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 Those 30 billion euros added to the amount withdrawn last year for a total of 80 billion euros.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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All Power to Brussels and the European Central Bank

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 12, 2012

A great complement to the decision to enable the European Stability Mechanism could materialize if the government in Brussels gets its way. The European government is now proposing that the European Central Bank should control all banking institutions in the EU. The European Commission wants the ECB to have the power to close or punish banks that do not abide by the rules issued in Brussels by the technocrats who now control the European banking system.

The European Commission proposed on Wednesday to empower the European Central Bank (ECB), that will oversee all eurozone banks beginning in 2014, to remove bank cards and punish non-compliant entities.

Brussels ignores Germany resistance to such power, which wants to limit the power of a single supervisor of larger systemic institutions. The initiative also collides with the reservations in the UK and the countries of Eastern Europe, which fear that the ECB will accumulate too much power while the nations are excluded in the decision making process.

In an attempt to allay these doubts, Brussels makes clear that the rules for the sector will be developed by the European Banking Authority, which lists the 27 member nations. In the first phase, starting in January 2013, the Central Bank will take over banks that have received state aid, thus opening the door for direct recapitalization, the EU plan says.

Then, the ECB will also monitor systemic institutions. By January 1, 2014 it will also be in charge of 6,000 entities that operate in the eurozone. The objective of this initiative, which was presented by the President of the Commission, José Manuel Barroso, in his State of the Union address in the Parliament, is to break the “vicious circle” between sovereign and financial debt and move towards a union bank. This has been the plan all along. The technocrats in Europe have always sought to erode national sovereignty — as explained in our report about the future of nation-states — so that the bankers can later consolidate power and resources, which is their ultimate goal.

“This new system, with the ECB in the center and involving national supervisors, restore confidence in the supervision of all banks in the euro zone,” said Barroso, who has called for a speedy adoption of the proposal so that it can be operational in early 2013. “In the future, the losses of bankers and debt will not become that of citizens, questioning the financial stability of entire countries,” he noted. That is difficult to believe, since the banks who are now posing as saviors were the ones who created most of the debt through fraudulent financial mechanisms.

The creation of a single banking supervisor in the EU is the condition imposed by Germany to allow the bank bailout of 100,000 million euros that the EU granted Spain. This bailout bypassed the state and was not computed as debt. Although n public Germany seems to not support more banker power grabs, in private Angela Merkel is indeed promoting the creation of a new European centralized entity.

The German finance minister, Wolfgang Schäuble, said in recent days that he wants the ECB to be limited to systemic institutions and intends to maintain control of its regional banks. However, the Commission contends that “as we have seen in recent years, even small banks can be systemic and cause financial turmoil,” as Northern Rock, Anglo Irish and Bankia.

The EU executive said his proposal is the “right balance” between the tasks of the ECB and the national supervisors. The ECB will have the final say in “key” decisions, while the daily work of supervision will remain with national authorities. This aspect is what the German minister of finance had opposed from the beginning. As proposed by Brussels, the ECB is responsible for granting new bank cards or withdrawing them if banks do not comply. Also, Brussels will evaluate major acquisitions and sales, and will require banks to increase their capital if it detects risks.

According to the proposal the EU will share power with the national authorities up until the moment when the EU’s authority for settlement is created. Then, it will be all up to the bankers. In order to perform the functions described above, Brussels will give new powers to the ECB, which may request information from entities and perform field inspections. In addition, it will be entitled to impose fines of up to 10% of its turnover. This last imposition is seen by skeptics as the mechanism for the ECB to fund its operations.

Do we or do we not work for the banks?

Secretive Committee meets again to “save Euro”

WSJ

Two months after Lehman Brothers collapsed in the fall of 2008, a small group of European leaders set up a secret task force—one so secret that they dubbed it “the group that doesn’t exist.”

Its mission: Devise a plan to head off a default by a country in the 16-nation euro zone.

