Today, the presidency of the dysfunctional EU has passed to Cyprus. Who? What? You’re kidding? No, you’re bonkers!
Today, the presidency of the dysfunctional EU has passed to Cyprus. Who? What? You’re kidding? No, you’re bonkers! Just as a virulent new virus spreads across Europe called Banking Crisis Bail-out Fatigue, for which the authorities appear helpless to produce any known cure to relieve this morale-sapping symptom, yes, Cyprus steps up to lead the Euro-club. Its credentials for the job are impeccable, as its bankers need a billion bail-out too.
On Friday, Mario Monti, the unelected Italian leader, emerged from his euro-crisis summit bunker and claimed a double Italian victory over Germany, following Balotelli’s double-strike into the German net, but methinks he calls the shots on the bail-out too early.
The EMS, the latest financial bail-out silo being got ready in Brussels, will not be filled with toxic waste from the PIGS quite so quickly and easily as he thinks: first, the Karlsruhe Constitutional Court has to approve it, and then the Bundestag maintains a veto and the other parliaments must approve it too, and then the new European Banking Authority will provide oversight.
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None of this bail-out structure, however, will be in place this year, which is a great way of tackling a crisis. Why on earth the Italian and Spanish stock exchanges rose by 5-7 per cent on Friday is anyone’s guess.
The real point is this: any bail-out money handed to the busted banks is wasted dosh. Paying in money to a bank full of busted real estate loans and dubious sovereign bonds does nothing for recovery of the real economy. The European banks have failed to write off their dud loans and that is why there is no recovery in Europe, as proven by the contrary experience of Iceland and the US, where the losses were written off right away.
The situation in the UK is halfway between the two: RBS and Lloyds-HBUST know there cannot be any more bail-out money, so they have only written off a proportion of their bad debts, as the taxpayer realises he has lost most of Gordon Brown’s obscene bail-out extravaganza.
And it’s just got worse in the UK too. The basic function of a bank is that you pay in your dosh with the expectation of being able to withdraw it when you need it. This expectation was ditched at the Ulster Bank, NatWest and RBS over the past fortnight, on account of computer software glitches.
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Then we hear that RBS and Lloyds-HBUST have also been involved in the great LIBORgate scandal, currently engulfing Barclays, as they all retreat into their bunkers. These first two are the banks that the UK-taxpayers had to reach into their back-pocket for a cool £45 billion to save, as a result of buying other bust banks and paying far too much. Priceless isn’t it, to buy over-priced losses!
There is now no hope of these taxpayers ever getting much of that money bank, and yet these banks are still paying massive bonuses to so-called bankers. Now, that’s what I call truly bonkers.
