In These New Times

A new paradigm for a post-imperial world

Posts Tagged ‘failing banks’

Why is the Federal Reserve tapering the gold market?

Posted by seumasach on January 31, 2014

“In other words, perhaps the Fed understands that a dollar crisis is a bigger crisis than a bank crisis and that its bailout of the banks is undermining the dollar. The question is: will the Fed let the banks go in order to save the dollar?”

Paul Craig Roberts

RINF

30th January, 2014

In former times, the rise in the gold price was held down by central banks selling gold or leasing gold to bullion dealers who sold the gold. The supply added in this way to the market absorbed some of the demand, thus holding down the rise in the gold price.

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US banks no longer ‘too big to fail’

Posted by seumasach on October 13, 2013

America’s biggest banks are now in a position to go bust without state intervention, the Bank of England’s deputy governor declares

Telegraph

12th October, 2013

The deputy governor of the Bank of England has declared an end to the era of taxpayer bail-outs for the world’s giant lenders.

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The very ugly truth about RBS

Posted by seumasach on June 23, 2013

James Ferguson

Money Week

19th June, 2013

I wanted to talk to you today about a topic that is on everyone’s lips at the moment: the re-privatisation of RBS. Because I think there is a disturbing story here that is not being widely reported in the mainstream press. And it goes right to the heart of the economic problems that Britain will face over the next few years. It certainly affects your investments.

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Federal Reserve signals end to QE

Posted by seumasach on June 21, 2013

QE is unsustainable. As Michael Hudson said, it is a declaration of war against the rest of the world bringing inflation and instability almost everywhere. Its end heralds the crash, the writing off of the totally bankrupt financial sector and the beginning of reconstruction within a global, multipolar framework.

Violent sell-off in world markets after Federal Reserve signals end to QE

Guardian

20th June, 2013

Stock markets worldwide plummeted on Thursday, after theFederal Reserve chairman, Ben Bernanke, rattled investors by signalling an end to America’s drastic recession-busting policy of quantitative easing.

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Euroland breaks definitively with QE

Posted by seumasach on March 26, 2013

It’s either the banks or the real economy and Europe has just outlined a new approach completely divergent from that of the Anglosphere. In US/UK the survival of the banks is a categorical imperative and the means to achieve this is bailout without end via QE or money-printing. This statement from Europe signals that the banks are to allowed to go under or rather, implicitly,  a new banking system, Euroland regulated and subordinate to general economic development is to created. This is a welcome development and any Anglo-Saxon schadenfreude regarding the inevitable pain accompanying it will prove to be misplaced. The QE approach is painless only to the banks: it has already seriously depleted deposits and can only lead to falls in both the pound and the dollar with devastating consequences for economies based on importing essential goods.

Cyprus bail-out: savers will be raided to save euro in future crises, says eurozone chief

Telegraph

25th March, 2013

The new policy will alarm hundreds of thousands of British expatriates who live and have transferred their savings, proceeds from house sales and other assets to eurozone bank accounts in countries such as France, Spain and Italy.

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‘Too big to fail’ banks must be broken up – Fed official

Posted by seumasach on January 18, 2013

RT

17th January, 2013

US “megabanks” with large toxic assets accumulated during the crisis should be split into smaller units, according to a senior Fed official. Thus they won’t be able to use the “too big to fail” excuse to get another government bailout.

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John Williams – Accelerating great collapse & hyperinflation

Posted by seumasach on January 27, 2012

PoorRichard’s Blog

27th January, 2012

kingworldnews.com

John Williams, of Shadowstats, just issued the following warning and King World News wanted to pass it along to our global readers:  “The U.S. economic and systemic-solvency crises of the last five years continue to deteriorate.  Yet they remain just the precursors to the coming Great Collapse: a hyperinflationary great depression.  The unfolding circumstance will encompass a complete loss in the purchasing power of the U.S. dollar; a collapse in the normal stream of U.S. commercial and economic activity; a collapse in the U.S. financial system, as we know it; and a likely realignment of the U.S. political environment.”

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Bankers regain power as Davos summit ends with a big fudge

Posted by seumasach on February 2, 2011

Liam Hallidan

Telegraph

29th January, 2011

By 2010, the bank boss-class did join the Swiss mountain-top gab-fest, but were still the whipping boys – with politicians berating them for “indecent behaviour” and “morally indefensible” pay packages.

