE than 20.8 trillion euros.  Guido lists those bond holders as holding between them 4 Billion euros in Anglo Irish bonds."

He's talking about CDOs and CDSs, so I think those amounts are US trillions or EU billions.

He's not innumerate or illiterate at all.

From Wikipedia:

Total over-the-counter (OTC) derivative notional value rose to $683 trillion by June 2008.

http://en.wikipedia.org/wiki/Financial_crisis_of_2007-2010

by kukute on Sat Nov 27th, 2010 at 11:55:55 AM EST
[ Parent ]
Yeah, but if you hold and invest 21 trillion euros, what is a 500 billion euro insolvency to you?

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010
by Migeru (migeru at eurotrib dot com) on Sat Nov 27th, 2010 at 12:00:38 PM EST
[ Parent ]
A drop of water in a bottomless pit!  -:)

Those of leap2020, ten days ago:

Warning Global systemic crisis - First quarter 2011: Breach of the critical threshold of global geopolitical dislocation
With the G20 summit in Seoul, which signalled to the planet in its entirety the end of US domination of the international agenda and its replacement by a generalised mood of "every man for himself", a new phase of the crisis has begun, prompting the LEAP/E2020 team to issue a new warning. The world is about to breach a critical threshold in this phase of global geopolitical dislocation... (page 9)

. Concluding the quantitative easing: the Fed placed under "house arrest" (page 11)

. Political paralysis in Washington: the US adrift, the dollar in freefall, and austerity looming in 2011 (page 12)

. European austerity: spread of social resistance movements; mounting populism; risk of fostering radicalism in rising generations; higher taxes (page 14)

. Strengthening of Euroland and beginning of euro manipulation in Europe (page 15)

. United Kingdom: a former power falters (page 16)

. Japan: the latest efforts to resist China's power (page 17)

by kukute on Sat Nov 27th, 2010 at 12:09:58 PM EST
[ Parent ]
That depends on whether you are leveraged more than 102:1 or not ;-P

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 27th, 2010 at 12:16:02 PM EST
[ Parent ]
Anyone who holds naked CDS on European sovereign debt deserves to go broke, I don't care if they're Deutsche Bank. Though probably Axel Weber does.


Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010
by Migeru (migeru at eurotrib dot com) on Sat Nov 27th, 2010 at 01:46:01 PM EST
[ Parent ]
Anyone who holds naked CDS on European sovereign debt deserves to go broke.

FIFY.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Nov 27th, 2010 at 02:20:10 PM EST
[ Parent ]
Jean Quatremer thinks there is media manipulation, too:

Comment les médias accroissent la panique des marchés - Coulisses de Bruxelles, UE

Ce n'est pas la première fois que le FT est pris dans le sac du mensonge (lire ici). Mais il n'est pas le seul à manipuler l'information ou à colporter des rumeurs. On l'a vu dans le cas irlandais où les agences de presse financière anglo-saxonne, dont les principaux clients, rappelons-le, sont les banques et autres établissements financiers, ont joué la dramatisation de la situation irlandaise, annonçant d'abord que Dublin n'avait pas d'autre choix que d'appeler à l'aide les Européens (ce qui reste techniquement faux), puis, ensuite, que des négociations avaient lieu entre avec les autorités européennes à une époque où il n'en était rien, ce qui n'a fait qu'accroître la panique des marchés et à pousser l'Union à intervenir, ce que souhaitaient les marchés. C'est ce qu'on appelle une prophétie autoréalisatrice.

Et cela recommence avec le Portugal et l'Espagne : quelques minutes à peine après l'annonce, dimanche, que Dublin a demandé l'activation du Fonds européen de stabilisation financière (FESF), les premières dépêches ont commencé à tomber sur le risque de contagion de la crise irlandaise. Et depuis, les dépêches pleuvent comme à Gravelotte, affolant les marchés... Le plus grave est que les autres médias, qui ont pourtant le temps de l'investigation pour eux, suivent, par peur d'être en arrière de la main (on ne compte plus les articles titrés : à qui le tour ?

How the media increase the market panic - Backstage Brussels, EU

This is not the first time that the FT is caught red-handed lying (see here ). But it is not alone in manipulating information or spreading rumors. We saw in the Irish case where the financial news agencies Anglo-Saxon - whose main customers, remember, are the banks and other financial institutions - have played the dramatization of the Irish situation, first announcing that Dublin had no other choice but to call for help from the Europeans (which is still technically wrong), then, that negotiations were taking place with the European authorities at a time when it was not the case, which only increased the panic on the markets and pushed the Union to intervene, which was what the market wanted. This is called a self-fulfilling prophecy.

And it starts again with Portugal and Spain: A few minutes after the announcement on Sunday that Dublin has requested the activation of the Fiscal Stabilization Fund (FESF), the first news began to fall on the risk of contagion from the Irish crisis. And since then, news items have been raining, panicking the markets ... The most serious problem is that other media, which have yet the time for the investigation, tend to follow, for fear of being behind the hand (Countless articles titled: "who's next?"



"People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them." - Jean Monnet
by Melanchthon on Sat Nov 27th, 2010 at 12:19:26 PM EST
FT site front page now:

Is that "newspaper of record" style, or is it deliberate pushing for disaster propaganda?

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 27th, 2010 at 12:33:55 PM EST
[ Parent ]
The proper title should be:

"Ceterum autem censeo Vadum Francorum deledum esse"...

"People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them." - Jean Monnet

by Melanchthon on Sat Nov 27th, 2010 at 12:59:48 PM EST
Delendum est Vadum Francorum, then...

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010
by Migeru (migeru at eurotrib dot com) on Sat Nov 27th, 2010 at 01:06:59 PM EST
[ Parent ]
Or in the technically precise Latin of the day:

Timeo Sopranos et dona ferentes

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Nov 27th, 2010 at 01:55:00 PM EST
[ Parent ]
given Mig's abilities, I wouldn't have been surprised to find the entire diary had been written in Latin

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Mon Nov 29th, 2010 at 02:01:27 PM EST
[ Parent ]


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