Jonathan Sugarman - A UniCredit Banker Speaks Out

In response to e-mails received, a reminder of the article in Village magazine:

2011-11-07T12:53:00.000-08:00

Still waiting for the truth from the regulator

- Village, Dec. 2010

UniCredit breached liquidity requirements in 2007. Matthew Elderfield nods. The interconnectedness of banking dysfunctionality.

Michael Smith

There is a general official view that Ireland’s ethical delinquencies are in the past. Corrupt planning stopped when the tribunals started; and bad bank-regulation stopped with the demise of Pat Neary and the production of two limited and innocuous reports by Patrick Honohan and Klaus Regling. Inconveniently for a country that has started to see regulation in black (then) and white (now) terms, the general view does not reflect the reality. Hold tight for a mind-boggling trip through the complexity of banking dysfunctionality....

http://www.villagemagazine.ie/index.php/2010/12/still-waiting-for-the-truth-from-the-regulator/

Matthew Elderfield - the Financial Regulator

whistleblower.irl@gmail.com

Senator David Norris attempts to talk about the Anglo-Irish bondholders in the Seanad (Irish Senate)

2011-10-23T11:43:00.000-07:00

In response to queries that I have received over the last few days, I am happy to provide the links below to the protocols of the Irish senate in which Senator David Norris tried desperately to name the Anglo-Irish bond holders. One has to wonder why he was the only one who attempted to do so? Why was he really silenced?

whistleblower.irl@gmail.com

=============================================================

Seanad Eireann Debate
Vol. 205 No. 17,
25 November 2010

Senator David Norris: Senator Quinn has given me my lead in with his reference to the four-year plan. I propose to speak about a particular form of energy about which I have spoken in this House previously. Members may recall that I defined “money” as “the symbolic representation of energy”. This may or may not be a renewable source in this country but it certainly will not be unless we take a very specific form of action. I am speaking about bondholders. This is renewable energy; this is money, and this is where it is at. I have managed to get a list of the bondholders and propose to place it on the record of the House. It is perfectly in order for me to do so. I have so defined it and will not be stopped.

An Cathaoirleach: We are dealing with renewable energy.

Senator David Norris: I know exactly what we are dealing with and I am speaking to it.

An Cathaoirleach: We are not getting involved in name——

Senator David Norris: I am talking about renewable energy and have made it perfectly clear, logically and intellectually, how I am doing it.

[1022]An Cathaoirleach: I want no names of people the Senator says are bondholders——

Senator David Norris: I am giving the institutions. I am perfectly entitled to name them. We have mentioned repeatedly Bank of Ireland and so on. It is frustrating the democratic wish of this House if the people concerned are not named.

An Cathaoirleach: We are not dealing with banking; we are dealing with renewable energy.

Senator David Norris: I am dealing with it because I have given a definition of “money” as including renewable energy.

An Cathaoirleach: The business ordered is renewable energy.

Senator David Norris: The business was ordered and I am speaking to it. The names are Aberdeen Asset Management (London) Limited, AGICAM, Aktia Asset Management, Aletti Gestielle SGR, AllianceBernstein (UK) Limited, Allianz Global Investors France, AmpegaGerling Investment, Anima SGR——

An Cathaoirleach: The Senator is totally out of order. I ask him not to get involved in that aspect. We are taking statements on renewable energy potential.

Senator David Norris: I am speaking very directly and clearly about renewable energy.

An Cathaoirleach: No——

Senator David Norris: I most certainly am.

An Cathaoirleach: That is not relevant.

Senator David Norris: It is very relevant.

An Cathaoirleach: No, it is not.

Senator David Norris: It is the most relevant issue in this country.

An Cathaoirleach: It may be to a different debate.

Senator David Norris: I will outline how relevant it is. Mr. Mohammed El-Erian, director of Pimco, which has $1.35 trillion in assets on its books and advises bondholders, said if——

An Cathaoirleach: We are sticking to the debate. There may be another forum to discuss that matter.

Senator David Norris: I do not accept the Chair’s ruling because I have indicated that I am talking about renewable energy. I have given a definition of “money” as including renewable energy. I have defined my terms clearly. The Chair is trying to frustrate me. He is trying to protect the Government and I think that is wrong.

An Cathaoirleach: I am not trying to frustrate the Senator and will not allow him to continue in this vein.

Senator David Norris: For what reason?

An Cathaoirleach: It is not relevant to the debate. The business was ordered.

[1023]Senator David Norris: It is completely relevant. We are talking about energy. I am talking about the most vital form of energy for this country and calling on the Minister to ensure the Government makes it very clear that the bondholders will be included and that they will be forced to accept their share in terms of assets. It is perfectly legitimate for me to do this.

An Cathaoirleach: We are not going down that road. I expect the Senator to respect the Chair. As a long-standing Member of the House——

Senator David Norris: One Swiss bondholder owns 40% of the bonds and will get millions of euro from us.

An Cathaoirleach: I am suspending the sitting for five minutes.

Sitting suspended at 1.40 p.m. and resumed at 1.45 p.m.

An Cathaoirleach: Senator Norris has five minutes left.

Senator David Norris: I thank the Cathaoirleach. I would like to make it clear that I did not mean any disrespect to this House, the Cathaoirleach or the Minister. I believed I was pursuing a perfectly logical course of action. The Chair has restricted me on this and, therefore, I will not pursue the matter at this stage. I was at that stage the last speaker and was not keeping anyone else out. I will continue my research in this area and will seek another opportunity when I will ventilate this matter fully because it is in the interests of the people, but I am happy now to yield to my colleague who I now understand wishes to speak.

http://debates.oireachtas.ie/seanad/2010/11/25/00005.asp

===============================================================

Seanad Éireann Debate
Vol. 206 No. 4
7 December 2010

Senator David Norris: With regard to the bank guarantee, I share my colleagues’ concern. I voted against the guarantee. I also asked several pertinent questions. I asked about the exact amount of the guarantee, which was some €440 billion. Then I asked the Minister and his advisers our gross national product for the previous year. They did not know and had to go out and make a telephone call. Is that not extraordinary? When they came back, it turned out that our gross national product for that year was less than half what we were to guarantee. It was quite extraordinary and one of the principal reasons I voted against it. I am concerned that, not only in this Parliament but across Europe, politicians are playing their own narrow sectional, national and partisan games. There is no doubt the German Chancellor, Angela Merkel, is making a mistake when she sets her face against the development of euro bonds. This is the weapon about which I was talking last week that might help to rescue the situation and she opposes it for perfectly sound national electoral reasons. If the euro is to survive, there is an inevitability that centrifugal forces will drive it towards such centralisation. If it does not, the euro will fracture.

I believe we are entitled to know various matters about the bank guarantee. Recently I tried to put some bondholders’ names on the record but the Cathaoirleach stopped me. I will now try to do so again and, subsequently, will be looking for the Cathaoirleach to explain why he stopped me. Will the Leader confirm that one of the bondholders is Goldman Sachs? This company has been described as a vampire squid on the face of the public purse and we are entitled to know if it is one of the bondholders. Money has been taken from the people referred to by Senator MacSharry who have had to switch off their electricity supply and live in squalor, fear and the cold to pay these big financial institutions which have gambled. It is wrong, unethical and unjust. We need to know to whom we are giving the money.

http://debates.oireachtas.ie/seanad/2010/12/07/00004.asp

==================================================================

Two other articles that have been hotly discussed in the last few days are:

Who bankrupted Ireland? - Golem XIV, Nov. 2010

Now across Europe the great blame game will rumble back into play. Our banks, your banks, their banks, or is it your feckless householders or ours, certainly can’t be theirs, they’re still doing well in Germany. Expect lots more national stereotypes to be wheeled out for ritual defamation.

So let’s ask who it was took a dump in Ireland?.....

http://www.golemxiv.co.uk/2010/11/who-bankrupted-ireland/

As Honohan’s report emerges, the Dáil is gagged - Vincent Browne

Sunday Business Post, 6 June 2010

Central Bank governor Patrick Honohan’s report on the financial collapse of the banking sector was presented to Minister for Finance Brian Lenihan last Monday.

Lenihan read it then, and told his cabinet colleagues about it on Tuesday. The report is to be considered this Tuesday by the cabinet - or at least by those cabinet ministers who have decided not to go off on an unearned holiday.

When the cabinet ministers who are around have decided how to ‘‘spin’’ the report, it will be published - but only then.

.......

...the forum (ie, the Dáil) which, theoretically, is expected to enforce accountability on the executive arm of government has been bullied by the executive arm of government into remaining entirely silent on one of the most pressing issues of our time, precisely when a report on the government’s culpability for the crisis comes into the public domain.

And the sovereign people are denied knowledge of the report until the government has its spin sorted out. This is called democracy, I think.

http://www.sbpost.ie/commentandanalysis/as-honohans-report-emerges-the-dail-is-gagged-49654.html

Some news from across the pond:

2011-08-18T14:28:00.000-07:00

Is the SEC Covering Up Wall Street Crimes? - Rolling Stone magazine
"A whistle-blower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation's worst financial criminals."
http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817

I suppose there is some hope in the fact that US authorities have the stamina and courage to investigate such allegations against the august Secuirites & Exchange Commission. The article sates that "As a federally protected whistle-blower, Flynn is not permitted to speak to the press." This is quite different to my own situation where I am threatened by the Central Bank of Ireland with criminal proceedings if I proceed to inform them of what they allegedly do not know.

WhistleblowerIRL
UniCredit Bank Ireland's EX Risk Manager

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

2011-08-12T11:44:00.000-07:00

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. "

http://books.google.com/books/about/The_march_of_folly.html?id=v5YlBtzklvQC

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.

http://blogs.telegraph.co.uk/news/peteroborne/100100708/the-moral-decay-of-our-society-is-as-bad-at-the-top-as-the-bottom/

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.

http://uk.reuters.com/article/2011/08/12/us-crisis-france-idUKTRE77B2YJ20110812

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.

http://www.reuters.com/article/2011/08/11/markets-forex-idUSN1E77A1DG20110811

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...

http://golemxiv-credo.blogspot.com/2011/08/swiss-will-decide-how-long-this-rally.html

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.

http://golemxiv-credo.blogspot.com/2011/08/bank-losses-and-fire-sales-confirmed.html

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....

http://golemxiv-credo.blogspot.com/2011/08/fire-sale-of-bank-assets-beginning.html

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.

http://golemxiv-credo.blogspot.com/2011/08/bank-blood-letting.html

Happy Summer Holidays everyone.

Zerohedge.com / UK Daily Mail - SocGen, Unicredit On "Brink Of Disaster"?

2011-08-08T00:54:00.000-07:00

Submitted on Zerohedge.com by Tyler Durden on 08/08/2011 02:57 -0400

Over the past 48 hours we had heard pervasive rumors that at least one, maybe more, banks in Europe are on the verge of collapse. Our thought was, naturally, Dexia, which is the modern equivalent of AIG, not to mention the bank most rescued by none other than the Federal Reserve. Well, we were wrong. And if the Daily Mail is correct, the two banks about to kick the bucket are French SocGen and Italy's UniCredit. While the fact that these two banks are in trouble has not been lost on the market, which has been sending their CDS to near record highs, the speculation that they are far closer to implosion likely means that the equity value of the European banking sector is about to be decimated. As the News reports: "The merest hint a major bank might fall is likely to reignite panic tomorrow in the stock market, which is already feared to react badly to the credit downgrade of the U.S. by rating agency Standard & Poor’s." Well, it's now tomorrow.

Europe Crisis Deepens - Golem XIV

2011-08-08T00:00:00.000-07:00

The show does indeed go on. Our dear leaders in Europe & the US are determined to keep us on the road to destruction. After all, they can hardly start telling the truth now; where would they start?!?

This is Golem XIV's posting this morning:

Europe Crisis Deepens

According to Bloomberg, The Euribor, the European equivalent of the Libor (remember that from 2008?) is locking up as banks decline to lend to each other. Those European banks that do have money are putting it in the ECB overnight in preference to lending it to the European banks that desperately need it - such as Santander in Spain and all the Italian Banks led by UniCredit.

Once the Euroibor starts to freeze that is the signal for non-European banks to stop lending to European banks altogether. Why should they trust European banks if fellow Europeans don't. Banks have to have overnight funding or they die.

I think we are now closer to the edge of then cliff than we have been at any time since AIG and Lehman's collapsed. Without short term and overnight funding Europe's banks will die within the week, so the ECB will now certainly step up its overnight lending to any and all not as a matter of prudent banking but of political panic. That however will be merely the response to the weekend's Euribor freeze. I say response because it is not a solution. The banks can't stay addicted to ECB methadone. The amounts would simply run out of control.

