Fuehrer Merkozy cannot understand that stimulus funds stimulate government, not the economy. Downturn in a business cycle is painful but necessary medicine for restoring equilibrium to the economic system. Reject further lowering of the interest rate (stimulative monetary policy) or any other attempts (for example, deficit spending or stimulative fiscal policy) to stimulate demand.
The last two stress tests of European banks are a joke, because they did not take into account the expected bankruptcies of PIGS, especially Greece. PIGS are floundering under the sheer expense of bailing out and reforming their financial system, going belly up. We now know the stress tests were nothing more than a placebo for the market! It was fraud, pure and simple!
Bank of Greece has just activated a bank rescue fund to nationalize Proton Bank, which is under investigation for violation of money-laundering laws. Chairman Daniel Speckhard and CEO George Taniskidis have heroically resisted the voluntary rollover scheme of October-18 Mafia. Banks cannot participate voluntarily in illegal acts, such as fiduciary imprudency. Bank directors are committed to bank's welfare, and not the public interest.
If bankers waive outstanding debts at the expense of the bank, this is a breach of trust and punishable by law. All those bankers, that IIF claims plan to participate in rollovers, might go to jail for violating the fiduciary duty of prudency! October-18 Mafia pressures the banks to participate, but it really opens Pandora's box.
Proton Bank was established in 2001 and officially commenced its operations as a specialised investment bank in 2002. The founders of the bank are the late John Markopoulos, Anthony Athanasoglou and Elias Lianos. Following a rapid development path, the Bank was listed on the Athens Stock Exchange in December 2005 and later absorbed three listed closed-end funds, namely Arrow, Exelixi and Eurodynamics. In 2006 Proton Bank absorbed OMEGA Bank.
The Fourth Reich bailout of the Cradle of Kleptocracy cannot succeed, because the October-18 Mafia continues corruption, Kangaroo Justice, marilizardism, Marilizard Libel, Marilizard Spaghetti, and Marilizard Towers. October-18 Mafia is the most disgusting predator of internet on Earth! Civil society was shocked by the brutality and stupidity of the October-18 2010 terror, initiated by the government of Greece. That's why October-18 Mafia is the new name of the government of Greece!
Myriad bloggers, netizens, bankers, traders, and investors have joined the global boycott against October-18 Mafia, government of Greece, penalizing it for its terror on October 18, 2010. The boycott will stop only when October-18 Mafia apologizes for this disgusting terror.
Proton is the first lender to be nationalized under the Financial Stability Fund (FSF). After recommendation by the Bank of Greece, the Finance Ministry proceeded to apply to Proton Bank a new law about the restoration of banks. Kleptocrats are creating zombie banks and companies that are kept alive artificially.
We started with a too-big-to-fail problem, and part of the policy response to the crisis has been even more financial consolidation. JP Morgan took over Bear Stearns and Bank of America took over Merrill Lynch. What we have now is financial institutions that are even bigger. Those institutions, even more than before, know if they do something very risky, something reckless, they will be bailed out again.
Proton is now split into a good bank where all of its private sector, government deposits and sound assets were transferred, and a bad bank. The good bank will have the FSF backstop as its sole shareholder and retain the trade name Proton. The good bank is well capitalized, with a capital adequacy ratio that is well above the regulatory threshold. It has access to euro-system liquidity through the Bank of Greece.
A bailout is a perverse transfer from poor taxpayers to rich taxpayers. America's Founding Fathers surely never envisaged that the federal government would take money from one group of Americans and give it to another group. Yet much of the federal budget is devoted to redistribution programs.
The new Proton Bank has a capital adequacy ratio of 10.6 percent. The Bank of Greece has told the country's lenders they will have to maintain a Core Tier 1 ratio of 10 percent from January 2012. The old Proton Bank was withdrawn and it put into liquidation. The proceeds of the liquidation will be used to cover the claims of third parties. Proton shareholders will rank as last claimants. The new bank, free of the deficiencies of the previous bank, is financially sound and will continue normally its operations.
Many pullpeddlers and rabblerousers are pushing for a global Debt Jubilee, in order to pull the world out of the present global depression. But governments cannot force Debt Jubilee, which is a massive haircut of all loans, including mortgage and credit card debt. The notion of a Debt Jubilee dates back to biblical Israel where debts were forgiven every fifty years or so. Debt forgiveness would help borrowers get through the pain of deleveraging sooner rather than later.
