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Tag: banks

Renzi, Machiavelli and the public platform

Monday, 5 December, 2016 0 Comments

Niccolò Machiavelli: “The demands of a free populace, too, are very seldom harmful to liberty, for they are due either to the populace being oppressed or to the suspicious that it is going to be oppressed and, should these impressions be false, a remedy is provided in the public platform on which some man of standing can get up, appeal to the crowd, and show that it is mistaken. And though, as Tully remarks, the populace may be ignorant, it is capable of grasping the truth and readily yields when a man, worthy of confidence, lays the truth before it.” Discourses on Livy (1517), Book 1, Ch. 4 (as translated by LJ Walker and B Crick)

Whither now, Italy, after Matteo Renzi, a man of standing, appealed to the crowd, only to see his proposed reforms rejected by the public platform? The most pressing matter is the country’s banks, which have bad debts of €286 billion on their books. The third largest institution, Banca Monte dei Paschi di Siena, needs a €5 billion recapitalisation, urgently. Although the situation is alarming, the can is kicked further down the road. The reason is that if the debts were written off, junior bondholders would take a massive hit, and many of these are ordinary Italians who bought useless bank debt.

Thanks to Renzi’s referendum, borrowing costs are increasing, making it very expensive to get capital for Italy’s zombie banks, and now there’s a government without a mandate. The fear is that the instability of Italy may spread from Rome to Brussels and beyond. Quoting Cicero, Machiavelli noted that the populace may be ignorant, but it is capable of grasping the truth.

Italy


We need to talk about Greece

Tuesday, 20 January, 2015 0 Comments

The latest poll before Sunday’s election in Greece show the anti-bailout party Syriza getting 33.5 percent of the vote. Should this translate into a majority for the left-wing agitator Alexis Tsipras, the cat will be truly among the euro doves and hawks next week. Note: Syriza has promised to enact a law preventing banks from seizing the homes of people who have fallen behind on mortgages on primary residences valued at less than €300,000.

Greek euro On Friday, the Wall Street Journal reported: “Adding to the air of trepidation ahead of the vote, Eurobank and another lender, Alpha Bank SA, have requested access to an emergency cash facility run by the central bank. Both said the moves were only a precaution and that neither faced an immediate funding crunch.” The report’s next sentence is a classic: “People familiar with the matter said the banks are seeking a few billion euros between them.” Just like that: “a few billion euros between them.” Not hundreds, not thousands, not millions; just a few billion.

The Journal article moved Bloomberg View columnist Megan McArdle to write a piece headlined “It Might Be Time to Panic About Greece.” Money quote: “I rush to note that we are hardly in the end days yet; bank officials told the Wall Street Journal that this was only a precautionary move, and they were not facing an immediate cash crunch. One is always pleased to hear that bankers are being cautious. But the Journal also reports that $3 billion has fled Greek banks over the last two months, and there are rumors that other European banks are reining in their lending to their Hellenic counterparts. Which means that, unfortunately, their caution seems more than warranted.”

Wait until Monday. Meanwhile…


How Cyprus was robbed

Tuesday, 26 March, 2013 0 Comments

Reuters: “As new President Nicos Anastasiades hesitated over an EU bailout that has wrecked Cyprus’s offshore financial haven status, money was oozing out of his country’s closed banks.”

All those TV and newspaper images of Cypriots standing in line to get their daily €100 from the ATM show the real victims of the bailout/bailin. The reality is that the big money has left the island and the Brussels PR campaign that the real pain would be felt by the “rich” is exposed as just another Big Lie. Check this out:

“The two banks at the centre of the crisis — Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus — have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia’s Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks’ largest depositors.”

And who’s left holding the can? We’ll see real suffering at the end of this week when Cypriot firms are scheduled to pay their workers.

When the euro was launched, its most ardent defenders used to argue that monetary union would eventually require political union. Their moment came, they thought, with the Greek nightmare. However, instead of being the expected catalyst, it turned out that the “cure” of forcing bitter economic medicine down reluctant throats in Athens generated hatred, not gratitude. The Cyprus crisis has exacerbated the situation and the thing that was meant to unite is now becoming the great divider. What we’re left with is an increasingly unhappy marriage of totally incompatible partners.


How Cyprus was betrayed

Monday, 25 March, 2013 0 Comments

“We are all prisoners of knowledge. To know how Cyprus was betrayed, and to have studied the record of that betrayal, is to make oneself unhappy and to spoil, perhaps for ever, one’s pleasure in visiting one of the world’s most enchanting islands. Nothing will ever restore the looted treasures, the bereaved families, the plundered villages and the groves and hillsides scalded with napalm. Nor will anything mitigate the record of the callous and crude politicians who regarded Cyprus as something on which to scribble their inane and conceited designs. But fatalism would be the worst betrayal of all. The acceptance, the legitimization of what was done — those things must be repudiated. Such a refusal has a value beyond Cyprus, in showing that acquiescence in injustice is not ‘realism’. Once the injustice has been set down and described, and called by its right name, acquiescence in it becomes impossible. That is why one writes about Cyprus in sorrow but more — much more — in anger.”

Hostage to History: Cyprus from the Ottomans to Kissinger by Christopher Hitchens


Cyprus banks pass EU stress test

Tuesday, 19 March, 2013 0 Comments

That was the headline on an article by Poly Pantelides, which appeared in The Cyprus Mail on 16 July 2011. Best bit: “In Nicosia the Finance Ministry issued a statement saying: ‘The measures which the banks are taking or planning to take will further increase solvency.'”. Two years later, the same paper is today reporting that “Eurozone finance ministers last night urged Cyprus to protect small savers’ deposits while still coming up with €5.8 billion from a deposit levy so the island’s €10 billion bailout could go ahead.”

Hero to zero in just two years. How come? Because EU stress tests are as reliable as EU promises and policies.