Monday, 10 October 2011

Dexia, Mafia and Revolution

I knew I had seen the script we're living somewhere:

What I am saying is, we have now what we have always needed, real partnership with the government.

And this is what follows: Revolution!

What does that tell you? It tells me that when predatory bankers and their complicit government cronies cannibalise the real economy to the tipping point, then regime change is just a matter of time. Politicians are acting like bankers are their only paymasters. In reality the bankers are just the noisiest and most demanding paymasters - until the people rise up in anger.

This morning the 11 million people of Belgium have woken to find themselves the 100 percent owners of a bankrupt and unprofitable retail bank at a cost of 4 billion euros, and guarantors of a further joint 122 billion euros in liabilities with France and Luxembourg. The shareholders and bondholders will be grateful, and the markets are accordingly delighted, but pity the poor Belgian taxpayer. The CEO and Chairman of Dexia have admitted that the bank operated as a hedge fund, and yet they are given serial bailouts at the taxpayers' expense. The Belgians have already thrown out their government, so now what do they do?

UPDATE: Ironically, after putting up this post about how crony accommodation of the banksters can lead to revolution, the reality is unfolding even now in Slovakia. Slovakia was the last country required for unanimous consent to the extension of the powers of European Financial Stability Fund. The prime minister made the vote on the EFSF a vote of confidence in the government. Ooops. Looks like she loses her post and the government tonight, as one of the smaller parties took offense at the blackmail against the national interest.

My new hero is Richard Sulik, leader of the coalition's SaS party, who is willing to take down the government rather than betray his country's taxpayers. The vote, which has had the market on edge all day, has now been indefinitely postponed. Even if the EFSF vote passes this week, when the fecal matter hits the ventilator in the not distant future, the voters will remember that Mr Sulik tried to do the right thing.
“I'd rather be a paraiah in Brussels than have to feel ashamed before my children, who would be deeper in debt should I back raising the volume of funding in the EFSF bail-out mechanism,” Mr Sulik told parliament.

Mr Sulik resisted the entreaties of Ms Radicova and other officials, who stressed that Slovakia's credibility as a responsible member of the eurozone was on the line.

While the trials of countries such as Portugal and Ireland do find sympathy in Slovakia, which is the second-poorest member of the eurozone, there is very little feeling for Greece, which is seen by many Slovaks as having caused its own problems.

“Extending the EFSF is mainly for saving foreign banks, and it will be expensive for Slovakia,” said Mr Sulik.

Zerohedge is liveblogging the Slovakian Parliament for those who like their crony capitalism raw and in colour.


jules said...

I would have thought as an Englishman you might have been even more disgusted that ther UK is embarking on more QE otherwise known as money rpinting to save banks.
FRom where I stand QE is backdoor bailout to the banks
They get new money to pump each oterhsw shares with. This money does NOT get into the wider econo0my only into speculation
whilst punishing save3rs even more and DEVALUING THE POUND.
What can be done about this outrage?
It is unbelievable that the ENGLISH put up with this. It is TREASON.
Inflation is already 5 percent.
If trhe baks neeed more money thyen why not attarct SAVINGS WITH higher interest rates
how can you have capitalism without CAPITAL?
Mervyn KIng is a FINANCIAL TERRORIST and should be executed for TREASON

London Banker said...

@ Jules
I agree that QE2 is a backdoor bailout and ill-advised, and will do nothing for the non-financial economy, but I would rather we execute the bankers responsible (or irresponsible) for financial depredations, and not Sir Mervyn. He has been less generous than his American peers, and has at least stabilised the Pound, more or less.

I agree you cannot have capitalism without capital, and it would be a seriously deranged depositor or investor that trusts a bank with cash these days. According to a recent market study, 99 per cent of UK deposit and savings accounts pay a negative real rate of interest.

An interesting point in the Vickers Report was that just 3 per cent of UK high street bank assets are UK assets. The other 97 per cent are in global speculation and foreign investments. How then can any depositor in the UK be secure of a return of principal and interest? Seems to be a lot of legal risk, sovereign risk and market risk embedded in the average bank deposit these days.

