Senator David Norris' address to Seanad Eireann (the Irish Senate)

In Sept. 2007, fourteen months before Ireland's bank bailout, I resigned from my position as the Risk Manager of UniCredit Bank Ireland. I did that in order not to incriminate myself. I have spent the last 4 years seeking justice. On Feb. 23rd., 2010, I was fortunate to have Senator David Norris raise the matter in Seanad Eireann (the Irish Senate), and request a response from the Minister of Finance, Mr. Brian Lenihan. Senator Norris concluded by stating that:
"...there is ministerial responsibility in this matter. This is a grossly serious matter which has been reported to the Financial Regulator. A man has lost his job as a result. He honourably resigned. The degree of breach was 40 times the accepted margin. This is a disaster. If we are not prepared to face the issue and investigate it when it has been laid before the House, there is absolutely no hope for the financial system or its reputation worldwide...How can the Financial Regulator investigate himself? He was in breach of his responsibility."
In Nov. 2011, Emma Alberici, Europe correspondent for ABC TV, told my story as part of her documentary 'Going Rogue' which featured Nick Leeson and Sir John Vickers among other interviewees. It is ironic that at a time when the Irish tax-payer is bailing out un-secured bond holders, my story which occurred in Dublin, is deemed of interest to the Australian TV license payer. Please click on 'play video' on the following link:
VRT, Belgian state-TV, aired this interview with me on March 6th., 2013. My Interview begins in minute 27:
Het verdriet van Europa: Zeepbellen blazen (The sadness of Europe: Bursting bubbles)
VRT, Belgian state-TV, released extra footage of my interview on March 8th., 2013. (in English):

Friday, 12 August 2011

A week in August - the 'March of Folly' continues

When looking back at the headlines of the last week, I can not help but wonder what Barbara Tuchman were to write if she were still alive. Her book The March of Folly dealt with:

"...the pervasive presence of folly in governments through the ages. Defining folly as the pursuit by governments of policies contrary to their own interersts, despite the availability of feasible alternatives, Tuchman details four decisive turning points in history that illustrate the very heights of folly in government: the Trojan War, the breakup of the Holy See provoked by the Renaissance Popes, the loss of the American colonies by Britain's George III, and the United States' persistent folly in Vietnam. "

What have we learned? very very little by looks of it. In Britain, land of the Magna Carta, we have a government threatening to call in its military forces to deal with civil unrest. In the US we have a president who has allowed corporate banking corruption to go unpunished declaring 'war' on rating agencies. Apparently, their methods did not irk him until now. A London thug will face prosecution for looting a flat-screen television. Sir Fred (the Shred) Goodwin goes unpunished for the biggest banking collapse in British history; but he is not a thug, he is Knight of the British empire. How many people will be held accountable at the Financial Services Authority (FSA) for 'supervising' RBS' monumental collapse into the lap of the tax-payers?!? How many employees at the Federal Reserve and the Securities & Exchange Commission will be held accountable for failing to spot the imminent collapse of Lehman Brothers & Merrill Lynch?

In an era of comfortable relationships between bankers and politicians, the wholesale criminals do not go to court. They go golfing.

Peter Oborne of The Telegraph wrote yesterday:

The moral decay of our society is as bad at the top as the bottom

David Cameron, Ed Miliband and the entire British political class came together yesterday to denounce the rioters. They were of course right to say that the actions of these looters, arsonists and muggers were abhorrent and criminal, and that the police should be given more support.
But there was also something very phony and hypocritical about all the shock and outrage expressed in parliament. MPs spoke about the week’s dreadful events as if they were nothing to do with them.
I cannot accept that this is the case. Indeed, I believe that the criminality in our streets cannot be dissociated from the moral disintegration in the highest ranks of modern British society. The last two decades have seen a terrifying decline in standards among the British governing elite. It has become acceptable for our politicians to lie and to cheat. An almost universal culture of selfishness and greed has grown up.
...These double standards from Downing Street are symptomatic of widespread double standards at the very top of our society. It should be stressed that most people (including, I know, Telegraph readers) continue to believe in honesty, decency, hard work, and putting back into society at least as much as they take out.
But there are those who do not. Certainly, the so-called feral youth seem oblivious to decency and morality. But so are the venal rich and powerful – too many of our bankers, footballers, wealthy businessmen and politicians.