But even before the Euribor crisis happened there was already a larger the problem which had, along with the US downgrade, caused a great part of last weeks massive sell-off and panic in Europe. Namely that the EFSF cannot, unless it is vastly increased - some are saying 2 trillion euros would be the sort of figure - bail out Italy and Spain.

As I wrote in Fanfare of Failure the EFSF doesn't have enough money or credibility to be seen as a credible back stop for Italy or Spain. Particularly because when it was set up just last year, as the bail out fund that would save Europe's banks, Spain and Italy were two of its larger backers. Now they are no longer backers but desperate customers.

Once Spain and Italy ceased to be backers and turned to insolvent customers the EFSF is over as an effective force. The only solvent backers it now has of any size are France and Germany. And lots of people are just waiting for France to suffer a downgrade similar to America's. Which leaves Germany holding the entire bill. That won't fly on the markets and certainly won't in Germany. So the EFSF is over unless Merkel and Germany can be blackmailed. I don't think that is going to happen.

What this means is the the ECB will have to start buying massive amounts of Italian and Spanish bonds - the bonds those countries now cannot sell on the open markets. And that is what we rumoured on Friday and led to a modest claw back of 50 points on the Dow. Reports now are that the ECB is going to buy significant amounts. The ECB is talking of 'dysfunctional markets' is an all too familiar replay of 08-09. Nothing has changed. Same debts being hidden, same banks being saved, saved calls for more austerity cuts. From MarketWatch,

Frank Engels, head of asset allocation strategy at Barclays Capital, said in a conference call Sunday that an announcement of further fiscal austerity by Italy and Spain and possibly France is needed to stabilize investor sentiment with regards to Europe.

My question is how will the ECB now step up its buying and keep it rolling forwards so that in effect ceases to be short term loans and liquidity and become a stand in for the failed EFSF for long term transfer of private bank debts to the public (ECB) vault?

You see the ECB is not tied to any particular nation, nor Treasury nor tax base. The ECB works by governments or more recently banks (who do it through their nation's central bank) depositing 'assets' in the ECB against which the ECB issues Euros. The idea is that the ECB issues Euros but always against high quality assets. By regulating how much is on deposit, it controls how much euro cash is out there. And since it was all supposed to be short term (essentially Repo arrangements - Repurchase agreements where assets are 'bought' by the bank under agreement to resell at a fixed later date and price) it is not a bail out because the assets are going to be re-purchased by the bank which originally deposited them.

That's how it was. But it's easy to see that all you have to do is keep rolling over one repo to a new one and those 'assets' can remain in the ECB and the bank or nation that put them there can keep a permanent bail out.

That is what I suspect is now going to vastly expand. The ECB will say any expansion will be only temporary while the markets are 'dysfunctional'. But that will be a knowing lie because the markets aren't dysfunctional, they are reacting to the fear that Europe's banks can no longer rely on nations to hide and pay off their losses for them.

One interesting detail before I go. The UK is not a backer of the EFSF. A fact the UK government has made much of in the sense of saying how Europe must solve its own problems and the UK will not have to pay. BUT, the UK IS a backer of the ECB. Here are the three largest plus GB.

Bank % Capital Paid up Capital

Deutsche Bundesbank 18.94 1,406,533,694.10

Banque de France 14.22 1,056,253,899.48

Banca d'Italia 12.50 928,162,354.81

Bank of England 14.52 58,580,453.65

The BoE figures look wrong. The BoE 'owns', has as large a percentage of investment in the ECB as France. Almost as large as Germany. But the actual amount seems far too small. That is because Non-EU members, like the Uk don't have to actually pay up theirn full amount.

BUT... I wonder if as part of an emergency measure the BoE would be asked to step up along side the Bundesbank and the Bank of France (especially if France faces growing rumour of its own downgrade) and pay up its full amount?

If it did - and this is 100% speculation - what assets would it put up?

You see to expand its 'lending' to Italy and its banks, the ECB must get large new deposits of assets in to its vaults to back the Euros's it lends out. But what sort of worthless junk can Italy or Spain offer. Their own debt is in trouble and the debt of their private banks is the problem in the first place. Of course the ECB will accept their junk as it has already been doing for months from Greece and Portugal already. But the more it does the more it endangers its own credibility. At some point the ECB will need some real collateral. If all it can do is turn to Germany and Franc then has the same sort of problem as the EFSF.

I wonder if the BoE would be asked to dip in to the immense pile of hundreds of billions on US debt that the BoE has been buying up over the last two years.

The BoE has had all those hunderds of billions of US debt/bonds on its books as AAA rated assets. Could the ECB use them for a while? You can see where I'm going with this. Once again, but now on the ultimate scale, we would have one lender of last hope (the ECB) using the IOU's of another Lender of last hope (the US) to prop up its solvency.

We are once again close to the edge and the crime of it is that the problems we have now are the same as we had three years ago only now made bigger and more painful by having had three years of yet more debt creation and transfer of public money to pay off private debts.

http://golemxiv-credo.blogspot.com/2011/08/europe-crisis-deepens.html

Freedom of Speech in Ireland?!?

2011-08-04T00:41:00.000-07:00

In response to a blog posting on Bocktherobber titled 'David Norris and the Troll', a comment was made which I would like to respond to.

Here is a link to the Bocktherobber piece:

http://bocktherobber.com/2011/08/david-norris-and-the-troll

Here is the comment:

____________________________________________________________________________

29. ObsessiveMathsFreak August 2nd, 2011 2:24 pm

Here’s a prime example of the kind of unfollowed scandal I mentioned in my previous post.

http://whistleblowerirl.blogspot.com/

This story may as well not exist as far as the Irish Media are concerned.

http://bocktherobber.com/2011/08/david-norris-and-the-troll#comment-124376

____________________________________________________________________________

My response:

The Irish Times decided for reasons only known to itself not to make any reference to the fact that David Norris had raised my issue in the Seanad (Irish senate) two months earlier. The fact of the matter is that the Time's interest in my story came on foot of the debate in the Seanad; why did they neglect to mention this in the article? I have some ideas, but I shall keep them to myself.

http://www.irishtimes.com/newspaper/weekend/2010/0403/1224267604942.html

The so called 'Irish Independent' is part of the INM group. INM and UniCredit Ireland have had a very comfortable relationship at board-room levels. Hence every approach that was made to me by journalists from the INM group of papers (The Irish Independent, Sunday Independent, Evening Herald, Sunday World and The Star) soon fell very silent. So while Kevin Myers was justifiably calling clearly and loudly for board-room level accountability in Ireland, he probably did not realise that this applied to his home turf, just as it did to the Central Bank, Anglo-Irish, AIB etc'.

The lone voices reporting on my story have been Kathleen Barrington in the Sunday Business Post and Michael Smith who dedicated the cover story of last December's Village magazine to my story. Michael Smith had to delay printing of the magazine on account of telephone threats made to his office by one of Dublin's leading law firms. Obviously, the threats were made on behalf of the firm's client - UniCredit Bank Ireland.

Here are some examples:

http://www.villagemagazine.ie/index.php/2010/12/still-waiting-for-the-truth-from-the-regulator/

http://www.thepost.ie/themarket/new-probe-into-liquidity-breaches-53862.html

http://www.thepost.ie/story/text/ojmhcwkfql/

http://kathleenbarrington.blogspot.com/2010/05/norris-raises-red-flag-at-ifsc.html

One does wonder why it is that a debate in the Austrian parliament about my story and its relevance to the meltdown of the Irish banking system, never got mentioned in any of Ireland's daily press. 'Free speech & informed journalism' anyone?!?

http://www.parlament.gv.at/PAKT/VHG/XXIV/J/J_07341/index.shtml

whistleblower.irl@gmail.com

Golem XIV's post yesterday - Fanfare of Failure - American debts and European contagion

2011-08-03T23:51:00.000-07:00

So the ignoble wrangling over the American debt ceiling is over. An agreement is reached and the market reaction was to promptly sell everything. The Dow fell 2.19, the Nasdaq fell 2.75 and the S&P fell 2.56. So that's what 'victory' over the debt ceiling looks like. Both sides were after all claiming a victory and a good deal for America. I'm tempted to ask, whose America?

The markets know this was not any kind of solution. It was the opening salvo in a re-election campaign. The Republicans have merely ensured that the whole crisis can be visited upon the White House again closer to the elections.

And after all what was all the wrangling when one clears away the shameful deceits of party political posturing? Each side, Democrat and Republican with the Tea Party in there to add extra zest and drama, claimed to be fighting for a noble principle and a vision of America's future. All sides were lying. There was no great principle at stake nor any differing visions. On one side were those who wanted to pile yet more debt on the backs of America's tax payers - and not in order to support the tax payers particularly, but to pay for more QE for the banks. And on the other side were those who felt the proper use of the American tax payer was to cut all services to them, such as welfare, but still expect them to pay their taxes and for a cherry on the top to cut taxes for the wealthier.

So any way I look at it what I see is two groups broadly agreed on who to help and protect - the bankers and financial class (themselves and their friends) - and agreed on who should pay - the broad base of America's working and lower middle class, their only disagreement was over how to extract the money and where to place the burden. Should it be via more debt to be paid off or via savage cuts to any social or infrastructure programme. Should we flog the lower classes or drown them? Decisions decisions.

The slight problem is that while the two political teams will fight for the right to be Betrayer in Chief, Wall Street and its rulers do not much care which party is in charge since they will buy the services of whichever gimp is elected.

And so while it makes all kinds of political in-fighting sense to re-run this battle again when even more political capital can be made from it, it makes less sense in Wall Street. Sure there will be opportunities for those with the best inside knowledge to make a killing, but the risks of volatility spilling over and getting out of control are already far too high.

The currency markets internationally are dangerously out of control.

Meanwhile in Europe we are playing our own fanfare of failure.

What was always going to happen is now starting. We were a badly holed ship but instead of closing the bulk heads, flushing the debt out of the flooded compartments of Greek, Irish, Spanish, German, French and Italian banking, and then repairing the holes, our leaders, those living it up on the upper decks, decided that the loss of those valuable compartments would curtail their party and opted instead to pump the ingress of debts from the banks to other larger rooms. The section of the ship from which we pumped seemed to rise fractionally, or at least the water level, it was claimed, was going down, and the ship, we were assured could deal with the extra cargo now being 'safely' stored for later disposal in two private rooms marked ECB and EFSF.

Sadly the holes, unfixed, are larger than was admitted, the flood is still coming in, the pumps are at capacity and the new store rooms, the ECB and EFSF, are filling up rapidly. In fact the EFSF is now flooded.

OK enough of the tortured analogy.

The EFSF (European Financial Stability Facility) is in trouble. Double trouble in fact. In an attempt to calm the debt markets by words alone (the European way) the rules of the EFSF were changed recently. The new rule said,

"To improve the effectiveness of the EFSF and address contagion, we agree to increase the flexibility of the EFSF, allowing it to intervene in the secondary markets on the basis of an ECB analysis recognizing the existence of exceptional circumstances and a unanimous decision of the EFSF Member States."

First the "exceptional circumstances" have been exceptional now for over a year at least and show absolutely no signs of ever returning to 'normal'. Simply because nothing is being done to address the root cause. The flood of bad debts. Pumping them into larger and larger rooms in the ship was never a solution.

Second their non-solution is a failure even in its own stupid terms. The extra ability to intervene has to be agreed unanimously, and so the markets have quite logically concluded it would never actually happen until the disaster was too overwhelming for it to make a difference anyway. This is why, I think, the cost of insuring Italian and Spanish debt has shot up to record levels in the last week. It seems clear that the markets don't believe the EFSF will work.

Third you have to look at how the EFSF is funded. These things get created, given names and buildings, their functionaries get titles, plush offices and salaries paid from our taxes, and their words are duly reported as edicts from some new power in the land. But the EFSF has no money nor any power of its own.

The EFSF exists on the basis of promises made by EFSF's backers and with the amounts of money they have pledged. It is their pledges, promises and their financial strength which gave the EFSF its AAA rating and allow it to act as Europe's version of the IMF. Here is a list of the EFSF's backers with the amounts they have pledged.