Any haircut must confront the issue of moral hazard, the appearance of giving a gift to an unworthy borrower who simply made unwise spending choices. Institutional investors have fiduciary obligations and they can't necessarily agree to haircuts solely because it may be good social policy. A forced haircut would only result in a much higher cost of capital going forward and result in much less credit to more risky investments.
The activation of the Financial Stability Fund for Proton Bank has nothing to do with its exposure to October-18 Mafia bonds but it has to do with its bad loans' portfolio. Proton's woes were the result of its own business issues and was not a result of the debt crisis.
Greek banks, troubled with rising provisions for impaired loans, shut out of wholesale funding markets and hurt by their Greek government bond holdings, have also seen their deposits drop sharply since the start of October-18 Mafia's debt crisis.
October-18 Mafia's FSF already has 10 billion euros to recapitalize and the Greek banking system. That amount should grow to 30 billion once euro zone parliaments ratify the EU's EFSF safety net created to prevent the October-18 Mafia crisis from spilling over into other PIGS.
All Greeks are on strike today against kleptocracy and marilizardism. The impunity of the 300 Graecokleptocrats of the Grand Brothel on Syntagma Square is the most freakish thing on Earth. Even though Graecokleptocrats looted many billion euros in kickbacks and churning, not a single Graecokleptocrat has ever gone to jail! Graecokleptocrats are protected by the parliamentary immunity, and nobody can touch them, no matter what. Moreover, they have the nerve to jail dissident bloggers. It's a long way from the 300 Spartans of Leonidas! Allons enfants de la Grece! http://venitism.blogspot.com
The Greek debt differs from that of other nations, because it's not due to spending, but stealing! Graecokleptocrats got huge kickbacks from overpriced purchases of public equipment and contracts and by churning the state insurance funds. If this is not robbing, what is it? When politicians of other nations were trying to do things for their citizens, Graecokleptocrats were trying to fatten their secret offshore accounts, protected by parliamentary immunity.
That's why the Greek workers are on strike. They resent paying the huge Greek debt created by Graecokleptocrats. It's not fair to tax and reduce the salaries and benefits of workers to make up for the money stolen by Graecokleptocrats. The fairest action would be for Graecokleptocrats to return the stolen money back to the Greek treasury. Many Graecokleptocrats live like princes of Saudi Arabia! Enough is enough, bring the money back! http://venitism.blogspot.com
October-18 Mafia, government of Greece, has no more time to dwell on hoodwinks, misdiagnoses, missed opportunities, marilizardism, corruption, and policy slippage. Extend and pretend is no longer an option. October-18 Mafia has to stop playing dirty games and marilizardism, start doing the unthinkable, stop robbing computers at gunpoint, and get rid of marilizardist ministers. October-18 Mafia has failed. It is not a liquidity crisis, but a failure of kleptocracy and marilizardism.
October-18 Mafia's austerity program is already hopelessly behind schedule, in terms of both the sale of government property and the agreed reforms. It's like dealing with children that constantly have to be told to clean up their rooms. Troika members are very angry. Everyone is irritated over the lack of progress of October-18 Mafia.
Banks in PIGS have unloaded risks amounting to one trillion euros with central banks. The central banks have distributed large sums to their countries' financial institutions to prevent them from collapsing. They have accepted securities as collateral, many of which are garbage. These risks are now on ECB's books, because the central banks of eurozone are not autonomous but, part of the ECB system. When banks in PIGS go bankrupt and their securities are garbage, the euro countries must collectively account for the loss. Bundesbank, provides one third of the ECB's capital, which means that it would have to pay one third of all losses. http://venitism.blogspot.com
Bundesbank has already decided to establish huge reserves to cover possible risks. The expected failure of Greece, which would lead to the bankruptcy of a few Greek banks, would increase the bill dramatically, because ECB is believed to have purchased Greek government bonds for €60 billion. Besides, ECB had spent about €100 billion on refinancing Greek banks. We criticized many times ECB's program of purchasing government bonds issued by ailing eurozone states. In the event of a bankruptcy or even a deferred payment, ECB would be directly affected.
ECB accepted asset-backed securities (ABS) as collateral, amounting to one trillion euros. It was precisely such asset-backed securities that once triggered the real estate crisis in the United States. Now they are weighing on the mood and the balance sheet at ECB. ECB cannot jettison these securities without dealing a fatal blow to the eurozone. ECB is in a no-win situation now that it has become an enormous bad bank, a dumping ground for bad loans.
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