Other than gas ovens, one of the most efficient ways of destroying a nation and killing off its population is to induce skyrocketing youth unemployment. It destroys the future potential of the productive economy. It leads to soaring drug addiction, worsening health conditions, and explosive criminal activity, including epidemics of deranged homicides/suicides. It is the perfect circumstance for terrorist recruitment. And above all, it leads to the rampant cultural pessimism which has always been fascism’s breeding ground, and the underpinning of any successful depopulation policy — such as that promoted by the British Empire from Thomas Malthus, to Bertrand Russell, to Prince Philip and Queen Elizabeth themselves.
[1] In Europe today, youth unemployment (ages 16-24) has surpassed 50% of the labor force in both Greece and Spain — two of the leading victims of the policies dictated by the infamous Troika (the European Central Bank, the European Commission, and the International Monetary Fund). In fact, the youth unemployment rate has overall more than doubled in Cyprus and the five so-called PIIGS countries (Portugal, Ireland, Italy, Greece, and Spain) between 2008 and 2012. For example, Greece’s youth unemployment had more than doubled, from 22.1% in 2008 to 55.3% at the end of 2012. Spain’s had also doubled, from 24.6% in 2008 to 53.2% at the end of 2012 (and further soared to 57% in the first quarter of 2013). Ireland’s had more than doubled, from 13.3% to 30.4%. This is the period of the British Empire’s “solution” to the 2008 financial meltdown: hyperinflationary bailouts for their banks, coupled with fascist austerity for the population, as enforced by puppets such as Barack Obama, Tony Blair, and the like.
Maps comparing European youth unemployment in 2008 and 2012, present an even more sensuous picture. [2] [3] In 2008, “only” six European nations had youth unemployment rates of 20% or greater: Spain, Greece, Croatia, Italy, Portugal, and Sweden. None was higher than 25%. But by the end of 2012, the number of nations with youth unemployment above 20% had tripled, to 19. Of these, four had youth unemployment rates between 30-40% (Portugal, Italy, Slovakia, Ireland); and three exceeded 40% youth workforce unemployed (Greece, Spain, Croatia).
The tide of economic fascism is clearly, once again, sweeping Europe.
But the United States has fared no better. America on Barack Obama’s watch has seen the real youth unemployment rate soar by nearly 50%, from an estimated 23.8% in 2008, to 34.6% in the first quarter of 2013. (We have calculated real unemployment by taking notoriously- understated official unemployment, plus forced-to-work-parttime, plus discouraged/left-the-workforce). [4] [5] Back in 2008, there were “only” three states with real youth unemployment rates of 30% or higher: Michigan (34%), Rhode Island (31%), and California (30%). But by the first quarter of 2013, the tide of despair had spread to 60% of the states of the union: 30 states plus the District of Columbia had real youth unemployment rates of 30% or higher. Of these, five exceed 40% (Nevada 42.6%; Illinois 41.7%, Mississippi 41.2%, California 41.2%, and North Carolina 40.4%); and another 11 have rates in the range of 35-40%.
Should we not do as Franklin Roosevelt did, and stop the tide of fascism with Glass-Steagall and related economic policy measures… before it is too late?
According to figures published yesterday, the number of unemployed workers in Spain and France has reached all-time highs, as Europe’s economic collapse accelerates under the impact of the global economic crisis and austerity measures imposed throughout the continent.
In Spain, the National Statistics Institute (INE) reported that the country had 6,202,700 unemployed workers, the first time in history that over 6 million Spanish workers were jobless. Spain’s unemployment rate rose 1.14 percentage points, to 27.16 percent, as 237,400 jobs were lost. Spanish youth unemployment has reached 57.22 percent.
Fully 3.5 million of Spain’s unemployed workers have been out of work at least one year, and 2 million have been out of work two years or more. The unemployment rate would be even higher if some 280,000 young Spaniards had not left the country to look for jobs in 2012.
Nearly 2 million Spanish households have no job-related income at all, because all family members are out of work.
Since 2008, Spain has lost 4 million jobs, and the unemployment rate has increased by 20 percentage points. Spain’s unemployment rate now stands second among the euro zone countries, just behind that of Greece—whose unemployment rate has risen from 7.7 percent in 2008 to 27.2 percent earlier this year, amid a wave of destructive EU bank bailouts starting in 2009.
In France the number of “Category A” job seekers—those who had not worked at all in the last month—rose to a historic high of 3,224,600. The total number of job seekers registered at the Jobs Pole in France and its overseas departments hit 5 million last month. France’s unemployment rate stands at 10.6 percent, with the youth unemployment rate hitting 25.4 percent at the end of 2012.
The record figures in Spain and France are part of a broad rise in unemployment throughout the EU, centered on countries that have undergone EU bank bailouts since the outbreak of the global economic crisis in 2008.
The EU economy has lost roughly 1.8 million jobs over the last year—leaving a total of 26 million EU citizens, or 12 percent of the work force, without a job. Among other countries hit by EU bailouts, Portugal’s unemployment rate has risen from 14.8 to 17.5 percent, and that of Cyprus from 10 to 14 percent.
The Markit euro zone Purchasing Managers Index (PMI) figures published on Tuesday show Europe’s economic decline continuing. The PMI Composite Output Index and Manufacturing figures both came in at 46.5, below the reading of 50 marking the borderline between contraction and growth. For the first time in recent months, PMI figures for Germany, the EU’s leading economic power, also indicated contraction.
Compared to the same period last year, German and Italian new car registrations in the first quarter of 2013 were down 13 percent, while registrations in France fell 14.5 percent.
Mass unemployment is reaching levels seen only during the Great Depression, affecting a majority of youth in Greece and Spain. This is primarily a result of devastating austerity policies and budget cuts imposed by the EU after the initial economic collapse of 2008. Since then, the Greek economy has contracted over 20 percent and Spain’s economy by 5 percent.
The hemorrhaging of jobs is an irrefutable indication that the hundreds of billions of euros spent on bank bailouts and social cuts in Greece, Spain, France, and other European countries have not gone to fix the economy. Rather, they have helped the European financial aristocracy preserve their wealth by looting the economy, and slashing wages and social services for the working class.
In one recent report, France’s INSEE national statistics institute found that while French living standards fell 0.5 percent from 2009 to 2010 overall, the top 5 percent of the population saw their revenues rise. For the top 1 percent of the population, the increase was a whopping €89,400.
The counterpart to the accumulation of wealth on the summits of bourgeois society was the collapse of masses of working people into misery and forms of deep poverty previously unheard of in Europe. Soup kitchens and charity medical services are now critical to the survival of large sections of the Greek and Spanish populations.
In a recent speech, International Monetary Fund Deputy Managing Director David Lipton pointed to the risk that constant social cuts will draw all of Europe into an economic downward spiral, like what happened in Greece. He said, “The euro area could find itself facing the specter of policy quicksand—in which relentless balance sheet deterioration drags the economy in deeper and blunts the impact of even bold policy adjustment. We saw that scenario play out in Japan over the last 20 years.”
The class interests underlying this policy were bluntly spelled out in a recent interview by EU Commissioner Maria Damanaki. She told Greece’s To Vima radio: “The strategy of the European Commission over the past year and a half or two has been to reduce the labor costs in all European countries, in order to improve the competitiveness of European companies over rivals in Eastern Europe and Asia.”
These interests underlie the defeats inflicted on every attempt by the working class in Europe to shift EU policy since 2009. Protest strikes have been ignored, and industrial action isolated by the union bureaucracy and—where it was found necessary, as in the 2010 strikes of Greek truckers, French oil workers, and Spanish air traffic controllers—smashed by the security forces. The European ruling elites see the impoverishment of the working class as a necessary measure to boost their profits and competitive position on the world stage.
The main fear driving the ruling class is that of rising anger and opposition in the working class. On Monday, European Commission President José Barroso warned that austerity policies had reached “the limit of political and social acceptance.”
Nonetheless, European heads of state are not deviating from the basic framework of austerity. French President François Hollande indicated that no new measures would be taken to deal with the ongoing economic collapse in France: “We will not have growth in 2013. The only way forward is to fully use the measures we have introduced.”
All signs point towards an eruption of class struggles between the workers and the reactionary financial aristocracy throughout Europe.
The EU’s Eurobarometer polling organization recently released a poll that found deep hostility to the EU in six European countries. Some 42 percent of Poles, 53 percent of Italians, 56 percent of Frenchmen, 59 percent of Germans, 69 percent of Britons, and 72 percent of Spaniards said they did not trust the EU as an institution. Together, these countries total over two-thirds of the EU population of 500 million.
Hollande’s poll ratings have collapsed to 26 percent, the lowest ever for a French president in the Fifth Republic, while Spanish premier Mariano Rajoy’s ratings dropped to 19 percent in February.
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NIGEL FARAGE: EUROCRATS’ CYPRUS CASH GRAB A TEMPLATE FOR FUTURE STEALING
Published on Apr 24, 2013
RT’s Aleksei Yaroshevsky spoke to a known eurosceptic, the head of the UK Independence party, Nigel Farage. He believes the days of the Eurozone are numbered, and that people should withdraw their money from its banks before what happened in Cyrpus happens elsewhere.
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WHAT EUROPE CAN LEARN FROM ARGENTINA
Published April 26, 2013
Cyprus, Spain and other Eurozone nations have faced a robbery by the hands of international creditors. In the case of Argentina, the Kirchner government put the
sovereignty of the nation and the population first which is discussed in this interview. Now Argentina is one of the fastest growing economies of the world.
This is likely to be the biggest financial story of the month, a story that’s bigger than Cyprus, and a story that you’re not going to see in American mainstream media – not by a long shot. Let’s take this from the top, for BoomBustBloggers were warned weeks in advanced. On Wednesday, 27 March 2013 I published EU Bank Depositors: Your Mattress Is Starting To Look Awfully Attractive – Bank Risk, Reward & Compensation wherein I explained that the situation of extreme loss faced by Cyprus bank depositors, savers and bondholders will not be a unique story – as excerpted:
The deposit accounts that you were getting just a few hundred basis points for have developed:
The little app below calculates what return you should expect to receive to take on the risk of a potential 40% haircut. The second tab offers what recent Cyprus bank rates were. Do you see a disparity???
