European Government seizing cash from private bank accounts in Cyprus

The move is part of the so-called rescue plan to get the country out of its financial crisis

REUTERS | MARCH 18, 2013

The surprise decision by euro zone leaders to part-fund a bailout of Cyprus by taxing bank deposits sent shockwaves through financial markets on Monday, with shares and the bonds of struggling euro zone governments tumbling.

The bloc struck a deal on Saturday to hand Cyprus rescue loans worth 10 billion euros ($13 billion), but defied warnings – including from the European Central Bank – and imposed a levy that would see those with cash in the island’s banks lose between 6.75 and 9.9 percent of their money.

Parliament in Cyprus put off a vote on the measure – which has shaken depositors’ confidence in banks across the continent – until Tuesday, however, and with public anger at the deal widespread the government said it was already looking to ease the pain for small savers.

Without the rescue, Cyprus would have be unable to avoid a default. That would have undermined the promise that Greece’s debt writedown last year was a one-off, but the unprecedented move to hit depositors adds a radical new dimension to the crisis across the euro zone.

The initial response of investors was unambiguous. Shares lurched lower, the euro fell to a new three-month low, while safe-haven assets such as gold and German government bonds jumped.

The cost of insuring the debt of even high-quality European banks against default also rose sharply with analysts citing fears the decision could spark contagion across peripheral regions with the potential for widespread outflows of deposits.

“If I were a saver, certainly in Spain or maybe Italy, I think I’d be looking askance at these measures and think this could yet happen to me,” Peter Dixon, global financial economist at Commerzbank said.

The European Markit iTraxx senior financials index, which tracks the most important European bank credit default swap (CDS) rates, widened by 17 basis points.

Some credit default swaps in Spanish, Italian and Portuguese banks widened more sharply with the five-year CDS for Spain’s Santander 30 basis points higher, while for Italy’s UniCredit it was 23.5 basis points wider.

However, some in the markets were drawing support from a view that the safety measures put in place at the European Central Bank should contain the fallout.

“Clearly this is a negative development for European assets but in the terms of contagion we think it is quite limited,” said Guillermo Felices, head euro asset allocation at Barclays in London.

“There are tools – such as the ECB’s OMT (bond buying program) and the option of more 3-year LTROs (ECB loans to banks) that can provide liquidity if needed – that the market will feel comfortable about when assessing the longer-term implications.”

Three of the world’s biggest central banks are also expected to signal their fresh commitment to loose monetary policies this week.

The Bank of Japan welcomes a new governor on Wednesday who is likely to begin pumping huge amounts of yen into the recession-hit economy. On the same day the Bank of England may get a new pro-growth mandate in the British government’s annual budget, while the Federal Reserve is expected to reaffirm its commitment to the current aggressive U.S. bond-buying program.

Equity markets were underscoring the more immediate worries, however, that the Cyprus deal could see savers and firms in other highly indebted countries like Italy and Spain rush to pull money out of their own banks.

By 1115 GMT the pan-European FTSEurofirst 300 (.FTEU3) had clawed back around half of its initial losses but was still down 0.8 percent in its worst morning since last month’s inconclusive Italian election.

London’s FTSE 100 (.FTSE), Frankfurt’s DAX (.GDAXI) and Paris’s CAC-40 (.FCHI) were down 0.8, 1 and 1.4 percent respectively, leaving MSCI’s global share index <.MIWD00000PUS> down 0.85 percent.

CENTRAL BANK SUPPORT

In the currency market, the euro staged a slight recovery after having dropped as low as $1.2882 in the Asian trade, to session be up 0.1 percent on the day $1.2950.

The dollar (.DXY) itself, which investors often head for when tensions in Europe rise, gained 0.45 percent.

“Euro zone politicians will be at pains today to manage down the danger of contagion to other markets. The euro will find a little bit of support from that but markets will remain jittery,” said Jane Foley, senior currency strategist at Rabobank.

Italian and Spanish bond yields both jumped sharply as the two countries remain at the centre of concern in the euro zone due to the size of their economies which some economists warn would be too big to rescue.

If savers and firms did pull their money en masse from already strained banks it could tip the region back into full-blown crisis, although the ECB’s backstop measures are designed to prevent such problems.

