John Ward May 26, 2012 Uncategorized

Dallara’s disaster scenario versus Berlin/Brussels bluff

More insights from the tangled web

One of the more amusing aspects of the 360-degree whoppers being told by all those in charge 24/7 is that the lies have to change depending on which folks they’re trying to frighten/fatsos they’re trying to save.

Take Charles Dallara for example. If Greece defaults, his IIF is going to be hit for six. So he must terrify everyone with dark tales of civilisation’s collapse in the event of Hellenica leaving the eurozone. The cost of Greece exiting the euro would be unmanageable and probably exceed the 1 trillion euros previously estimated by the Institute of International Finance, he told a European radio audience yesterday.

“Those who think that Europe, and more broadly the global economy, are really prepared for a Greek exit should think again,” he concluded gloomily: the European Central Bank’s exposure to Greek liabilities is more than twice as big as the ECB’s capital, said Dallara, and thus he predicted the bank would be unable to provide liquidity and stabilise the euro-area financial sector.

Charles wasn’t being quite so determinedly pessimistic when the Athens bondholder negotiations were at their height, however. He told those on the other side of the table to be in no doubt that his members could handle any sh*t, and were not afraid to walk away.

The same is true of Berlin-am-Brussels. Fifteen months ago they predicted Armageddon in a bid to persuade EU electorates to bail Greece out. But now the Greek Left is looking rather truculent, they insist that they could handle a mile-wide asteroid with ease.

But Dallara actually told his listeners that things had got worse over the last year, not better – because the liability is bigger. He’s right too, but this interpretation of the world doesn’t really work for the Sprout-Kraut Axis of Evil.

On a broader canvas, what this reveals yet again is that there are many conflicting interests involved in this unravelling ball of wool; and there is no honour among thieves.

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1

Wrangler on May 27, 2012 at 6:47 pm

The common theme from every direction is surely that none of them know what to do, none of them are able to resolve the problems…

They are simply self serving by nature and have avoided the only possible cure from the beginning.

That would have been to Liquidate the rogue banks that caused this problem in the first place back in 2006/2007 due to avarice, incompetence and crony-ism

A Capitalist system has a simple cure for Insolvency – Bankruptcy.

If a single indebted Taxpayer cannot repay £5,000 then there are no alternatives other than Bankruptcy, no Government Bailout, and that is metered out swiftly.

The Banks were Criminally Negligent and heads need to roll. Forthwith.

Start with Fred and hang him.

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2

Bankrupt Taxpayer on May 27, 2012 at 8:44 am

@VJ: A quote from Dallara:
“Germany should give up its resistance and Euro-Bonds must be understood as an opportunity: with Euro-Bonds the European States would be motivated to save more and to conduct stricter fiscal policies.”

It continues to amaze me that people in the public eye – that one might expect to know what they’re talking about – come out with rubbish like this. All things being equal, I cannot see how Eurobonds would impose any sort of sanity on profligate EZ member states. The opposite is more likely given the reduced costs of borrowing by having Germany as a backstop.

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3

Viking Jack on May 27, 2012 at 2:58 am

JW, you haven’t told the whole story – he’s also sticking his oar into waters which, being as he is nothing more than a silly banker, are not within his remit!

“Banking boss Dallara: Only political union in Europe will calm the markets

DMN | 05.27.12, 00:50 |

The head of the International Banking Federation IIF, Charles Dallara, believes that a comprehensive political union is the only solution to the euro crisis. Germany must give up its opposition to the pooling of debt and accept Euro-Bonds.

The markets will first be calmed down only when there is a comprehensive political union in Europe and the uncertainties about the future of the EU have been eliminated. This represents the view of the head of the International Banking Federation IIF, Charles Dallara, in an interview with Bloomberg

To the common future of Europe as a full political union belong, in Dallaras view, also Euro-Bonds, with which the debt can be amortised collectively. Dallara is of the opinion that Germany should give up its resistance and Euro-Bonds must be understood as an opportunity: with Euro-Bonds the European States would be motivated to save more and to conduct stricter fiscal policies.”