Now, the “Overbanked” article was posted back in 2010. That’s right, I warned about the two Irish banks listed in the chart above THREE YEARS ago, You’ve had plenty of time to mover your money out! Speaking of those Irish banks, I warned the Irish again a few weeks ago as well – with specificity - in Global Banking Crisis – How & Why YOU Will Get “Cyprus’d” As This Bank Scrambled For Capital!!! Here, I focused on Anglo Irish, already nationalized and being wound down. I warned that there will be unhappy returns, if there would be any, just like Cyprus – as excerpted:
First Off Let’s Make Bank Collapse Real…
To begin with, let’s make this Cyprus thing real, by showing a live example of what happens when to a real small business that had the gall to bank with Laikie Bank, from the Bitcoin forum I excerpt a post that puts things into perspective, re: bank account confiscation:
Anglo Irish Bank/IBRC bondholders will actually get some of their money back!
As if on cue, a day after my expose on Anglo Irish Bank and its shenanigans (see Global Banking Crisis – How & Why YOU Will Get “Cyprus’d” As This Bank Scrambled For Capital!!!), The Irish Business Post announces senior bondholders will get wiped out. That’s right, a 100% loss! Zilch! Zero! Nada! Now, that’s investing. That’s getting “Cyprus’d”, plus some!!! From Businesspost.ie: IBRC senior bondholders to be burned
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Of course, the story doesn’t end with the bondholders. Exactly as anticipated in the articles mentioned above, and as published in the Irish mainstream media over the weekend…
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As you can see, this is actually MUCH WORSE than the deal the Cypriots got. These Irish pensioners are facing a total wipeout – 100% LOSS!!!
If you’re not disenfranchised, yet, hold on… It get’s worse, much worse. The Irish Examiner published this today…
The ECB has gagged the Government from releasing any information in relation to the liquidation of the former Anglo Irish bank, IBRC. A senior official in the Department of Finance told the Irish Examiner they were under strict instructions from the ECB not to release any details to the public. “What they [ECB] have said from an early stage is that if there is any release, at all, then all negotiations are off. They do not want to discuss this in any forum, other than that of a member state and the ECB council,” he said. The department has received about 16 freedom of information requests in relation to the IBRC liquidation and is now considering adopting a policy position that would allow it to refuse all applications for the release of information.
Sinn Féin finance spokesman Pearse Doherty said the decision to liquidate IBRC was one of the biggest ever made by the State and he was concerned certain firms may have used insider information to secure payments. “The minister has refused several requests from me for information pertaining to the weeks and months before the event, specifically concerning whether certain sources in the know used confidential information to fast-track invoices in anticipation of liquidation.
So there you have it. Unless you’ve been hearing a lot about Irish bank collapse lately, it seems if you don’t hear it from Reggie Middleton and BoomBustBlog, you’re probably not going to hear it at all – so says the powers that be.
It’s not just Anglo Irish Bank, either. I’ve warned about several other Irish banks. Here’s another one I feel likely to give Irish savers a nasty surprise…
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You see, the banks can get away with this fleecing because the common person doesn’t get a hold of my information and analysis very often, at least not until it’s too late. But…… Guess what happened in the Irish mainstream media over the weekend, in the Irish Sun, the most popular rag on the most popular day….
Subscribers, can download ALL documents supporting shenanigans by these banks (click here to subscribe):
WHAT SHOULD THE UNITED STATES DO IF ONE OF THE BIGGEST BANKS IN IRELAND BLATANTLY DEFRAUDED U.S. INVESTORS?
By Reggie Middleton
Since I’m not a securities attorney, let’s get a basic understanding of where I’m basing my allegation – after all, I could definitely be wrong as a layman. From Wikipedia:
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of securities laws.[1] Offers of risky investment opportunities to unsophisticated investors who are unable to evaluate risk adequately and cannot afford loss of capital is a central problem.[2][3]
Securities fraud can also include outright theft from investors (embezzlement by stockbrokers), stock manipulation, misstatements on a public company’s financial reports, and lying to corporate auditors.
Characteristics of victims and perpetrators
Any investor can become a victim, but persons aged fifty years or older are most often victimized, whether as direct purchasers in securities or indirect purchasers through pension funds. Not only do investors lose but so can creditors, taxing authorities, and employees.
Potential perpetrators of securities fraud within a publicly traded firm include any dishonest official within the company who has access to the payroll or financial reports that can be manipulated to:
overstate assets
overstate revenues
understate costs
understate liabilities
Enron Corporation[27] exemplifies all four tendencies, and its failure demonstrates the extreme dangers of a culture of corruption within a publicly traded corporation. The rarity of such spectacular failures of a corporation from securities fraud attests to the general reliability of most executives and boards of large corporations.
So, with that layman’s understanding of what securities fraud is (along with my emphasis added), let’s move on.
The Bank of Ireland
In the 2008 Annual Accounts (Irish version of Annual Report) of Bank of Ireland (see attached, page 178) it states the bank gave a first floating charge in favor of the Central Bank of Ireland (an arm of the European Central Bank) and the Financial Services Authority of Ireland over the Banks ‘right, title, interest, benefit, present and future, in and to certain segregated securities listed in an Eligible Securities schedule.’
Fact: The BoI 2008 Irish accounts (~annual report) refer to the charges in their Disclosure Section (see attached page from 2008 accounts) where they describe the charge as being over ‘certain segregated securities.’
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I ILLUSTRATE HOW THE IRISH BANKING CANCER SPREADS TO THE UK TAXPAYER AND METASTASIZES THROUGH U.S. MARKETS
By Reggie Middleton
US retail investors and financial media tend to be a little… well… US-centric. They tend to ignore a lot of international happenings even though these events can, and often do, have a direct impact on the immediate US financial situation. I have ranted, raved, preached and prognosticated on the interconnectedness, and the inherent risks therein, of the global banking system. From my highly analytical ravings on Bear Stearns (pre-bust Is this the Breaking of the Bear?) to my more free form rants on Lehman (pre-bust Is Lehman really a lemming in disguise?), I think I have proven that being the lone voice in the investment wilderness is not necessarily an indicator of that voice being wrong. See Who is Reggie Middleton? for more on that topic. For now, let’s continue where we left off in “Ireland, You May Very Well Be Bust & I Make No Apologies For What I’m About To Show You” wherein I’m about to clearly demonstrate how contagion easily traipsed through geographic borders from Ireland to the UK to the US, and how this big bank seemingly omitted the evidence of such.
Note to professional and institutional subscribers: Please download the supporting documents for this report from BoomBustBlog’s subscription archive and depository – Ulster Bank/RBS Supporting Charge Documents. This file contains several hundred pages of documentation to support the assertions and allegations contained in this report (click here to subscribe).
Ulster Bank Ireland Ltd, has charges registered (see Supporting Charge Documents) with the Irish Companies Registration Office (CRO). The bank gave a first floating charge in favour of the Central Bank of Ireland (an arm of the European Central Bank) and the Financial Services Authority of Ireland encompassing “all its right, title, interest and benefit, present and future, in and to each of the securities of such a class or description as may from time to time be designated by the European Central Bank as eligible for sale and/or purchase, as the case may be, by the Bank under its standard form for the time being of Master Repurchase Agreement, which specification may be made by reference to particular classes of repurchase transactions, and which are included in the schedule of Eligible Securities provided to the Bank from time to time.”.
These charges were registered with the CRO on 15th February 2008, yet there is no mention whatsoever of these charges in the Banks 2008 Annual Accounts (see attached).
Ulster Bank is a 100% Owned Subsidiary of the UK (now taxpayer owned) Institution – The Royal Bank of Scotland (RBS)
This affects US investors as well and this piece should be well read by anyone in the US, UK or Ireland who has lost money investing in RBS/Ulster Bank Group.
rbs share price history
In 2008, RBS traded ADR’s in the U.S. under the symbol .NYSE:RBS. These ADR’s were traded OTC. This gives the SEC jurisdiction over the companies US securities.
What happened behind closed doors?
Ulster Bank gave a first floating charge in favor of the Central Bank of Ireland (an arm of the European Central Bank) and the Financial Services Authority of Ireland. U.S. investors would have had to rely on the contents of The Royal Bank of Scotland’s 2008 Annual Accounts which apparently (in my opinion) concealed the existence of the CRO registered charges to the Bank of Ireland.
Ulster Bank RBS charge doc 2 Page 1Ulster Bank RBS charge doc 2 Page 1 copyUlster Bank RBS charge doc Page 1Ulster Bank RBS charge Doc to Pfizer International Bank Page 1
I also attach charge documents that Ulster Bank entered into with Pfizer International Bank. I cannot find these charges in any disclosures.
If you look at the attached charge documents from Ulster Bank to the Central Bank you will see that the wording is different when compared to the charge documents of the other Irish Banks. It specifically states that a first floating charge was created by the Deed of Floating Charge over Eligible Securities for Liabilities Arising in Target2-Ireland. Having said that I can see no mention of these charges in the Annual Accounts for 2008. On page 72 (28) of the Annual Accounts it gives the only details that I can find of charges registered. It states that A registered charge exists over the assets of the Group, securing all borrowings and other obligations in whatever form that relate to the Group’s use of the Euroclear system, that are outstanding to Morgan Guaranty Brussels and to any other office of Morgan Guaranty Trust Company of New York. This looks as if it could be a double encumbrance of certain assets for the charge to the Central Bank of Ireland features very similar, all-encompassing language for Ulster Bank, which is a fully owned subsidiary of RBS. Although I’m not an international banking attorney, my layman’s eye sees double counting of collateral barring a clause that somehow excludes that covered by the charge over Ulster Bank.
There are also two charge documents for Ulster Bank to Pfizer International Bank. One is for 2009 and the other for 2010. I can see no mention of these in the 2009 and 2010 Annual Accounts.
These charge documents are also not apparent in the recent bank ‘stress testing’ conducted by the European Banking Authority, at least not in the summary results that the EBA have made available, reference RBS Stress Test.
I cannot see how the charge documents are disclosed in the RBS annual accounts (annual report). I see it mentions that the Bank provides collateral in the form of securities in repurchase agreements (footnote page 41). On page 60 it states the Group engages in securitization transactions of its residential loans which are generally transferred to a special purpose entity. This likely relates to the cashflows and not the principal. The charge documents relate to the principal (the actual loan). The registered charge (page 72) exists over the assets of the Group, securing all borrowings and other obligations whatsoever that relate to the Group’s use of the Euroclear system (privately owned by J.P.Morgan, http://en.wikipedia.org/wiki/Euroclear).
The charge documents are not covered in the Ulster Bank Annual Accounts or the SEC Group RBS Annual Report. I think that this is a serious misrepresentation of the Accounts/Annual Report. The charge is a floating charge over Secured Obligations (Repo Agreements) which means all present and future liabilities of Ulster Bank (100% owned by RBS). As stated Target2 is only a payment system. The true reasons for the charge increasingly appear to be that of emergency funding, for it also appears as if Ulster Bank was bust. This information should have been included in the SEC Group RBS Annual Report, especially when ADR’s were being traded.