Country

Guarantee

Commitments

EUR (millions)

Kingdom of Belgium 15,292.18

Federal Republic of Germany 119,390.07

Ireland 7,002.40

Kingdom of Spain 52,352.51

French Republic 89,657.45

Italian Republic 78,784.72

Republic of Cyprus 863.09

Grand Duchy of Luxembourg 1,101.39

Republic of Malta 398.44

Kingdom of the Netherlands 25,143.58

Republic of Austria 12,241.43

Portuguese Republic 11,035.38

Republic of Slovenia 2,072.92

Slovak Republic 4,371.54

Republic of Finland 7,905.20

Hellenic Republic 12,387.70

Total Guarantee Commitments 440,000.00

You'll note that some of those backers are also the same countries who are bankrupt. Problem number three. I have highlighted those countries already bankrupt and those whom the world knows are one short step away from needing rescuing.

You can see that Ireland and Greece are not major backers and so their relegation form backer to beggar is not erminal for the EFSF. But take out Spain and Italy from the list of backers and have them take money out rather than putting money in and "Berlin, we have a problem."

This is what is meant when people say the cost of bailing out Europe is going to fall increasingly upon Germany and France. Ireland is not going to stump up more money for the EFSF. Nor is Greece nor Cyprus. And who is going to be so stupid as to think that all is well if Spain and Italy give money with one hand and "stand fully behind" the EFSF while also nipping round the other side of the counter to stand in line in order to take far more money out, with the other hand?

The EFSF has €440 billion. Everyone inside and outside the EFSF has already admitted this is not enough. And that was before Italy joined the general collapse. Who will give the EFSF the hundreds more billions teh banks are saying will be a necessary minimum?

Contagion is not an 'if' nor even a 'when'. It is already a fact. The only questions are who's already infected, how badly and who is next?

Contagion is the dark twin to 'We're all in this together". Let's just take one example but a relevant one - UniCredit. I could just as easily use Santander but not today.

UniCredit is in all kinds of trouble. Its vast US subsidiary, Pioneer, is the Marie Celeste. I do not believe it is long for this world as a going and profitable concern. But it is in Europe that the infection is most advanced. UniCredit has had trading in its shares suspended time after time on the Italian Bourse because of massive and unstoppable losses in the last few weeks. In the last few days the other main Italian banks also had trading in their shares suspended. Why now? Because of what I wrote about a few days ago - Support Uplift - the support a bank has from its national government. Italy's government is in a bad way. There is talk of the head of the Italian Central Bank, Mr Draghi, being asked to head a new government of national unity to steer a perilous course through the present crisis. How this would work with him also becoming the new head of the ECB I have no idea.

UniCredit and the Italian Financial sector will not survive if Italy is perceived as not being able to support them. But if Italy itself has to go with a begging bowl to the EFSF then how much confidence can investors have in the future stability of UniCredit? The answer is there every day on the Italian Bourse - and it is "Not much."

But if UniCredit were to implode and need rescuing would this be Italy's problem only?

UniCredit own Austria's largest bank - Bank Austria. I know that there are already political concerns in the Austrian Parliament that UniCredit's troubles would hammer Austria. And they're correct. It would.

It would also hammer Ireland and Bavaria because UniCredit also owns what was HVB (HypoVereins Bank). HVB is big in both Ireland where it has a major part of its operations and in Bavaria where it came from.

Bank Austria is also perhaps the largest player in banking in Eastern and South Eastern Europe. Were UniCredit to collapse it would set off a line of depth charges from Greece , through the Balkans, further East and up the Adriatic as well.

The plan is failing, as it was always going to. It is starting to pick up speed. Can the European powers regain control? How much longer before the German voters rebel? How much more uncertainty and fear will the coming Spanish election create? How much stronger will the Swiss franc become as a 'safe haven' alternative to the Euro before no level of Swiss Central bank intervention has any effect and the franc gets so strong it kills countries like Hungary stone dead?

And before I go, transfer what we have said about the EFSF to the IMF. The IMF has been around, hurting people, for so long it almost seems a fixture. It has also recently been given the power to issue its own bonds. Both of which make the IMF seem like a power in this world in its own right. But it is not. The IMF is actually not unlike the EFSF - it is not a country with a tax base of its own - it has to be funded and most of that funding relies on the assurance that behind the IMF lies real power and real financial clout. The IMF's sugar daddy has always been America. The IMF's power was that it was seen as a projection and arm of American power.

But America is broke and living off a parabolic rail gun trajectory of increasing debt. At what point in the ruination of America will the IMF be seen for what it is, America's version of the EFSF?

The IMF is not the lender and disciplinarian of last resort. It is the ideological bully of last resort paid for principally by America. If America itself starts to lose control of its own debts (which I think it already has) then the IMF is just another larger hollow colossus and its guarantees of help will be questioned and discounted exactly as may soon happen to the EFSF.

http://golemxiv-credo.blogspot.com/2011/08/fanfair-of-failure-american-debts-and.html

Here some of the comments that followed:

steviefinn said...
...On another point, David Norris has been forced out of the Aras election, am I right in thinking he was someone who took WhistlebowerIRL seriously ?

Golem XIV - Thoughts said...

Hello Steviefinn,

Yes, Norris was the onoly one who actually tried to do something about the WhistelblowerIRL situation. Norris was also the ONLY one who tried twice to get the Irish government to discuss who the Bond holders of Anglo Irish Bank actually were. Twice he tried to read out the list of Bond holders and twice was silenced.

Whatever else, he was one of the very few to stand up and fight for the ordinary people of Ireland.

Whistleblower IRL said...

@ Steviefinn

Here is the link to one of the Irish Seanad (Senate) debates in which Senator Norris tried to read out the list of Anglo bond holders. What a weird idea?!? trying to discuss the burning issues of the day in our houses of parliament. No wonder the powers that be dug out everything they possible could to ensure he would change his mind about running for presidency (he withdrew yesterday). After all, David Norris single-handedly challenged the Irish State in the European Court of Human Rights in 1988; the last thing our puppet parliament would want now would be a strong-minded man in as the president of country. Good heavens, NO!

http://debates.oireachtas.ie/seanad/2010/11/25/00005.asp

http://en.wikipedia.org/wiki/David_Norris_(politician)

whistleblower.irl@gmail.com

'Central Bank Bill published' - Breaking news on the Irish Times website. Once again, Minister Noonan, forgive me for confusing you with some facts.

2011-07-28T05:04:00.000-07:00

The show must go on.

Michael Noonan, our Finance Minister, acknowledges regulatory failures and is proud to present the latest attempt at tooth-less legislation. The motivation? it was a demand by our lords and masters - the ECB & IMF as part of our punitive bailout. Read with your own eyes:

Central Bank Bill published - IrishTimes.com

CHARLIE TAYLORThu, Jul 28, 2011

New legislation that enhances the Central Bank's regulatory powers and provides protection for whistleblowers was published today.

The Central Bank (Supervision and Enforcement) Bill 2011 strengthens the ability of authorities to impose and supervise compliance with regulatory requirements and to undertake interventions when necessary.

The publication of the Bill is a further requirement under the EU-IMF programme of support for Ireland.

Announcing the publication of the Bill this morning, Minister for Finance Michael Noonan said the legislation was a response to the regulatory failures which led to the recent financial crisis.

"The publication of the Central Bank (Supervision and Enforcement) Bill 2011 represents a significant further step in the reform of financial regulation in Ireland. The changes introduced by the Bill will underpin an assertive, risk-based model of regulation supported by a credible threat of enforcement," said Mr Noonan.

Among the provisions included in the Bill is protection from civil liability and victimisation for so-called whistleblowers and a requirement for financial service providers to provide independently prepared reports to the Central Bank for diagnostic, monitoring and compliance purposes.

The power to issue regulatory interventions is included in the new legislation as is the ability to fine or suspend financial services providers where necessary.

The Bill is expected to progress to second stage in the Dáil this autumn.

http://www.irishtimes.com/newspaper/breaking/2011/0728/breaking22.html

Once again Minister Noonan, allow me to confuse you with a couple of facts:

1. At my meeting with the Central Bank of Ireland on the 4th. of May this year it became apparent that although the Central Bank told the Sunday Business Post last January that:

"If any party has specific information they wish to draw to our attention in this matter it will be treated on a confidential basis.",

http://www.thepost.ie/themarket/new-probe-into-liquidity-breaches-53862.html

there seems to great confusion about what the word 'confidential' means. So much so, that the Central Bank officials asked for the meeting to be adjourned. They then left the meeting room and returned only after they check what the Central Bank means when it says 'confidential' (Did they call Honohan's office? Or yours?!?). The conclusion was that merely my identity would be regarded as confidential, not the facts to be disclosed. Therefore, I could potentially be facing criminal charges on account of what transpired at UniCredit Bank Ireland in 2007.

Yes, I, the person who officially reported a liquidity breach of 1,900% (one thousand and nine hundred percent) to the Financial Regulator, could be facing criminal charges. The fact that this was a year before the entire Irish banking system ran dry of liquidity and required the infamous late-night last-minute guarantee, does not seem to matter. No one is to blame for that, and no one has been convicted of any criminal charges since. The Irish tax payer, and every tax payer trough-out Europe is paying for it.

Here are some more reminders:

http://kathleenbarrington.blogspot.com/2010/12/whistling-down-wind.html

http://www.villagemagazine.ie/index.php/2010/12/still-waiting-for-the-truth-from-the-regulator/

2. As our new champion of integrity, Minitser Noonan, would you care to answer my questions to you of last April? I am sure your replies would interest many people in Ireland and abroad:

RTÉ - Noonan demands shake-up of bank boards [Following the Nyberg Report] -

The Nyberg Report. Minister Noonan, allow me to confuse you with the facts.

http://whistleblowerirl.blogspot.com/2011/04/nyberg-report-minister-noonan-allow-me.html

Perhaps my previous postings in which I provide proof of my dealings with Fine Gael in June of 2010, which you later completely denied, will help you to refresh your memory:

Here is a copy of my correspondence with a Fine Gael Deputy:

http://whistleblowerirl.blogspot.com/2011/04/can-we-have-truth-please.html

And here is your denial that it ever happened:

http://whistleblowerirl.blogspot.com/2011/04/noonan-sends-report-on-bank-crisis-to.html

Unfortunately for you, there are minutes of the meeting kept safely at a well-known solicitors firm in Ballsbridge, Dublin 4. Although you claim to have no knowledge of my affair, you did actually raise reservations about my telephone conversation with your secretary about the subject.

3. It is somewhat alarming that as a result of my blog post two days ago - 'An open letter to the banker who contacted me', my blog has been inundated by visitors from two of Ireland's major banks. It certainly looks like Pandora's Box is cracking open; despite your best efforts.
http://whistleblowerirl.blogspot.com/2011/07/open-letter-to-banker-who-contacted-me.html

whistleblower.irl@gmail.com

An open letter to the banker who contacted me:

2011-07-26T02:35:00.000-07:00

Dear fellow banker,

I am responding publicly to your email to me as I believe that the dilema you are facing is one that is probably tormenting many others at the moment.

Only you can make a decision about what is the 'right thing for you to do'. Ultimately only you can decide how to negotiate the tension that you contend with daily between the 'party line' and the REAL figures on the one hand, and your obligations as a family man on the other.

If you decide to take action in view of the gap between 'the party line' and the REAL figures, there is no telling what the future may hold for you. In my case, it took the Financial Regulator 3.5 years to invite me to a meeting. I doubt that meeting would ever have happened had it not been for the fact that my issue was raised in the Austrian parliament, especially so soon after our entire banking system neared complete collapse and required bailout.

As you have probably noticed, not a single banker, nor a single politician, has been held accountable for the flagrant breaches of the law. 'It just broke, it wasn't me' is the infantile excuse they all made, and we have allowed them to get away with it.

You and I both know that the taxes that our families, friends, and neighbours are paying, are disappearing into a bottomless pit called banks. The schools and hospital wards that are shutting down all around us are just part of the 'Belt Tightening' that our Dear leaders are advocating.

Only you can decide what is the right thing for you to do. As you and I both know, the consequences of taking action, or not taking action, can be severe and far-reaching.

I do advise you to read the blog post that I wrote following my meeting at the Central Bank of Ireland:
http://whistleblowerirl.blogspot.com/2011/06/word-of-advice-to-those-who-have.html

With my best wishes,
WhistleblowerIRL

Bank of Ireland makes a 'lucky' escape. For the moment. UniCredit to lead cash queue if EU crisis worsens.