London Banker said...

I should modify the above to make clear that I use the term "execute" metaphorically. I am opposed to the death penalty and subscribe to universal principles of human rights. Even for bankers.

jules said...

I'm, sorry Banker The banks just do what they can get away with. Its centr4al banks and governmnets that let them get away with it.
The whole bailout thing is not capitalism, its fascism. In capitalism you rise on your own and you fall on your own.
The central ban ks of the world are now actively interfering in the free market
and scaring us into the belief that DEFLATION is the bogey man but it is the opposite its the cure. DEflation will solve the misallocation of credit
during the bubble period. Sure if we allowedd banks to go under we would have a deprssion but as long as the DEPOSITORS are bailed out evenetually thosewho are prudent IE thye savers come in and buy the distressed asstes off the imprudent ie those who lent tolo much to the wrong people and those who borrowed to much. Thnats is how capitalism is meant to work and indded
the falling prices area buffer when employmnet and money is scarce. What they are doing is devaluing the currency rather than allow assets to come dowen to a market price, this punishes the savers and bails out the speculators and creates moral hazard, all n ot good. Inded there used to be a capital punishmenent for anyone who devalued the currency. Tell me what is different from a counterfeiter and what Meryn an d Bernanke are doing?
AS for stabilising the pound I have no clue what you are talkinga bout. I live in South east asia and had planend on early retirem,ent from the rent from my debt free properties in the UK
The pound has sun k more than 30 percent against asian currecnies
Now some of this is market6 action
but most is due to QE and bailouts
Mervyn King is nothinbg more than a gimp for the banks. A criminal and a prostitute. I fail to see how anyone with an ounce of moraility can defend his policies
Keynesian economics has been proved to be nonsense and the definaition of insanity is doing the same thing over and over again and expecting a diffgerent resukt
Japan tried QE and had TWO lost decades.
The US has tried it and failed
obviously King is retarded and cannoy add 2 and 2 together or as I say is a criminal and knows its just a handout to his buddies in the city
I believe its the latter, noone can be that stupid to believe in Keynesian nonsense.
In the 1918 they alowed a depression to run its natural deflationary course and it was over in two years
LESSON, don't interfere in the market

jules said...

By the way London banker, seeing as you have inside knowledge is the bankof England entirely owned by the governmnet or is it as the conspiracy therie4s suggest private like the federal resaerve?
I see there is a nominee account for the BOE but nnone is allowed ot know who is on it soi would suggest there is somehting to hide

jules said...

I like your blog by the way
I have mine at

richard in norway said...

i would also be interested in the answer to jules's question about the BoE

dearieme said...

I don't mind hanging, as long as we start with Blair.

jules said...

Yes we need to start with Blair, then Brown Then King
King is the slimiest
Pretnds he feels our pain and then does the opposite of what is moral and correct.
hed fceels savers pain we here whilst eh slashes rates to zero and devalues savings by 30 odd percent the c*nt

London Banker said...

@ Jules
Keep it civil, please.

jules said...

London Banker this is your blog but how can anyone with an ounce of pride remain civil at at time like this?
If someone robbed you and then tried to steal your children would you remain civil?
these are no times for pussyfooting around in apolitically correct bubble.
We are at war. I did not choose the war as a saver these parasites declared war on me. Its war of savers versus the speculators and rigth now they are winning and its not the way i was bought up to English society. King clearly stated trhat savers will be slaughtered when its only the savershwo can help the situation. You cannot have capitalism without savings but right nbow they are saying NOONE should save
at a time when there is zero capital
what happens when the peop;le with savings have spent it all?
what then, we just print money 24/7?
I'm sorry banker but its high time we give no civility to criminals like KING

Anonymous said...