RBS Stress Tests
The afore-linked copy of the RBS Stress Test results do not make it possible to determine whether the charge documents were included in the Stress Test, however it is worth pointing out that the charges do not appear in the annual accounts, so one could assume that they were not included in the stress test. The information is based on data supplied by each bank, via its respective national supervisor. Accuracy of this data is primarily the responsibility of the participating bank and national supervisor. This information has been provided to the EBA in accordance with Article 35 of EU Regulation 1093/2010. The EBA bears no responsibility for errors/discrepancies that may arise in the tables.
A Short Traipse Through Recent History & The Expense That Ultimately Befalls The UK Taxpayer
In 2007 Ireland had significant cross border exposure to UK and US banks through derivatives and property products. As I warned in 2007, the real estate bubble in the the US/UK popped in 2008, sending pathogenic contagion straight through the Irish banking system. The entire banking system started collapsing. On February 15, 2008, Ireland took extraordinary measures (which we will explore in depth a little later on) to mitigate said collapse, measures that many a layperson would deem misleading, if not fraudulent. RBS (Royal Bank of Scotland, one of the largest financial institutions in the countries of Ireland and the UK) was effectively nationalized by the UK and a bad bank was formed to purchase bad debt/products from the Zombie Irish banks in exchange for government bonds, backed by a country that just simply couldn’t afford it.
It was the UK taxpayer that footed the bill for this nationalization – as per Wikipedia:
The bonus payments paid to RBS staff subsequent to the 2008 United Kingdom bank rescue package have led to controversy. Staff bonuses were nearly £1 billion in 2010, even though RBS reported losses of £1.1 billion for 2010. More than 100 senior bank executives were paid in excess of £1 million each in bonuses. Consequently, former CEO Fred Goodwin was stripped of his knighthood in mid-January, and newly appointed CEO Stephen Hester renounced his £1 million bonus after complaints over the bank’s performance.
82 percent of RBS’ shares are now owned by the UK government, which bought RBS stock for £42 billion, representing 50 pence per share. In 2011, the shares were worth 19 pence, representing a taxpayer book loss of £26 billion ($40B). Historically, the RBS stock price went from a high of over 700 pence in early 2007 (taking into account a 3 for 1 stock split that took place later that year) to around 20 pence in late 2011.
… the UK Government (HM Treasury), as of 31 March 2012, holds and manages an 82% stake through UK Financial Investments Limited(UKFI), whose voting rights are limited to 75% in order for the bank to retain its listing on the London Stock Exchange. In addition to its primary share listing on the LSE, the company is also listed on the New York Stock Exchange. The group is based in Edinburgh, Scotland. In 2009, after the financial collapse, it was briefly the world’s largest company by both assets (£1.9 trillion) and liabilities (£1.8 trillion). In 2012, the UK government announced plans to bid for the rest of the RBS shares that it did not own, as it felt that “while the taxpayer owns over 82pc of the bank following a bailout in 2008, they bear 100pc of the bank’s huge liability risks”.
Part and parcel of the RBS problems was its purchase of Ulster Bank and its exposure to the Irish lending issues!
The app below allows the UK Taxpayer to calculate for themselves exactly what their individual contribution (pro rata) is to the government bailout of RBS.
I’ve taken the liberty of pre-populating the input fields for you, but if you don’t agree with the numbers then by all means insert your own!
Following my warning in February of 2008, Lehman filed bankruptcy in September sending an additional set of contagion shock through Ireland and its banking system, causing Ireland to issues bonds and further indebt itself to save its Zombie banks – again! This time through blanket bank guarantees backed by the full faith of the government.
In September of 2010, a large swath of said government guarantees for the banks were about to expire. Reference this excerpt from the book “Zombie Banks: How Broken Banks and Debtor Nations Are Crippling the Global Economy”:
In September 2010, some of Ireland’s government guarantees for bank debts were about to expire, which put U.S. Treasury officials on edge. If the guarantee wasn’t renewed, the banks would likely default on their bonds, triggering the next event in line: a slew of credit default swap (CDS) contracts on Irish banks’ debt. U.S. Treasury officials had reason to worry – the names backing those contracts were the largest U .S. banks, and they could end up paying billions in case of default. Any more weight on U.S. banks could be a tipping point to collapse. Treasury officials made inquiries to their counterparts at the Irish finance ministry asking about the course of action the country was planning to take and indicated their concern about possible default and its CDS repercussions. A year after having issued blanket guarantees on the banks’ liabilities the Irish government once again didn’t dare let the bank fail. Instead it ended up asking for financial assistance from the European Union (EU) and the International Monetary Fund (IIMF): the country had been pushed to the brink of collapse.
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Litigation
201294 r01o 09CV00300 Page 01rbs litigation
Indications of capital shortfalls in the Ulster Bank arrangement:
ULSTER BANK’S parent company, Royal Bank of Scotland (RBS), injected as much as £4 billion (€4.7 billion) into Ulster Bank last year, bringing its total investment in its Irish subsidiary to £10 billion (€11.8 billion) since 2008.
If you have believe that the information above actually identifies a gross misrepresentation of fact, omission or outright fraud, simply contact the SEC and let them know that Reggie Middleton suggested they look into it. You can actually use this form to convey my message.
And for those blokes in the UK, I suggest you drop a note to the Financial Conduct Authority. You can reach them via this link, tell them Reggie Middleton sent you. This was excerpted from their website (emphasis added):
We intervene when firms:
treat consumers unfairly
behave in ways that risk the integrity of the market
We supervise firms differently depending on their size and the nature of their business. This includes:
continuous conduct assessment for large firms and regular assessment for smaller firms
monitoring products and other issues to ensure firms play fair and don’t compromise consumer interests
responding quickly and decisively to events or problems that threaten the integrity of the industry
ensuring firms compensate consumers when necessary
Well, straight from the horse’s mouth. Have at ‘em. They should do the right thing, and EU media should pick up on this as well. You don”t want your 2,000+ pound/euro bank bailout investment to be handled solely by a blogger from NYC, do you?
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THE EUROPEAN HOMELAND SECURITY STATE. EUROPEAN UNION ANTI-TERROR DRILLS AND FEAR CAMPAIGNS
European Union Coordinated Counter Terrorism Exercise in Dublin
By R. Teichmann | Global Research
The events of 9/11 in the US not only led to the attack on several sovereign nations but the government under George W. Bush established the so called “Homeland Security” and proceeded to implement plans to curtail civil rights. First the “Patriot Act” was passed, then the “Natinal Defence Authrorisation Act”.
The combination of these acts and presidential “Executive Orders” transformed the American society. Where previously at least some basic rights existed a basicly lawless society was created. The territory of the USA has been declared a battleground. Americans can now be killed on US soil without trial or due process. They can be held indefinitely without charge or without ever knowing why. The inalienable rights believed to be guaranteed by the Bill of Rights and the Constitution have proved to be illusions.
All of this was made possible by creating fear among the population through permanent media propaganda about a terrorist threat. Americans and people in the “western world” were and are made to believe that in order to have security and live in peace they have to give up their liberty. They were made to believe that it is not the foreign policy of their own governments that creates terrorism but enemies envying their freedom and prosperity.
Is Europe and Ireland now heading down the same road? In an article published last week the journal.ie reported (emphasis added):
A NUMBER OF gardaí took part in a European Union Coordinated Counter Terrorism Exercise in Dublin this afternoon.
The operation included a simulated hostage rescue scenario that required sea-based, land-based and airborne elements.
Three other police forces from European jurisdictions attended the exercise at the ESB Generating Station at Pigeon House Road in Dublin 4.
Photo credit: Leon Farrell/ Photocall Ireland; source
The fear-based propaganda did not catch on so much in Europe where large portions of the populace do not believe in the goods of fighting wars for corporate interests in various regions of the world. The desire for peace after the experiences of 2 devastating world wars has been used cleverly to bring about the Europe we see today. The awarding of the Nobel Peace Prize to the EU was an attempt to keep the myth that Europe was build to maintain the peace alive a little longer.
In reality western Europe, later the EU, was always dominated by the interests of the USA. During the cold war it was the beachhead against the USSR and after its breakdown it became the tool to expand the sphere of US/NATO domination to the nations of eastern Europe which just won their freedom. Since World War 2 western Europe followed in the foootsteps of the US in all major questions of war and peace. In one way or another European nations were involved actively in all recent US/NATO led wars.
While recently Europe is engaging more actively in warfare (Libya, Mali) the economic situation inside the EU is anything but stable and the political situation is becoming more and more unstable as people across the EU begin to question the direction in which the EU is going. The currency system is on life support, unemployment is generally rising, people across the EU become slowly but surely disillusioned about the “European Project”. It is in those times when external threats come in handy to deflect attention away from the problems and to create fear. This is the context in which the recent EU-wide anti terrorist drill on the 17th and 18th of April took place. It was led by the Atlas Network.
Planned in 1996 the “Atlas Network” was officially created in 2001 using the pretext of the 9/11 events. It is a network of specialist units of national police forces of all 27 European member states. It works under the supervision and is financed by the “Directorate General of Home Affairs” of the EU Commission. Neither the EU Commision nor the “Directorate” are democratically elected entities. As these units are answerable not to national goverments but to the “Directorate” they are removed from democratic control and thus morph into kind of “Federal Special Police”. The participation of foreign police units in the excercise in Dublin demonstrates that under this network these units can dispatched everywhere in the EU.
Interestingly it is the Boston Marathon Bombing which provides the pretext for holding the EU wide drills. Here is the Press Release of the EU Commission:
European Commission
Press release
Brussels, 17 April 2013
The ATLAS Network prepares for the biggest anti-terrorism exercise at EU level
On April 17 and 18, 2013, the EU Member States anti-terrorist police forces are uniting as part of the European sponsored ATLAS Network, which carries out the most complex preparation and crises response simulation so far at European level. The simulation involves simultaneous terrorist attacks in 9 different EU Member States (Austria, Belgium, Ireland, Italy, Latvia, Slovakia, Spain, Sweden and Romania).
EU Commissioner for Home Affairs, Cecilia Malmström said: “The fight against terrorism is one of the key challenges to our internal security. Terrorism does not recognise borders and maintaining public security is a complex challenge which requires the coordination of our efforts. I believe that the cooperation between police authorities in Europe is more necessary now than ever and I welcome the exercise of the ATLAS network.”
The ATLAS Network contributes to increasing the proficiency and expertise of special intervention units, by establishing common platforms for training and tactics, sharing equipment, and by establishing close cooperation in trans-border areas of Member States, in turn benefitting the public security.