When Greece ran into trouble a year later, the conclave, whose existence has never before been reported, had yet to agree on a strategy. In a prelude to a cantankerous public debate that would later delay Europe’s response to the euro-zone debt crisis until the eleventh hour, the task force struggled to surmount broad disagreement over whether and how the euro zone should rescue one of its own. It never found the answer.

A Wall Street Journal investigation, based on dozens of interviews with officials from around the EU, reveals that the divisions that bedeviled the task force pushed the currency union perilously close to collapse. In early May, just hours before Germany and France broke their stalemate and agreed to endorse a trillion-dollar fund to rescue troubled euro-zone members, French Finance Minister Christine Lagarde told her delegation the euro zone was on the verge of breaking apart, according to people familiar with the matter.

The euro zone’s near death had stakes for people around the world. A wave of government defaults on Europe’s periphery could have triggered a new crisis in the international banking system, with even worse consequences for the global economy than the failure of Lehman.

The dangerous dithering was driven by ideological divisions that continue to paralyze the currency union’s search for solutions to its structural flaws. Deep differences on economic policy between Europe’s frugal north and laxer south, between Germany and France, and between national governments and central EU institutions hindered an effective early response to the crisis. Only when faced with calamity—the collapse of the euro zone—did leaders put aside their differences and reach a compromise.

Complicating matters: The two most important politicians deciding the fate of the euro often had conflicting agendas—and much at stake personally.

French President Nicolas Sarkozy, known in France as the “hyper-president” for his relentless flurry of new initiatives, faced declining approval ratings as his domestic economic overhaul stalled. The excitable 55-year-old leader saw that Greece’s woes could rock the euro zone. Mr. Sarkozy seized on the issue as an opportunity to prove his leadership chops and thus shore up his popularity.

For German Chancellor Angela Merkel, 56, the crisis was the biggest test of her career. A trained physicist known for her cautious, deliberative style, she feared a backlash from German voters and lawmakers, and defeat in Germany’s supreme court, if she risked taxpayer money on serial deficit-sinner Greece. Despite pressure from Mr. Sarkozy, she fiercely resisted a quick fix.

When Mr. Sarkozy barreled into one meeting with camera crews and photographers in tow, Ms. Merkel icily ordered the cameras out: “I won’t let you do this to me,” she said, warning she wouldn’t play the part of “the stubborn old bag.”

Europe eventually did establish a rescue fund in May. By then the price of calm had soared, requiring a pledge of €750 billion. It defused the panic but hasn’t snuffed out the crisis: Unsustainable borrowing still poses huge challenges, especially in Greece and Ireland.

The danger of a government-debt crisis in the euro zone began to preoccupy top European policy makers in October 2008. Hungary, an EU member which doesn’t use the euro, found itself unable to sell bonds to jittery investors. The EU, using an existing but little-used program, and the International Monetary Fund and World Bank swiftly propped up Hungary by pledging about €20 billion in loans.

But it soon became apparent that the euro zone had no tools to save one of its own. EU treaties made clear the facility used for Hungary was off limits to euro members. For most EU officials, the IMF was taboo, too: Its loans were fine for poor ex-Communist nations, they felt, but not for developed euro members.

In March 2009, French Treasury official Xavier Musca was preparing to step down as chairman of the Economic and Financial Committee, an influential body of technocrats who manage EU economic policy. He briefed his successor, Thomas Wieser of Austria, on the duties. At the end of a long list, he added one more. “Incidentally,” Mr. Musca said, “there’s a group that doesn’t exist.”

The secret task force, coordinated by the committee chairman, had been meeting surreptitiously since November 2008 to craft a plan should a Hungary-style crisis strike a euro nation. Membership was limited to senior policy makers—usually just below ministerial level—from France, Germany, the European Commission, Europe’s central bank and the office of Jean-Claude Juncker, the Luxembourg premier who heads an assembly of euro finance ministers.