2011-07-25T09:30:00.000-07:00

Reuters reports:

Bank of Ireland sale keeps it out of state hands

By Conor Humphries and Padraic Halpin

Mon Jul 25, 2011 10:25am BST

DUBLIN, July 25 - Ireland sold a 1.1 billion euro (983.4 million pounds) stake in Bank of Ireland (BKIR.I) to a group of unidentified investors on Monday to keep the country's largest bank out of state hands and provide a rare boost to a battered sector and bruised economy.
The government had been widely expected to take control of Bank of Ireland, the last domestic lender outside of state ownership, after it agreed to underwrite a rights issue, the results of which are due on Tuesday.

However -- after the sale and rights issue -- the government will now own maximum 32 percent in the bank while new investors will hold between 14 and 37 percent, the finance ministry said.
"It has been recited far and wide that it is impossible for Ireland to get money on the markets," Finance Minister Michael Noonan told national broadcaster RTE.
"Now we have significant private sector investors prepared to put money into Bank of Ireland and that's a strong signal internationally."

It is the second significant boost for the Irish government after European partners last week agreed to cut the rate it is charging for a multi-billion euro bailout by 2 percentage points, a change Dublin says could save it up to 1 billion euros per year.

Dublin, which has closed two of its six domestic lenders, merged another two state-controlled institutions and will soon take over a fifth. It has put a 70 billion-euro price on drawing a line under its banking crisis after stress tests in March.

Bank of Ireland was told to raise 4.2 billion euros in additional core tier one capital following stress tests in March. The tests were required under the terms of the 85-billion euro EU-IMF bailout Ireland received late last year.

The state has shrunk the bill for bailing out its banks by around 5 billion euros by sharing losses with subordinated debt holders. Bank of Ireland raised 1.96 billion euros by hitting junior bond holders with losses of up to 90 percent and expects to secure another 510 million from further burden sharing.

The bank's shares, which reached nearly 12 euros in early 2007 when Ireland's property boom was at its height, cost 11 euro cent on Monday, up 8.9 percent on the day...

http://uk.reuters.com/article/2011/07/25/uk-bankofireland-brief-idUKTRE76O0ST20110725

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Analysis: UniCredit to lead cash queue if EU crisis worsens

Reuters) - UniCredit (CRDI.MI), Societe Generale (SOGN.PA) and Deutsche Bank (DBKGn.DE) may have passed the recent health check of Europe's banks, but they are likely to be among the first big lenders in need of cash if the euro zone crisis worsens.

Europe's "stress test" of its lenders was widely derided as too soft, but it shone a light on potential trouble spots.

UniCredit could need up to 5.6 billion euros and both SocGen and Deutsche Bank would need about 3 billion euros to reach new global capital standards in the event of a two-year recession and after applying more realistic losses on their euro zone bonds, according to Reuters estimates.

UniCredit is expected to raise capital when the rules become clearer later this year and analysts reckon it could be looking for 5-7 billion euros. Whether more big banks join it is likely to hinge on the speed and severity with which the euro zone crisis plays out.
"Many banks out there will have to raise capital in the event there's contagion due to the Greek, Portuguese and Irish issues," said Guy de Blonay, who runs Jupiter's Financial Opportunities Fund.

A rescue deal for Greece last week eased fears the crisis will spread. But the threat remains real, and some think that because the first selective default has occurred it is now more likely Ireland and Portugal will follow...

http://www.reuters.com/article/2011/07/25/us-unicredit-idUSTRE76O1GG20110725

Ireland has become the UK's Greece...

2011-07-25T08:40:00.000-07:00

So now we have the UK government using its tax-payers' money to bail-out a sinking Irish bank. GolemXIV writes this afternoon:

RBS bailing out Bank of Ireland

The Bank of Ireland saga continues.

Here is an article from the Irish Independent from Saturday. It begins,

BANK of Ireland (BoI) yesterday raised €2.9bn in fresh short-term funding, believed to be from Royal Bank of Scotland(RBS), as the bank fights to stay out of state control.

And of course RBS is owned by you and me. So a British bank which was nationalized to save it from insolvency, is now lending to an Irish bank to save it from insolvency and being nationalized.

Several questions beyond the simple WHY? First what does RBS get from this deal? Why does the British Government (for their proxies would surely have been consulted) think this is a good thing to spend money on at a time when our banking sector is not healthy enough to stand on its won feet and our public spending is being cut with a savage glee?

And why does the Irish Government prefer this solution plus selling stakes to unidentified investors in New York, to nationalizing via further Irish State support?

The broad details of the deal are that BoI will pay RBS 2.76% above the Libor rate which banks usually charge to lend to each other. The duration of the loan is for 2,2 years. So this is short but not very short. It is the kind of debt that before the crash risk managers smiled upon. Swapping out longer loans for shorter ones of this sort of length. But that was then. These days the banks are a little less sanguine about the brilliance of being dependent on short term loans that have to be rolled. So this is probably the longest RBS would settle for.

The rate speaks for itself. So this could just be RBS thinking here is a way of placing 2.9 Billion in a profitable deal. But I don't think that explains it. BoI is not a great bet and neither is Ireland as a whole, The implicit government guarantee of not letting 'to big to fail' banks go down has to be questioned by the very fact that the Irish government is now hitting bond holders of Junior and unsecured debt for 80-90% losses. (Not that those holding the debt will lose that much since many will have bought the debt more recently at a discount when they [purchased. But this is still making the private bond holders share the pain. So there is no blanket guarantee. So why would RBS want to get involved at such a volatile time?

I think we have to entertain the possibility that RBS is lending to cover larger losses if BoI was to fail. RBS is one of the British banks I have long suspected was heavily exposed to Ireland. I think RBS is trying to save itself via this deal. The banks call it a loan. I see it as a bail out. The two states are using private banks as cover.

The larger question is what the position of the Irish government is and its debt sewer NAMA. NAMA is the Irish 'bad bank' which has previously bought up a river of effluent from the Irish Banks. More recently it has been buying less. Why? You could argue, sound business sense. But why would we get an outbreak of that where it has never been seen before.

I think NAMA is hiding its own rising pressure of troubles. This BoI deal suggests to me pressures are growing and options for addressing them are dwindling.

Germany is trying to control an explosive pressure in Greece. The UK is dealing with something so far smaller but potentially larger in Ireland. In Germany the voters are aware of what extra debts and risks they are being forced to shoulder. And they are angry and getting angrier. In the UK the voters are unaware. Unaware of what RBS is doing and what extra risks that exposes the UK tax payer to.

http://golemxiv-credo.blogspot.com/2011/07/rbs-bailing-out-bank-of-ireland.html

Bank of Ireland collapse confirmed- UPDATED

2011-07-25T02:59:00.000-07:00

From Golem XIV:

This morning this from Reuters saying that "unidentified" investors have bought a €1.1 billion stake in BoI.

Why unidentified?

The bank is calling it a vote of confidence in the irish Economy. Unidentified investors have confidence in Ireland's economy. Confidence that the Irish economy will what? Recover in a way that benefits the many or that its further collapse will benefit the few?

http://golemxiv-credo.blogspot.com/2011/07/bank-of-ireland-collapse-confirmed.html

Here is the Reuters update (the link worked this morning but is now returning an error message):

UPDATE 1-Ireland sells 1.1 bln eur stake in Bank of Ireland

Mon Jul 25, 2011 2:55am EDT

* Sale will keep country's largest lender out of state control

* Bank says major vote of confidence in Irish economy

* Deal will reduce state's recapitalisation bill by 1.1 bln (Writes through, adds background)

DUBLIN, July 25 - Ireland sold a 1.1 billion euro stake in Bank of Ireland to a group of unidentified investors in a deal that will keep the country's largest bank out of state control, the government said on Monday.

The government had been widely expected to take control of Bank of Ireland, the last domestic lender outside of state ownership, after it agreed to underwrite a rights issues, whose results are due on Tuesday.

After the sale and rights issue, the government will own a maximum of 32 percent in the bank, the finance ministry said.

"The bank is very pleased to see this major endorsement ... and the confidence which these investors share with the bank in the future for the Irish economy," Bank of Ireland said in a statement.

Under the deal the investors will initially purchase 241 million euros worth of the state's shareholding. They will then purchase the remainder of up to 882 million euros after regulatory approvals. In all they will purchase 4.2 billion ordinary shares.

The government said the sale would not involve any additional risk sharing for the government.

Depending on the results of the rights issue, Ireland will end up with between 15 and 32 percent of the bank. Existing shareholders will hold between 31 and 71 percent and the new investors will hold between 14 percent and 37 percent.

The sale will reduce the size of a state capital injection into the lender required under a IMF/EU bailout deal by 1.1 billion euros to a total of 2.4 billion euros.

The government will thus be able to recapitalise the bank without recourse to EU/IMF funds, the finance ministry said.

Dublin has closed two of its six domestic lenders, merged another two state-controlled institutions and will soon take over a fifth as it seeks to draw a line under a banking crisis that forced the former Celtic Tiger economy into an EU-IMF bailout. (Editing by David Holmes)

http://www.reuters.com/article/2011/07/25/bankofireland-brief-idUSL3E7IP16420110725

Irish Government makes a statement on a SATURDAY re Bank of Ireland

2011-07-23T13:19:00.000-07:00

Thanks to Golem XIV for his help on this:

Saturday, 23 July 2011

Bank of Ireland collapse confirmed

WhistleblowerIRL's rumour is now confirmed.

Again from Reuters

Ireland says in talks over Bank of Ireland equity investment

DUBLIN, July 23 | Sat Jul 23, 2011 10:02am EDT

(Reuters) - The Irish government on Saturday said it was in talks with potential equity investors in Bank of Ireland (BKIR.I) as it struggles to keep its last major bank out of state control.

They hid this one for as long as they could but once word got out they had no choice but to confirm, hence making a statement on a Saturday. They couldn't let this be a rumour come Monday.

The article goes on to break the inevitable 'shaft the tax payer' news that,

If the lender cannot find an investor or persuade its largely retail shareholder base to participate in a 1.91 billion euro ($2.8 billion) rights issue then the state, which is underwriting the offer, could end up with a 70 percent stake.

Translation - the banks was indeed in New York on Friday trying to flog it and it's not looking good. If it was the government wouldn't have released this news at all. The big American Investors aren't buying because they don't think the bank is viable or solvent and worry that the Irish government and its EU pimp may not bail it sufficiently to make it profitable to buy in. That leaves asking Irish investors to be patriotic and give more of their money to the people who own the banks bonds. Fat chance.

So it's a goner and guess who will pay? The tax payer of course.

Dublin has closed two of its six domestic lenders, merged another two state-controlled institutions and will soon take over a fifth as it seeks to draw a line under a banking crisis that forced the former Celtic Tiger economy into an EU-IMF bailout.

Seeks to draw a line? Let me rephrase that, "...as it seeks to draw the noose a little tighter round the necks of its own people for the profit of the few."

See WhistleblowerIRL's comment under the previous blog for the full article and his take on it.

Here is the link to Reuters article above:

http://www.reuters.com/article/2011/07/23/bankofireland-idUSWLB840020110723

Irish Bank Default Rumour - UPDATE

The plot thickens.

This came in yesterday from Reuters and seems to have received almost no notice at all. Which I find strange as it looks to me that it confirms WhistleblowerIRL's post.

DUBLIN, July 22 | Fri Jul 22, 2011 6:48am EDT

(Reuters) - The International Swaps and Derivatives Association (ISDA) on Friday set July 28 for an auction to settle credit default swaps (CDS) in relation to Bank of Ireland after ruling that the bank had suffered a restructuring credit event.

The ISDA said a restructuring credit event occurred after Bank of Ireland closed an offer to buy back about 2.6 billion euros of Tier 1 and Tier 2 subordinated debt at a discount of up to 90 percent earlier this month.

A credit event is financial industry jargon for default on payment, breach of bond covenants or other event that casts doubt on an issuer's ability to service its debt. (Reporting by Conor Humphries)

http://www.reuters.com/article/2011/07/22/bankofireland-idUSWLB837520110722

WhistleblowerIRL said he was told one of the last two major Irish Banks to have not yet crashed was about to be nationalized. In my mind that had to be Bank of Ireland. The Bank of Ireland did spend an unusual amount of time on my blog yesterday. But nothing at all in the main stream press. Then late yesterday Reuters says Bank of Ireland had defaulted on payment and was trying to buy back 2.6 billion in Tier one and two subordinated debt.

For those who don't know the ISDA is the body which sets the standards for all swaps deals other than some private over the counter deals done direct between buyer and seller. Any market based deal adheres to the ISDA standards. So the ISDA know what they are talking about. This is a deal they are fully aware of and not in any way just a market rumour.