Past terrorist attacks, carried out both by individuals and groups, both abroad and in Europe have shown great sophistication and coordination by the terrorist groups. The 2008 Mumbai coordinated attacks, the Al Qaeda 2012 attacks on the Algerian gas production plant, as well as the recent Boston marathon bombings highlight the need to increase protection against attacks on both critical infrastructures and other public areas in a national and cross-border context. In order to ensure equal protection for all citizens in the EU, the ATLAS Network exchanges best practices and procedures and undertakes joint training exercises. In order to prepare against terrorist attacks, real life simulations of terrorist acts are carried out by Atlas members of the anti-terrorist units from different Member States.
The 2013 practical exercise, named “Common Challenge” simulates terrorist attacks in 9 different EU Member States in different areas of public life. Simulated terrorist targets include attacks on power plants, schools, and several transport modes (shops, busses and trains). Therefore, the Atlas “Common Challenge 2013”, the largest of exercise of this kind, will help practice and draw lessons on how to further strengthen preparation and crises response. The European Commission’s Directorate-General for Home Affairs is responsible for the coordination of the simulation exercise, which is carried out jointly with the ATLAS Presidency held by the German Police Special units (GSG9).
The ATLAS Network is an example of the pro-active stance against terrorism and underlines the solidarity and cooperation between European Union Member States as set in Article 222 of the Lisbon Treaty, contributing to ensuring the protection of citizens and public security in EU.
Background
The Atlas Network, created in 2001, is an association consisting of special police units of the 27 EU Member States working on countering terrorism and criminal acts. The Network is financed and supported by the European Commission, Directorate General for Home Affairs. The goal of Atlas Network is to improve cooperation among the police units and to enhance skills by training and exchange of best practices.
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TAKE YOUR MONEY OUT OF THE EUROZONE
by Egon von Greyerz
Matterhorn Asset Management AG / Gold Switzerland
Today the UKIP leader and MEP Nigel Farage told the European Parliament that the Troika (European Commission, ECB and IMF) are common criminals stealing money from people’s bank accounts. He warns depositors to get their money out of the Eurozone. He calls the EU the New Communism having Power without Limits.
This is a powerful speech by Farage. Getting the money out of the Eurozone is of course not enough. Investors must get their money out of the banking system worldwide. See my recent piece “Get Your Assets out of the Banks – NOW”.
The situation in the banking system is critical not only in the EU but also in the USA, Japan and China. The headline in the Financial Times today is “Warning on “out of control” China debt”.
In a bankrupt financial system it is critical to preserve wealth by holding gold outside the system.
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CFR APPLAUDS EUROPEAN UNION’S “REAL SUBVERSION OF SOVEREIGNTY”
U.S. Secretary of State John F. Kerry was in Brussels, Belgium, on April 22 to meet with European Union officials, including European Commission President Manuel Barroso, and to promote the administration’s new push for congressional approval of the Transatlantic Trade and Investment Partnership (TTIP). President Obama is calling upon Congress to provide him with Trade Promotion Authority (TPA), also known as “fast-track” to push the TTIP and the Trans-Pacific Partnership trade pact through Congress with little debate and no amendments.
The New American has been following and reporting on the efforts to conclude a TTIP and TPP for many years, throughout the Clinton and Bush administrations. One of the most important objections — though not the only one — regarding both of these efforts is that throughout the various iterations and proposal it is very apparent that the architects and proponents of the agreements are being thoroughly dishonest. They are publicly packaging and promoting the agreements as “trade agreements” when, in fact, they have been designed as evolving projects that will progressively “integrate” the economies and political systems of the signatory nations into a supranational regime modeled along the lines of the European Union.
Dennis Behreandt’s article “Transatlantic Two-Step” of May 10, 2008, during President George W. Bush’s administration, is one of the many articles we have published that details the efforts of globalist elites in organizations such as the Council on Foreign Relations, the Transatlantic Policy Network, the Brookings Institution, the Carnegie Endowment for International Peace, and others, to use the battering ram of trade agreements to smuggle political and economic integration schemes that are aimed at destroying national sovereignty.
Recently, the Council on Foreign Relations (CFR) held a panel discussion at Princeton University entitled “The G20: Prospects and Challenges for Global Governance.” (See video below.) There are many interesting and revealing comments made by the panel participants, but an admission by Eurasia Group President Ian Bremmer is especially noteworthy, in that it publicly confirms what critics of the European Union have been saying for decades, but which CFR globalists like Bremmer have usually denied. Bremmer admits that “there’s real subversion of sovereignty by the EU.”
The CFR panel included:
• Nicolas Berggruen, Chairman of the Berggruen Institute on Governance and coauthor of Intelligent Governance for the 21st Century: A Middle Way between West and East;
• Ian Bremmer, President, Eurasia Group;
• Stewart M. Patrick, Senior Fellow and Director of the International Institutions and Global Governance Program at the Council on Foreign Relations; and
• Anne-Marie Slaughter, Bert G. Kerstetter Professor of Politics and International Affairs at Princeton University
Professor Slaughter served as the presider of the CFR panel discussion. The context of the Bremmer quote was a venting of frustration by the panelists over the “ineffectiveness” of the G20 process. Professor Slaughter and Mr. Berggruen particularly argued that the G20 needed to be given actual powers that would enable it to do more to effect global governance. Unfortunately, from the panelists’ viewpoints, national sovereignty and national interests get in the way of this objective. This is where Mr. Bremmer commented (see the video at 18:30 minutes): “The EU is much more significant. There’s real subversion of sovereignty by the EU that works.”
It would appear that the panelists all favored this type of EU-style of sovereignty-subverting “governance.”
Secretary Kerry, of course, is also a member of the CFR, as is our top trade negotiator Michael Froman, a former Citigroup exec (and bailout beneficiary) who is now Assistant to the President of the United States and Deputy National Security Advisor for International Economic Affairs.
The Transatlantic Trade and Investment Partnership and Trans-Pacific Partnership would effect the same kind of “real subversion of sovereignty.”
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EUROPEAN UNION CITES BOSTON ATTACK TO JUSTIFY MAJOR ANTI-TERRORIST OPERATION
By Chris Marsden
24 April 2013
The growing threat to democratic rights internationally was underscored by the fact that, just two days after the Boston bombing, the latter was being cited in a press release of the European Union (EU) Commission to justify a massive continent-wide anti-terrorism operation.
On April 17 and 18, anti-terrorist units of numerous EU member states organised in the ATLAS [Army Tactical Level Advanced Simulation] Network carried out what was described as “the most complex preparation and crises response simulation so far at European level.”
The operation involves simulated and simultaneous terrorist attacks in nine different EU member states—Austria, Belgium, Ireland, Italy, Latvia, Slovakia, Spain, Sweden and Romania.
Justifying the operation, an EU Commission press release said, “The 2008 Mumbai coordinated attacks, the Al Qaeda 2012 attacks on the Algerian gas production plant, as well as the recent Boston marathon bombings highlight the need to increase protection against attacks on both critical infrastructures and other public areas in a national and cross-border context.”
The exercise, code-named “Common Challenge,” simulated attacks on targets including power plants, schools, shops, busses and trains.
EU Counter Terrorism coordinator, Gilles de Kerchove, said of the April 17-18 operation, “This initiative is the largest anti-terrorism simulation exercise to take place in Europe, and is being carried out by the special intervention units of several Member States.
The scale of the operation was indicated by the best reported exercise, which took place in Kolarovo, Slovakia, involving police counter-terrorism units from Hungary, Romania, Slovenia, the Slovak Lynx commando and 5th Special Force Regiment.
The scenario for this particular exercise was inspired by the Beslan school hostage crisis in 2004. According to Military Photos, “The siege was going on for around 3 hours and there were 335 students and teachers taken as hostages. Several of students were psychically traumatised and had to be medically dismissed from [the] exercise.”
The small report, together with an extensive and important collection of photos, can be seen here.
In Norway, more than 100 officers from Norway, Sweden, Finland and Denmark trained to enter one of the Color Line ferries from police boats and helicopters, according to Aftenposten. Two Swedish police helicopters with snipers escorted during the operation, based on the potential hijacking of the ferry with 210 passengers and a crew of 40.
In Ireland, the Gardaí staged a simulated hostage rescue scenario on the River Liffey and at a decommissioned power station in Dublin, comprised of sea-based, land-based and airborne elements.
According to the Irish Independent, “Heavily armed members of the gardai’s special intervention squad, the Emergency Response Unit (ERU), are gearing up for a key role in preventing a cross-Border terrorist attack during the G8 world leaders’ summit in June.
“The ERU will be deployed in patrolling Border routes into Northern Ireland, including the network of waterways that could be used to launch attacks on politicians and top economists.”
The article explained, “The overall scenario, central to all exercises, deals with the threats posed by a fictional terrorist organisation, the Global Liberation and Revenge Army.”
ERU officers “are equipped with Heckler and Koch MP7 machine guns and Sig Sauer semi-automatic pistols and they also have access to Benelli 12-gauge shotguns and Heckler and Koch 33 rifles.”
The ATLAS Network was created in 2001, consisting of special police units of the 27 EU member states. The ATLAS presidency is held by the German Police Special units (GSG9). Germany played the leading role in the formation of ATLAS after September 11, 2001, but the organisation includes two French units, GIGN for airplane raids and RAID for raids on trains and busses, and Britain’s CO19 for raids in subways.
The implications of the type of operations undertaken under the ATLAS framework are indicated by the presence of Britain’s CO19 unit. Also in 2001, Britain launched Operation Kratos, setting a shoot-to-kill policy for the Metropolitan Police when dealing with suspected suicide bombers.
On July 22, 2005, in the aftermath of the July 7 London bombing, innocent Brazilian Jean Charles de Menezes was shot dead by plainclothes officers without warning while he was seated on a train at Stockwell tube station. Officers wrestled him to the ground and fired seven bullets into his head at point blank range.
There is a profound connection between the response of the US police and security services to the Boston bombing and an operation on the scale of that which took place throughout Europe two days later.
For over a decade now, every country has witnessed an assault on democratic rights and the passage of legislation in many cases providing the framework for a police-state regime. What that looks like was shown in Boston as an entire city was placed under lockdown. It was on display in Europe April 17-18 in the form of muscle-flexing by state forces in nine countries.
The choice of Ireland, Italy and Spain, three of the EU countries targeted for savage austerity measures, and impoverished eastern European countries such as Latvia, Slovakia and Romania, indicates the broader considerations animating the ruling class. All legal measures passed in the name of combating terrorism that strengthen the repressive powers of the state are available for use against the rising wave of social and political discontent among millions of workers as a result of the wholesale destruction of jobs and vital welfare provisions now underway.