The widespread anxiety drove up German government bonds, the traditional favorite of risk-adverse European investors, and indiscriminately pushed up the cost of insuring against a sovereign default in the euro zone’s southern rim.

German Bund futures were up 49 basis points at 144.09 by late-morning in Europe, while gold, another safe-haven asset, rising to a 2-1/2-week high of $1,608.30 an ounce before settling at $1,601.60, up 0.6 percent. (GOL/)

U.S. crude and Brent oil both tumbled, with Brent futures $1.70 a barrel lower at $108.12 before recovering a little to trade around $108.20 by 1030 GMT. U.S. oil declined $1.10 to $92.35. (O/R)

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EU Ministers agree on framework to create New World Order Bank

By LUIS MIRANDA | THE REAL AGENDA | DECEMBER 13, 2012

Ministers of Economy and Finance of the European Union reached an agreement early Thursday on the  legal framework that will allow Europe to create a single banking supervisor. The pact is the first step towards joining the euro zone bank and comes hours before the EU summit on Thursday, which will  ratify the commitment. It is expected that the bank becomes operational in March 2014.

During the hours leading up to the agreement, the main hurdle was the distribution of power and scope of the supervising entity, which as explained in previous reports published during 2012, will become the economic and financial beast the bankers have always dreamed about. Germany wanted to exempt regional banks and savings banks from the control of the supervisor, while France, like Spain, defended the institution to supervise all institutions without exception.

The bank union is full of technicalities, but in reality it comes down to one detail: who has the power. Germany has convinced others that the ECB will only oversee the nationalized banks and the largest institutions; those with assets in excess of 30,000 million or 20% of GDP, about 100 entities, to leave others in the hands of national supervisors.

Although initially it was thought that the supervisor could only have the power to control, at any given time, any entity in difficulty, Germany blocked that option, leaving out of the ECB’s orbit Länder banks, which are supposedly loaded up with toxic assets. These banks will remain under the supervision of the German Bundesbank.

Germany also imposes a watered down solution for the common guarantee fund (consisting simply of standardized national funds) and a considerable delay to the bank resolution fund (a mechanism to close banks if necessary), which at some point could be a form of mutualisation of euro problems to be done through back door deals. And almost everything else gets delayed from the original schedule, against the advice of Italy, France and especially Spain, the country most affected by the financial cliff.

The bankers are already salivating due to the agreement. “Historic agreement on the supervisor!” said the  European Commissioner for Internal Market and Financial Services, Michel Barnier, after 14 hours of meetings. In his Twitter account, Barnier judged that the creation of this entity is “a big step for a coherent supervision of all banks in the euro area.”

The objective is that the complete control of the European Central Bank (ECB) over all entities will serve to recapitalize troubled banks and break the vicious circle between the financial crisis and debt, but that kind of power will also undermine the sovereignty of the each of the member nations to a considerable degree in regards to their economic and financial policies. Everyone has seen in the last two years what happens when a complete continent is managed by a group of technocrats whose only goal is to consolidate power.

The supervising entity will be open not only to the euro zone, but all European countries that seek to yield their independence to a centralized, unaccountable banking system. So far only three countries have indicated that they are not interested in joining the single banking supervisor: the UK, Sweden and the Czech Republic.

The Cypriot Minister of Finance, Vassos Shiarly, announced at a press conference that the agreement will allow the Council to start negotiations with the European Parliament, which will begin early next week.

According Shiarly, the Twenty member states have reached an agreement on cooperation between the European Central Bank (ECB) and national regulators, the voting systems in the supervisory board of the entity and the European Banking Authority (EBA), the degree of enforceability of decisions made for countries outside the euro which are participating and the different phases of direct supervision.

Of course, it is clear that an entity that holds as much power as the supervisor will not share any kind of power to regulate how member nations direct their policies. Centralization of power and control is the reason why the bankers created this monster in the first place. From now on, it will be take it or leave it.

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IMF presses Euro countries to hand over Sovereignty

By LUIS MIRANDA | THE REAL AGENDA | NOVEMBER 9, 2012

The International Monetary Fund (IMF) has urged countries that are under pressure from markets and high financing costs, including Spain, to seek the help of the European bailout funds to enable the debt purchase program created by the European Central Bank (ECB) to be initiated.