This year, the bankers not only turned up and largely avoided political opprobrium, but they even succeeded in setting the Davos agenda. While some financially-literate people may view this as progress, it is actually a disaster.

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Ireland:agreement reached- NAMA to be extended, raid on pension funds

Posted by seumasach on November 28, 2010

The NAMA Scheme will be extended to remove remaining vulnerable land and development loans from Bank of Ireland and Allied Irish Bank by end-Q1 2011

The State’s contribution to the €85 billion facility will be €17½ billion, which will come from the National Pension Reserve Fund (NPRF) and other domestic cash resources.

Government Statement

Announcement of joint EU – IMF Programme for Ireland

29th November, 2010

 

The Government today agreed in principle to the provision of €85 billion of financial support to Ireland by Member States of the European Union through the European Financial Stability Fund (EFSF) and the European Financial Stability Mechanism; bilateral loans from the UK, Sweden and Denmark; and the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) on the basis of specified conditions.

The State’s contribution to the €85 billion facility will be €17½ billion, which will come from the National Pension Reserve Fund (NPRF) and other domestic cash resources. This means that the extent of the external assistance will be reduced to €67½ billion.

The purpose of the external financial support is to return our economy to sustainable growth and to ensure that we have a properly functioning healthy banking system.

The external support will be broken down as follows: €22½ billion from the European Financial Stability Mechanism (EFSM); €22½ billion from the International Monetary Fund (IMF); and €22½ billion from the European Financial Stability Fund (EFSF) and bilateral loans. The bilateral loans will be subject to the same conditionality as provided by the programme.

The facility will include up to €35 billion to support the banking system; €10 billion for the immediate recapitalisation and the remaining €25 billion will be provided on a contingency basis. Up to €50 billion to cover the financing of the State. The funds in the facility will be drawn down as necessary, although the amount will depend on the capital requirements of the financial system and NTMA bond issuances during the programme period.

If drawn down in total today, the combined annual average interest rate would be of the order of 5.8% per annum. The rate will vary according to the timing of the drawdown and market conditions.

The assistance of our EU partners and the IMF has been required because of the present high yields on Irish bonds, which have curtailed the State’s ability to borrow. Without this external support, the State would not be able to raise the funds required to pay for key public services for our citizens and to provide a functioning banking system to support economic activity. This support is also needed to safeguard financial stability in the euro area and the EU as a whole.

Programme for Support
The Programme for Support has been agreed with the EU Commission and the International Monetary Fund, in liaison with the European Central Bank. The Programme builds on the bank rescue policies that have been implemented by the Irish Government over the past two and a half years and on the recently announced National Recovery Plan. Details of the measures are set out in the accompanying Notes for Editors.

The Programme lays out a detailed timetable for the implementation of the measures contained in the National Recovery Plan.

The conditions governing the Programme will be set out in the Memorandum of Understanding and the Government will work closely with the various bodies to ensure that these conditions are met. The funding will be provided in quarterly tranches on the achievement of agreed quarterly targets.

The Programme has two parts – the first part deals with bank restructuring and reorganisation and the second part deals with fiscal policy and structural reform. The requirement for quarterly progress reports covers both parts of the programme. When the documentation on the Programme is finalised, it will be laid before the Houses of the Oireachtas.

Bank Restructuring and Reorganisation
The Programme for the Recovery of the Banking System will be an intensification of the measures already adopted by the Government. The programme provides for a fundamental downsizing and reorganisation of the banking sector so it is proportionate to the size of the economy. It will be capitalised to the highest international standards, and in a position to return to normal market sources of funding.

Fiscal Policy and Structural Reform
The Ecofin has acknowledged the EU Commission’s analysis that a further year may be required to achieve the 3% deficit target. This analysis is based on a more cautious growth outlook in 2011 and 2012 and the need to service the cost of additional bank recapitalisations envisaged under the programme. The Council has today extended the time frame by 1 year to 2015.