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PARIS HIT BY PROPERTY FREEZE AS TAXES DETER BUYERS
By Francois de Beaupuy -Bloomberg
April 23, 2013
At least one in four Paris apartments listed by realtor Agence Etoile can’t be sold, even with mortgage rates at record lows, as buyers and sellers fail to agree on price, the company’s director said.
“I have some inventory that’s too expensive and sellers don’t want to lower prices,” Christine Perrissel said in an interview. “Buyers are just much more selective.”
Across France, an economy that’s stalled for two years, joblessness at a 15-year high, property prices near record highs and new taxes have made households reluctant to borrow to buy homes. While Europe’s debt crisis prompted banks to tighten credit, since the start of this year they’ve offered more attractive terms to lure customers and meet lending targets, after borrowing plunged in 2012.
The average home-loan rate fell 0.8 percentage point from a year ago to a record low 3.34 percent in the first two months of the year. Still, new mortgages granted in the 12 months through February slid 27 percent from a year earlier to 98.4 billion euros ($129 billion), according to the Bank of France.
New home sales fell 18 percent in 2012 to 77,900. Existing home sales declined 12 percent to 709,000, with the drop worsening to 22 percent in the year to February. The average housing investment funded with loans represented 3.73 years of the buyer’s income in March, the lowest since January 2010, a study by lender Credit Logement SA and polling firm CSA shows.
Hollande Taxes
The data show that as rates fall, the market still hasn’t fully shaken off the gloom of 2012, when real estate purchases plunged as banks tightened mortgage lending and after former President Nicolas Sarkozy and his successor Francois Hollande, elected in May, added property taxes to cut the country’s deficit.
Hollande, the first Socialist president in France since 1995, has called on those “with the most to show patriotism” in tough times. He’s raised income taxes, those on capital gains from property, as well as wealth and inheritance levies. That prompted Gerard Depardieu, who played Obelix in films about one of France’s most beloved fictional characters, to move to Belgium.
“We’ve had a catastrophic start of the year in January and February with the tax squeeze,” said Marc Julien, founder and chief executive officer of Pierre Invest, a broker specializing in new properties for the Paris region, referring to the property taxes.
Sweetened Terms
March and April saw some improvement as banks and real estate companies offered sweetened terms, he said. Julien, who was at a property trade fair this month, said he’s giving up half his commission to pay for kitchens and waiving transaction fees for each contract signed at the event.
Still, 52 percent of banks said demand for housing loans dropped in March, when some lenders tightened requirements slightly, according to a Bank of France survey published on April 11. Some banks increased margins on the riskiest loans.
“Banks remain cautious in granting loans because of unemployment and the start of a price decline,” said Sandrine Allonier, head of economic studies at online credit broker Meilleurtaux.
French home prices, which surged 163 percent in the past 15 years, have slipped 2.9 percent from a peak in 2011, according to the national statistics office Insee.
Banks are still “competing strongly to lure the best borrowers,” Allonier said, adding that lenders may make it more attractive for such property buyers. “Banks still have room for maneuver and mortgage rates can fall lower,” she said.
More Liquidity
Liquidity at banks was bolstered after the European Central Bank plowed 1 trillion euros into the financial system through cheap three-year loans in December 2011 and February 2012.
The French 10-year government bond yield, a benchmark for home loans, fell to 1.704 percent at 12:57 p.m. in Paris, the lowest since Bloomberg began compiling data on the securities in 1990. The previous record of 1.709 percent was set on April 8, four days after ECB President Mario Draghi said policy makers “stand ready to act” to bolster the region’s flagging economy.
Banks “are making hefty margins at the moment, so they’re asking for more production as funding conditions are even more favorable,” Philippe Taboret, deputy CEO of Cafpi SA, France’s largest mortgage broker, said in an interview. “Each week, we’re hearing ‘we must lend, last year was a bad year.’”
The average term of home loans in March averaged 205 months, about 17 years, up from a seven-year low of 199 months in January, when rules were tightened on tax write-offs for investment properties and interest-free loans for first-time buyers, according to the CSA-Credit Logement study.
Purchasing Power
“Lowering rates and extending durations are ways to provide extra purchasing power,” Cafpi’s Taboret said. Lenders including Caisse d’Epargne and BNP Paribas SA (BNP) “are very willing to lend,” while Societe Generale SA (GLE) is more reticent, he said. Banks are coming up with one-off discount offers, while stopping short of a rate war, he said.
Joelle Rosello, a spokeswoman at Societe Generale, declined to comment. The bank’s lending unit didn’t have a stand at this year’s property fair. Caisse d’Epargne, which is offering 20- year fixed-rate mortgages at 2.95 percent, advertises its policy with a poster asking: “Who says the credit tap is closed?”
Banks are seeking long-term customers through their home loans, Meilleurtaux’s Allonier said. First-time home buyers may make renovations, buy insurance, cars and open up savings accounts, she said.
Best Clients
“The best clients, such as households with annual income over 60,000 euros and 15 percent down payments, can get an extra discount of up to 0.4 points and borrow at 2.7 percent over 20 years, ” Allonier said.
For first-time buyers earning less than 1,800 euros a months, banks “are a bit tougher,” Pierre Invest’s Julien said.
“Banks are now asking for at least a 10 percent down payment, and are unwilling to lend over more than 20 or 25 years, while they used to go over 30 years,” he said.
They’re more willing to lend to safer borrowers, Cafpi’s Taboret said.
“Markets are excluding the most fragile first-time home buyers as subsidies have been trimmed and amid unemployment concerns,” he said. “For good clients, banks won’t hesitate a second to fund even 100 percent of the property value, even over 30 years.”
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PARIS RIOTS AFTER GAY MARRIAGE VOTE
Police fought running battles with protesters in central Paris last night after the French parliament approved legislation authorising same-sex couples to marry and to adopt children.
The vote, which made France the fourteenth country in the world to legalise gay marriage, was hailed by supporters as an epoch-defining commitment to equality. But it sparked fury among opponents.
As protest marches turned violent, stones, bottles and iron bars rained down on riot police units brought in to parliament. They replied by firing teargas at the demonstrators.
Wealthy households would face new taxes on property and other assets under German plans to prop up the struggling eurozone.
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By Ambrose Evans-Pritchard | telegraph.co.uk
Senior advisers to Chancellor Angela Merkel are pushing for better-off households to pay towards the cost of any future bail-outs for the weaker members of the single currency.
The proposals, from members of Germany’s council of economic experts, raise the prospect of taxes being imposed on property in a country like Spain if its government was forced to seek a bail-out.
The council, known as the “Five Wise Men”, is often used to test new policies that are later adopted officially.
The German suggestion is the latest sign that Berlin is intent on imposing even tougher rules on weaker southern euro members in exchange for using its economic might to support their finances.
As well as inflaming tensions between Germany and its smaller southern partners, the suggestion could also mean that Britons with holiday homes are dragged deeper into the eurozone crisis.
Around 400,000 Britons live or own homes in the south of Spain, which is suffering a deep recession that is hampering Madrid’s attempts to balance the public finances and stave off a bail-out.
Senior figures in Germany are now arguing that some richer home owners in countries like Spain, Portugal and Greece have so far avoided paying their fair share to rescue the euro, leaving Germany paying too much.
Taxes on property or other assets would mark a significant change in Europe’s approach to funding bail-outs for eurozone members. Until now, the cost of rescue packages for countries like Ireland, Greece and Portugal has fallen largely on people who invest money in either those countries’ bonds or – in the case of Cyprus – bank accounts.
Prof Peter Bofinger, an adviser to Mrs Merkel, said that levies on bank accounts are the wrong way of funding bail-outs, because rich people are able to shift their money out of the country.
“The resourceful rich just move their money to banks in northern Europe and avoid paying,” Prof Bofinger told Der Spiegel, a German magazine.
Instead of taxing cash, European Union governments should in future target property and other, less mobile assets, he said.
“For example, over the next 10 years, the rich should give up a portion of their assets,” Prof Bofinger said. Spain was last year forced to seek international help to prop up its banks. Despite recent signs of progress, some analysts believe the Spanish government itself could also have to seek a bail-out in order to pay its debts.
Spain is suffering from the bursting of a huge property bubble that has left many home owners struggling to sell houses for much less than the price they paid.
A “sovereign rescue” of Spain would dwarf any previous eurozone bail-out package, with Germany again likely to pay the lion’s share.
Mrs Merkel, who seeks re-election later this year, is coming under increasing pressure to drive an even harder bargain in Europe from German voters unhappy at footing the bill for what they see as southern profligacy.
Southern eurozone governments have argued that it is right for Germany to pay more because it is wealthier and because its economy has gained so much from the single currency.
But German economists are now challenging that argument. They say that new figures taking into account property values show that people in many southern countries are actually wealthier than their German counterparts.
Prof Lars Feld, another “wise man”, highlighted a recent study by the European Central Bank, which Germans say show that the people in bailed-out countries are often better-off than those in Germany. Less than half of Germans own their own home, lower than the rate in many southern eurozone members.
The ECB study found that the “median” wealth in Cyprus is €267,000 (£227,600), compared to just €51,000 in Germany.
The median or midpoint level – which strips out the distorting effect of the super-rich – was €183,000 for Spain, €172,000 for Italy, and €102,000 for Greece, and even €75,000 for Portugal.
Average wealth in Cyprus is €671,000, far higher than in the four AAA creditor states: Austria (€265,000), Germany (€195,000), Holland (€170,000), Finland (€161,000).
Prof Feld said the report showed that people in the crisis countries are richer than the Germans. “This shows that Germany has been right to take a tough line of euro rescue loans,” he said.
Alternative für Deutschland, a German eurosceptic party, is putting Mrs Merkel under increasing pressure in her response to the eurozone’s prolonged crisis.
Many members of the new party, which held its first conference on Sunday, want Germany to pull out of the euro and revert to the Deutschmark.
Ignore the latest Justin Bieber antics! Pay no attention to the continuous CNBC cheerleading for the S&P 500. Wake up and smell the coffee brewing in Cyprus! You’ll be ahead of the investing public, currently tranquilized by the belief that risky assets will never fall again with Ben Bernanke in charge.
This brewing Cyprus issue is far bigger than the market believes…
By now you probably know about the “deposit tax” the EU and IMF imposed on Cyprus. It was a condition of a bailout loan. Politicians in northern Europe, including German Chancellor Merkel, need to convince the voting public that bailouts won’t cost them a penny (fat chance).