“Countries should implement plans to adjust and, if necessary, seek appropriate support from the EFSF / ESM. This would allow the ECB to intervene using the recently established program,” said an IMF document prepared for the meeting of Finance ministers and central bank governors of the G20 for the past 4 and 5 November.

In this regard, the organization stresses that although the ECB’s decision has removed some of the main risks for the eurozone, political and economic factors can cause these countries to not seek help from European partners and the ECB at the right time.

The institution led by Christine Lagarde said that although progress has been made, the resolution of the eurozone crisis will require “timely and decisive” policy implementation.

The IMF warns that access to finance at a reasonable cost is “essential to enable successful economies to adjust. While the economies of the periphery must continue to adjust their fiscal balances at a rate that they can afford in the current fragile environment, they should also adopt the right policies.” The document warned that changes that do not include a so-called rescue may not be sufficient to fully recover the confidence of the markets, especially risk implementation.

So, the supposed solution provided by the bankers is not only not effective, but also a double whammy. On top of keeping countries in debt, the bankers also want to deepen the crisis by issuing more debt so that more risk can be created and nothing will ever change. That is why the banks want to take complete control, micromanaging every single country’s fiscal and monetary policies, so that they can risk as much as they want with other people’s money without having to be accountable to anyone.

The IMF disingenuously stresses that measures adopted because of the crisis should be accompanied by a roadmap towards creating a banking union and greater fiscal integration to strengthen the monetary union. That is exactly the mechanism that would, once and for all, given them the complete control of all financial decisions in Europe. They also intend to export this to the rest of the world once the EU nations are fully absorbed.

In the opinion of the IMF, the union should be based on a unique mechanism of supervision — controlled by the banks who created the crisis –, a resolution mechanism at the level of the Euro zone, with support from all members and a scheme where all countries pitch in to have a deposit guarantee scheme for the entire currency union. That money will also be spent at the banker’s discretion and countries or banking institutions will be ‘rescued’ only if they agree to all terms in the contracts.

The IMF also stresses that continued implementation of financial, fiscal and structural reforms is “essential”, while acknowledging that several years will pass before all policies are fully implemented. This means that bankers, at least for now, do not intend to collapse the European financial system at once, as long as they can continue to postpone it by creating more debt and adding sovereign nations to their portfolio of debt slaves.

The bankers have smartly warned about using austerity as a way to curb out of control spending, and instead advocate for perpetual indebtedness. That is because this is the most efficient mechanism for them to get to control nations directly from the inside. The truth is however, that the IMF is one of the main pushers of austerity as a first step in the acquisition of indebted nations. Once government bureaucrats are no longer able to cut anything else, the bankers pose as saviors by lending fake money so the countries can begin another cycle of debt-based ‘development’.

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The crisis has reached Germany, warns ECB president

By LUIS MIRANDA | THE REAL AGENDA | NOVEMBER 8, 2012

Mario Draghi, the president of the European Central Bank (ECB), said Wednesday that the effects of the crisis are beginning to be felt in the German economy, which until now had remained largely untouched by the difficulties experienced by other European nations.

In a statement, Draghi said that Germany had remained somehow unaffected by the crisis and that many of the problems seen in other countries had not extended their tentacles to the country. The difficulties in the rest of the euro zone, especially in countries such as Spain, Greece, Italy and Portugal have been more visible, while Germany was seen as the ‘untouched one’.

“But recent data suggest that these events are beginning to affect the German economy,” Draghi said in a speech in Frankfurt on the eve of the meeting on interest rates from the ECB.

In this respect, the Italian banker said that given Germany’s openness, it is not a surprise that the country is affected by the slowdown in the rest of the euro zone, especially when 40% of GDP comes from direct trade between Germany and the rest of the region. Additionally, about 65% of foreign direct investment in the country comes from other euro countries.

“The financial events in Germany are the mirror image of the financial situation in the rest of the euro zone and this means that measures to ensure the stability of the euro zone as a whole will also benefit Germany,” he added. Draghi sought to justify recent austerity measures imposed by the Euro bankers on nations that requested bailouts for their banking system or the governments themselves.