A "restructuring credit event" is what Greece is trying to avoid. It is, as the article says a default on debt. And this is a LARGE default. 2.6 BILLIONS large and a 90%!! loss for the bond holders. And this was 'earlier' this month.

Now either I have completely misunderstood what this is or I have to ask why this wasn't news back then or even today? Weeks ago, Ireland's last standing bank tried to buy back at a 90% discount (90% loss from face value for those holding that debt) and no one said a word?

If this is what it seems, then this must be the rumour WhistleblowerIRL had heard. I will try to talk to him later today.

Bank of Ireland has defaulted on 2.6 billion of bonds and is trying to buy them back at a huge discount. Why it's trying to buy them back is then the question and who does it help to do so?

Whoever it helps in the long run, bank or bond holders, the fact is Bank of Ireland is valuing a large chunk of its own Tier one and two subordinated debt as having lost 90% of its original value!

I think the Euro authorities will need to get that EFSF (European Financial Stability Facility) - the European IMF and Plunge Protection Team rolled in to one - fully funded and looking West to Ireland not just East and South to Greece, Portugal, Spain and Italy.

http://golemxiv-credo.blogspot.com/

Another Irish bank bites the dust - a rumour from across the pond

2011-07-21T12:55:00.000-07:00

Today, I was informed by a source in New-York that our very own movers & shakers have been hitting the streets of the Big Apple in a last breath attempt to attract the finance needed to prevent the nationalisation of yet another major Irish bank.

That would be another of the Irish banks that according to Matthew Eledrfield, Head of Financial Regulation at the Central Bank of Ireland, were well on the way to recovery. That would be due to all the generous help they have received - the billions you and I have given to them. Let's remember that this regulatory genius wrote just last April in the Irish Independent:

"It will take time to recover to a stronger banking sector, backed by more effective regulation, and to sounder public finances. But the road to recovery has started.

The recent Central Bank stress tests are an important milestone on that road.... "

How much do we pay this man? For those of you who perhaps don't know him. He is a graduate of Cambridge University. He was also the official at the British Financial Regulator, the FSA, who was responsible for Northern Rock in the months before it collapsed (way to go Mathew!). That was apparently more than enough of a recommendation for our government to hire him.

Back in the Independent in April, Mathew went on to gush,

"...I meet so many people in Ireland who want to get on with it and demonstrate a hugely impressive determination to face up to the task. I'm determined that the Central Bank builds a regulatory system that learns the lessons of the past and works hard to rebuild the banking system step by step. And I'm optimistic that the recent stress tests were a very big step in the right direction."
http://www.independent.ie/opinion/analysis/matthew-elderfield-regulation-with-real-bite-is-key-to-rebuilding-banking-system-2617688.html

Nice that he was determined. Sadly not determined enough to stop another bank going under, on his watch just 3 months later. To paraphrase a famous Irishman, Oscar WiIde, "To lose one bank may be regarded as a misfortune; to lose two looks like carelessness, Matthew."

And so here we are with another bank rumoured to be going broke and the financial titans of Dublin desperate to flog it to whoever will take it off their hands. And remember, they've had practice at this sort of grovelling. Our Fine Gael leaders were practising bank-flogging even before they came to power. No sooner had the Fianna Fail government raided our tax payers pockets to resuscitate our defunct banks, our ex Fine Gael Prime-Minister was out in the Arabian Gulf flogging said banks:

Ireland looks to Persian Gulf to buy its banks - Tehran Times, December 2010

"Top Irish officials have approached Persian Gulf sovereign wealth funds to gauge interest in the sale of Ireland’s banks after the €85 billion (Dh412.26bn) bailout from European governments and the IMF.

John Bruton, a former Irish prime minister, is leading a delegation from the country on a whistle-stop tour of the region as Ireland prepares to sell assets...."
http://www.tehrantimes.com/index_View.asp?code=232010

So, where are we? We have a new Irish government and a new Financial Regulator. What has changed? Very little.

'Lies and Truths on Greek Public Debt lead to the urgency of Audit' - Guest Post by Maria Lucia Fattorelli

2011-07-21T02:53:00.000-07:00

Maria Lucia Fattorelli is Coordinator of Citizen Debt Audit-Brazil since 2001; Member of the Commission of Debt Audit of Ecuador (2007-2008) and Assessor of Brazilian Parliamentarian Investigation of Public Debt (2009-2010): CPI da Dívida da Câmara dos Deputados em Brasília. www.divida-auditoriacidada.org.br Citizen Debt Audit-Brazil is part of CADTM international network and Latindadd.

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The pressure against Greece is getting stronger every week. Everybody talks a lot about the debt crisis; but it´s important to remark that before being a debt crisis it was a bank crisis. Since 2008, there was a big problem located in the largest banks sector, originating from issuing derivatives and other assets without any support – called toxic assets - putting some of the largest banks of the planet in risk of default. Under secret documents^ⁱ, atmosphere of fear and emergency summits, European Union took the countries to a series of “bank bail-out” operations. How European countries saved the banks? By issuing large amounts of sovereign bonds, transforming the bank crisis into a sovereign debt crisis.

The news in all kinds of media follows the “market feelings” and too much is published about the debt crisis, specially Greece´s, but almost nothing about its origin. It´s urgent to audit this public debt, in order to prove the origin of Greek public debt and uncover many lies which have been built against Greece´s situation, that are costing a very high price to its population.

The experience of debt audit in Ecuador showed that when a country owns a strong audit report with all the proofs of illegality and illegitimacy of the “Debt System”, the bond-holders accept any negotiation. When President Rafael Correa announced, on TV and radio, in October/2008, the main findings of the audit commission (CAIC), and suspended the coupon payment due in November/2008, the Ecuadorian bonds in secondary market went down to 30% of their nominal value. In 2009 the President made the sovereign proposal to pay 30% of the nominal value of the bonds - Global 2012 and 2030, that had interest rates of 12% and 10% at the time – putting an end to this debt. Almost 95% of the bond-holders presented their bonds and no legal action was initiated against Ecuador. This experience proved that a country can suspend payments and take sovereign acts anytime, and a safe result can be guaranteed by a deep audit report properly documented.

One of the most cruel lies that has been published is that the only way out for Greece´s debt crisis is submitting to impositions of IMF and EU, making new expensive debt to pay previous debt and privatize all national wealth, including the historical monuments! That´s not true. First, it is important for Greece and other European countries to look back to Latin American history, because what is happening in Europe now is very much like what happened here in the 80´s, with an aggravating circumstance: we were still under dictatorship and had no right to protest and absolutely no access to documents and information. Second, it is important to remember that if in theory nobody can obligate a country to make new loans to pay the previous debt, in reality, the creditors do pressure and coerce nations to get into the “Debt System”. That happens when the creditors organize themselves as a cartel composed by largest banks oligopoly, international financial authorities (IMF, EU, ECB), and other creditors^ⁱⁱ. This situation can be considered illegal, for the evidence of the asymmetry between parts. Besides, the manipulation of the "country-risk" by the risk agencies - lowering the classification of the Greek debt exactly in refinancing days - is also a clear manipulation with the participation of the same banks oligopoly that contributed to push Greece into IMF and EU agreements. The illegality of the circumstances can nullify the debt operations.

The truth is that the “Debt-System” is a very profitable business and has many privileges. One of their main privileges is the possibility to negotiate the sovereign bond in any market, globally, and many times without the knowledge of the country. This has been a real large difficulty since the 70´s, when the international banks used to sell parts of the debt-contracts in secondary market. The important argument for us is that anytime a country can make a call of holders of its public debt. Even if the contract doesn´t have this prevision, this is always a sovereign act of a country that is called to pay for all disasters done in its name in secondary markets that includes tax heavens and all deregulated international finances. Another thing that can be done is a call for all stock markets to show up the operations with Greek sovereign bonds. They´ll probably argue that the bank secrecy impedes them to give the information, what can´t be accepted as public debt. In reality, the country must have the control of its own creditors, otherwise, to whom the interest will be paid?

Another very common comment in media is that some bond-holders have sold Greek bonds in the secondary market for a low price, like 60% of their value for example, and have already suffered the consequences – a “haircut”. Then, the new holders talk like they have helped Greece.

Is that comment true?

First of all, to evaluate how much someone lost or gained on a bond operation, we must know some information that a debt audit will answer:

How much the bond-holder paid when he bought these bonds in the first place? Most of the times, the market-price is different from the bond nominal-value. But always the interest rates are calculated over the nominal-value. Combining these two factors, when someone buys an amount of bonds for a price under its nominal-value, this bond-holder is surely making a lot of money. That is, the yield – the real income of the bond, calculated by dividing the interest coupon by the market-price – can be enormous. For example: If someone buys bonds for 60% of its value, instead of an interest rate of 7%, this person will have an income (yield) of 11,67%!

	Bond-Nominal Value	Market Price	Interest-rate	Interest coupon	Yield
Example	€1.000	60% = €600	7%	€70	11,67%

In this case, the country registered a debt of €1.000, but in fact received less than €600, because of all costs involved on the emission of the bond. For this reason, it’s very important to investigate the real value the country received when the bonds were issued, in order to calculate the yield and reveal the true damage caused by the speculators, which also influence the continuous increases of the interest rates, submitting the nation under the market’s humor.

To give an idea of how a comment that is sold like true can be a big lie, let´s put it in numbers. We read that on April 14thⁱⁱⁱ the interest rate required by the “financial market” to buy Greek bonds was 18.3% per year! We don´t know the market-price that Greek bonds have been sold then – the audit would answer. If it was 100% of the nominal value, and the interest rates were 18.3% per year, the coupon the bond-holder will gain is €183 for each thousand! That can be considered an abuse against any Nation, and that´s why an audit is so urgent in Greece.

In case this holder had bought his bonds for 60% of its value, he is still making a lot of money, gaining with Greek bonds almost 100 times he would gain with US-Treasure bonds, for example.

If the bond was bought for 90% of its face-value, the yield goes up to 20.33%! In case of 80% of face-value, the yield goes up to 22,88%!

	Bond-Nominal Value	Market Price	Interest-rate	Interest coupon	Yield
April,14,2011	€1.000	100%	18,3%	€183	18,3%
April,14,2011	€1.000	90%	18,3%	€183	20,33%
April,14,2011	€1.000	80%	18,3%	€183	22,88%

This simple example shows that it´s not true that the new bond-holders who bought the bonds with a “haircut” would have “helped Greece” and have the “right” to force the country to implement policies to guarantee their payments, selling out and privatizing the national wealth, or shifting bond-loans to burdensome mortgaged debts. They are already taking extreme advantage.

Looking at the examples above, we can figure out that when a bond-holder sells its bonds with the so called “haircut”, the one who buys these bonds makes a lot of money. As the market-price goes down, the higher goes the yield, which is a complete attraction for speculation. So, if someone “suffers” a haircut by selling bellow the nominal-value, the one who is buying will have an extra-gain over the enlarged yield of the bonds. Considering the two parts of this operation in secondary market can easily do their attached business, these actions can be characterized as “market manipulation” and “abuse” against Greece. While Greek workers are desperate, losing their jobs and even their lives, many people are making a lot of money against Greece.

This situation leads to the urgency of an audit that should be integral, which means that the audit must take care not only of the numbers of each bond issue, the accountability, but also look at all aspects and circumstances that took Greece to this point, like:

How much sovereign Greek debt was issued to bail-out failed banks?
What is the responsibility of European Central Bank and European Commission on Greece indebtedness process evolution?
What is the responsibility of the rating agencies for downgrading the Greek bonds, causing the elevation of interest rates?
What is the responsibility of IMF and EU on their impositions to Greek government to implement reforms against the people, benefiting the Banks?
What is the responsibility of the Banks for:
1. not telling the truth about the amount of Greek Debt in order to impulse more and more new loans, turning it exaggerated?
2. speculating with Greek bonds, in order to make the interest rates go up continuously to force an intervention from IMF?
3. playing with derivatives, “Credit Default Swaps” and other “toxic” papers?
What is the origin of Greek Debt? Did Greece receive this amount of money? Where did it go? Who got the benefit of these loans? For which purpose?
Which private debts were transformed into public debts? What is the impact of these private debts to the budget?

When we have this information all clear, we can tell what part of Greece´s debt is illegal, supported in many legal aspects, like:

Co-responsibility of creditors and international financial institutions
Asymmetry between parts
Violation of general principles: Reasonability, Rebus sic Stantibus
Right to Development
Right of Sovereignty
Violation to Human Rights

Other legal studies are necessary to match, in the country’s legal structure, the prohibition for procedures like “market manipulation” and “abuse”, because it´s evident that Greece is assuming abusive interest rates, as shown with the above examples.