The Belgians failed to elect a new government. So the country is run by the last government, which is a caretaker government. Theoretically, the caretaker government of Belgium really does not have a mandate to make such important decisions as the bailing out of an insolvent bank run by a bunch of criminals and putting the nation into even further debt. No-one is talking about this. Where is the mandate for the Belgian Dexia bailout???

jules said...

where is the mandate for any bank bailout?
was anyhone asked? we live in a supposed democracy so all these bailouts and QE should be put to the people to vote on.
we do n ot live in a democracy and won't until the production of money and its poiwer is taken away from private hands

Anonymous said...


I can't believe you chose Hyman Roth's quote from "The Godfather: Part II"! I've thought of it many times since the "Great Hustle" began in 2007.

I've wondered about the revolution angle as well. In particular, what would it take to compel people to eschew the ballot box for the streets?

Glad to have you back!


Anonymous said...

Jules, you're right. I phrased that badly. I should just have said: the people who made this Dexia deal are not actually a government of Belgium given that they were not elected at the last Belgian election. As such, they have no right to tax, borrow or obligate the people of Belgium to take on Dexia's debts.

Tracy Alloway said...

Didn't Dexia spend the past few years extending an enormous amount of credit to the Belgian government itself? ... (Well, not government since this is Belgium but you get what I mean.)

wirplit said...

Be interesting if the Belgian caretaker PM had no legal right to take on the Dexia debt on behalf of the Belgian people if this can therefore be challenged legally. I have little idea of how the Belgian legal system works and if there is anyone able or willing to do this. One does not get the sense of a unified country here...will it survive at all?

London Banker said...

@ Tracy Alloway

The Tracy Alloway! I'm honoured. You are one of my heroes. Keep up the excellent coverage of securitisations, ETFs and other financial weapons of mass deflation.

Mr. Kowalski said...

Iceland's President Grimmson last week had this to say comparing Iceland to Ireland.. much to the displeasure of EU officials: "The difference in Iceland is that we allowed the banks to fail. These were private banks and we did'nt pump money into them in order to keep them going. The state should not shoulder the responsibility". A tempting course of action indeed.

Richard said...


When it comes to dealing with the bondholders, governments have created a problem for themselves.

In theory, and it has only been a theory for large banks, bondholders are putting their capital at risk.

In reality, bondholders do not put their capital at risk because governments know that it is only the financial regulators who have access to the data necessary for evaluating the risk of each bank.

In other words, how can the government stick bondholders with losses after the government says the bank is solvent and safe to invest in?

Until governments are forced to give up their information monopoly, we are going to continue to have taxpayer funded bailouts.

While this would be revolutionary, it would not be quite the revolution you are thinking of (although it might take your revolution to get the financial regulators out of gambling on redemption mode and into releasing the necessary data).

London Banker said...

@ hnladvsr
I'm sorry, but I've removed your comment querying my identity. I will stop writing if attention becomes too intrusive, as this is my hobby and not my career.

London Banker said...

@ TA
I've thought of the Hyman Roth quote several times over the past few years as well, but nationalisation of Dexia just seemed an apt usage - especially given the Occupy Wall Street campaign and its spread to other venues.

@ Richard
You raise an interesting point that is relevant to my criticisms of Basel Accords. Once regulators took it on themselves to relieve banks of the responsibility for assessing each others creditworthiness by setting common prudential regulatory standards, they also created a vast moral hazard. Regulators get confidential reporting that the market is denied. Banks no longer develop the long term relationships or require the bald disclosures for inter-bank credit or bonds that they might have 25 years ago. Relying on prudential supervisors has proved disasterous for real capitalism, and left us with debilitating crony capitalism.

JMD said...

"predatory bankers and their complicit government cronies"

Complict government cronies Mr Banker? Are these the same cronies whose debt you praised as 'riskless' a few months back?

You must remember, I accused you of missing the target at 50m shooting off of a bench-rest.

jules said...

London banker
would you be so kind as to answer my question as to whether from your experience the cntral banks are run for private profit?

jules said...

support the slovakian MP to just say no to more bailouts

And if youy want a laugh Dexia past the stress tests with flying colours,

how any confidence reamins in this market is beyond me and now the market rallies on talks of saving the system by Merkel and Sarkozy
Who are they kidding, these two clowns could not change a lightbulb

London Banker said...