It will be interesting to see how, exactly, the Cypriot government plans on ever reopening its banks. A devastating bank run is exactly what to expect immediately after banks reopen. Permanent psychological damage was done the moment the deposit tax (theft) was proposed. Cyprus’ role as an international banking hub is finished. So to mitigate a run of depositors out of Cyprus, government authorities will feel they have to impose capital controls.
As I write, another plan is getting leaked: Uninsured depositors of Cyprus Popular Bank could lose up to 40% of their savings. International depositors won’t know when (or if) they will regain access to their accounts. Liquid demand deposits may be forcibly converted into term deposits. If depositors need liquidity to compensate for getting locked out of Cyprus accounts, they’ll sell assets elsewhere. This hardly is a bullish development.
Depositors in Spain and other peripheral EU countries will be watching closely. If EU and IMF officials think they can control a panicked crowd of depositors — now that they’ve opened Pandora’s box — they are mistaken.
Spaniards, Greeks, Portuguese and Italians should fear capital controls as much as a deposit tax. Some depositors will run for the border — just in case capital controls arrive in their own country.
In a recent note, David Goldman, president of Macrostrategy LLC, explains how this might play out in Spain:
“Given the unusual character of the Cypriot banking system, nicking large depositors was inevitable. No one will weep for them.
“The IMF and EC decision to tax small depositors, though, was an important signal that retail investors will not be spared in future bank reorganizations. Cyprus may adjust the tax to reduce the levy on small depositors.
“It seems naive to think that the international organizations merely blundered into a measure that threatens systemic problems. On the contrary: This appears to have been a deliberate signal about wealth taxes to come.
“It’s a matter of numbers. We think the Spanish banks are holding up rotten real estate loan portfolios by capitalizing interest, such that all their [subordinated] debt and perhaps some of their senior debt should be bailed in.
“But the problem can be postponed only so long. The market has bought into the Spanish bank story in a big way…”
Little by little, we will discover more about the “rotten real estate loan portfolios” in Spain. Shareholders of Santander (SAN) and BBVA Group (BBVA) won’t like what they see. Bloomberg ran a story recently on the Spanish banks. Apparently, they’ve finally decided to clean out their construction loan portfolios. There is an element of social pressure in this process. No bank wants to go first; but once the cleansing process starts, every bank follows.
Consequently, we will see a surge in bankruptcies among Spanish real estate developers. Unemployment will jump higher. More empty properties will come on the market, pushing prices lower. The Spanish public and EU officials will each pressure the Rajoy government to move in a different direction.
Spain’s banks have not yet been properly restructured, and until they are, the problems won’t go away.
Recent reports published by a number of statistical organisations reveal just how massive and rapid the pauperisation of the Spanish working class has been.
Since the eruption of the global economic crisis in late 2007, the Spanish ruling class, along with its international counterparts, has been engaged in a social counterrevolution. Not since the victory of Franco’s fascist forces in April 1939 has the Spanish working class suffered such a massive drop in its living standards.
The rightwing Popular Party (PP) government and its Socialist Party (PSOE) predecessor along with regional and local authorities of various political persuasions, including the Communist Party-led United Left have imposed one draconian austerity package after another, involving cuts in health care, education and social services and increases in taxes and electricity, gas and water bills.
The latest data, published by the Catholic Church-run charity Cáritas in “Inequality and Social Rights: Analysis and Perspectives 2013,” shows that income levels of Spanish workers have declined to levels below that of 10 years ago. The annual purchasing power of the average Spanish person stood at €18,500 in 2012, below the 2002 level.
Around 21.8 percent of the Spanish population (10 million people) are classified as poor—living on less than 60 percent of the average national income, which, according to Eurostat, amounts to less than €7,300 a year. Those living in extreme poverty now make up 6.4 percent of the population, some three million people.
According to Cáritas, the 2012 data shows that conditions of life for millions of workers have deteriorated rapidly. “We have gone from 300,000 households with no income in 2007 to 630,000 in 2012, and, added to this, households that are unable to handle unforeseen expenses have gone from 30 percent to 44.5 percent. Also, we have increased to more than 1.8 million households those where all members of the family [available for work] are unemployed, compared to the 380,000 homes that had this situation before the crisis.”
Inequality has shot up. Since 2007, the difference between the richest 20 percent and the poorest 20 percent has risen by 30 percent. The report warns that “Spanish society is fractured as a result of the severe increase in inequality. The latest Eurostat data shows that social inequality as measured by the Gini coefficient (where 0 expresses perfect equality and 100 expresses maximal inequality), increased from 31.3 in 2008 to 34 in 2011. The European Union average is 30.
These terrible facts are confirmed by the nongovernmental organisation Intermon Oxfam, whose report “Crisis, inequality and poverty” indicates even more people are in poverty than suggested by Cáritas—around 12.7 million people. It warns that austerity measures and welfare cuts will result in an estimated 18 million poor in 2012—equivalent to an unprecedented 38 percent of the population. The same report also publishes other indicators of the social devastation in Spain, including the fact that some 46,559 evictions took place in the first quarter of 2012—an average of 526 families losing their homes each day.
The policies of the ruling class have also meant an exodus of Spanish workers and youth. According to the National Statistics Institute (INE), the number of people with Spanish nationality resident abroad in 2012 increased by 6.3 percent on the previous year to reach 1.9 million.
The latest data also indicates the way the ruling elite is pushing ahead with its aim of converting Spain into a cheap labour platform. According to the Bank of Spain, wages fell by 8.5 percent in 2012. On top of this, companies have slashed their social security payments and the government has raised the retirement age and made it easier to fire workers.
The ruling class has profited from this social misery even as its political representatives repeat endlessly that “we all have to make sacrifices”. Spain’s exports reached a record €223 billion in 2012. Credit Suisse has estimated that the number of millionaires would more than double over the next five years, to around 616,000.
The working class has reacted to these attempts at mass pauperisation with strikes and protests. Last year, there were nearly 1,300 strikes involving almost four million workers—nearly six times more than in 2011. Over 40 million working hours were lost—almost twice the previous year.
Aware that the class-war agenda being waged at the behest of the ruling elite is leading to a social explosion and mounting opposition from the working class, the PP government has increased this year’s outlay on riot personnel and equipment by 1,780 percent. A new special rapid reaction force called Protection and Reaction Unit has been created to collaborate with the riot police, the motto of which is “We assume custody and will reestablish order”.
Recall that Bankia is the large Spanish bank that was partially nationalized’ in 2012, and that received 18 billion euros in new equity funds at the end of 2012. At that time Bankia shares fell by 25% to 41 euro cents (41/100 of one euro). At that same time Bankia said it expected to report a 19 billion euro loss for 2012. See my January 3 commentary titled Spain: Bankia and its parent! where I said “My assumption with respect to Bankia and other large Spanish banks is that ‘we have yet to hear the worst of it”.
On Monday, following a ‘forced revaluation’ by Regulators to 1 euro cent (1/100th of one euro) announced after the financial markets closed on March 22, Bankia shares closed at just under 15 euro cents (15/100 of one euro), down over 40% on the day. That ‘forced revaluation’ is said to have been a ‘condition’ of Bankia receiving a further capital injection of 10.7 billion euros from European rescue funds in circumstances where in February Bankia reported a 19.2 billion euro loss (as had been expected) for 2012. Standard & Poor’s is reported as having lowered Bankia’s rating by one notch to BB-.
In February Bankia reported that it expected a quick return to profitability following a ‘clean-up’ of its balance sheet.
Bankia strikes me as needing to be on every trader and investors radar screen going forward, given its size and what I think has to be its possible impact (positive or negative) on Spain, the eurozone, and perhaps the banks and banking systems of both Spain and other countries – the latter pursuant to possible contagion issues.
In other Spanish bank news, yesterday afternoon Banco CEISS, BMN and Caja 3, three comparatively small Spanish banks reported 2.5 billion euros, 3.7 billion euros, and 1.0 billion euros losses respectively for their latest fiscal years. These losses were all driven by previously unrecognized real estate exposure losses, or in the case of BMN writedowns on property holdings.
1,000+ Spanish companies filed for creditor protection in February, up 80% year/year, and 10% of Spanish loans were in arrears;
in 2012 1,000 companies per month failed in Italy, and by January 7.4% of loans were non-performing; and,
unemployment in both Spain (now 26.0%) and Italy (now 11.7%) is expected to climb in both countries.
Also, see Men in Black Headed for Spain, which reports (in some detail) that in May officials of the European Union, the European Central Bank, and the International Monetary Fund may audit (my word) the placement of the approximate 41 billion euros advanced against the Spanish bank bailout last year.
Finally, see Spain faces prolonged depression, which suggests that Spain’s economy will contract by a further 1.5% in 2013 (1.4% in 2012), and says “Spain’s public finances are in disarray as the government is seeking to prevent the collapse of the country’s banking sector in the wake of a huge mortgage crisis”.
You may recall that early last October I expressed concerns with the Spanish bank stress tests - see Consultancy says Spain’s banks could need 60 billion euros. In particular I suggested that those stress tests were based on assumptions provided to the consultant and simply accepted by the consultant, where I wasn’t convinced the consultant’s conclusions were credible. I continue to be of the same mind – and expect more negative news to come from Spain in coming weeks and months.
The land is a source of wealth for a few, here and on the other side of the planet. In the Spanish State, the housing boom has left a legacy of ruinous urban development, airports (almost) without airplanes, ghost towns, huge, obsolete infrastructure projects… And in the global South, the desire to profit from the land has driven off peasants and indigenous peoples, and imposed monocultures for export, large infrastructures for the exclusive benefit of capital and the plundering of their natural resources.
The oligarchy in power takes advantage and pulls the strings behind the scenes, negotiating shady urban development deals, redefining rural land to allow it to be used for construction. Corruption cases are multiplying. The culture of backhanders is the order of the day. So is a new despotism by big business at the expense of citizens and our territory. And elsewhere, history repeats itself. Corrupt governments are the best partner for investors who want to acquire land quickly and cheaply. According to an Oxfam report, every six days overseas investors sold an area equivalent to the size of the city of London. It is the fever of the land.
Privatization and Land Grabbing
Privatization and land grabbing are the order of the day. What’s more beneficial than what we need to live and eat? The food and financial crisis, which erupted in 2008, gave rise, as has been well documented by the international organization GRAIN, to a new cycle of land grabbing on a global scale. Governments of countries dependent on food imports, in order to ensure the production of food beyond their borders for their own population, as well as agribusiness and investors (pension funds, banks), hungry for new and profitable investments, have acquired fertile lands in the South. It is a dynamic that threatens farming and food security in these countries.