The task force met in the shadows of the EU’s many councils and summits in Brussels, Luxembourg and other capitals, often gathering at 6 a.m. or huddling over sandwiches late at night. Participants kept colleagues in their own governments in the dark, for fear leaks would trigger rampant speculation in financial markets.

Potential crisis candidates were obvious: Portugal, Ireland, Greece and Spain, a group of deeply indebted states derisively tagged with the acronym “PIGS” by bond traders.

A gap quickly opened up between Germany, attached to euro-zone rules it viewed as banning bailouts for profligate countries, and France, which wanted greater freedom for national governments to support each other as they saw fit.

A fault line also developed over whether EU institutions should run any bailout operation. The European Commission, the union’s executive branch, pushed for a central role in raising and lending funds—and found an ally in France. Germany, wary of a power grab, was deeply reluctant to put its cash in Brussels’ hands.

The German finance ministry feared the commission was trying to establish a precedent for centralized European public borrowing, through EU bonds. That would imply Germany, Europe’s strongest creditor, subsidizing other nations. Instead, Germany insisted any aid must come via loans by the individual euro-zone members to a stricken country. That way Berlin, writer of the biggest check, could control the process and force a wayward recipient to reform itself.

The philosophical divide among task-force members persisted for nearly a year. Last October, it ceased to be academic.

That month, Greece’s newly elected Socialist government declared the country’s 2009 budget deficit was heading for 12.5% of gross domestic product—more than three times the previous government’s official forecast.

Stunned investors began to dump Greek bonds. Greece faced daunting debt repayments in spring 2010, and it wasn’t at all clear if it would have the money to make them.

By February, it became obvious that the 16-nation euro zone would have to do something to address the Greek bond meltdown. The secret task force of France, Germany and EU bureaucrats opened its doors to the rest of the member countries—except Greece.

A summit of EU leaders had been planned for Feb. 11 to mull Europe’s long-term economic goals. Governments insisted publicly that Greece was “not on the agenda.” The hope, say aides to several European leaders, was that if Europe didn’t upset the markets by talking about the matter, Greece might be able to sell enough bonds to escape trouble.

But Greek bond prices—a key measure of investor confidence—began plunging in the days before the meeting. Luxembourg’s Mr. Juncker convened an emergency teleconference of euro-zone finance ministers on the eve of the summit. They agreed on a statement to be read at the summit’s conclusion pledging “support” for Greece.

In Berlin’s austere chancellery building, Ms. Merkel wasn’t happy. Her advisers were telling her that Greece’s problems ran deeper than a short-term cash shortage: The country was economically uncompetitive and living beyond its means. Without a deep overhaul, a quick-fix bailout would keep Greece afloat for only a few months, they warned. In addition, Germany’s supreme court would strike down a bailout, the advisers warned, unless it was absolutely unavoidable.

Deep in the night, Ms. Merkel called other leaders, including President Sarkozy, and made it clear she would veto any promise of aid for Greece unless Athens took much tougher action to cut its public spending and overhaul its economy.

Mr. Sarkozy replied that Greek Prime Minister George Papandreou was already taking brave action.

“Now it is time for Europe to help,” he said.

“The financial markets will say this is not a solution,” Ms. Merkel told the French leader.

The next day’s summit, on a Thursday, was scheduled for 10:15 a.m. at the Bibliotheque Solvay, a historic library on a Brussels hilltop. Late Wednesday, EU President Herman Van Rompuy of Belgium postponed it by more than two hours. Snowy weather was the official explanation given for the delay.

In reality, Mr. Van Rompuy huddled that morning in his office on the fifth floor of the EU’s summit building with a few key leaders—including Ms. Merkel, Mr. Sarkozy and the head of the European Central Bank, Jean-Claude Trichet. Other European leaders were cooling their heels at the library. On currency markets, the euro was gyrating in anticipation of a bold rescue—or a bust.

Mr. Sarkozy pushed the chancellor for a clear public declaration that Europe stood behind Greece. “I cannot buy that,” Ms. Merkel responded.