I have been a consistent critic of the zero risk-weighting of sovereign OECD debt in the Basel Accords on this blog. I have never said that government debt was "riskless" - and the zero weighting is a large contributing factor to the undercapitalisation and over-leveraging of banks.

@ Jules
In my experience central bankers are a mix of characters, just like every other walk of life. Many are committed public servants who choose central banking out of a real desire to contribute to economic growth and stability. Some are too closely allied with banks' interests, especially political appointees from the banking sector.

jules said...

@london Banker
I am sorry but your terms of stability and central banks are at odds with each other
Central banking means central planning which means no free market and no democracy. You say they are from all works of life and are public servants but I am saying that the real power behind them are in private hands for profit
why else would there be a nominee account
The FED is obvioulsy private with the power lieing in the hands of the primary dealers who just so happen to be the TBTF banks.
The FED doesa n ot serve citizens it serves the interest of the Primary dealers likme Goldman
Central banking is just interference of ther free market, The market should set interest rates not a central body full of academic sell outs who have zero experience of life outside of indoctrinated economic schools. Sorry i know you used to be one but I thought maybe you had turned your back on it having seen the light hence the blog. I have noi interest in yuor identity
thats private

jules said...

proof of either how stupid Sir King is or how corrupt he is is his statemnet backing up the Bernank that its hard to spt asset bubbles
This is so stupid its not even funny
A 5 year old could have spotted the housing bubble
hold dopwn interest rates artificailly for years and give mortages to anyone with a heartbeat and its doesn't take a PHD to see this will lead to a bubble.
These two clowns are either some of the thickest human beings ever to have been born or are as thick as thieves
I susepct its a combination of the two.
They both look like they have been dropped on their heads as babies and then been high on LSD and whisky for life

London Banker said...

@ Jules
I won't bother to defend Greenspan, Bernanke and Geithner, as I believe you may be right about their motivations - and certainly their policies were horrific. And yes, the Federal Reserve Bank of New York is owned and governed by the member banks of the 2nd Federal Reserve District - which means Wall Street. The Fed does not distribute profits, however, so runs as not for profit.

However, I think you should read more of what Sir Mervyn has said and understand more of what he has done. The UK is not the USA, and the Bank of England is not the Fed.
You can start with this:
Bagehot to Basel and Back Again

Response-Able. said...

I write this from far across your firmament,so to say, from the countless Beggared, the Useless Eaters, the Great Unwashed.
WE ARE SO VERY MANY,you on the other hand, are so very few.
Your narrative is interesting. Thus it advances.
Today you see us, moving hither and thither, darting like chickens under the shadow of a hawk's wing; but I can assure you that we are not who you Central Bankers and Security Markets
Regulators think we are.
[How little Regulation appears to get done,don't you think?]
The influence of prejudice creates your choice.
You write Revolution. Oh, but this is not Hollywood. It is more than that.
"When the suffering becomes acute enough one moves forward". [H.Hesse].
We say we are like water. A Deluge.
In spite of CIA, MI6, Tavistock, Central Bankers and all; in spite of the carefully manufactured [Belgrade
calling], and the AYM pontificating[we are the Commitee ], and those imported from Spain[Somos los Indignados], so slick- do it like this and that will happen- you can rest absolutely assured Mr Central Banker, that we smell the stench of appropriation. Now here I speak your language.
I think it was Madison who wrote:" the circulation of confidence is better than the circulation of money."
Well guess what. Spell confidence now; if you can.
"Talk to the hand 'cause the face is in Spain".
And thus all have heard the wake up call and will come like the Deluge. One minute before midnight.