Indigenous people, driven from their territories, are spearheading the fight against the privatization of the land. This is not a new struggle – and is one that was spearheaded by Chico Mendes, rubber tapper, known for his fight in defence of the Amazon and who was murdered in 1988 by Brazilian landowners. Chico Mendes helped create the Alliance of the Peoples of the Forest, comprising indigenous peoples, rubber tappers, environmentalists, farmers … against multinationals demanded logging and land reform with communal land ownership and its use for the benefit of farm worker families. As he said: “There is no defence of the forest without the defence of the people of the forest.”
Here in the Spanish State, the Union of Agricultural Workers (SOC), part of the Andalusian Workers Union (SAT) has been one of the key exponents in the struggle for land and the rights of farm labourers. For over a year, they have occupied and worked the farm of Somonte, in Palma del Río, in the southern Córdoba province, that the regional government of Andalusia was preparing to sell, even though 1,700 people in the small town are unemployed. The aim of the occupiers is that this farm is worked by cooperatives of the unemployed, rather than pass into the hands of bankers and landowners. Somonte is a symbol of the struggle of the SOC and the SAT, which is involved in similar efforts elsewhere.
In Catalonia, today, a clear example of how the use of land to private interests take precedence over the social and the collective is Can Piella, a seventeenth century farmhouse with land attached that is one of the few remaining rural areas in metropolitan Barcelona. After being abandoned for ten years it was taken over by a group of youths. They created an association, which currently has about two thousand members, who have restored the property, resumed farming, revitalized the surrounding environment and opened it up to people living in the surrounding areas of Llagosta, Santa Perpetua de Mogoda and Montcada i Reixac. Now, after three and a half years of operation, an eviction order threatens the project. The owners who for a decade abandoned the finca and have no plans for it, now claim it back.
In the early twentieth century, Emiliano Zapata, peasant and leading figure in the Mexican Revolution, demanded: “Land for those who work it.” It has been over one hundred years and this continues to be a topical slogan. •
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SPANISH BANK DEPOSITS SEIZED, CYPRUS-STYLE
March 28th, 2013
Eurogroup President Joeron Dijsselbloem caused both a political furor and rumblings of major bank runs across Europe, with his remarks March 25 that the great bank heist in Cyprus was actually a “template” for other European countries. The influential Eurogroup Working Group quickly drafted an internal memo which denied Cyprus was such a “template,” the Wall Street Journal reports today. And Spanish Prime Minister Mariano Rajoy held a joint press conference yesterday with French President Francois Hollande, to proclaim that “the problem of the Cypriot banking sector is different [than that of the rest of Europe]; the decision adopted is extraordinary and unique, and will be applied in an extraordinary manner and only to Cyprus.”
But even as Rajoy was speaking, his government was announcing a long-awaited final settlement of the cases of five bankrupt Spanish banks, led by the giant Bankia, which involved fleecing up to a million small depositors in those banks of anywhere from 30% to 70% of their holdings — something over 6 billion euros. Although the mechanism employed is slightly different than that in Cyprus, the policy is identical: the international financial system is in full meltdown; the game is over; and small depositors and the population in general are being forced to take the hit in order to bail out the big international speculators.
The only alternative to such genocidal robbery, Lyndon LaRouche has repeatedly explained, is the international implementation of full banking separation under Glass-Steagall legislation.
In the case of Spain’s Bankia, the thievery involves the fact that, over recent years, the bank fraudulently tricked over 400,000 small depositors to use their savings to purchase the bank’s “preferred shares” — or “preferentes,” as they are known in Spain — with promises of very high rates of return. Marketed as fixed-term deposits, the reality of the “preferentes” is that they either could never be cashed in, or carried terms as long as 1,000 years!
With Bankia bankrupt, the FROB (Spain’s bank reorganization agency) has imposed “haircuts” of 39-50% on all “preferentes” holders, followed by their forced conversion into common stock in Bankia. As part of the settlement, those common stocks, which last week were trading at 2 euros per share, will be drastically slashed down to 1 euro cent per share—a 99% loss. The head of Spain’s ADICAE (Association of Consumers and Users of Banks, Savings Banks and Insurance Companies), Manuel Pardos, has denounced this arrangement as “double thievery and fraud,” and has filed suit against most of Spain’s major financial institutions for the “crime of massive consumer fraud.”
In addition to Bankia, four other bankrupt financial institutions are involved in the heist: Catalunya Bank is slashing “preferentes” by 61%, Banco Gallego by 50%, Novagalicia Banco by 43%, and Banco de Valencia by 90%. In all five cases, the Wall Street Journal admits, “most” of the “preferentes” holders are small depositors.
Three additional features of the robbery should be noted.
1) The drastic “haircut” of defrauded small depositors was imposed on the Spanish government as part of a July 2012 Memorandum of Understanding with the detested Troika — the same criminals who just authored the great bank heist in Cyprus.
2) While Prime Minister Rajoy was busy impersonating Pinnochio, his Deputy Economics Minister, Fernando Jimenez Latorre, was assuring Spain’s Senate that the deal “was as generous as possible, because it converts holders of those products [the 'preferentes'] into stock holders, and that lightens their load to help clean up the institution. It is satisfactory, if you compare it to other cases which happened within the EU.”
3) The “preferentes” scam in Spain is almost identical to the late 1930s looting of consumers carried out by First National City Bank (today Citibank), whose exposure by chief counsel Ferdinand Pecora in the famous 1933 congressional hearings led to the passage of Franklin Roosevelt’s Glass-Steagall law that year.
Government to Impose Heavy Losses on Shareholders and Bondholders, Hire Advisers to Help Manage Lenders’ Assets
By JONATHAN HOUSE And CHRISTOPHER BJORK | The Wall Street Journal
MADRID—The Spanish government will impose heavy losses on investors at nationalized banks and hire external advisers to help it manage these banks’ assets, its latest efforts to overhaul a financial sector battered by the collapse of a decadelong housing boom.
Bloomberg NewsShareholders of Bankia will be nearly wiped out. Above, its Madrid offices.
Forcing shareholders and bondholders to share the cost of restructuring the country’s five nationalized banks was a politically costly step for the government of Prime Minister Mariano Rajoy, but one that was required under the terms of a European Union bailout of Spain’s ailing lenders. The decision to solicit advice in drafting a long-term strategy for these lenders came after the state-backed Fund for Orderly Bank Restructuring failed to sell one of them, midsize Catalunya Banc SA.
The bailout fund, known as the FROB, has decided to hire consultancy McKinsey Co. and investment bank Nomura International PLC as advisers, say people close to the situation.
Representatives for the FROB and Mckinsey weren’t immediately available to comment on the decision. A Nomura spokeswoman declined to comment.
Overhauling the banks is a key part of the government’s efforts to turn around an ailing economy, now in its sixth consecutive quarter of recession. Bank credit is shrinking and unemployment has shot past 26%.
The restructuring terms announced by the FROB will impose losses of up to 61% at Spain’s largest nationalized banks. At Bankia SA, the largest of the institutions and the only one that is publicly traded, shareholders will be nearly wiped out and junior bondholders will lose around 30% of their original investment.
In keeping with EU requirements that investors bear losses before companies receive state aid, the nominal value of Bankia’s shares will be reduced to €0.01 from €2 and the nominal value of its preferred shares and subordinated debt will be reduced to €4.841 billion ($6.29 billion) from €6.911 billion, the bailout fund said.
To recapitalize Bankia, the €4.841 billion worth of preferred shares and subordinated debt will be converted into ordinary shares, while the FROB will inject €10.7 billion. This recapitalization will result in a massive dilution for Bankia’s shareholders, who will be left with less than 1% of the bank.
The FROB also said it would reduce the value of preferred shares in other ailing banks—Catalunya Banc’s by 61%, Banco Gallego’s by 50% and NGC Banco’s by 43%—and then convert them into ordinary shares. But as these three banks aren’t publicly traded, the Spanish government said it would give the holders of their newly created ordinary shares the option of selling them to the country’s deposit guarantee fund.
Last month, the FROB said the preferred shareholders at Banco de Valencia SA, a smaller nationalized bank, faced losses of 90%.
The government had warned that the losses imposed on investors at the nationalized banks would be significant. The FROB had ordered external valuations, which found that their liabilities far exceeded their assets. In Bankia’s case, an evaluation found that it had a negative value of €4.15 billion.
Nonetheless, imposing losses on investors is one of the politically difficult steps required of Spain in exchange for just over €40 billion in EU aid because most of those who made investments in the troubled lenders were small depositors.
Many of these small savers have taken to the streets to protest their expected losses in recent months, claiming they were misled into believing that that they were buying low-risk savings products, not risky bonds or shares.
Spain’s government for months argued with Brussels, ultimately unsuccessfully, to allow for some flexibility on state-aid rules that require investors share the burden with taxpayers.
Spain then set up an arbitration mechanism by which clients who claim they were misled can have their case reviewed; when such claims are upheld, the sales will be annulled and the clients will recover their initial investment.
Vladimir Simovic and Darko Vesic (VS and DV): Norway is considered as one of the most successful (economically, socially, etc.) countries in Europe and beyond. As such Norway is usually taken as a model for other countries to look up to. But the real question would be is Norway an exception in this age of neoliberal capitalism and the crisis it generated?
Asbjørn Wahl (AW): Norway is currently in a better position than most other countries in the world. There are two important reasons for that. Firstly, Norway is well-endowed by nature. Particularly, we are for the time being a wealthy oil-producing country (but also rich in fish resources and hydro-electric energy). This gives the government a huge annual surplus which most countries can envy us. The oil and oil-related industries also create jobs at a rate which keeps unemployment among the lowest in the world, at about or under 3 per cent. This low unemployment rate means that the trade unions are still relatively strong at the bargaining table.
Secondly, Norway was already among the most developed welfare states when oil was first found (in the 1960s). The balance of power in society was in other words of a sort which made it possible to socialize most of the oil revenue, different from the situation in many other oil-producing countries where big oil companies and/or local elites are able to expropriate most of the extraordinary high economic rent and profit from this industry. There has therefore neither been necessary, nor politically possible, to implement the same sort of harsh austerity policies in Norway as we can see in most of the rest of Europe. The relatively big public sector then, contrary to mainstream neoliberal theory, also contributed to stabilizing the economy and reducing the negative effects of the financial crisis from 2008, and extra oil revenue was put into the public economy in 2008-2009 to further dampen the effects of the crisis.