Dallara also believes that the ESM should be used to pump money directly into banks. His argument: in this case the national budget deficits would not increase, wheretrough the financing costs would not increase – and the taxpayers would not be burdened.

He considers the withdrawal of Greece as not affordable: the cost would exceed one trillion euros and the ECB would become insolvent due to the large debts that the Greeks have at the ECB. Therefore, the EU should send a further 10 billion euros to Greece. The austerity measures should be postponed for 12 to 24 months.”

So far this comment:

“A world turned upside down.

If the debt is to be spread over all Europe, then for countries like Italy, Spain and Greece there will be absolutely no need to change anything. The debt is to be carried mutually, which then means we all simply sink mutually.

The EU, including the Euro, is a Communist project.”

But, is anyone in Germany likely to notice. If this article is anything to go by, then not many, and their numbers are increasing.

“Hunting for customers: Publisher has developed a new illiteracy magazine for chavs:

Udo Ulfkotte

Germany was once the land of poets and thinkers. Meanwhile, around the world the Germans are known more as chavs. And because nowadays chavs are living en masse in Germany, a publishing company is now preparing a new magazine – only for chavs. You can look forward to Chav, Chav-wife and Baby-chav. A joke? No, not at all.

Approximately one in ten of the residents of the Federal Republic are now illiterates. The number of illiterates is growing in Germany almost faster than in any other country in the world. Some 3.5 million immigrants in Germany cannot read or write. Just one literacy course costs about 10,000 €. Even the worst pupils can count on the fingers of their hands that we have no money to teach reading and writing to illiterate masses. The children of illiterate people are also highly likely to be illiterate. The development is therefore foreseeable. We all wanted it, because it has happened neither overnight nor secretly. From the perspective of companies that must adapt to consumer groups, illiterates in Germany are certainly a large group of buyers for tomorrow.

There is also another development that firms must take into account in their market research: quite apart from the growing illiteracy in Germany, the number of chavs is also growing. This too did not happen overnight or in secret. After all, in the meantime even the public television stations direct their programming, during the best prime time slots, to the wishes and needs of chavs. Whoever needs to be convinced of that can zap through the channels every night. The “homo proletaris” should simply not be overwhelmed, intellectually. He begets children with constantly changing partners, because he sees it on television daily, but gets nothing else worthwhile done, except for the regular bus trip to the social security office. We now have millions of these chavs, who are already willingly stuffing their offspring with fruit yoghurts for kids and are particularly relevant from the perspective of advertising companies, because they are willing to buy any crap.

In our grossly consumerist world there is everything for chavs – except their own magazines. The chavs share that with the illiterates. Now, large magazine publishers are constantly looking for new groups of buyers. In development departments many new magazines are being secretly crafted, which must then first pass a marketing test before a few actually end up at the kiosk. A major magazine publisher has, a few months ago, detected illiterates and chavs as a new target group. An eight-member editorial team had four months to come up with a first issue for the CEO, one that will stimulate the illiterates as well as the growing underclass. Four editors are themselves illiterate, the others are what are commonly known as “chavs”. Not only the magazine publisher, but also an advertising agency, had an idea about which the publisher boss is increasingly enthusiastic. The first issue is scheduled to go into market research in twelve cities in June. Whereas almost all magazines have growing problems finding advertisers, the new magazine Chav has exactly the opposite problem – from what has been heard, firms are desperate to be able to advertise there.

The editorial content is – carefully formulated – something that needs getting used to. The publication consists almost entirely of photos, drawings and easy to follow stupid instructions. The cover story on “How I damage my enemy?” explains, in a hundred photos, how one can, for example, with cress seeds and a few drops of water permanently ruin carpets in the dwellings of others, how with with a small plastic piece you can cripple the sales turnover of a supermarket for hours and how, overnight, you can turn the neighbours green lawns into a desert. One may now be on edge about how illiterates and chavs will respond to the market test for this rather questionable, legally anyway, issue. The publisher is already dreaming of developing it into Chav-wife and Baby-chav. Only the name of the chavvy magazine is still not really fixed. Just imagine, a real chav would demand a copy of Baby-chav. How good it is to know that there are still intelligent people in Germany who like to read good books.”

