mardi, 21 août 2018

As a "path of facility", European banking Union is unnecessary. Looks like the cart-before-the-horse.

Eurozone Banking Union lacks conviction and may even be a dangerous slope. Brace for the Apocalypse or Stand up with German economists.

Following the great news of the 170 German economists that have signed a petition calling German citizens to stand up against the announced european banking union project, we are proud of them, for this will be the first time a civilian group of right impartial experts - not Brussels corrupted Technocrats - are making their voice heard. In fact, this German’s voice is a sample of the mainstreet people in Europe. That’s why it should be given a serious response to match the level of the alert.

Chancelor Merkel rebounded upon the issue stating that it was not the way forward for a common insurance of sovereigns deficits and debts. It is the ESM reason of existence, she said. Precisely, being funded with eurozone’s countries money, the ESM mechanism already embodies a phisolophy of a debt mutualisation pot. If so - and it is a mistake right now - where is the necessity for another banking union structure ?

You don’t need to be a keen economist to see that, growth pack defenders are just looking for more and more guarantees as backstopers for their chronical inabilities to pay back their debts right on time which in return translates into higher costs of borrowing ; just as Greek’s new governement is asking for a two years delay to fulfill the commitments taken by its previous leaders knowing in advance, they won’t keep their words.

If eurozone members are willing to keep their indebted level on a sustainable path, fiscal disciplinary is the only viable option. We are afraid that having singled out the cause, the prescription would inoculate another illness to the sick common currency body.

Accepting a banking union bears a highly risk taken and will end up in Germany taxpayers hands essentially, to keep the whole european banking union working. It is not fair. Germany citizens should fight back the vicious proposal.

Time for change has come for Eurozone. No more talks and wishful thinking but acts and real thoughts.

First step, eurozone must stick to its starting principles. Back to the beginning then. No bank should be labelled "too big to fail". The eurozone was built up over two feet : one pillar was banks lending money to states and the other one was fiscal disciplinary : 3% deficit over the GDP. Has this been respected, the eurozone should not be in crisis. Before jumping into another rush ahead void, eurozone countries should be wise to recall the original project that was viable, despite of some building defaults. Nothing is perfect.

Second step. "Too big to fail" is a mistake and irresponsible politics. Banks allowing corrupted loans and junk credits should be taken accountable for and let on their own in cleaning the mess they contributed themselves to create. If not, let them disappear, for the sake of the World Economy. After all, once a firm go bankrupt, it is out from the market.

Serious Banks, rating agencies and countries can deal properly and responsibly with the eurozone debt. This implies honesty first, control and oversight. Not another insurance : ESM or union banking that are redundant. Now, just think the ECB is also playing another insurance role for countries unable and unwilling to engage "structural reforms" to drive growth from within.

ESM and ECB are already backing the eurobonds to come. They have paved the way forward for that. Simply, they are not telling it out. As if this was not a big trouble per se, a banking union coming as the third floor of the insurance building for unpaid debts is provocative. We quote Mrs Merkel ; this is "the path of facility". May be we should complete the sentence, in accordance with the 170 Germany economists by "the path for disaster".

Not because some Southern european countries have failed - as usual - to do what they were supposed to, should we consider this a sufficient reason to reshape the whole system eventually transforming it into an unmanageable Monster destined to desintegration sooner or later. The Monster would resist and cross many phases, but desintegration is looming and with the time passing, it seems end of the road is the more certain horizon. So far a breakup is not ruled out, despite of the vibriant declarations. In which form the breakage would come, this is the only suspense.

Chancelor Merkel should have stood firm on the principles instead of giving in to external calls and pression.

Once you derailed from the principles, you are lost and blind. Principles are the best guidelines ever. Eurozone should stick on them first and foremost. Some had argued in the past, those principles were ill-designed. A corrective treaty was drawn to adjust to those principles. Unfortunately, those adjustments earned the unfair label of "Austerity measures". It never was the case but how some false rumors gain strenght and popularity remains a secret of false propaganda makers and professional gamblers.

« A Single deposit insurance fund » ; the IMF and the G20 leaders and Obama common advice.

