IMF issues plan to starve Portuguese people even further in 2013

By LUIS MIRANDA | THE REAL AGENDA | JANUARY 10, 2013

Portuguese Prime Minister Pedro Passos Coelho warned a month ago: The Portuguese, that bears a progressive and growing cut in services for the last year and a half, intends to save another 4,000 million euros a year starting now. For ideas on where to do it, the Portuguese Executive requested a report to the International Monetary Fund (IMF). The report was released on Thursday and immediately sparked controversy (and fear) in the Portuguese population, as cuts and adjustments will be constant and repetitive in the months to come.

Technicians at the Washington-based institution advised Portugal to, among other measures, fire workers, increase working hours for government employees, reduce (more) unemployment benefits and cut (even more) pensions. Only then, they say, will the country reach 4,000 million euros in savings that the Liberal government of Passos Coelho considers necessary to reform the state so that, in his opinion, the Portuguese nation becomes efficient and competitive.

To begin, the IMF experts say the Portuguese system of social protection “is directed disproportionately towards the wealthier and the older.” It adds that the system “pushes out younger workers while keeping the older inside.” To solve that problem, the IMF suggests that unemployment insurance, which now provides subsidies for 26 months and that has already been cut, should be cut even further, and that once it gets to  ten months, it is reduced further to become simply a payment of social allowance of just over 400 euros.

The IMF also recommends reducing the wages of civil servants in an amount which can range between 3% and 7%, and get rid of up to 120,000 public employees (from 10% to 20%), focusing mainly on teachers , health professionals and low-skilled employees. In addition, Fund staff recommend ending the discrimination suffered by other employees, who work 40 hours a week, with respect to staff, whose working week is 35.

According to the IMF, the payment for doctor visits (already implemented in Portugal) could be increased up to a third of the expense involved in supplying such service. Right now, going to the emergency room in a hospital in Lisbon costs 20 euros. If the government accepted the IMF’s recommendation, the same visit would cost 50 euros. A mammogram can cost 15 euros and a GP consultation would cost around ten euros.

Pensioners, whose payments have been greatly cut, will experience even more cuts. According to the IMF, for starters, Portugal should raise the retirement age from 65 to 66 years, reduce the amount received by pensioners by 20% so that all payments are equally low.

The report has raised considerable media dust. The left accuses the government of Passos Coelho of thoroughly dismantling the country piece by piece, and establishing a process that will cost more than a mere private insurance scheme. Portuguese State Secretary, Carlos Moedas, has clarified that the report is “very good”  and that it will be considered by the Government.

The Portuguese government plans to present in February its own savings plan, which is why it requested the report from the IMF. Now, Portugal plans to include almost all of the recommendations in the report as its own since the IMF itself has now called for such measures.

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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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Shadow Banking Bonanza hits $67 Trillion in 2011

REUTERS | NOVEMBER 19, 2012

The system of so-called “shadow banking,” blamed by some for aggravating the global financial crisis, grew to a new high of $67 trillion globally last year, a top regulatory group said, calling for tighter control of the sector.

A report by the Financial Stability Board (FSB) on Sunday appeared to confirm fears among policymakers that shadow banking is set to thrive, beyond the reach of a regulatory net tightening around traditional banks and banking activities.

The FSB, a task force from the world’s top 20 economies, also called for greater regulatory control of shadow banking.

“The FSB is of the view that the authorities’ approach to shadow banking has to be a targeted one,” the group wrote in a report, noting the current lax regulation of the sector.

“The objective is to ensure that shadow banking is subject to appropriate oversight and regulation to address bank-like risks to financial stability,” it said.

Officials at the European Commission in Brussels also see closer oversight of the sector as important in preventing a repeat of the financial crisis that has toppled banks over the past five years and rocked the euro zone.

The study by the FSB said shadow banking around the world more than doubled to $62 trillion in the five years to 2007 before the crisis struck.

But the size of the total system had grown to $67 trillion in 2011 — more than the total economic output of all the countries in the study.

The multitrillion-dollar activities of hedge funds and private equity companies are often cited as examples of shadow banking.

But the term also covers investment funds, money market funds and even cash-rich firms that lend government bonds to banks, which in turn use them as security when taking credit from the European Central Bank.

Even the man credited with coining the term, former investment executive Paul McCulley, gave a catch-all definition, saying he understood shadow banking to mean “the whole alphabet soup of levered up non-bank investment conduits, vehicles and structures,” such as the special investment vehicles that many blamed for the financial crisis.

The United States had the largest shadow banking system, said the FSB, with assets of $23 trillion in 2011, followed by the euro area — with $22 trillion — and the United Kingdom — at $9 trillion.

The U.S. share of the global shadow banking system has declined in recent years, the FSB said, while the shares of the United Kingdom and the euro area have increased.

The FSB warned that tighter rules that force banks to hoard more capital reserves to cover losses could bolster shadow banking.

It advocated better controls, although cautions that shadow banking reforms should be dealt with carefully because the sector can also be a source of credit for business and consumers.

Forms of shadow banking can include securitization, which can transform bank loans into a tradeable instrument that can then be used to refinance credit, making it easier to lend.

In the run-up to the crisis, however, banks such as Germany’s IKB stored billions of euros of such instruments in off-balance sheet vehicles, which later unraveled.

Another example is a repurchasing agreement, or repo, where a player such as a hedge fund could sell government bonds it owns to a bank, agreeing to repurchase them later.

The bank may then lend those bonds onto another hedge fund, taking a position on the government debt. Such agreements are used by banks to lend and borrow. A risk could arise if one of the parties in the chain collapses.

The European Commission is expected to propose EU-wide rules for shadow banking next year.

Copyright 2012 Thomson Reuters.

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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