Every day of the first three months of this year 4 of the big American Banks found a way to making record profits. Greece collapsed.
Every single day without exception, the men and women of Goldman Sachs, JPMorgan Chase, Bank of America and Citi, according to their own figures, never lost a cent. Greece, Portugal, Spain and Ireland did. Goldman’s daily NET trading revenue was $100M every single trading day. Stock in these banks went up.
No one can explain how this was possible. It is like winning very single hand in a long game of cards. Every single hand without exception.
At the same moment, the German government revealed that the people of Germany would be facing the worst austerity measures since WWII. Also today, the Spanish Prime minister was forced – and that is the word – to announce that, alongside pay cuts and changes in the law to make it easier to make people unemployed, plans to give parents a €2,500 payment for newborn children and plans to help those looking after the elderly at home would all be cast aside.
In the UK the bond market has told the coalition government it expects to see a plan for deep cuts instituted rapidly.
The outlook for bank profits is apparently good.
Don’t look back in anger. Look forward in fury.
With a record breaking 20% unemployment in Spain, of course what the markets expect is for lay-offs to be made easier. And in Germany child care and education are singled out for cuts.
It's almost as if the politicians defy its people to rise or have their parliaments vote down the bail-out fund (we tried, but our people would not have it).
It has been suggested (New York Times) that President Obama was very insistent on this shock and awe fund idea in telephone calls to Merkel and Sarkozy last week-end. In return the FED(?) would change dollars for Euro. Any ideas as to why the US took such a strong interest?
And during the night before Monday morning, the ECB board members were heavily leaned on to begin buying sub-prime sovereign debt, which was then decided in a hasty telephone conference and implemented immediately.
Urgency, almost panic must have reigned. What was it? The near dry-up of interbank lending as banks contemplated possible bust of their counterpart?
Who can know what President Obama said to President Sarkozy and Merkel? What was widely rumoured, however, was that at least AIG if not several othter major US banks had written CDS insurance on Greek and Spanish debt.
Had either fallen over, AIG and I think also the others also, would NOT have been able to cover their obligations. That would, in the case of AIG at least, have left the US taxpayer on the hook to pay.
First that would have created a back-lash and second would have wounded the US credit rating.
There are of course more involved rumours and one can start to imagine the follow-on from AIG or a bank or two going under. BUt just the basic rumour, which I think is very likely to has substance, is enough.
President Obama might well have noted that the FED funnelled money to European banks to make good on AIG dents and now expected the Europeans to return the favour.
In a limited sense of course you can se some sort of justice in the argument. But on a broader scale is doesn't work for me. If AIG was going to have more of its stupid contracts blow up I see that as AIG's problem and those moronic enough to be bailing it out. That others should be lent on to join the festival of stupidity is, in my opinion, wrong.
If there were swaps European banks were going to default on that too is not something we should have bailed out. Just because the US chose that policy response does not mean Europe should have to. But we did.
If our leader chose freely to do so, then they are as stupid as the Americans. If our leaders allowed themselves to be bullied into it then they are cowards and traitors. Either way, to my way of seeing things, they failed their nations and their people.
The Euro 750 billion fund serves mainly American interests, as a return favour for the US taxpayer deleivering on AIG guarantees; intriguing thought.
Almost like Europeans fighting in Afghanistan for US' imagined interests there. At least as hard to justify in European parliaments.
This time around, not only risking young peoples' lives, but pensions and economies of deserving senior citizens, maybe not…
The slide in Euro against the dollar since Monday, we are back at levels lower than before that famous last weekend telephone "conferences", seems to cast doubt on the fund's reality, in my opinion.
It's not a done deal – yet. I think we're in for stunning developments in the saga about where all that debt will finally be absorbed and the value of the collateral realised, the "troubled" assets' final re-pricing.
An economic war. Economic warfare. Armies of bankers and their units. The Public as collateral damage. CDS insurance as weaponry. However the situation is described war is a poignant analogy for it.
Dylan,
Yes it is, sadly. But war is the most utter failure of the imagination. It is too easy and too tragic to do nothing until war is the only option left. Tyranny comes in many forms and many are the ways it can be fought.
Speaking out radically may seem irrelevant, but I do not believe it is. I believe history shows rather clearly, that radical thought liberates shackled minds and those minds unshackled are the pre-requisite for any real revolution.
Just my opinion.
Keep commenting.