It is wise acknowledging that European history and American Union building are not comparable. What has proved profitable for Germany and American federal unions may not fit for the eurozone. « One size fits all » is not operative here. By the way, Union has never meant Uniformity.

Neverthless, we recall the IMF insisting on "Further integration at the European level" in Brussels, on May, 31, 2012.

Quote « To complement reforms at the national level, EU governments will have to take further steps to integrate their economies. Though Europe has a single market for products, the single market for financial services is lagging. this is in stark contrast to other currency areas. Decisive steps toward more complete financial integration would complement the growth agenda and weaken the adverse bank and sovereign feedback loop.

Such steps would involve providing banking support from a common resource pool independent from national sources, sooner rather than later. To insure that banks which receive pan-European support are properly restructured ans supervised, these banks could over time be made subject to centralized regulation and supervision, through a joint bank resolution authority with a comon backstop and a single deposit insurance fund » (IMF speaker.

« A more integrated financial architecture » (Barack Obama)

At Press Conference After G20 Summit on the 20th June, President Obama reset the general frame « G20 leaders all supported Europe working in partnership with the next Greek governement to ensure that they remain on a path to reform and substainability within the eurozone. Another positive step forward was the eurozone’s commitment to work on a more integrated financial architecture - including banking supervision, resolution and recaptilization, as well as deposit insurance. Also, in the coming days Spain will lay out the details of its financial support request for its banks restructuring agency, providing clarity to reassure markets on the form and the amount and the structure of support to be approved at the earliest time. »

What lies precisely inside the « A Single deposit insurance fund » (IMF version) or in « a more integrated financial architecture » (Obama version) is to be told through democratic proceedings. Are we talking about a new structure (architecture) a frame or only of a process, a rule of law ? This is the first question. The second is, whatever we’re talking about, the necessity of this is still questionable.

Democracy in Europe, the missing link.

So, this is time for Democracy.

Again, we quote the IMF’s May speaker : "For governments, explaining the rationale of reforms to the public is now more important than ever. Losing public suport now, at this critical juncture, risks negating the efforts of the past two years, and will set Europe back".

This is already the case. Since May 31st, no public communication with the public has taken place in France for example. News are coming from the press side ; no comments from the mute new French leaders. I guess it is the same in Germany, Italy, Spain, Greece at least, as we haven’t got any echo of such a communication.

Nemat Shafik, Deputy Managing Director for the IMF ended her Brussels Speech on May 31, 2012 quoting an European Statesman, Jean Monnet : "People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them. It is time to accept necessity, and to step boldly forward to complete the reform agenda that will restore Europe’s growth and enable its future".

"People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them". In an ideal world, yes. But we are not leaving in such a world. People are convinced this crisis is a self made technocratic level one playing devilish games with Wall street and the City’s financial immoral gurus and tax evasion mongols specialists the Mitt Romney Bain like shoring big money off in some hidden places free from fiscal duties.

In fact it looks like the eurozone is putting the cart - of reforming the global financial sector worldwide and repairing it properly upside down - before the horse. To say it another way, as long as the financial system is not washed away properly and regulated worldwide, eurozone and even the World are likely to feel the heat of the financial crisis burden in the long run until they decided to be true to themselves.

Until then and with great respect to the IMF, President Obama and the G20 leaders Mexico (Los cabos) last summit, brace for the Apocalypse or Stand up with German economists who are warning the "common insurance deposit for eurozone banks creditors" would benefit to big financial market places at the expense of "German taxpayers".

Why German taxpayers only ? Right now, Germany is accused of not playing solidarity inside the zone. The bad eurozone scholars propaganda have succeeded their fingers pointing accusation towards those rich German people refusing to help other members financially. What those accusers failed to say is Germany has endured the hard way those 20 latest years of reunification and that what they are enjoying today is the accomplishment of the sacrifices made yesterday. The same sacrifices and fiscal discipline the accusers such as France, Italy, Spain, Portugal, and Greece have been reluctant to.

So who is the crook here ? It looks like eurozone members are having a serious democratic problem there.

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