YES,all your major desecrations are now set in stone;

and YES, we now await for the Sect[You being a Central Banker,a manipulator of worthless fiats,] to monetize fiscal deficits and introduce us to :"one Ring to rule them all and in the darkness bind them";
and YES, we continuously watch the charade of the Elders,setting their stage management for the punishment of their intermediates,no doubt to expand their manipulations on their favorite theme "World Government".
Same song, different verse.
Much have they written about it and much has been read. Divide et Imperum, Caesar's dictum, is as old as the wake up call.
Plotted collapses are meant to surprise us sheep. But they do so no longer. Neither do their plans to plan.
Pardon me while I chuckle. Are you a bank of England class A share holder? No?
Wish you were? But you work for them.
"Buy when blood is running in the street"
N'est pas?
The more things change the more they stay the same.
And so I ask you:
Why did the Prince of Peace vomited violence twice?
How he whipped and how he scattered and how those banker demons yelled when they heard His dinner bell.
Immediately after came his torture. Granted.
Might it be that perchance He foresaw our end times? He who ushered our Age?
And will this lacerating now happen on a global scale? Or do the bankers think that the world will roll over and play dead to die afterwards. I wonder.
Do you?
If not, in the interest of those high- jackers that crowned themselves in the 1690's and1913 may you remain as ignorant as they are "wise". This collapse will be met by emergency powers world wide.

jules said...

@ London banker
Mervyn King SAYS a lot and most of it sounds good but there is a world of difference between saying something and doing something. He reminds me a lot of Obama in that his speeches are excellent but at the end of the day its empty rhetoris banked up with no action.
Obama seems to lie everytime his lips move. he got elected on the false promise of reigning in the banking sector and stopping the Iraq war, both of which he failed to do much as KIng says he feels sorry for savers as he then announces more money printing and negative real interest rates. I think these sorts of people are even more dangerous and criminal as they are FULLY aware of what they are doing.
Its like A BURGLAR SAYING HE FEELS sorry for victims of burglary and more should be done to catch them , then proceeds to rob your house.
There is no need what so ever for interest rates to be zero at all but is again just another BACKDOOR bailout for banks
Everythinghas been tied to saving banks
and as i say they should eat their losses in a capitalist system.
IF it IS necessasry to spend money on them , then as Liam Halligan says the banks should come c lean on their balance sheets and mark asstes to market. Most have marked the assets to fantasy as with FASB ruling or the Voilker rule and so NOONE knows how much in the red they are truelly are
In My opinion they are beyond saving as they had HUGE crim inal leverage and with losses across the board with lower hoiuse prices they are dead men walking
its just throwing moeny into a bootomless pit
They should let the banks goi and bailout the depositors and if the banks have been foudn to have lied about what they have on their balance sheets then the bosses go to jail for fraud
If I was in cahrge I could sort it out in one week and i have zero experience in banking but at the end of the day its just common sense and a sense of morality both of which are lacki8ng in our leaders and central bankers.
I'm surprised you defend KING who has doen as much damage if not worse than Bernanke and Greenspan

jules said...

A goiod articel here
If bankers give bonuses this year it really is time fdor the pitchforks
yeah really talented bankers and they give so much to society

jules said...

Brilliant 95 percent mortages are back, nothing changes

Knute Rife said...

If King is a terrorist, then everyone we have here is Satan incarnate. Scratch that, I don't believe Sir Mervyn is a terrorist, but several of our leading financial lights here are at least higher-order demons. And frankly, I turned down the sound when you started ranting about Keynesianism. The mess we're in is the result of guzzling Austro-Chicago Kool-Aid for three decades.

There is a fundamental, institutional difference between the Fed and the BoE: The Fed has a revolving door at all levels between itself and the finance industry that the BoE can't come close to. King is an example.

As for executions, you know I have know particular qualms about killing, but we can't come up with a death penalty procedure that even remotely satisfies due process. Personally, I'd just like to see a few players take the perp walk, instead of just Bonehead Bernie and some spear-carriers. On the other hand, "no executions" doesn't mean "no killing." As JFK said, "Those who make peaceful protest impossible make violent protest inevitable," and there are a lot of people walking around making noise about voting from the rooftops.

On a lighter note, I liked the sign at Occupy Wall Street that read, "I'll believe corporations are people when Texas executes one."

Julien S said...

Did Christian Noyer (Banque de France), who recently said Dexia was just an anomaly, meet his duty to faithfully report French banking risk in the past few years? Check my blog if interested.