The road to ruin is on plain display and the playbook is easily seen at this juncture. Let’s take a look at how things will unfold. Contrary to popular outrage of the solution being imposed in Cyprus, it is the correct one once the insured depositors were protected. In this situation the elites suffered first followed by the private sector depositors who foolishly believed false balance sheets which were Politically correct but practically incorrect fictions approved by the fiduciary (regulations and regulators allowed ongoing insolvent operations rather than protect the public by ending and prohibiting them) challenged governments (work for the banks and crony capitalists not for the public at large).
The pecking order of the losses was the correct one: Shareholders first, bondholder’s second and lastly uninsured depositors. Have we seen this anytime since the crisis began? It is clear that this is and what must be what’s done in the future. But for the countries in question to recover they must recover the ability to print and devalue their currency to competitiveness.
Ask Iceland and Greece how the different paths turn out? Iceland (wiped out bond holders, shareholders, prosecuted the banksters and devalued its currency and is in RECOVERY mode), versus Greece (where the Troika holds all the debt, refuses to take a haircut, the bank shareholders and current bondholders (TROIKA) are intact, is forcing INTERNAL devaluations (to get their new slaves in line) rather than external and is in a perpetual DEPRESSION).
Which country would you choose to be in? One is internally devaluing (Greece) and Iceland externally. In Greece the future is BLEAK, in Iceland freedom and a good future only requires hard work and REAL wealth creation for the public at large. Italy, Spain, Portugal, Cypress, Ireland are internally devaluing and firmly on the road to ruin. France is up next.
This is why the euro is DOOMED as internal devaluations destroy many generations of citizens and allow unelected technocrats to gather POWER over all. Whereas external devaluations provide the path to recovery. Beppo Grillo is a hero to those who want a future and their freedom from the debt slave masters in Brussels, the IMF, BIS and European central bank.
In a rare moment of candor the Head of the Eurogroup of finance ministers spoke the truth:
“If there is a risk in a bank, our first question should be: ‘Ok, what are you the bank going to do about that? What can you do to recapitalize yourself?’ If the bank can’t do it, then we’ll talk to the shareholders and the bondholders. We’ll ask them to contribute in recapitalizing the bank. And if necessary the uninsured deposit holders: ‘What can you do in order to save your own banks?’…”
“If a bank can’t recapitalize itself, then we will talk to the shareholders, bond holders and uninsured depositors.”
– Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers
Unfortunately the vast majority of banks in the Eurozone will CEASE to EXIST inside this TEMPLATE. This statement reflects reality and is practically correct but is politically incorrect. He quickly retreated to the standard of LYING after the proper amount of PRESSURE from Brussels was applied.
It is THE template and since the sovereigns in which these insolvent banks reside are ALSO insolvent themselves a belly button moment is at hand for the European central bank and the European commission in Brussels. CLOSE DOWN HALF of the banks (or more) within the Eurozone, stockholders, liquidate bomb…er…bond holders and confiscate the rest from uninsured depositors or get the printing press in HIGH GEAR!
There really is no alternative after this TRUTHFUL statement. Human behavior has been altered to the extent that bank runs in Italy have already begun in the weakest institutions. As they say: fool me once shame on you, fool me twice shame on me. The die is cast and buffoonery by the TROIKA will it gather speed and momentum.
The average bank asset to GDP ratio in Europe is approximately 375% of GDP.
Switzerland is not included but its bank asset to GDP ratio is over 700% and according to the ECB Luxembourg is 22 times GDP. If those assets are written down by 20% (those assets are worth FAR LESS) you are still looking at a CUMULATIVE $14 trillion dollar price tag MINIMUM. The number does not include European sovereign debt which is the elephant in the room as most WILL NEVER BE REPAID but sovereign governments let the banks hold it as RISK FREE.
“Most Europeans, even today, probably would be better off if over-indebted governments were allowed to default in accordance with the relevant bankruptcy precepts. But it can’t happen in societies so trained to look to politicians to overrule the laws of arithmetic and economics whenever those laws are inconvenient.”
– Holman Jenkins, wsj.com
The losses yet to be allocated or PRINTED AWAY by the TROIKA for the European banking systems is probably north of $30 trillion as the numbers above do not reflect off balance sheet and shadow banking activities. A lot of those bank assets are SOVEREIGN BOMBS…er…BONDS and are UNPAYABLE and inextinguishable although they are sitting on the BANK balance sheets as RISK FREE. HA, ha!
MONETARY monopolists who printed the MONEY out of THIN AIR and LENT IT OUT. The idea that these central bankers, sovereign governments and the IMF can’t take a loss is a FICTION! There is no loss when the money lent was created out of thin air!
By: Ty Andros / TraderView – Gold & Silver Backed, Absolute-Return Alternative Investment Specialists
7800 Southland Blvd. #110 Orlando, FL 32809
PH: 800.253.7689 // +1.407.855.4433
info@TraderView.com www.TraderView.com
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