Eventually, Mr. Van Rompuy brokered a compromise, in the form of a nine-word sentence tacked on to a statement aides were scribbling out on a conference table: “The Greek government has not requested any financial support.” The language sneaked in a back-door mention of Greece, but it conformed to Ms. Merkel’s insistence that the country not be offered any help.

She had won the round.

Other European leaders believed Ms. Merkel was playing for time because of domestic politics. Her center-right coalition faced a crucial regional election on May 9 in North Rhine-Westphalia, Germany’s most populous state. Opinion polls showed voters were furious about the prospect of bailing out the profligate Greeks.

“It was clear that the election was playing a big role,” says the finance minister of another euro-zone country. Spokesmen for Ms. Merkel strenuously deny that North Rhine-Westphalia influenced her tactics on Greece.

The chancellor struggled to rein in speculation about an imminent bailout one Friday in late February, when the head of Germany’s biggest bank, Deutsche Bank Chief Executive Josef Ackermann, mysteriously appeared in Athens for consultations with Greek leaders. Mr. Ackermann had an idea for supplying Greece with up to €30 billion of credit—half from Germany and France, half from major European banks.

In a phone call from Athens that day, Mr. Ackermann pitched the proposal to Ms. Merkel’s chief economic adviser, Jens Weidmann. The reply: unacceptable. “You cannot tell the Greeks that this is a German government offer,” Mr. Weidmann said, fearing the already-widespread impression that Mr. Ackermann was acting as a go-between.

A posse of cameras met Mr. Ackermann when he emerged from the Greek parliament building. “I’m regularly in Greece because I love Greece and the beautiful weather,” a grinning Mr. Ackermann said, before disappearing into his armored Mercedes-Benz.

By mid-March, Greek Premier Papandreou was clamoring openly for Europe to reassure markets by putting money on the table. Ms. Merkel went on German public radio that month and said Greece didn’t need aid. An upcoming EU summit should focus on other issues—and other European leaders shouldn’t stir up “false expectations,” she said.

But behind the scenes, Ms. Merkel was starting to take over the contingency planning.

There was one thing the secret task force had agreed on: Europe, not the IMF, would handle any bailout. The German finance ministry felt the same. Involving the Washington-based fund in a bailout of Greece would be an admission of European weakness, Finance Minister Wolfgang Schäuble said publicly. Mr. Sarkozy, Mr. Juncker and ECB chief Trichet all shared that view strongly.

Ms. Merkel, however, overruled them all. Her advisers were telling her that aid to Greece could be sold to her skeptical countrymen only as part of a wrenching IMF program of economic adjustment for Greece. IMF-inflicted pain would also deter other indebted euro-zone countries from seeking aid.

The disagreement came to a head before the broader EU’s regular spring summit in Brussels on March 25.

That afternoon, before all 27 leaders gathered, Ms. Merkel met Mr. Sarkozy in one of the many spartan meeting rooms in the EU’s warren-like headquarters. The chancellor agreed to announce that the euro zone would rescue Greece if it faced default—but only as a last resort, once Greece had exhausted its access to capital markets. Also, the IMF must be part of any loan package, and the IMF—not the European Commission—should draw up Greece’s program of overhauls, she said.

Mr. Sarkozy protested against involving the IMF, whose biggest shareholder is the U.S. government. Europe cannot let “the Americans” decide who gets credit in Europe, he said.

Ms. Merkel put her foot down, insisting that only the IMF had the necessary experience. Mr. Sarkozy, recognizing that Germany’s financial muscle was essential for any bailout, reluctantly gave way.

On April 11, with the crisis of investor confidence spreading from Greek government bonds to the country’s banking system, the EU finally put money on the table. As Germany wanted, the €30 billion for the first year would come in the form of 15 separate government-to-government loans, while the IMF would lend another €15 billion. Officials hoped the sum, enough to cover Greece’s borrowing needs for less than a year, would be enough to calm markets.

It wasn’t.