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4

shaftedagain on May 26, 2012 at 10:52 pm

“The largest exposure is €110 billion to the European Union, including a €60 billion exposure to the European Financial Stabilisation Mechanism. A Member State’s guarantee of the European Union’s debts is joint and several, so if 26 Member States fail, the 27th pays everything”…..etc

http://www.brugesgroup.com/eu/the-uks-risks-and-exposure-to-the-eib-and-other-european-financial-mechanisms.htm?xp=paper

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5

shaftedagain on May 26, 2012 at 10:31 pm

“To the tune of 149 billion it seems”

That 149 billion is shared between the 27 member states, if one or more cannot repay their share, the remaining members have to pick up the tab – if 26 member states are bankrupt leaving the UK to pick up the entire tab, that would come to approx ~149 billion Euro’s – it was posted here in the last 2 days – report by the Bruges Group ? link to report is here within last 2 days

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6

kouros on May 26, 2012 at 9:25 pm

+5 % for Syriza and ”Sexy” Alexis Tsipras, right after that announcment!!

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7

aflatoxin on May 26, 2012 at 8:42 pm

sorry, 149 billion *Euros*, that is….
what exchange rate would be used after the collapse I wonder?

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8

aflatoxin on May 26, 2012 at 8:38 pm

@Criggion “We are not in the Euro, but we are in the Eurozone whether we like it or not and are up there without a paddle.”

Exactly.
“As one of two remaining large EU Member States with a AAA-rating the UK plays an important role in back-stopping the EU and the euro”. (Bruges Group)…

To the tune of 149 billion it seems.

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9

Criggion on May 26, 2012 at 8:23 pm

This from the Bruges Group re exposure of UK to ECB collapse:
‘The third area of exposure is to the European Central Bank. The UK – through the Bank of England – has a risk on paper of only €1.6 billion, but the ECB counts the bullion and currency reserves of the National Central Banks into its own reserves and it spins a very large wheel in its operations. Those operations, it appears, are executed by National Central Banks as the ECB’s agent, whereby any losses are taken by the ECB. Losses of over €10 billion would eliminate the ECB’s capital: the ECB reportedly owns €40 billion of Greek government bonds, so a haircut of any size would eliminate its capital and cause it to call upon its shareholders. As such the UK, as an EU Member State, may have to bailout the ECB which would imperil the UK’s AAA rating’.

There is no wonder that our politicians are not talking about UK exposure. We are not in the Euro, but we are in the Eurozone whether we like it or not and are up there without a paddle.

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10

Romford Dave on May 26, 2012 at 7:42 pm

Consistent reports highlighting the plight of regular Greek citizen under the rule of austerity must surely leave them asking how much worse could a default be?

If you’ve been reduced to F’all there’s not much left to lose by choosing to default, apart from getting them off your back once and for all plus younget to make a fresh start. Ok so you can’t import oil, so f*****g what, walk or use a bicycle just as you used to.

Lets see democracy in action – vote with your feet and when you get to the booths vote NO

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11

Blank on May 26, 2012 at 7:19 pm

There is no doubt whatsoever that they are all examples of the lowest form of human life.

Seeking only to remain aboard that gravy train at all costs to the taxpayers.

Load them up on a one way ticket to oblivion and allow everyone to be free of them…

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12

Bankrupt Taxpayer on May 26, 2012 at 7:19 pm

@JW: “One of the more amusing aspects of the 360-degree whoppers being told by all those in charge 24/7 is that the lies have to change depending on which folks they’re trying to frighten/fatsos they’re trying to save.”

Spot on. Watching them dance on pinheads is amusing.

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