Greece

[stopmakingsense]

Bilderberg Meeting Report from 1955

 

I came across this the other day doing some research on the birth of the European Union. Pretty interesting for a group that have tried to keep their existence secret for several decades. I've often seen its attendees claim they don't formulate any kind of policy and that it's just somewhere were they can talk candidly without the glare of the media upon them. Not very democratic of them.

 

I also came across an Etienne Davignon interview with the EU Observer in 2009.

 

It was this part that stood out to me:

 

"A meeting in June in Europe of the Bilderberg Group - an informal club of leading politicians, businessmen and thinkers chaired by Mr. Davignon - could also ‘improve understanding’ on future action, in the same way it helped create the Euro in the 1990s, he said."

 

- also contains some interesting information from members letters and mouths.

[Manx1e44]

Time they kicked Germany out of the EU, they're just making trouble & don't have maturity as a top European nation like what we are

[Lxxx]

Mr Farage talks sense again today.

 

[gazza]

one more part of the the jigsaw coming un done.

 

Earlier data from France and Germany, Europe’s largest economy, showed their manufacturing sectors contracted at the fastest pace in nearly three years. It was only German strength that prevented the eurozone falling into recession in the first quarter.

Italy’s factories contracted for the tenth straight month while in Spain the PMI fell below that of Greece’s, and posted the lowest reading of all the countries surveyed.

 

Germany on the decline, which was to be expected as most of its goods went to the EU.

[Nom de plume]

How do you think the 100 Billion Euro bailout Spain's banks are getting will assist the 50% youth unemployed there ... ?

 

It's quite staggering how this is all playing out. Bailout after bailout to protect bankers and their extravagance. Austerity deepens, further social unrest, no growth to speak of with little hope for the immediate future ...

 

Yes, there will be a bad outcome to all of this no matter what the action BUT can someone please tell me in simple English how we will be affected (we being the average Joe's on the street) if the European banking system collapses?

 

I have little to no savings, my house is effectively owned by the bank ...

 

What is this Doomsday that they speak of?

[GD4ELI]

If the banking system collapses then you and most of the island will be seriously f**ked.

 

This is why governments (UK with RBS) and the EU (Spain last Saturday) and the USA (hundreds of banks rescued over the last few years) will not allow the banking system to collapse.

 

Will the EU / Euro collpase 'big time'? I don't think so.

[Nom de plume]

That's just more doom-mongering ... white noise a la politician speak.

 

Why will I and my like be "seriously f**ked". I want a simplistic explanation - come on, that was the question afterall.

 

Banks fail, new opportunities arise ... Virgin / Tesco etc etc etc

 

 

If the banking system collapses then you and most of the island will be seriously f**ked.

 

This is why governments (UK with RBS) and the EU (Spain last Saturday) and the USA (hundreds of banks rescued over the last few years) will not allow the banking system to collapse.

 

Will the EU / Euro collpase 'big time'? I don't think so.

[GD4ELI]

1. If the banks fail you'll be trading with bags of herring and pebbles.
   
2. There will be no trust between businesses.
   
3. There will be *very* greatly reduced economic acitivity.
   

 

And what I wrote is not white noise, doom mongering or anything like it. The banks will not be allowed to fail (except in small financial jurisdictions);

[Slim]

Yes, there will be a bad outcome to all of this no matter what the action BUT can someone please tell me in simple English how we will be affected (we being the average Joe's on the street) if the European banking system collapses?

 

Look to the 2008 crisis and domino of bank failures. The result was for the island a doubling of unemployment, a tightening of the work permit system that resulted in migrant labour buggering off with the knock on effects to all kinds of businesses. The resultant lack of public income has meant a large axe taken to public services and a large chunk of our common purse agreement going away.

 

Our (UK and Manx) banks are heavily invested in european nations and organisations. If the european banking system goes down, there will be bank failures here. Bank failures cost us a fortune, in bail outs, in compensation payments, in lost revenue. We need banks for liquidity to support business. If banks fail, or if banks curl up into a ball and stop lending completely the economy basically stalls. Money will flow out to safer havens compounding the problem.

 

Then there's the fact that we need europe as a trading partner. Half the UK's trade is inside Europe and the IOM is highly dependant on the UK economy. A big drop in GDP means unemployment, inflation, more public service cuts etc.

 

You personally? You live in an an economy that's entirely dependant on banks, if many banks fail there'll be a lot of unemployment here. Your have no savings, but you have a mortgage. If you lose your job because of the business failures, can you keep up your mortgage payments?

[Nom de plume]

The banks run the world so it's all hypothetical ...

[Chinahand]

Non de plume - banks borrow money on short terms - ie you could turn up and empty most of your accounts tomorrow - but they lend it out on long terms - ie decade long mortgages.

 

This creates a serious problem, because "your money" is no longer in your accounts, its been lent to someone else to buy a house, a motor, or to a business man to cover his work in progress etc.

 

To ensure there is enough money in the bank when you turn up to make a withdrawl banks have to balance the difference between your funding horizon and theirs by keeping capital reserves, and by borrowing from the markets.

 

But capital reserves are really at risk from changes in behaviour - if more people turn up and ask for their money back, or less people are able to save and so make a deposit at the end of the month, then banks can suddenly need to increase their reserves by alot.

 

Also the markets are fickle - if a bank is rumoured to be in trouble its funding will just dry up - as happened with Northern Rock, RBS, Lloyds and numerous European banks.

 

Currently both these problems are happening simulataneously. People are panicky and avoiding having lots of cash in risky banks, and the markets don't want to lend - to the point they are willing to pay the German government to take their cash off them (ie negative interest rates on short term Bunds).