Every legal system includes the notion of the Abuse of Rights. In general, the main characteristics that define an abusive act are connected to the case when the act produces damage, harm or injury; when there´s excessive prejudice to a part; when there´s evidence of the intention to produce prejudice or to obtain excessive benefits; when the act is against the social and economic rights; when the act doesn´t obey the reasonability cast in terms of social interests, among others.

During the Ecuadorian Debt Audit, besides applying the country legislation, the audit commission – CAIC - also searched for principles of International Public Right, International Pacts, like the International Pact of Civil and Political Rights and the International Pact of Economic, Social and Cultural Rights. We found out that most of the negotiations of Ecuadorian external debt had violated those treats.

The CAIC also utilized some General Principles of Law that can also be useful for Greece, like:

Enrichment without cause
Principle “contractus qui habent tractum successivium et dependientium de futuro rebus sic stantibus”, which determines that an obligation can be revised and become not eligible if the circumstances have substantially changed (interest rates, for example);
Usury, known as the illegal practice of charging excessive, unreasonably high, and often illegal interest rates on loans.
Anatocism
Vicious in origin
Good Faith (like in the United nations Convention)
Equity (The laws do not deal with other forms of abuse such as financial abuse)
Solidarity and Cooperation (also part of UN Convention)
Public Policy

Besides that, the CAIC deepened the studies about the doctrines of Odious Debt and Illegitimate Debt that can also be applied to Greece, because there are many subjects to be investigated, as Eric Toussaint^{^iv} resumed:

The Greek public debt made the headlines when the country’s leaders accepted the austerity measures demanded by the IMF and the European Union, sparking very significant social struggles throughout 2010. But where does this Greek debt come from? As regards the debt incurred by the private sector, the increase has been recent: the first surge came about with the integration of Greece into the eurozone in 2001. A second debt explosion was triggered in 2007 when financial aid granted to banks by the US Federal Reserve, European governments and the European Central Bank was recycled by bankers towards Greece and other countries like Spain and Portugal. As regards public debt, the increase stretches over a longer period. In addition to the debt inherited from the dictatorship of the colonels, borrowing since the 1990s has served to fill the void created in public finances by lower taxation on companies and high incomes. Furthermore, for decades, many loans have financed the purchasing of military equipment, mainly from France, Germany and the United States. And one must not forget the colossal debt incurred by the public authorities for the organization of the Olympic Games in 2004. The spiraling of public debt was further fueled by bribes from major transnationals to obtain contracts, Siemens being an emblematic example.

This is why the legitimacy and legality of Greece’s debts should be the subject of rigorous scrutiny, following the example of Ecuador’s comprehensive audit commission of public debts in 2007-2008. Debts defined as illegitimate, odious or illegal would be declared null and void and Greece could refuse to repay, while demanding that those who contracted these debts be brought to justice. Some encouraging signs from Greece indicate that the re-challenging of debt has become a central issue and the demand for an audit commission is gaining ground.

When we start to investigate the public debt of any country, the first step to take is to know the origin of this debt. In Ecuadorian debt audit (CAIC) and also during the parliamentarian investigations in Brazil (CPI), only when we went deep on documents and data we could prove, for example the explicit practice of anatocism, for its evidence on the transformation of interest into capital. That happened during the Brady Plan – the same plan was adopted for many countries in Latin America. This plan transformed the previous debt in new sovereign bonds. The previous debt had a part of capital and a large part of interests that had been accumulated because they got just so high that our countries couldn´t pay them. Some of the new bonds issued under the Brady plan were the unequivocal transformation of the accumulated interests into capital and were called Interest-bond!

The Brady plan took place in the early 90´s and all kinds of media and even some people from academia believed that the Brady plan was a good step, because it was widely presented as a plan that would bring our countries back from insolvency to the market operations. Besides that, it was said that the transformation was “giving” our countries a discount. In fact, one of the new bonds issued under the Brady plan was called “Discount Bond”. Only when we did the audit in Ecuador and the investigations in Brazilian parliament and had access to the contracts we could see the reality was totally different from the propaganda.

The documents proved that there was a “Debt System” under a continuous refinancing of previous debt; a mechanism of creating new debt to pay previous debt in a way that the new debt was always much bigger than the previous one, besides the huge payments of capital, interests, commissions, fees, taxes, costs, and all kind of extra bills. The audit also proved that the negotiations were made abroad and in many occasions – like in the Brady plan - the money registered as debt on the contracts and bond issues never arrived into our countries, because the exchange of the previous debt into the new bonds was made by the creditors themselves, in the Luxemburg stock market, with no registration in the SEC - Securities and Exchange Commission in United States of America – besides the law and jurisdiction were the North American ones. The interest rates, costs and clauses of the contracts were completely illegal and abusive. Resuming, the audit uncovered the complete misinformation about the real meaning of the Brady plan for our countries. And this was possible by reaching the documents of the negotiations: contracts, records of meetings, writings, proceedings and all registers of each operation, besides the statistics and data available.

This is only one of the examples of how we proved the anatocism and the illegality of the process. The main conclusion of the 30 years audited in Ecuador and 39 years investigated in Brazil is that the “Debt System” benefited only the large international banks, and did not serve as a mechanism to finance our countries, as the economic theory defines public debt. The instrument of public debt has been usurped by the “market”. Our job is to reveal the truth, by reaching the documents and proofs that can unmask the many lies that have being told about our countries public debt. We can not keep paying illegal debt with our jobs and our lives. Feel encouraged to start Greece´s debt audit urgently, and count on our help.

See http://www.telegraph.co.uk/finance/financialcrisis/4590512/European-banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns.html

In Ecuadorian Debt Audit we proved by documents (clauses in contracts, letters and telex) the coordination between all creditors – international private banks organized in Committee, IMF and Paris Club - in 1982/1983, forcing the country to get into a new deal that transferred private and public debts into the responsibility of Central Bank of Ecuador.

iii Noticed by http://economicsnewspaper.com/policy/german/horrendous-interest-rate-on-bonds-greece-groans-13838.html

iv www.cadtm.org - Greece: the very symbol of illegitimate debt, by Eric Toussaint

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Another interesting article by M.L. Fattorelli is 'Why A Debt Audit in Greece'. The beginning of the article reads:

After 6 days in Greece, all I could hear from many Greek people is: “we don’t know what is our public debt; we can’t understand how come it became so immense, because we don’t see it’s correspondence in investments, benefits, or anything to the country; workers only know we are paying too much taxes and having our rights being cut down every day with closing of schools, hospitals, kindergartens; employee going high and we’re are hit every day with terrorist information about the future of our country’s economy and even risk for our historical monuments”.

The women are the main victims of these measures, because they are the first ones to be filled from their jobs, and the last ones in line for new jobs. Also, when social services are cut down or eliminated, it’s expected that women will take care of services like health, education, assistance, children care, and many others, without any payment.

To read further, please go to:

http://www.cadtm.org/Why-a-debt-audit-in-Greece

My comment to Golem XIV's blog post - 'Final Destination Europe'

2011-07-19T07:55:00.000-07:00

David Malone, in his Golem XIV blog, wrote the following today:

"Three years ago Europe's and America's banks were supposed to die in an horrific accident. Their own rampaging greed and corruption had finally caught up with them. But somehow they cheated death. They did it by selling the lives of others; the tax payers in their own nations and those of nations, like Greece and Ireland, whose leaders had long since sold their own rotten and threadbare souls and were now keen to sell the souls of others.

But Death doesn't like to be cheated.

And so here we are with Death picking them off one by one: Ireland, Greece, Portugal, Spain. Who's next? Italy?

Who would have seen Strauss-Kahn arrested on suspicion of Rape? One moment in the lap of luxury the next in Rikers Island trying not to end up in anyone else's lap. Fate? I think so.

The Irish Celtic Tiger was the first to go. The whore master of Europe's best little banker's brothel, the IFSC (International Financial Services Centre) . Come to Dublin and do whatever you want. What could go wrong? Answer - almost everything. Anglo Irish began to puke up everything it had ever swallowed. Depfa and Hypo Real Estate broke out in pustules and blamed each other. While all over Ireland property and land developers began to choke and suffocate in a cloud of their own lies and unpaid bills.

The Taoiseach Bertie Ahern and his finance minister Brian Cowen saw Death coming for them. And tried to buy him off by selling the soul of Ireland's future. €70 billion and counting which is what has been crammed into 'saving the banks' but which is more accurately described as saving their bond holding creditors and the foreign banks who lent to them. Ireland is being tortured to death. Water boarded with debt.

Then came Greece. €340 billion in national debt. €100 billion in 'emergency loans' from the EU and IMF. Strapped to a table with tubes pumping blood into a bulging and livid vein. Being told it will help but not realizing that the blood coming in is being sucked straight back out from the other arm making its devious way to the intended recipient - the bloated, syphilitic, sick men of European banking. Greece is just there to wash the blood through. A "pass through" to protect the identity of the real recipients. Papandreous will enforce austerity and watch Greece wither.

Watching the grisly spectacle has been Jose Luis Zapatero. Who's one contribution so far has been to blubber "Not me. I'm not like them. Spain isn't Greece." While doing as little as possible to recognize the undeclared debts being hidden away in the regions, municipalities and their pet Caja's. No Spain isn't Greece. It's bigger. Will Spain be next, crushed under falling masonry in some obscure town?

Or will Italy go first? Giulio Tremonti, Italy's Greenspan, suddenly finds that the 'friend' in whose apartment he has been living, is required to help the police with their enquiries. Will Tremonti go? Will Berlusconi fall from power before him? If either does will UniCredit suddenly find it has bad loans surfacing like the dead from unmarked graves all over Italy? Word has it that their American operation, Pioneer, which they tried to sell then suddenly decided not to, is floating like the Marie Celeste. Silent, ragged, becalmed. Not a soul on board.

There was a time when the strong thought they might survive by feeding Death with the weak. Give him Greece and maybe he'll go away. But Death is as patient as he is voracious.

Now panic is not far beneath the surface of calm. Bloomberg today quotes Suki Mann, senior credit strategist at Societe Generale as saying,

“Greece appears beyond repair, Italy is on the brink and the chances are that the euro might be no more very soon.”

Herman von Rompoy and his boys and girls at the ECB and beginning to wonder if they have put themselves on Death's list. If Greece defaults, will Portugal or Spain be pulled over after them? And if so will the ECB be inexorably after them? The ECB is stuffed with bad paper from all the debtor nations. If they go what will happen? Wil the ECB be downgraded? The ECB doesn't want to find out. It wants Germany and France to pay for their own European experiment in bank blackmail.

But in Berlin Angela Merkel of Germany is closing the doors and windows. No one is to be allowed in or even near. She has seen how the film ends and doesn't want to star in the final reel. Let America and the Fed default. Bernanke is there printing and praying. Let him die. Let China crash land, let the ECB bleed, but Germany will not go down.

Let Greece default. Today the ECB seems to have bent to Germany's will and is saying it will consider a 'temporary Greek default'. The yield on Greek two years bonds just went into orbit.

Perhaps even France will struggle as she drowns in the defaulted sovereign and corporate debts that BNP Paribas', Credit Agricole and Societe General are nurturing like a cancer within them. But when Death calls no one wants to be next. One more breath, just one more. Take my friend. Just not me. Not yet.

One more European summit in which the defenceless will be sacrificed to protect the wealthy.

http://golemxiv-credo.blogspot.com/2011/07/final-destination-europe.html

My comment:

Dear Golem,

Grudgingly, I would have to agree with your comments regarding what was allegedly the Celtic Tiger. However, I whole heartedly agree with your observation about the current state of affairs in Ireland as that in which "Ireland is being tortured to death. Water boarded with debt."

Our elected government and our Prime Minster especially, began with a show of strength in front of Angela Merkel, intended to impress us, gullible Irish folk. This soon turned into Fianna Fáil mark II, where Dublin takes its orders from Berlin. Anything else might result in Pandora's box being opened - an extremely embarrassing prospect to the authoties, banks and elected politicians both in Germany and its newly acquired vassal state of Ireland (Land Irland).

Call it Pandora's Box, or Death knocking at the door, it would seem that we are about to witness a crack, a knock, or a bang of colossal magnitude.