The folly continues. Merkel and Sarkozy are due to meet on Tuesday for another round of discussions about the Euro crisis. Undoubtedly, this umpteenth act in this play will end with the usual declarations about how they 'have it under control' and that there is 'nothing to worry about'. Soon enough it will be followed with another declaration by Ollie Rehn, of the European Commission that 'Markets did not react as we expected' and rendez-vous umpteen-plus- one will take place in Berlin/Paris/Brussels.
Last weekend we had the dubious pleasure of seeing America fight for its AAA rating; this weekend La France is providing that spectacle - 

PARIS | Fri Aug 12, 2011 2:40pm BST
(Reuters) - It was the week the euro zone debt crisis reached France, one of the twin pillars of the European currency alongside Germany.
As jitters over Paris' prized top-notch AAA credit rating took hold, President Nicolas Sarkozy returned from the beach to order up new austerity measures. Then panic selling of French bank shares and an abrupt halt to economic growth added to France's plight.
The sight of the euro zone's number two economy buffeted by rumors and investor anxiety in the midst of the holiday season raised existential questions about European monetary union that will confront Sarkozy and German Chancellor Angela Merkel when they meet in Paris next Tuesday.

Switzerland, that naturally fortified independent nation state in the heart of Europe, might also discover soon enough that Geography, like Death, can not be cheated:
NEW YORK, Aug 11 (Reuters) - The dollar and euro jumped 6 percent against the Swiss franc on Thursday after falling to record lows this week, as the Swiss National Bank said it could peg the franc to the euro to rein in a soaring currency.
SNB Vice Chairman Thomas Jordan, when asked about temporarily pegging the franc said the bank was open to exchange rate measures consistent with long-term price stability. 

It would seem that the proud descendants of the Helvetic Republic are about to have their monetary independence relinquished courtesy of their central bank by a simple act of 'pegging'. What makes this even more scary is that the 'pegging' is to the Euro - a currency fighting for survival. The Euro patient is now depending on a German Chancellor hoping to stave off having to tell her populace the truth about the rot that is German banking and a French President realising that his country's economic future depends on the opinions of rating agencies in New-York.
As always, Golem XIV has provided wonderful insights into the reality behind the headlines:

The Swiss will decide how long this rally lasts

This headline in MarketWatch this afternoon has got to be one of the most fatuous in financial history.
NEW YORK (MarketWatch) — U.S. stocks soared on Thursday after a surprising fall in jobless claims curbed worries about the economy.
I'm really supposed to believe that because the US  jobless claims decreased by a whole 7000, in a nation where 43 million are on food stamps, that this was the cause of the Dow regaining 293 points?  I cannot bring myself to believe this piffle...

Bank losses and Fire sales confirmed and spreading.

Quick update - (Thursday)

Banco Pupular, Spain's third largest banking group, has just announced that it will sell "non-strategic assets".

In Italy All three of Italy's big banks (UniCredit, Intesa and Banca dei Monte Pasci) have had their stocks stopped yet again this morning.

While in France Soc Gen which already fell 15% on Wednesday is down another 4.24% this morning and PNB Paribas is down 4.18% at time of writing noon GMT.

Fire Sale of Bank Assets beginning?

Earlier today in "Bank Blood Letting" I wrote,
Bank of America has lost lost $33 billion of its market value in a single week. Unless these losses are magically erased by spectacular gains, and soon, we will see forced selling of assets as banks try to raise capital.
A few hours later this from Reuters,
HONG KONG/DUBAI, Aug 10 (Reuters) - Bank of America Corp (BAC.N) has held exploratory talks with the principal investment funds of Kuwait and Qatar about selling part of its stake in China Construction Bank (0939.HK), sources with direct knowledge of the talks told Reuters.
Bank of America, which owns about 10 percent of CCB's (601939.SS) Hong Kong-listed shares and is scurrying to raise capital for its mortgage-scarred balance sheet, will be contractually free to sell the bank shares after Aug. 29. They are valued at about $17 billion
The same article goes on to say that estimates are that BoA will need $50 billion to shore up its Tier One capital.

As ZeroHedge notes,
There are several problems with this approach: first, the petrodollar sovereign wealth funds just lost over 20% of their AUM courtesy of the global equity rout and of the plunge in oil by more than 20% in less than 2 weeks;
Quite. I would say we are seeing the beginnings of a fire sale.  And the thing about fires, is they spread....

Bank blood letting.

RBS has lost a quater of its share value in the last two weeks. Not far off 10% in the last two days. The British tax payer has so far lost 50% of the money, our taxes, that the government invested in it.

Commerzbank in Germany just announced a 93% drop in profts due to 'impairments' on exposure to Greece.  Can't wait to see what 'impairments' they declare in a couple of months time due to exposure to Italy and Spain.

Intesa Sanpaolo in Italy is down 11.74% on the day on massive trade volume. A share of Intesa is now worth 1.16 euros which is lower than in October 09.

UniCredit in Italy is down 8.81% on the day, trading now at less than 1 euro.

In France:

Credit Agricole        - 14.12%
Societe Generale      - 13.82%
PNB Paribas            - 10.42%

In America:

Bank of America has lost lost $33 billion of its market value in a single week.  Unless these losses are magically erased by spectacular gains, and soon, we will see forced selling of assets as banks try to raise capital.

Happy Summer Holidays everyone.