The ECB president reiterated his defense of the decisions taken by the institution, particularly in the case of the direct purchase of debt from countries that formally request it. He said that this move “sent a clear signal to the markets that fears about the euro zone are baseless”. Draghi miss the point — most likely intentionally — regarding the actions taken by the government in Brussels. That is, none of the measures adopted so far have visibly accomplished anything.

Under the current policies neither Europe nor any other region or country in the world will be able to come out of the debt hole. This is even more true when countries and their governments are guaranteed that financial rescues are waiting for them as long as they follow economic and financial policies crafted by the unelected European technocrats. As mentioned here before, the bankers actions are comparable to combating a raging fire by pouring fuel over it.

Draghi then tried to emphasized that the purchases of debt, although unlimited, are not random. “It is important to emphasize that unlimited does not mean uncontrolled,” he said. Later Draghi stressed the indispensable condition that countries request the intervention of the ECB and that they fully accept the conditions offered through the European Stability Mechanism plan which conditions the so-called financial rescue to the intervention of the International Monetary Fund.

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International Banking Mafia Drools over ‘Spanish Prize’

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 19, 2012

The global banking cartel that almost daily proposes the destruction of the nations states is working harder than ever to once and for all conquer Spain. Even before the European Central Bank issued a statement about its openness to bail out Spain, technocrats in Europe were already proposing the looting of the country. Now that the ECB agreed to print million of euros to acquire the peninsular country, they are megaphoning louder than ever that Spain must immediately accept the bailout in order to solve its debt problem.

In previous reports, The Real Agenda reported how the unelected leaders in Brussels believe that Spain will not be able to comply with the conditions imposed by the bankers should Mariano Rajoy request the money from the European Stability Mechanism, which would turn such a request into an official hand over of the nation to the European bankers and nothing else. According to sources in Brussels, Spain does not have and will not have the capacity to cut its deficit by collecting taxes or reducing government spending. What these two actions would definitely do, is to harden even more the dire situation in which millions of Spanish people are now: unemployed, having to use their savings to pay for daily expenses and while looking at an uncertain future.

Proof of the tough conditions in Spain are two reports that circulated on the Spanish press yesterday. One news article on the newspaper La Vanguardia, told about how Spanish people withdrew over 30 billion euros from their bank accounts during the month of July alone. That is how much they trust their government to solve the economic and financial crisis. Those 30 billion euros added to the amount withdrawn last year for a total of 80 billion euros. The withdrawals include individual and business accounts.

The other report published on the newspaper El País describes how the conditions imposed on Spain — after the country requests the bailout — will be the toughest so far in the region. This comment did not come from a speculator, but from the president of the Eurogroup, Jean-Claude Juncker, who said that Spain will experience deep cuts in government spending, which most likely be applied to government services, pension system and entitlement programs. Juncker’s prediction contrasts the comments made last week by the Spanish Secretary of Economy, Luis de Guindos, who assured the nation that the measures adopted along with the bailout would not mean ‘further sacrifices’ in the 2013 government budget.

In summary, Spain will not be able to meet the conditions of the bankers. Those conditions will represent more sacrifices from the Spanish people, who do not have an ounce of trust on their government to take the nation from the debt hole where it is sitting now. However, the same government led by Mariano Rajoy is still considering requesting the bailout, perhaps being influenced by the European banking sharks who are calling for the immediate request of the funds by the Spanish bureaucrats.

“The announcement of the ECB was very brave on one hand, but will not help unless Spain or Italy request the support of an economic program of the EU and the IMF,” said Charles Dallara, the Director of the International Institute of Finances (IIF), while attempting to portray the bankers as the saviors of the European region. In this regard, he said that in the absence of a government negotiating a reform program that is supported by the European Commission, the “massive potential support” by the ECB will remain only potential and will not materialize.

Spain had already requested the bailout of its “too big to fail” banks, which were instructed to hoard the money to avoid the otherwise impending hyper-inflation. The same situation occurred in other countries of the Euro zone and the United States. This explains why despite government interventions through massive fiat money printing, nations on both sides of the Atlantic haven’t generated any significant economic activity. Neither small or medium size business have been able to request loans to run their businesses. Instead, the bankers have hid the money given in bailouts, or have used it to pay fat bonuses to their board members and most influential investors.

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