The Programme endorses the Irish Government’s budgetary adjustment Plan of €15 billion over the next four years, and the commitment for a substantial €6 billion frontloading of this plan in 2011. The details of the Programme closely reflects the key objectives set out in the National Recovery Plan published last week. The adjustment will be made up of €10 billion in expenditure savings and €5 billion in taxes.

The Programme endorses the structural reforms contained in the Plan which will underpin a return to sustainable economic growth over the coming years.

The Government welcomes the support shown to Ireland by our Eurozone partners and in particular by the United Kingdom, Sweden and Denmark who have expressed their willingness to offer bilateral assistance. The Government also welcomes the assistance of the IMF.

As part of the Programme, Ireland will discontinue its financial assistance to the Loan Facility to Greece. This commitment would have amounted to approximately €1 billion up to the period to mid-2013.

Ends

28th November 2010
Notes for Editors – Programme Measures

Fiscal Measures in the Programme

Taxation
Lowering of personal income tax bands and credits or equivalent measures
A reduction in pension tax relief and pension related deductions
A reduction in general tax expenditures
Excise and other tax increases
A reduction in private pension tax reliefs
A reduction in general tax expenditures
Site Valuation Tax to fund local services
A reform of capital gains tax and acquisitions tax
An increase in the carbon tax

Programme Expenditure
Savings in Social Protection expenditure through enhanced control measures, structural reform measures, a fall in the live register and if necessary, further rate reductions.
Increase the state pension age to 66 years in 2014, 67 in 2021 and 68 in 2028.
Nominal value of State pension will not be increased over the period of the plan.

Public Service Costs
Reduction of public service costs through a reduction in numbers and reform of work practices as agreed in the Croke Park Agreement.
A reduction of existing public service pensions on a progressive basis averaging over 4% will be introduced.
New public service entrants will also see a 10% pay reduction.

Reform of Pension entitlements for new entrants to the public service
including a review of accelerated retirement for certain categories of public servants and an indexation of pensions to consumer prices.
Pensions will be based on career average earnings.
New entrants’ retirement age will also be linked to the state pension retirement age.
Other
Other programme expenditure and reductions in public capital investment

Structural fiscal reforms
a Fiscal Responsibility Law will be introduced including a medium-term expenditure framework with binding multi-annual ceilings on expenditure in each area
Additional unplanned revenues must be allocated to debt reduction.
The government will establish a budgetary advisory council to provide an independent assessment of the Government’s budgetary position and forecasts.
the voluntary 15 day rule for prompt payments is extended to the health service executive, local authorities and state agencies
measures to be put in place to cap the contribution of the local government sector to general government borrowing at an acceptable level.

Structural reforms in the Programme

Labour market adjustment
Minimum wage:
Reduce national minimum wage by €1.00 per hour to foster job creation for categories at higher risk of unemployment and to prevent distortions associated with sectoral minimum wages
Enlarge the scope for the “inability to pay clause”
An independent review of the Registered Employment Agreements and Employment Regulation Orders. Terms of Reference to be agreed with European Commission Services.
Reform of the unemployment benefit system to incentivise early exit from unemployment.
Steps to tackle unemployment and poverty traps including reducing replacement rates for individuals receiving more than one type of benefit (including housing allowance).
Streamline administration of unemployment benefits, social assistance and active labour market policies, to reduce the overlapping of competencies among different departments;
Enhanced conditionality on work and training availability;
Reform of activation policies:
improved job profiling and increased engagement;
a more effective monitoring of jobseekers’ activities with regular evidence-based reports;
the application of sanction mechanisms for beneficiaries not complying with job-search conditionality and recommendations for participation in labour market programmes

Review of the personal debt regime:
New legislation to be prepared which will balance the interests of both creditors and debtors.

Competition
Removal of restrictions to competition in sheltered sectors including:

Legal profession:
establish an independent regulator;
implement the recommendations of the Legal Costs Working Group and outstanding Competition Authority recommendations.

Medical Profession:
eliminate restrictions on the number of GPs qualifying, remove restrictions on GPs wishing to treat public patients and restrictions on advertising.

Pharmacy Profession:
ensure the recent elimination of the 50% mark-up paid for medicines under the State’s Drugs Payments Scheme is enforced.