On the other hand, also in Norway we have seen more or less soft neoliberal policies pursued by governments – both right and so-called left – over the last 30 years. Liberalization, deregulation and privatization have taken place. The pension system has been reformed and thus weakened (reduced pensions for most people, less redistribution from the top to the bottom, more individual risk etc.). So-called New Public Management methods have been introduced in the public sector, so that for example the hospital sector has been more market-oriented; inequality and child poverty has increased, and so on. All this has taken place in a more modest way than in the rest of Europe, but the direction is the same.
My view is that the currently favourable situation in Norway is rather fragile. The country is deeply integrated in the European and World economy and thus strongly influenced by the neoliberal offensive. A further set-back in the world economy can hurt Norway’s export heavily. If so, unemployment will increase rapidly and the trade union movement can thus be weakened considerably, a trade union movement which is still deeply embedded in the social partnership ideology, and thus less able to mobilize for more confrontational struggles if and when that becomes a necessity. I often frame the Norwegian situation in this way: Yes, it is true that the Norwegian welfare model for the time being stays on the upper deck of the global ship. But it may be the upper deck of Titanic.
VS and DV: Similarly to this specific position of Norway today, we can say that specific historical conditions enabled the rise of welfare state after Second World War. Can you tell us something about the emergence of the welfare state?
AW: The history of the welfare state is very much linked to the class compromise between labour and capital which developed in most of Western Europe in the 1930s or immediately after World War II. [Ed.: see “Rise and Fall of the Welfare State”] Thus the rise of the welfare state also in Norway was strongly influenced by global power relations (including the Russian revolution and the following existence of another, competing economic system in Central and Eastern Europe – including the need for capitalists in the West to gather support from its own working-class in the Cold War against the Soviet Union). Simultaneously, there were also many national peculiarities which gave the welfare states different forms and contents in the various countries – and also different levels of developments. Even if there were many similarities in the Scandinavian countries (Denmark, Sweden and Norway), there were therefore also differences here.
Norway has historically never had a strong upper class, neither during feudalism nor under capitalism. In a small and sparsely populated country small peasants have formed an important, independent and self-confident group. In the 1930s, we had a very strong growth and strengthening of the trade union and labour movement – based on a class alliance of workers, small peasants and locally based fishermen who owned their own boats. One of the effects of this development was that fascism never became strong in Norway. Another effect was that the main employers’ association decided to strike a deal with the trade union movement (in 1935) – the then formalization of a mature class compromise. At about the same time, the Labour Party won sufficient support to form its first government in Norway. It was on the basis of this compromise and these power relations that the welfare state was developed in Norway.
“At the global level it was the threat of socialism which made capitalists in Western Europe go for a class compromise (as a lesser evil in their view). We should also have in mind that the welfare state was never the demand of the working-class before it was established. What the working-class fought for was socialism. ”
Thus, global and national circumstances played together to form the preconditions of the welfare state. At the global level it was the threat of socialism which made capitalists in Western Europe go for a class compromise (as a lesser evil in their view). We should also have in mind that the welfare state was never the demand of the working-class before it was established (not even the notion ‘welfare state’ existed). What the working-class fought for was socialism. As we know, this was not achieved. The welfare state then became the result of the historically very specific development which rather led to the historic compromise between labour and capital. Thus the welfare state itself is a compromise of interests. That is also the reason why the welfare state is so many-facetted and full of contradictions. While it represented enormous social progress for most ordinary people, it is maybe time now also to remind a rather modest labour movement that the welfare state does not represent, and has never represented the emancipation of the working-class.
VS and DV: In the given circumstances of contemporary class dynamics is it realistic to expect the return of welfare system which was dominant in the third quarter of the 20th century?
AW: My view is that the era of the welfare state is over, or at least it is coming to an end now. What we see particularly in the most crisis-ridden countries of Europe, is the systematic destruction of the welfare state. The rise of the welfare state was, as mentioned above, the result of a historically very specific development which can hardly be copied in any way. The welfare state then became possible due to comprehensive regulations and restrictions which were imposed upon capital (capital control, regulation of financial markets, bank regulation, a rapid expansion of public ownership in many countries and – not to forget – democratic reforms which gave ordinary people more influence in politics). The changes of power relations in society which we have experienced since the neoliberal offensive started around 1980 have abolished most of these regulations, so the power structure on which the welfare state was based, has already disappeared.
What we experience now is more or less the harvesting period of capitalist and right wing political forces, in which they exploit the new balance of power to get rid of the best parts of the welfare state (not all of it – it was the result of a compromise, so it does also reflect capitalist interests here and there). To fight for a re-establishment of the welfare state in the current situation is therefore relatively meaningless. Of course we have to defend what we achieved through the welfare state, but our more long-term task is to re-establish our vision of another society, a society which is directed toward meeting peoples’ needs – and the strategies to get there.
VS and DV: For the time being it is certain that the system is moving in the different direction – austerity measures, imposed under the pretext of crisis, eliminate the last trace of welfare state. Is the crisis used as an excuse to concentrate the power in the hands of the dominant class?
AW: Yes, it certainly is. I see that many politicians and trade unionists, also on the left, today say that the austerity policy of the Troika (the EU Commission, the European Central Bank and the International Monetary Fund) as well as of most governments in Europe is mistaken, because it will not contribute to regaining economic growth and creating jobs. They therefore try to convince the Troika and EU politicians to change policy. I think that is a grave misinterpretation of the situation. The short term aim of the Troika is not economic growth and jobs, it is actually to abolish the welfare state and defeat the trade union movement. At least, that is what is going on.
VS and DV: Dominant interpretation of the post-socialist reality in Serbia is that we are still on our way to the “genuine capitalism” and that EU integration is going to resolve most of the economic and social problems of our society. From your point of view what does the EU represent today?
AW: This sounds like a political fairy tale to me. What is “genuine capitalism”? Is it the post World War II welfare capitalism (which is now history), or is it the much more harsh, brutal and crisis-ridden capitalism we see unfolding around us today (and which Samir Amin has named “generalized monopoly capitalism”)? To believe that EU integration will create a prosperous future for Serbia, given what is now going on in Greece, Ireland, Portugal, Spain, the Baltic countries, Hungary, Bulgaria etc., really requires a big portion of unfounded optimism.
Even if the EU was established already in 1958 (the EEC), and with more positive aims, the EU of today has got most of its form (pacts and institutions) and contents during the neoliberal era, something which is strongly reflected in its power structure, its policies and legislation. It therefore aggressively acts in the interest of capital. Neoliberalism and austerity policies are more or less constitutionalized in the EU today, and Keynesianism (or traditional social democratic policies) is banned by law (interestingly enough supported by all the social democratic parties in the EU). The fact that the EU already from the outset had a deep democratic deficit, has given it an important advantage in this regard. Furthermore, over the last couple of years the EU has moved rapidly toward a more and more authoritarian supranational state body in the interest of primarily financial capital – a development which is extremely dangerous seen in the light of recent history in Europe.
VS and DV: We witness mass mobilizations and protests all around EU. Trade unions have major role in these events. Can you tell us how much have trade unions and their strength and position in society changed in last half a century? How much austerity measures, imposed by the troika, further paralyze trade unions and leave workers without their basic weapon for protection of their rights?
AW: The trade union movement is under enormous attacks in Europe today. The European Court of Justice has limited the right to strike. Collective agreements in the public sector have been set aside by governments in at least ten EU member countries, while wages have been cut, all without negotiations with trade unions. Legislation is being introduced at national level in a number of countries in order to limit the right to strike and to be able to use more extreme measures to curb strikes by police forces and so on.
In addition to this, capitalist forces are given ever more power in society, and regulations are introduced at the EU level, something which makes it easier to exploit the enormous wage gap between Eastern and Western Europe for social dumping in the west.
This has provoked increasing mobilization and struggles from trade unions and social movements in many countries. However, the trade union movement in Europe has been strongly weakened during the neoliberal era and fights from a very defensive position. High unemployment and enormous loss of union members represent an important part of the picture. So far there has therefore not been possible to develop a coordinated cross-European resistance, even if the 14 November actions last year represented an important step in the right direction – when trade unions in six EU countries (Portugal, Spain, Italy, Greece, Cyprus and Malta) carried out a joint general strike while unions in many other countries mobilized for demonstrations.
Both at the European and national level, most trade union confederations are strongly influenced by the social partnership ideology, putting a meaningless high priority on so-called social dialogue in a situation in which employers mainly have withdrawn from the class compromise and gone on the offensive to attack – day and night – what they previously accepted in the name of the social pact. In the current situation, this represents a dead end for the trade union movement.
The European Trade Union Confederation (ETUC) has even launched a new ‘Social Compact,’ that is a new class compromise, as its main aim for campaigning. It seems as if they aim to convince employers and politicians that a new class compromise (of the post World War II sort) will be “in everybody’s interests.” Given the enormous struggles and the shift in the balance of power which took place prior to the previous compromise, this sounds pretty uninformed, to put it mildly.
VS and DV: What would be your suggestions for further organizing? Is it possible to bend the stick, which is now significantly on the side of capital, back to balance? But in the end should we be satisfied with the balance or continue to push things forward?
AW: I should have liked to say that I have the answer, but there is no quick fix. We are very much on the defensive today, and it will take time to organize, to mobilize and to build the social strength necessary to be able to meet the confrontational attacks from capital and states – and thus to turn the tide. There is a lot of organizational work to do among workers, including the growing groups of precarious and informal workers, unemployed, youth and so on. Then we have to build strong social alliances, firstly in the trade union movement itself – and then with other social movements (the on-going Alter Summit process is an interesting project in this regard at the European level). Based on what I have already mentioned, the trade union movement will also have to break with its social partnership ideology, which in reality today represents an un-workable reminiscent of a class compromise which is already history. This will require quite a lot of internal discussions in the trade union movement.
However, reality itself will assist us in this discussion, as the massive attacks which are now being launched upon the best parts of the welfare state, upon workers, women, youth – and not least upon the trade union movement, will provoke resistance in ever more groups in society. This is the start of a new era of social struggle. Social models, however, cannot be copied, neither from previous phases in history, nor from country to country. Social models are the concrete results of struggles and power relations in society. Therefore, there is no ‘back to balance,’ in the meaning of a re-establishment of the post war class compromise and the welfare state. That is what we did have, but we do not have it any more, exactly because such a social compromise was not, and can never be, a stable balance. The reality that we are now losing the welfare state is proof enough that we did not go far enough last time. The main problem was that the question of ownership was not addressed in full. Social ownership of banks and other financial institutions as well as of the means of production will therefore have to be put on the agenda again – and democracy, real democracy, to correct previous mistakes in the emancipatory struggles of the working-class. •
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EU Bank Capital Confusion, Part 3 – It’s BIG! (professional and institutional subscribers only)
Ulster Bank/RBS Supporting Charge Documents