Regards,
WhistleblowerIRL
UniCredit Ireland's EX Risk-Manager

PS

For readers who might not be familiar with the source of the reference that Golem made above to the IFSC in Dublin:
David McWilliams, an Irish economist & journalist who began his career at the Central Bnak of Ireland, and then went on to work for UBS and BNP, was interviewed by ZDF, the German TV channel about the collapse of Hypo Real Estate. In that interview, McWilliams uses the metaphor of German bankers behaving in Dublin like 'Men in a brothel' with the blessing of the Irish Financial Regulator. This observation makes it a bit harder to lay the blame fairly and squarely at the door of a particular nation, but reminds us that we are all paying for the greed of bankers and the criminal stupidity of the authorities.

Tuesday afternoon update from Italy

2011-07-12T08:03:00.000-07:00

Bloomberg reports this afternoon that:

UniCredit Shares Halted in Milan as Italian Banks Extend Losses

July 12, 2011, 3:56 AM EDT

By Dan Liefgreen

July 12 (Bloomberg) -- UniCredit SpA was temporarily halted after falling as much as 7 percent in Milan as Italian banks extended losses. The Italian Exchange generally halts trading of a stock when fluctuations exceed 5 percent from the opening price. Milan-based UniCredit, Italy’s biggest bank, is trading at its lowest level since March 9, 2009. Intesa Sanpaolo SpA, the country’s No. 2 lender, declined as much as 7.3 percent and was trading at 1.44 euros, down 5.6 percent, as of 9:27 a.m.

http://www.businessweek.com/news/2011-07-12/unicredit-shares-halted-in-milan-as-italian-banks-extend-losses.html

Italy Plunge Brings Debt Crisis to EU’s Biggest Borrower

July 12, 2011, 7:09 AM EDT

By Andrew Davis

July 12 (Bloomberg) -- The plunge in Italian markets overshadowed policy makers’ efforts to fix Greek finances as the euro-region’s debt crisis infected Europe’s largest borrower.

Italian bonds fell for a seventh day and the nation’s borrowing costs jumped by more than half at an auction of 6.75 billion euros ($9.4 billion) of bills today. Stocks pared declines after falling to a two-year low. Warnings by Moody’s Investors Service and Standard & Poor’s over Italy’s ability to trim debt, coupled with infighting in Silvio Berlusconi’s government over a budget-cutting plan, fueled the sell-off.

“Italy coming under severe market pressure, being the third-largest economy and a founding member of the EU, signals that the sovereign and banking crisis has reached a deeply systemic phase,” Vladimir Pillonca, an economist at Societe Generale SA in London, wrote in a note to investors today.

The rout in Italy underscored Europe’s inability to contain the crisis that began in Greece in October 2009 and led to bailouts in Ireland and Portugal. Finance ministers last night failed to agree on how to share with creditors the cost of a second bailout for Greece to be financed primarily by its European Union allies, including Italy.

...The yield on 10-year Italian bonds rose 7 basis points to 5.76 percent, after reaching 5.96 percent earlier, the highest since 1997. The yield premium investors demand to hold the debt over German bunds to a euro-era reached a euro-era record 348 basis points, before narrowing to 311.

...Trading in shares of UniCredit SpA, Italy’s biggest bank, had to be suspended limit down after the stock plunged more than 7 percent, pushing the benchmark FTSE MIB index down as much as 4.8 percent. UniCredit, one of the biggest holders of Italian bonds, pared losses and advanced 4.5 percent to 1.206 euros as of 11:40 a.m. in Milan. Even with the rebound, UniCredit has fallen by 22 percent this month, shedding about 9 billion euros in market value.

...Italian bond yields are nearing “disaster,” according to Gary Jenkins, head of fixed-income at Evolution Securities Ltd. Greece, Ireland and Portugal all sought international assistance after their 10-year yields rose past 7 percent.

Italy has more than 500 billion euros of bonds maturing in the next three years. That’s about twice as much as the 256 billion euros extended to Greece, Ireland and Portugal in their three-year aid programs.

At almost 120 percent of gross domestic product, Italy’s debt is the EU’s second largest by that measure after Greece. Its 1.8 trillion euros of borrowing in nominal terms is more than the combined debt of Greece, Spain, Portugal and Ireland.

http://www.businessweek.com/news/2011-07-12/italy-plunge-brings-debt-crisis-to-eu-s-biggest-borrower.html

Per l'attenzione degli studenti presso le università italiane:

2011-07-12T02:56:00.000-07:00

Un numero crescente di voi hanno visitato il mio blognelle ultime 48 ore. Se qualcuno di voi vuole offrire un aiuto con traduzione di italiani, questo sarebbe molto apprezzato.

Si prega di contattarmi al seguente indirizzo:
whistleblower.irl@gmail.com

Grazie

Axis of Disaster - Monday afternon update by Golem XIV

2011-07-11T08:52:00.000-07:00

"Well Italy is certainly doing the business for Europe and the Euro today as I suspected it might.

Italy's other huge bank Intesa Sanpaolo just dropped 6% of it share price before trading in its shares was halted. All the European bourses are way, way down. French and German exchanges are down 2%+ while Spain and Italy are down 3% and 3.24 % respectively as of 14.16 GMT.

And the Euro is plunging against the Swiss franc again. UniCredit's East European business is hurting now. I wonder how much is pure CDS speculation and shorting and how much is capital flight. It's bound to be both but I wonder which is leading which?

One thing's for sure Greece and Italy are going to make a lovely pair.

Remember the other nation (other than Italy) whose banks have exposure to banking in Hungary and the region is...yep you guessed it, Greece. So as those currencies in Hungary Romania and Bulgaria fall against the rampant Swiss Euro, the Italian and Greek banks will feel the defaults. Two thirds of the outstanding debt in Hungary, Romania and Bulgaria is in Swiss Francs."

http://golemxiv-credo.blogspot.com/2011/07/axis-of-disaster-monday-update.html

Golem XIV's blog post 'Italy and Greece an axis of disaster' and my comments to it

2011-07-11T02:04:00.000-07:00

This is Golem XIV's most recent posting:

"I think there is something big, possibly very big, about to surface in the Sovereign debt bond markets.

What follows is pure speculation. so please take it as no more than that. But the signs seem ominous to me.

First the facts.

On Friday Italian government bonds got a kicking. The demand for Italy's standard 10 year bonds dropped, and the cost of insuring them against default (CDS cost) jumped. The reason reported was renewed fears that Italy's finance minister Mr Tremonti would leave his post after he was linked to a corruption investigation on top of the ongoing rift with Berlusconi.

Then, also Friday, UniCredit, Italy's Trillion Euro bank had trading in its shares suspended after they dropped 6%. That is a big drop. The reason reported for that was fears that some Italian Banks might fail the latest European Bank Stress Tests whose results are due on the 15th of July. And that UniCredit, which has constantly denied it has any problems whatsoever, might nevertheless have to raise new capital. UniCredit is the only one of the global European Banks not to have raised more capital so far in this crisis.

Then it was reported today (Sunday 10th July) that European finance ministers are to hold an emergency meeting on Monday, "to discuss the possibility that the debt crisis could spread to Italy from Greece...." Suddenly we there is some tlink from Greece to Italy and we skip Spain and Portugal.

This looks to me like something unravelling.

First let's remember that Mr Tremonti is Italy's answer to America's Greenspan. He has governed Italy with Berlusconi for 15 of the last 17 years and spent many of them as finance minister. During that time Italy's debt has climbed to about 120% of GDP and over 2 trillion euros. Right or wrong people see Tremonti as the man who has protected Italy and her banks. They fear that without him something bad will happen. I think they're right. Without him some bad things will surface.

Turning to UniCredit, it is always noted that somehow, despite Italy's vast debt, both Italy's banks and Italy herself have avoided the worst of the financial crisis. That Italy's banks have not suffered downgrades and insolvency has always surprised me. And apparently it surprises the markets as well who have been jittery about UniCredit all through the crisis.

Friday's plunge in UniCredit's share price and the suspension of trading is not the first time. From the beginning of the banking crisis UniCredit has seen its share price plunge and had to suspend trading in them, over and over again. Just a quick look back reveals trading in UniCredit shares being suspended in June '08, several times on July 10th '08, again on 30th Sept '08 and Oct 6th and again in January of '09. There may be others I didn't spot.

The key to this is what the ratings agencies said when they were questioned about why they gave Northern Rock a good rating only days before it collapsed. They said at the time that part of their evaluation of the 'health' of the bank was how likely they thought it was that it would be bailed out by the government in event of a crisis. Thus they were not evaluating the bank, purely financially - as we might once have assumed - central to their evaluation of the bank's 'health' was how likely it was to have the guarantee of a government bail out. Being likely to be bailed out equaled, in their eyes, a 'healthy' bank.

This is the logic that I think explains why the market sells UniCredit like it has the plague at the slightest hint of trouble. I think the market knows or at least suspects that UniCredit is a very bad shape and will only survive for as long as it's friends have total control over Italian regional and National politics. Should Tremonti, in particular, lose his grip, then UniCredit's viability suddenly looks very fragile indeed.

And if UniCredit looks fragile then so does Italy as a whole. UniCredit's fall would bring Italy down, gold reserves or no gold reserves.

In my opinion Italy as well as UniCredit is in far, far worse shape than has so far been admitted. Italy has, I think, hidden debts in its Cities and regions, particularly those of the North. I think we will see 'new' debts surfacing, particularly if Berlusconi and or Tremonti goes.

But why should you accept my feeling that UniCredit is in trouble? I have written about UniCredit's debt problems before in Dominoes Falling from the East. In that article I detailed how exposed UniCredit is to East European debt. WIthout going in to details, UniCredit owns Austria's largest bank, Bank Austria, which is one of the largest players in Eastern European lending in countires such as Hungary, Poland and Romania. These and other countries of Eastern Europe and the Balkans have a common problem.

One of the things I have been watching is the remorseless strengthening of the Swiss Frank against the Euro and all other currencies. A huge amount of the loans in countries like Hungary were taken out in Swiss Francs. At the time it made sense to borrowers because the rate was far lower than for loans in local currencies or Euros. Now however, as the Swiss franc crushes all the other currencies, people are finding the money they earn, is worth less and less relative to the Swiss franc denominated loan they have to pay. As the Swiss franc gains, more and more loans in Eastern Europe and the Balkans are going under. UniCredit is the final resting place for those losses.

Now I could be seeing dark clouds where there are none. But two sudden developments make me think I am not imagining them.

First, according to an Italian article reported tonight (Sunday) in ZeroHedge, the Italian regulator is so concerned that there could be a blood bath in Italian Bank shares in this week, that it may enforce a ban on naked shorting. Now whether you like or detest naked shorting, this clearly says the rumour is out that UniCredit, among others, is exposed: Hidden debts and a sugar daddy who might be about to fall himself equals dad, bad ju-ju.

Second, the FT's headline on Monday morning (online version at least) is "EU shifts stance on Greece default". The news is that all of a sudden European leaders ( read - the banks who advise them) are willing to countenance Greece defaulting on some of its debt. The article reports how the French plan which was seen as the answer only a few days ago, has suddenly been abandoned for a version of the German plan which had been considered unworkable.

I think this U-Turn is very significant.

The French plan was complex - I did my best to read the French text - and as far as I could see it would have benefited the big banks much more than Greece. The key to the French plan was time. It extended the time Greece had to pay its debts. but in the end Greece would have paid the banks far more. It was a rotten plan for Greece and pretty good plan for the banks. So why abandon the chance to fleece Greece even more?

The only reason I can see is if suddenly time no longer looked as if it was on the bank's side. As long as the banks felt the situation was going to remain stable for a while, then it made sense to extend the repayments but on harsher terms and get more in the longer run. But if suddenly there was reason to think that the situation might deteriorate then that plan would be disaster for the banks. In the face of an approaching disaster the banks would rather get what they could now, and get out.

And then we read about the new plan in which the banks are suddenly in favour of having Greece repurchase its bonds (its debt) from the banks who currently hold the bonds (the debt) even at a loss. Greece would use EU money to do this, lent to it by teh EU. This would be a technical default and a loss for the banks. But suddenly this seems OK to the banks. They are, it seems in a hurry to get what they can now, even if they do make a loss.

Now I don't believe the banks ever do anything out of a sense of civic duty. They do only what benefits them. The only reason I can see for teh banks do be in a hurry to get paid soon even it it means taking a loss, is if the banks feel there is a larger loss coming. What would trigger a fear of a larger loss and make the banks, who only recently refused out right to ever consider taking a loss on their bonds, consider such a thing?