Enhanced competition in open markets
empower judges to impose fines and other sanctions in competition cases in order to generate more credible deterrence
require the competition authorities to list restrictions in competition law which exclude certain sectors from its scope and to identify processes to address them.
Examination of the impact of eliminating the cap on the size of retail premises

Bank Recapitalisation and Restructuring Measures

The Programme for the recovery of the banking system will be an intensification of the measures already adopted by the Government. The programme provides for a recapitalisation, fundamental downsizing, restructuring and reorganisation of the banking sector. The outcome will lead to a smaller banking system more proportionate to the size of the economy, capitalised to the highest international standards, with renewed access to normal market sources of funding and focused on strongly supporting the recovery of the economy.

The proposed programme has been developed with the assistance of, and is endorsed by, our international partners.

The main elements of the programme are as follows:-

Building on the results of the Central Bank of Ireland’s Prudential Capital Assessment Review (PCAR) carried out earlier this year additional capital requirements have been set.

The domestic banking system will benefit from a substantial and immediate recapitalisation raising Core Tier 1 capital ratios to at least 12%.

This action, along with early measures to support deleveraging set out below will result in an immediate injection of €10bn of fresh capital into the banking system, above and beyond that already committed.

Further recapitalisations will take place in the first half of 2011 as necessary based on the results of a detailed review and updating of the banks’ capital needs following a revised PCAR exercise undertaken by the Central Bank of Ireland and involving stringent stress testing.

A Prudential Liquidity Assessment Review (PLAR) will be implemented by the Central Bank of Ireland for the domestic banks to identify deleveraging actions necessary to significantly reduce their reliance on short term funding.

A substantial downsizing of the banking system will be achieved through early and decisive actions including:-

Banks will be required to run down non-core assets, securitize and or sell portfolios or divisions with credit enhancement provided by the State, if needed.

The NAMA Scheme will be extended to remove remaining vulnerable land and development loans from Bank of Ireland and Allied Irish Bank by end-Q1 2011

This process will be carried out in a carefully balanced and controlled manner with the benefit of the substantial resources available to the banks for their funding and capital needs.

Banks will be required to promptly and fully provide for all nonperforming assets.

The restructuring of Anglo Irish Bank and Irish Nationwide Building Society will be swiftly completed and submitted for EU State aid approval.

A significant strengthening of the regulation and stability of the credit union sector will be carried out by end-2011

A special legislative regime to resolve distressed credit institutions will be introduced early in 2011.

Specific legislation to support immediate restructuring actions is in preparation.

The credibility and implementation of the programme is underpinned by the availability of a very substantial capital pool comprised of both national and international resources.

The programme builds on and complements the broad set of actions taken by the Government over the past two years to resolve the difficulties of the banking sector including the provision of guarantees, recapitalisation of the banks and NAMA.

The primary objective of this far-reaching programme is to rebuild international market confidence in the Irish banking system to enable the banks to revert to normal market funding in due course and reduce progressively their reliance on funding from the Eurosystem and guarantees and other financial support from the Exchequer.

The programme provides a strong foundation for a reformed and restructured banking system. The programme is underpinned by the large commitment of financial resources to recovery of the banking system and the support and endorsement of the programme by the IMF and the EU.

This will be crucial to ensuring that the banks play a full and vital role in underpinning economic recovery and the achievement of the Government’s objectives detailed in the National Recovery Plan.

 

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US rally: ‘Too big to fail’ not too big to jail

Posted by seumasach on May 18, 2010

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Financial Crisis: The Next Big Bank Bailout is on the Way

Posted by seumasach on March 17, 2010

Mike Whitney

Global Research

17th March, 2010

Housing is on the rocks and prices are headed lower. That’s not the consensus view, but it’s a reasonably safe assumption. Master illusionist Ben Bernanke managed to engineer a modest 7-month uptick in sales, but the fairydust will wear off later this month when the Fed stops purchasing mortgage-backed securities and long-term interest rates begin to creep higher. The objective of Bernanke’s $1.25 trillion program, which is called quantitative easing, was to transfer the banks “unsellable” MBS onto the Fed’s balance sheet. Having achieved that goal, Bernanke will now have to unload those same toxic assets onto Freddie and Fannie. (as soon as the public is no longer paying attention)

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