 

So banks are faced with rising capital calls to ensure they've got enough cash to make withdrawls, but are having trouble raising this cash from either depositors or the markets.

 

You may have no savings, but you are still withdrawing your salary every month. The banks need to fund that. If a bank is unable to pay one depositor their cash, it'll destroy the bank's credibility and start a run, and given the mismatch in time horizons between depositors and the bank the bank simply can't give everyone it's money back if they tried. Not even 10%.

 

That is a genuine systematic risk at the heart of the banking system and Greece and Spain are close to the limit when everyone decides they need to get their cash out and the house of cards collapses (read up about Argentina in 2000-2002 it's scary!)

 

The banks may not run the world, but they supply the money, and money is used for absolutely everything, and it is based on trust that banks will deliver.

 

If that trust goes it is rational for people to destroy the banking system - as the governor of the bank of England acknowledged when everyone was queuing up to get their cash out of Northern Rock prior to it being nationalized - it was rational for the individual, but catastrophic for the bank.

 

Unless Greece changes course that logic will reduce it to a barter system within months, and then trying to reconstruct a new fiat currency.

 

The risks of this spreading and causing huge damage are very very real, and frighteningly no one really knows what to do because at one level destructive behaviour is logical when banks are at risk - game theory goes into these dilemas all the time, but to have them being played out with the pounds in your pocket or at your bank is really serious!

[pongo]

This is why governments (UK with RBS) and the EU (Spain last Saturday) and the USA (hundreds of banks rescued over the last few years) will not allow the banking system to collapse.

 

The Spanish bailout has not actually been agreed despite the headlines. There is no agreement about where the money is supposed to come from. The Spanish agreement is just more words.

 

Unless Greece changes course that logic will reduce it to a barter system within months, and then trying to reconstruct a new fiat currency.

 

But Greece is surely going to end up with a coalition govt which will be pro € but anti austerity - ie another stalemate. Then the EU will come up with another meaningless agreement which will convince nobody for more than a couple of days. And then another. And another.

 

It's interesting to speculate how they might get kicked out (even when Greece effectively defaulted, months ago now, they were not asked to go - the 'haircuts' amounted to a default). For it to work, it would have to happen by complete surprise. And yet it is hard to imagine that political agreement could be reached since it would undermine the European project - and impossible to imagine that agreement could be reached in secret such that it was a surprise. And everyone knows that if Greece goes then Spain and more importantly Italy are next.

 

Interestingly and laughably the EU has undermined confidence in the past few days by clumsily talking about the possibility / threat of border currency controls.

 

The EU has shown itself to be incapable of reaching meaningful agreements which can be substantiated. There is no reason to believe that this is going to change now. In which case there is no likelyhood of any sort of orderly outcome.

[GD4ELI]

Interestingly and laughably the EU has undermined confidence in the past few days by clumsily talking about the possibility / threat of border currency controls.

 

Money is flooding out of Italy, Spain, France and Greece into Switzerland and the UK. They want to buy property in general and especially holiday appartments in the Alps in large ski resorts.

 

[Cambon]

The "can" will be kicked down the road indefinitely. The debts will be written off by the banks eventually. Then they can start again. This is just like any other cyclical downturn, just a lot bigger.

 

The governments will not let the banks fail. They cannot. If they did, the governments would also fail and chaos would follow. So, expect more asset purchasing devaluing the pound. Europe will eventually also issue the eurobonds that germany will not yet allow. Inflation will follow, followed by growth and high wages and the happy daze will be here again.

[Lxxx]

How do you think the 100 Billion Euro bailout Spain's banks are getting will assist the 50% youth unemployed there ... ?

 

It's quite staggering how this is all playing out. Bailout after bailout to protect bankers and their extravagance. Austerity deepens, further social unrest, no growth to speak of with little hope for the immediate future ...

 

Yes, there will be a bad outcome to all of this no matter what the action BUT can someone please tell me in simple English how we will be affected (we being the average Joe's on the street) if the European banking system collapses?

 

I have little to no savings, my house is effectively owned by the bank ...

 

What is this Doomsday that they speak of?

 

The Doomsday is that this system NEEDS to fail. The fiat currency system we have has reached tipping point, in 2008 the banks were bailed out by the governments and now there is no-one left to bail out the governments. We will have massive deflation (as there is no liquidity) followed by the printing of more funny money and hyper inflation (which will decrease the value of the pound in your pocket) then following that we will have some kind of new Bretton Woods scenario whereby a new system will be devised. But don't bet on some kind of debt jubilee, the international bankers have worked hard to get everyone indebted to their system, they won't relinquish it that easily.

 

The whole fiat currency system is based on the trust of the bank to deliver on it's obligations, and the trust of the country who prints that currency to come good on it's I.O.U stamped on the notes they issue. When either of the trusts in that chain is broken we have a domino effect of chaos throughout the system. It's why the banks in countries like Spain and Italy are being downgraded, as they take into account the ability of the governing country to come to their rescue in the event of any liquidity issues.

 

How will it affect you? Presuming you hopefully have a fixed interest mortgage (as one of the consequences of hyperinflation is rising interest rates) will you be able to make your mortgage payments if your company goes bust through lack of bank funding, at a time when the costs of the daily supplies rise as the pound in your pocket is worth less and less with each new one printed.

This is assuming we don't have an even more catastrophic scenario where we have rampant bank runs and the resulting chaos of capital/border controls.

Anyone who thinks this whole crisis will just blow over in 6 months and then it'll be business as usual is grossly underestimating the severity of the situation.