Italy. If Italy looks like it might be unravelling - the bond markets would start to dump its sovereign and its banks's debts and that would definfitely make it worth getting paid out from Greece now.

Like I said, this is speculation. But something is definitely up."

http://golemxiv-credo.blogspot.com/2011/07/italy-and-greece-axis-of-disaster.html

These were my comments:

"Good morning Golem,

Thank you once again for a fascinating read. Speculation or not, there are enough facts in it to make anyone seriously concerned. The increased traffic on my blog over the last few days is another indication that UniCredit is a source of concern not only on our side of the Atlantic, but also in the US, courtesy of Pioneer. It is remarkable how UniCredit did a complete U-turn on its decision to sell Pioneer. First, it was up for sale it is was deemed irrelevant to UniCredit's global business plan, then the markets were told that UniCredit has decided not to sell Pioneer because it was 'the best thing since sliced bread' - to use a common Irish expression. Could it be that no one wanted to buy Pioneer? Could it be a similar story to our very own AIB (Allied Irish Banks) which no one in the market has wanted to touch with a barge-pole?

A tragically comic aspect which I hasten to add to your article above is the following: the regulator presiding over the chaos that is Italian banking is Governor Mario Draghi. He has done such a good job at it, that he has been appointed for the top financial job in Europe - he is to be the next governor of the ECB. Hilarious if it were not true. Hence his efforts last Friday to refute speculation such as yours:

Draghi defends Italy budget and banks, markets fret

"ROME/AIX-EN-PROVENCE, France, July 8 (Reuters) - Bank of Italy chief Mario Draghi delivered a robust defence of Italy's banking sector and public finances in the face of intense financial market pressure on Friday.

Draghi, who will succeed Jean-Claude Trichet as European Central Bank president in November, also saw an "undisputed" need for advanced countries to end the support provided by their fiscal and monetary policies in the last three years..."

Needless to say, I have a very personal interest in all matters UniCredit. Hence, I hope you will not mind the fact that I am enclosing a comment I posted on your blog last January.

Regards,
WhistleblowerIRL, UniCredit Ireland's EX Risk-Manager

---------- Forwarded message ----------
From: whistleblower IRL
Date: 14 January 2011
Subject: Comment on Golem's blog

In addition to Golem's point about UniCredit being hit with a train load of debt from east, there is more trouble brewing in the west. Kathleen Barrington reported in Ireland's Business Post last Sunday that "The Central Bank of Ireland has initiated another review following further media reports of alleged liquidity breaches at the Irish subsidiary of a leading international bank in 2007." http://www.thepost.ie/themarket/new-probe-into-liquidity-breaches-53862.html

Kathleen Barrington refers to the question raised by Dr. Graf in the Austrian parliament on 23 Dec. 2010, the link to the question is:

http://www.parlament.gv.at/PAKT/VHG/XXIV/J/J_07341/index.shtml

A previous article by Kathleen Barrington relates to the curious way in which "UniCredit Bank Ireland reclassified €3bn of assets":

http://kathleenbarrington.blogspot.com/2010/12/unicredit-bank-ireland-reclassified-3bn.html

For further reading about UniCredit Ireland and the Irish Regulator's handling of its business conduct, please see the cover story in the recent edition of Village magazine:

http://www.villagemagazine.ie/index.php/2010/12/still-waiting-for-the-truth-from-the-regulator/

For further information about UniCredit Ireland, please visit my blog at:

http://whistleblowerirl.blogspot.com/

Regards,

WhistleblowerIRL, UniCredit Ireland's EX Risk-Manager.

'Deutsche Bank, UniCredit May Have to Raise Additional Capital After Basel' - Bloomberg, 27 June '11

2011-06-28T00:38:00.000-07:00

Deutsche Bank AG (DBK), Germany’s biggest lender, and UniCredit SpA (UCG) are among European banks that may have to raise additional capital after regulators dismissed lenders’ threats that stiffer rules may stunt economic growth.

Regulators meeting in Basel this weekend agreed to make as many as 30 of the world’s largest, or systemically important, banks hold as much as 2.5 percentage points more capital than the 7 percent core Tier 1 capital required. They also blocked European banks’ requests to use hybrid capital, such as contingent convertible bonds, to meet the target. The biggest banks will use mostly retained earnings and ordinary shares.

Lenders had lobbied against the extra capital requirements, saying they risked stunting the global economic recovery and some had sought to avoid being categorized as systemically important. The decision marks a loss for European banks that are grappling with the region’s debt crisis and had sought to use hybrid capital to meet regulators’ extra requirements.

“It’s likely to be the catalyst for the last wave of capital raisings, with UniCredit, Deutsche Bank and the top three French banks needing to boost capital,” said Christopher Wheeler, a banking analyst at Mediobanca SpA in London. “The winners are the U.S. banks.”

Combined Shortfall

Deutsche Bank spokesman Ronald Weichert declined to comment beyond remarks by Chief Risk Officer Hugo Banziger on June 10, when he said the bank was “confident” of meeting the Basel III capital requirements. UniCredit spokesman Andrea Morawski referred to Chief Executive Officer Federico Ghizzoni’s comments on June 17, when he said the lender could handle a 2 percent surcharge through retained earnings alone. Spokeswomen for France’s biggest banks -- BNP Paribas (BNP) SA, Credit Agricole and Societe Generale -- all declined to comment.

The banks, together with Banco Santander SA (SAN) and Credit Suisse Group AG, will have a combined 62 billion-euro ($88 billion) capital shortfall, according to Mediobanca. Spokesmen for Credit Suisse and Santander declined to comment.

To read further, please go to:

http://www.bloomberg.com/news/2011-06-26/deutsche-bank-unicredit-may-have-to-raise-additional-capital-after-basel.html

'Truth, Threats and the IMF' - Golem XIV's blog posting today

2011-06-27T15:57:00.000-07:00

---------------------------------------------------------------------------------
Although some of us might not like to admit it, Greece's fate might hold some clues as to what is in store for us in Ireland. Golem XIV's blog posting of this morning does not make for encouraging reading.
WhistleblowerIRL
---------------------------------------------------------------------------------

"Three men spoke out this last week, between then they paint a picture of our crisis: John Lipsky, Acting Head of the IMF, Greek Deputy Prime Minister, Theodorus Pangalos and Mervyn King Governor of The Bank of England.

According to the Greek Deputy Prime minister, Theodoros Pangalos, Greece "may have trouble" passing some of the reforms which the IMF and the EU have said are non-negotiable pre-requisites for any further bail out money. According to the Guardian today Mr Pangalos believes the Parliament may reject certain of the key measures the IMF and EU insist upon.

And insist they do. At a crisis meeting of European Finance Ministers in Luxembourg a week ago, the Acting Head of the IMF, Mr John Lipsky, made the IMF's position very clear,

"...Europe is at a "crossroads. The euro area needs to strengthen economic governance and may need to be more intrusive in terms of national structures."

The IMF has, for some time been in favour of relieving citizens within nations of their democratic right to determine their own economic path and instead to centralize economic decisions in to a Europe level Financial and economic authority.

In Mr Lipsk's whole speech he never once uses the word 'People', nor citizen, nor democracy. (Full text here) Not once. What he did say was,

"...in Greece, a mission is currently in the field, working closely with the authorities to identify the policies needed to underpin the adjustment program going forward."

Helping "the authorities" with their "adjustment program...." I think it is worth noting that Mr Lipsky was the IMF's man dispatched to Chile in 1978 once Allende had been violently overthrown and Pinochet took control. In the aftermath of that coup 2700 political opponents of Pinochet were murdered and 27 000 or so were incarcerated many of whom were tortured.

Mr Lipsky did not return home in protest at what the Pinochet regime was doing. He worked, 'helping the authorities' with their 'adjustment program'. A job he did for two years before returning to New York. Mr Lipsky, when not at the IMF, is a JP Morgan man. He was their Chief economist and then the head of their Investment Bank. Mr Lipsky believes that,

"...global problems require global solutions. In our increasingly interconnected world, we need policies that are right for the national interest and right for the global interest."

Whose interest do you think Mr Lipsky has in mind when he says 'national' interests? The people, whom he never mentions or the financial class and their banks? What do you think Mr Lipsky sees as being 'right' for the 'global interest'? What is a global interest? I feel certain it's not mine or yours. But it could quite possibly match nicely with the interests of the banks he has worked for and the class who own and profit from those banks.

Mr Lipsky feels Europe, his Europe of banks and financial interests, are at a cross roads. One road leads to a free market utopia where we don't talk of 'citizens' or 'people' or 'democracy', but focus instead on what is 'right' for the 'global economic interest'. And of course only those who live in that global world of global banks, global finance and global agreements can possibly know what is best. And therefore they must be left alone, unquestioned by the ignorant mob, to decide what is best for the global economy and the 10 percent of Europe and America who own upwards of 80% of it.

Down the other path lies what? I would call it democracy, the rule of law and policies designed to build a better and fairer economy which serves its people rather than forcing the people to serve it. But the financial class and our intellectually challenged politicians won't have us believing that sort of thing. They see the democratic path, the path of making the banks pay their own debts, of making the Bond holders, take their own losses quite differently. they want us to be afraid of it.

The most recent IMF report into the European crisis published last week, concluded,

"It will be essential to bring the unproductive debate about debt reprofiling or restructuring to closure quickly."

Why is it essential? 'Unproductive' for whom? Funny that it is so 'essential', that your debate and mine, the Democratic debate, must be closed down and quickly.

And such sentiments are not restricted to the IMF. Our own political class are betraying us and our democracy as well. Greece's Deputy Prime Minister, Mr Pangalos, in an interview with the Spanish paper El Mundo, said if the IMF imposed austerity measures are not accepted and implemented NOW,

“the next day the banks will be surrounded by terrified people who would try to withdraw their money, while the army would turn out tanks in the streets .... There would be riots everywhere, the shops will be empty, some people jumped from windows … And all this would be disastrous for the eurozone as a whole."

This is a re-run of the threats made by Hank Paulson when he bullied the US Congress in to passing the 700 billion dollar TARP bail out of America's banks in 2008. Same threats. Tanks and anarchy, but with the added frisson of mass suicide. What kind of dark, lurid fantasies is this man fed and who by?

That Pangalos is making such open threats is sad. He is a scion of one of the powerful ruling families of Greece. As is the Prime Minister of Greece. A small number of families rule and own Greece.

Pangalos's grandfather was military dictator of Greece in 1926. In his youth Pangalos rebelled against his family and became a Left wing firebrand. I listen to him now, as an old man, and I see him as an emblem of the failure of the old political order and class of Post War Europe. Left and Right they are captured by the Free Market Ideology and afraid of anything that questions or threatens it.

His message is simple, 'Do what the bankers and the financial class want or it will be tanks on the streets.'

And then there is Mervyn King, Governor of the Bank of England. This week he said something far more important than anyone else. As quoted in the FT, he said,

“Right through this crisis from the very beginning ... an awful lot of people wanted to believe that it was a crisis of liquidity,” Sir Mervyn said. “It wasn’t, it isn’t. And until we accept that, we will never find an answer to it. It was a crisis based on solvency ... initially financial institutions and now sovereigns.”

He continued,

“Providing liquidity can only be used to buy time,” Sir Mervyn said. “Simply the belief, ‘oh we can just lend a bit more’, will never be an answer to a problem which is essentially one about solvency.”

In short - the bail outs WILL NOT WORK. What is more they were never going to work. They were only ever about buying time. But not for us. Not for you and me.

On the one hand I want to kiss Mr King for standing up and speaking the truth. On the other I want to ask him why he waited? Why so long Mr King? What kept you?

I'll also make one small prediction. If Mr King keeps saying this, the global financial class will start a smear campaign against him. Rumours will start about his health and his judgement. People will start to suggest that he has perhaps become a bit senile and soft in the head.

Now let's put these three things together. What Mr King has told us is that the financial class has known and does know, that the bail outs are not about recovery. They are about saving a system that has made 1% of the Western World unimaginably rich and powerful. Beyond all measure and perhaps beyond reasonable restraint.

What Mr Lipsky says, tells us the Global Financial class doesn't care. They are out to protect the system which makes them what they are and gives them what they have. Mr Lipsky does not even see people like you and me. We are not part of his concern.

And those who we elected, Mr Pangalos and his like are spent, decrepit afraid and morally rancid.

We must look to each other now, or go down to ruin each of us alone."

http://golemxiv-credo.blogspot.com/2011/06/truth-threats-and-imf.html

http://en.mercopress.com/data/cache/noticias/30163/0x0/john-lipsky.jpg